UK's GMB Accuses Private Equity Investors Of 'Stripping' Pension Fund Assets

by Philip Morton, Investors Offshore.com

05 June 2007

General union, GMB this weekend alleged that a total of 96 insolvent pension funds in the rescue schemes set up by the UK government have direct links to private equity owners, and called on the UK authorities to take action to prevent 'asset stripping' by such investors.

According to GMB, 58 of the insolvent pension funds are in the Financial Assistance Scheme (FAS), and 38 of these are under consideration by the Pensions Protection Fund (PPF).

The union stated that:

"21 of these insolvent pension funds have unfunded liabilities of GBP1,994,268,000. GMB has examined all the information on the public record regarding all the 96 insolvent pension funds. Due to the secrecy in which private equity operates GMB has not been able to establish any figures for the amounts of the unfunded liabilities of each of the other 75 insolvent pension funds."

The full report containing the names of the companies with the 96 insolvent pension funds and the private equity companies allegedly linked to them, entitled "Private Equity's Broken Pension Promises - Private Equity companies' links to insolvent pension funds", is being debated at the GMB Congress, which is taking place from Sunday to Thursday.

Paul Kenny, GMB General Secretary argued that:

"It is clear that private equity racketeers are treating the British public with contempt. It is time that we all stopped being so gullible and faced the facts."

In a statement likely to cause controversy amongst the UK's private equity investors, the GMB further argued that:

"Asset strippers, as private investors hiding under a cloak of secrecy and pretending to be interested in building up the UK economy, are taking the taxpayer for a ride, while destroying jobs and leaving in their wake thousands of workers who saved for their pensions without a pension and dependent on the state."

The GMB has called on MPs to use their "full powers to uncover the full amount of the unfunded liabilities of all 96 insolvent pensions funds with links to private equity which have been dumped in the taxpayers lap. The MPs should also examine how private equity companies are allowed to takeover companies, asset strip them, place them in liquidation and then hand the pension fund liabilities to third parties".

It concluded:

"Gordon Brown must close the loopholes to stop private equity mugging the British taxpayer. He should also bring in a windfall tax on private equity to recover the amount the taxpayer pays to bail out the unfunded liabilities of insolvent pension funds."

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