Private Equity Briefcase

June 4, 2008

The SEIU Is At It Again

A group of activist organizations led by the Service Employees International Union is planning to thump the protest drum against the private equity industry. The SEIU plans to contact more than 10 million people Wednesday around the world about attending demonstrations planned in 100 cities, particularly large metropolises like Mexico City, New York, Paris and Tokyo, located in 25 countries on July 17.

Just exactly who is being targeted as potential attendees since the labor organization itself only has two million members?

Announced today by the massive labor organization the same day it is holding its annual convention in Puerto Rico where it was addressed by Democratic Presidential nominee Barack Obama, the planned protest is being directed at the “special treatment and tax loopholes lavished on private equity firms such as [Kohlberg Kravis Roberts] whose risky debt-laden deals have helped throw the economy into a free fall.”

Never mind the credit crunch or slowing consumer spending as other factors at work in this stalled economy.

Speaking of politics, the service workers labor union, a big supporter of Obama, will urge voters to contact John McCain about his ties to KKR co-founder Henry Kravis, a fundraiser for the McCain camp. McCain is also apparently being taken to task because, predictably, he does not support closing tax loopholes for hedge fund and buyout industry executives. The SEIU has tapped an ally in the form of comedian Lewis Black who kicked off the campaign.

Black may be astute and witty, but couldn’t the organization have picked a more serious persona ala Hollywood to pursue the cause—Sean Penn perhaps?

Protestors taking part in the protests, meanwhile, will be asked to sign a petition aimed at legislators that says, in part, “Support the fight to take back the economy and pledge to close tax loopholes that feed the greed of the buyout industry.”

It should be noted the demonstration isn’t just against the buyout industry, an SEIU media rep says, but to take back the economy.

“The responsibility to create a healthy world economy is shared by all,” says Andrew Stern, president of SEIU, “and that means companies like KKR have a responsibility that extends beyond making a few people rich.”

Yet another protest by the SEIU shouldn’t come as a much of a surprise to private equity executives. After all, the SEIU is probably the most vocal and organized critic the US buyout business has contended with over the last year apart from disgruntled investment bankers. Since last summer, the labor organization has had Washington private equity behemoth The Carlyle Group, as well as New York’s KKR in its cross hairs.

In May, Stern expressed concerns over “risky deals that put workers and companies at risk, exuberance, quick flips, conflicts of interest, transparency issues, [and] missed opportunities for workers.”

The SEIU sponsored street protests in front of Carlyle’s Washington office last year, characterizing private equity executives as “fat cat tycoons” and tax cheats. What impact the street-level protests have had on the way private equity firms conduct their business, though doesn’t seem to be the point.

“There are a variety of different avenues that you have to take,” says an SEIU media rep, noting that street protests were also part of the civil rights movement. “This is a representative democracy and this is a way that a lot of people who don’t have a lot of influence make their voice heard.”

Point made.