Friday Letter: David Walker vs. John McFall

A ring-side seat at the UK Treasury Select Committee was one of the hottest tickets this summer as politicians played to the gallery and attacked the buyout industry. Sir David Walker, author of the industry’s new code of conduct, promises a fiery winter-warmer when he appears before the committee next month.   

The UK Treasury Select Committee is to reopen its inquiry into the private equity industry after its chairman John McFall, the Labour backbencher, called the Walker report a “failure”.

In an interview with UK newspaper The Daily Telegraph McFall said while Walker had made a “valiant effort” in drawing up his proposals to make private equity more open, “it needs to go further”.

He said: “Publicly-listed companies have to disclose issues and I don't see why Sir David says [private equity firms] should just go half-way. If they want to ensure they get public confidence and want to be accepted as an industry then they should go that bit further and disclose the same as PLCs.”

McFall suggested a “tightening up” of the voluntary aspect of Walker’s code of conduct, saying that the signing up to guidelines should be compulsory for all members of the BVCA. 

Walker has responded by calling McFall a “totally inconsistent” critic of the report. He said McFall’s demands for public company-like disclosure without an increase in regulation or primary legislation was not realistic.

It is no surprise that McFall has been raging at Walker’s recipe for change in private equity. Detractors like him were always going to be disappointed with his work, especially those who will only relent once the buyout industry is hounded out of town.

Back in the real world, away from the distractions of the circus, Walker’s report should be lauded as a measured response to a disproportionate fuss. His efforts should ensure that demystification comes through disclosure. This will not happen overnight, but the requisite process to help the industry communicate more effectively is the substance of the Walker report.

In December, Walker and McFall will meet for a showdown at another Treasury Select Committee meeting at the House of Commons. If nothing else, it promises to be an engaging confrontation between McFall’s blustering and Walker’s altogether more level-headed approach to the debate about the merits and demerits of private equity.

Our poll is now open for our annual awards. These are the only awards for the global private equity industry voted for by the industry. This is the eighth year of voting. Often called the PE Oscars, this year we have decided to adopt the two-stage voting process favoured by the Academy of Motion Picture Arts and Sciences. The polls for Europe, the Americas and the Rest of the World will be open to the end of the month. We will then use the results to produce shortlists for a final round of voting.

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