States Risk Repeat of Wall Street Bailout with Private Equity Infrastructure Deals
A major increase in responsible infrastructure investment is critical to job creation and a U.S. economic recovery
WASHINGTON, DC – Increasing investment in infrastructure projects is critical to America’s economic recovery, but states that partner with private equity firms on deals risk a repeat of the Wall Street bailout, according to a draft of a policy discussion paper authored by one of the nation’s largest labor unions.
As states and the federal government seek ways to create jobs, generate revenue, and fix crumbling roads and bridges, momentum is building to address America’s infrastructure crisis. The policy discussion paper by SEIU, the nation’s second largest union of public sector employees, outlines the risks to states of doing deals with under-regulated private equity buyout firms whose risky financial strategies could put taxpayer dollars, and valuable state assets and services at risk. The report is online at behindthebuyouts.org
Private equity buyout deals typically involve large amounts of debt, increasing the risk of default if economic conditions fail to generate the revenue needed to make debt payments. If private equity-owned infrastructure projects default, taxpayers will be forced to pick up the tab, bailing out the financiers. In addition, most private equity deals are structured to generate short-term profits for the firms and their investors, a formula often at odds with taxpayers’ interest in steady, long-term state revenues and quality services.
Press Release . . .
Read the Report Here
America For Sale?
This week, SEIU began running radio and print advertisements in six states as part of an ongoing public awareness campaign highlighting the national security concerns raised by the growing links between foreign governments and private equity buyout firms. The ads – running in Virginia, Wisconsin, Alabama, Ohio, Michigan and Indiana – point out how foreign government-controlled investment funds, known as “sovereign wealth funds” (SWFs), are partnering with private equity funds to make huge investments in American companies that are responsible for important aspects of our national defense, energy, and homeland security. Because private equity firms are exempt from many of the public disclosure requirements that apply to public corporations, it is difficult to ascertain the size of the SWF’s holding or the manner in which decisions are made about the companies they own together, some of which are critical to national security.
Press release...
View the print ad (PDF)
Listen to the radio ad (MP3)
AMERICA FOR SALE?
Foreign Governments' Links to Secretive Buyout Firms Raise Potential National Security Concerns, Says New Public Awareness Campaign
Ads calling for increased federal oversight to run in six states
Full Release...
Backgrounder: Carlyle Group/Abu Dhabi Portfolio Companies
Latest News
Exploitation of Residents at Wasserstein and Lazard-linked Senior Care Facilities Exposed
NEW YORK, New York, / July 7/PRNewsire/--
Lazard CEO Bruce Wasserstein comes under fire as healthcare workers’ union informs residents, families that Atria senior care facilities value private equity gain over safety measures
See the new video by Robert Greenwald's Brave New Films that exposes how Wasserstein and Lazard are gouging seniors:
Members of the Service Employees International Union (SEIU) have also launched an online campaign to bring attention to ongoing safety concerns at leading assisted living provider Atria Senior Living, as well as the controversial business practices of its parent, Lazard Real Estate Partners, a private equity fund affiliated with Lazard Ltd. While costs have increased for Atria residents and some Lazard executives celebrate record compensation, problems with resident care persist. Beginning today, Web ads running on some of the world’s largest news sites will highlight Atria’s gouging of its elderly residents. View the ads online: web ad #1 and web ad #2. Read more.
WEDNESDAY, JULY 3
Major Union Questions PA Pension Fund, Calls On PSERS to Protect Workers, Retirees
HARRISBURG, Pennsylvania, / July 3/PRNewsire/--
Eileen Connelly, Executive Director of the Service Employees International Union’s Pennsylvania State Council, today called on the Pennsylvania School Employees’ Retirement System (PSERS) to protect retiree pension dollars and workers’ rights by steering clear of an investment management firm affiliated with Lazard, Ltd., a troubled firm whose affiliates have lost money for PSERS annuitants and whose past is replete with union-busting and scandals.
On June 23, PSERS’ Board of Trustees announced that it would entrust a Lazard affiliate with $350 million of PSERS participants’ retirement assets. The Board did so despite the poor performance of its Lazard-managed investments. PSERS’s sole investment with a Lazard-affiliated entity—as a investor in a real estate fund called “Lazard-Freres Strategic Realty Investors Fund II”—has consistently underperformed and failed to meet performance benchmarks. More
FRIDAY, MAY 16 Carlyle Group Buyout of Booz-Allen Would Add Billions in Sensitive U.S. Contracts to Portfolio Partially Owned by Abu Dhabi Government
$2.54 Billion Deal Warrants Close Scrutiny, Heightened Standards for Review, Given “Critical Services” Involved
Carlyle’s acquisition of Booz-Allen’s government business, which held $1.2 billion in Department of Defense contracts last year, raises the question if foreign governments could potentially gain access to sensitive national security information through their stakes in private equity firms. The stakes are becoming alarmingly high, as the Carlyle Group announced its intention to invest billions in developing U.S. infrastructure such as toll roads, water and sewer systems, bridges, tunnels, highways and airports.
In a report released last month, “Sovereign Wealth Funds and Private Equity: Increased Access, Decreased Transparency,” the Service Employees International Union outlined issues that arise when opaque foreign funds team up with secretive buyout firms. SEIU is sharing its concerns about the proposed Booz Allen buyout with Senate and House committees on armed services.
To read the full press release, click here.
WEDNESDAY, APRIL 23rd
New SEIU Report on Sovereign Wealth Funds and Private Equity Calls for More Transparency of SWF Investment in U.S. Buyout Funds
“Sovereign Wealth Funds And Private Equity: Increased Access, Decreased Transparency,” a new report released today by the 1.9 million member Service Employees International Union (SEIU) to coincide with tomorrow’s (April 24) U.S. Senate Committee on Banking, Housing and Urban Affairs Hearing on sovereign investments, calls on Congress to equip itself and the public with the tools necessary to make informed decisions about sovereign wealth fund (SWF) investment in United States private equity firms.
Current U.S. rules exempting private equity from many disclosure requirements, coupled with gaps in laws concerning foreign ownership, have inadvertently left a door open for virtually unregulated foreign ownership of American assets, which could have a broad effect, according to the SEIU report.
“Families are working hard to make their house payments and to send their kids to college. When a private equity firm and its foreign government partners swoop in, the public should know who is making the decisions and what immediate and long-term impact these deals could have on their lives,” said Stephen Lerner, director of SEIU’s Private Equity Project.Find out more about sovereign wealth funds and private equity.
To read the full press release, click here.
To dowload the full report, click here.
The War On Greed
Tuesday, February 12
Protesters Blast Lazard's Billionaire Boss for $100+ Million Payday at Lazard New York City Headquarters
I live in a basement apartment in Queens and couldn't afford health care when I was working at Atria. I brought home $300 a week after 10 years at Atria, and this Wasserstein guy is making over $100 million? If he invested just a little of that in Atria facilities, they could increase staffing for residents, offer affordable healthcare and a living wage to hardworking employees," said Radika Munna, former employee of Atria Lynbrook on Long Island.
Protesters then attempted to deliver bags of fake money to Wasserstein's 30-Rockefeller Center offices.
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With one protester dressed as a "fat cat CEO", protesters handed out fliers and fake money to the crowd. Participants also played "Billionaire CEO Bruce Wasserstein or Underpaid Atria Worker?," highlighting the glaring differences between Lazard CEO Wasserstein and the average Atria worker in New York City. |
Protesters then attempted to deliver bags of fake money to Wasserstein's 30-Rockefeller Center offices.
Read Press Release »
See photos from the protest »
Worker at Lazard's Atria reacts to Bruce Wasserstein's $100M+ pay package: "I've never even had the weekend off"
The announcement on January 30 by Lazard Ltd. that Bruce Wasserstein, CEO of Lazard Ltd. and a principal of the Lazard group of companies, has signed a new contract worth more than $100 million and will be paid more than $41 million for 2007 is leaving low-wage workers in shock at Lazard-affiliated Atria Senior Living.
"How can they give this guy so much money?" »
What industry insiders are saying:
Portfolio.com 2/5/08 (“Are You Overpaid? Your Board Thinks So.”)
BreakingViews.com 1/30/08 ("Bid'himself up Bruce")
BloggingStocks.com 1/30/08 ("Lazard: Bruce Almighty")
Striking workers TUESDAY, JANUARY 29
Striking Aramark workers to march on Private Equity annual industry meeting in New York
More than a dozen striking workers from Aramark, a private equity owned company that serves and prepares food in New York’s corporate dining rooms, will march on the conference to draw a stark comparison between the workers –some of whom are expected to raise their families on as little as $400 a week—and the excessive bonus, wages, and fees paid to private equity managers and their consultants.
Get the story »
FRIDAY, JANUARY 25
SEIU statement on the World Economic Forum Study on the economic impact of private equity
"The buyout business remains at its core a vehicle for the spectacular accumulation of wealth by the few without regard for the impact on others."
— Stephen Lerner, Director of SEIU's Private Equity Project
Full statement » | Recent buyout industry claims » | SEIU report: Behind the Buyouts: Inside the World of Private Equity »
Could the Carlyle Group buyout of Booz Allen government consulting arm be a threat to national security?
Carlyle Group sewer sludge business may increase health risks to communities
People who live near the operations of a Carlyle Group sewer sludge business could be at an increased health risk if Carlyle does not provide information to those communities about toxins and other hazards associated with its business.
Recent news features
Carlyle Exposed: A new web site about the Carlyle Group
Jump to CarlyleExposed.org » | Carlyle Group embrace of Abu Dhabi undermining respect for human rights »
SEIU President Andy Stern calls on states and pension funds to ensure investments support respect for human rights
Press release »
Australian and US unions team up to hold the Carlyle Group accountable for treatment of workers
Go to the article » | Australian Financial Review coverage »
SEIU REPORT
Behind the Buyouts: Inside the World of Private Equity
Workers, communities, and the nation as a whole should share in the economic opportunities being created by the booming private equity buyout industry, according to a new report released by SEIU.
DOWNLOAD THE REPORT (PDF) » | WHAT EXPERTS ARE SAYING (pdf) »
PRIVATE EQUITY PULSE
What financial leaders and experts are saying about the Private Equity Economy
"We are totally conflicted — get used to it."
-- Morgan Stanley Vice Chairman of Investment Banking Robert Kindler [2]
“Their success has put pressure on many public companies to adopt their strategies and tactics -- whether it's being ruthless in reducing costs or taking on more leverage or giving big pay packages to top managers.”
-- Washington Post Columnist Steven Pearlstein [8]