The secretary general of the industry body European Private Equity and Venture Capital Association Javier Echarri has criticised union representative John Monks for using “spin” in an article in the UK newspaper Financial Times to attack private equity and hedge funds.
In a letter to the FT, Echarri said: “The debate for and against private equity is not helped by rants such as John Monks’ piece ‘Europe should not give in to casino capitalists’.”
He alleged Monks, who is the general secretary of the European Trade Union Confederation and former head of the UK Trade Union Congress, demonstrated his prejudice through his claim that alternative investors are “among the wildest animals in the jungle.” Monks would do better to present cogent arguments based on evidence, Echarri added.
The union head wrote in his original article for the FT: “Many politicians initially shared (the unions’) concern (about private equity), but in the face of an expert public relations and lobbying campaign, most of the governments of the industrialised world have given up, in fear of these businesses emigrating.”
But Echarri said governments do not “give up” when sound arguments are provided. “It is right and proper that any regulation of government action should be preceded by research to improve understanding and ascertain the impact of any action.”
The argument comes as private equity is the subject of legislative reviews around the world. This week, UK prime minister-in-waiting and chancellor of the exchequer Gordon Brown said a private equity tax review was due “soon” in the UK.
Echarri insisted that private equity is fully regulated in all 27 European member states.
In private equity’s favour the trade association head said buyout firms are able to focus on much larger companies than in the past. Yet he added this ignores the wider scope of the sector which has invested in more than 7000 companies in the last five years and of these 90 percent have less than 500 employees.
Echarri went on to say that many of the investors in funds producing the highest returns are pension funds which benefit millions of ordinary people including many, if not most, of the TUC’s members. “Would (Monk) rather pension funds flowed into loss-making assets?” he asked.