US union continues buyout campaign(2)

America’s largest labour union has sent out email blasts and established blogs pertaining to private equity deals it finds troubling – the action follows last week’s issuance of a buyout report and launch of an associated website.

The Service Employees International Union’s private equity-related publicity campaign continued this week with email blasts and blogs dedicated to questioning recent buyout deals.

The information released by the SEIU does not specifically cite any negative impacts from recent buyout activities, but the union says the deals raise “questions” and may spark “debates”.

A Tuesday email from the SEIU regarding the JC Flowers-led, $25 billion Sallie Mae buyout questioned what the sale means for student borrowers in light of ongoing investigations into the US student loan industry. The union promised to monitor the sale on its “salliemaerevealed” blog hosted by blogspot.

The SEIU’s email characterised lead investor JC Flowers as “no stranger to profits” and suggests some of the firm’s successful exits, such as its Shinsei Bank and Green Tree Financial deals, are emblematic of large profits and quick flips the SEIU has said it finds worrisome.

“The private equity buyout industry, armed with more than a half-trillion dollars of capital, is today engineering financial deals that together are larger than the annual budgets of most of the world’s countries,” the email says. “This financial juggernaut is generating hefty returns to its investors, extraordinary riches for its executives, and newly relevant questions about the impact of its business practices on American workers, businesses, communities, and the nation.”

The same statement – as well as disclosure that the union’s 1.8 million members participate in pension funds that allocate 5 percent to 10 percent of more than $1 trillion assets to private equity – accompanied a Monday email regarding Clayton, Dubilier & Rice’s $4.8 billion ServiceMaster deal.

“The buyout raises questions about how CD&R will resolve the ongoing controversy over the use of toxic chemicals by [ServiceMaster subsidiary] TruGreen Chemlawn,” the SEIU said in its email.

Referencing the environmental concessions made by TPG and Kohlberg Kravis Roberts in their bid for Texas utility TXU (concessions which the SEIU says some environmental groups have lauded while others consider them window dressing), the email says the ServiceMaster deal “could spark further debates about the impact of private equity owned companies on the environment”.

Last week, the SEIU issued a report on the private equity industry and buyouts, which it said in some cases may harm workers and their rights, as well as void companies of value. It also launched a related website, behindthebuyouts.org, and challenged the private equity industry to help better American workers’ opportunities.

The union is calling for private equity to be more open in its dealings and disclosures in terms of finances and business plans for portfolio companies. It also feels the public and workers should have a voice in potential deals and benefit from their outcomes.