Plunder, profit and private equity - a Trojan horse and the future of regulation
Ancient Greek myth tells the story of the Trojan War, according to which Greek soldiers defeated the city of Troy they had besieged for ten years by means of a giant wooden horse in which soldiers were concealed. The unwary Trojans, thinking it a gift, brought the horse into the city and out popped the soldiers, who pillaged the city, murdered the inhabitants and left Troy in ruins. A Luxembourg court will shortly decide whether the alleged looting of a Greek mobile phone company by two large private equity funds, Apax and TPG, was a financial Trojan horse carried out by fraudulent means.
That decision will presumably impact on a civil lawsuit by the same creditors which will be heard in a US court next year. But it should also serve as a warning to what the financial vultures circling a Greek economy bled dry by successive 'bailouts' may bring. And it should prompt a fresh look at the EU's Alternative Investment Fund Manager Directive (AIMF Directive), which ostensibly safeguards against 'asset stripping' by private equity investors, in view of another potential leveraged buyout bubble.