'McCreevy slammed on private equity defence' - unison.ie
"EU COMMISSIONER Charlie McCreevy - already under fire for taking time out in Cheltenhamn race week - yesterday took on Europe's socialist group by defending private equity and the huge fees paid to its promoters."
The Internal Market Commissioner is looking at ways to reduce national barriers which prevent private equity firms from operating easily across borders, but is against EU-wide regulation of the industry.
He said it was up to national regulators to monitor risk in private equity deals closely but defended the industry, which has been attacked fiercely by trade unions and some politicians for "stripping" assets and destroying jobs in acquired companies.
"The private equity industry is the most critical source of capital for start-up and developing businesses that stimulate innovation, competitiveness and growth," Mr McCreevy said in a speech to British politicians.
"There is a big selling job to be done. The industry must go out and tell the many stories of success," he added.
Loneliest
His comments were immediately attacked by Socialist party president in the European Parliament Poul Nyrup Rasmussen, a former prime minister of Denmark.
"McCreevy may have got friends with the industry but, as far as public responsibilities, he is the loneliest man in the world," Mr Rasmussen said. The Socialists, who form the Parliament's second largest political bloc, will publish a report next week which they say illustrates how leveraged buyouts can damage companies and the real economy.
Mr Rasmussen said huge fees earned by private equity managers did not send the right signal to society.
"We are in the beginning of a much more open discussion on the development of the financial market. We have no intention to demonise them," he said.
Mr McCreevy said asset disposals were generally part of a private equity company's plans for transforming the businesses they invest in.
Huge bonuses paid to some private equity managers could be justified when they outperform substantially.
Golfers
"If those rewards are properly performance driven, I ask myself why they should be less acceptable than performance fees paid to professional golfers, or transfer fees paid to professional footballers?" Mr McCreevy said.
A Commission working group is drawing up a a "comply or explain" code for the industry to boost transparency, he said.
Brendan Keenan
© http://www.unison.ie/
See also: McCreevy praises private equity