Posts Tagged ‘Private Equity Companies’

More from Private Eye on BoJob’s Connections to the Hedge Funds

October 6, 2019

I’ve found a few more little snippets from Private Eye about how Boris is being funded by hedge funds, the financial speculators looking forward to a no deal Brexit, as they’ll clean up when the country and its businesses go bust. In their issue for 14th-27th June 2019, the Eye ran an article, ‘Backing Boris’, about how Boris’  campaign to be selected leader of the Tory party was being funded by Jon Wood, another hedge fund manager. The article, on page 7 of the magazine, ran

The launch video for Boris Johnson’s leadership campaign was full of soft “Cameroon” social messages, fretting that “too many people feel left behind” and excluded from “opportunity and success”. Odd, then, that his largest financial backer seems keener for the government to look out for the big guy.

Hedge-fund manager Jon Wood gave Johnson £25,000 in May, according to the latest register of MPs’ interests. (He had already given the former foreign secretary a £50,000 donation for “office and staffing costs” in October). His hedge fund, SRM Global, was a major investor in Northern Rock, the bank that collapsed in the financial crisis and was nationalised by the Labour government in 2008. Shareholders like Wood’s firm got nothing: the government judged it had made a bad bet.

Wood’s company argued, however, that it had a human right to compensation for its bad investment, and took the government to the high court and then to the European court of human rights. In 2012, the latter rejected the laughable claim brought by SRM Global and other investors, calling it “manifestly ill-founded and therefore inadmissible”.

The court said the government was quite right to take over the bank but not to compensate the big investors. There was “no duty owed by the State to the shareholders to protect their investments in Northern Rock”. That Johnson’s biggest backer is a man with experience of “manifestly ill-founded claims” is perhaps, er, no surprise.

The edition for the 26th July – 8th August carried another such story on page 7, ‘Fine By Them’, reporting how Johnson was being funded by a private equity boss, who had been an officer in the Vote Leave campaign. The article ran

Why should breaching electoral law stand in the way of becoming key backer to the favourite in the prime ministerial race?

Boris Johnson certainly saw no problem as he accepted £100,000 for his leadership bid, declared last week, from private equity boss Jon Moynihan. The hard Brexit-favouring businessman also happens to have been finance director of the official Vote Leave 2016 referendum campaign. That’s the same Vote Leave that was fined £61,000 by the Electoral Commission for breaching campaign spending limits by channelling large sums to young Darren Grimes’ BeLeave youth group (Eyes passim).

The 25-year-old “BeLeaver”, meanwhile, was jubilant last week after he successfully challenged his £20,000 fine from the commission, incurred for acting as a funnel for the over-spend. The judge, who upheld Grimes’ appeal said that even if the wee scamp had committed an offence, it wouldn’t have justified fining him £20,000, the maximum allowed.

While Darren basks in congratulations from Vote Leave pals, less attention has been paid to the main Vote Leave appeal against its £61,0000 fine. This appeal has been quietly dropped, with Vote Leave admitting defeat and covering the Electoral Commission’s legal costs, footing a £200,000 bill.

The Electoral Commission itself now looks embattled on all sides, with both Leavers and Remainers furious over its handling of the 2016 referendum, and with all major parties irate at past fines for election spending irregularities. Defenders of the agency argue that if it’s annoying everyone, it must be doing something right.

Our boorish, anti-democratic joke of a prime minister is being funded by financial speculators, who are determined to have Brexit, and have not been above breaking the law to make sure they get it. And they stand to make millions from the misery it will cause if their puppet, Johnson, does manage to deliver it.

Get them out of politics – get him out of No. 10!

Private Eye on the Failure of Private Law Enforcement Firms

March 3, 2016

One of the ideas floated by the Tories under John Major way back in about 1992-3 or so was that law enforcement should be privatised. Instead of the police patrolling our neighbourhoods to protect us from crime, citizens should be free to hire private security firms to do the same. It’s an idea they nicked from the American Libertarians, though unlike Rothbard, the author of the idea, they didn’t go as far as recommending the privatisation of the courts. The Mail on Sunday ran an article promoting this and other Neo-Lib Tory ideas in their issue that winter.

In their issue 9th – 22nd December 2005, Private Eye ran an article on how one Private Law enforcement firm, had not lived up to the hype, and had spectacularly failed to catch many criminals.

Private Equity
Drake’s Progress

The woeful performance of private law enforcement firms has been exposed once again in a Norwich courtroom.

The Eastern Daily Press recently reported how the firm paid to enforce arrest warrants on people failing to serve community punishment orders managed to catch on 31 out of 260 offenders over the summer, while its success rate before then wasn’t much better.

The company responsible, Drakes (“total civil enforcement and debt recovery solutions”), is one of a breed of companies operating in the criminal justice system that are part of the secretive and avaricious private equity industry. it is part of the Bridgman group that says that it is owned by funds managed by an outfit called Gresham, including the mysterious South Place Zurich Partnership 2002, none of which supply accounts.

Bridgman gets nearly all its funding in the form of loans totalling £10m from anonymous creditors at inflated interest rates, a standard feature of the private equity industry that allows financiers to strip out profits asap and often leads to the kind of cost-cutting that makes chasing offenders look distinctly uneconomical.

Gresham is unabashed about its approach, boasting of its “strategy for exit to deliver maximum value to all investors”. So the uncooperative small-time crooks of East Anglia might soon be somebody else’s problem, but not before the private equity funds have got away with a few quid.

Many of the care homes that collapsed a few years ago, or were so disastrously run that the inmates were abused and neglected, were also owned or managed by these private equity firms. It’s clear that these firms can’t manage services, as they’re simply not interested in them, except as a source of profit.

Private Eye on the Perils of Healthcare Ownership: The Winterbourne View Hospital Scandal

July 19, 2013

I’ve blogged today about how the government has privatised the NHS blood plasma service to a private equity firm. It was a private equity firm, Lydian Capital Partners, that owned Castle Holdings, which in turn owned CB Care Ltd. CB Care Ltd was the parent company of which Castlebeck Care was a part, which ran the Winterbourne View Residential Hospital near Bristol. Winterbourne View was the subject of a massive scandal after the BBC’s documentary programme, Panorama, uncovered the horrific abuse of its residents by the staff who were supposed to be caring for them. Winterbourne View was a home for people with learning difficulties. The programme showed the brutal treatment of the patients, including physical violence. It made for difficult, unpleasant viewing. An official investigation and court case followed. This revealed that many of the staff employed at the hospital had little training in the care of such vulnerable handicapped people.

Private Eye published their own investigation of the firm in their issue for the 10th to 23rd of July 2011 in their In The Back section devoted to investigative reporting. The piece was entitled ‘Financial Jiggery Pokery: The Idolatry of False Profits’. It ran as follows:

‘Both Southern Cross and the company behind the Winterbourne View residential hospital, whose management failed to respond to concerns well before Panorama exposed them, ought to have paid more attention to care, and less to financial engineering.

Winterbourne is run by Castlebeck Care, which is part of the CB Care Ltd group. This group, accounts filed at Companies Hpouse reveal, is owned by a Jersey company called Castle Holdings Ltd, which in turn is controlled by the Jersey limited partnership, Lydian Capital Partners LP, through which the group was acquired in 2006 by the Swiss-based private equity group Lydian.

The main backers of Lydian are Irish financiers JP McManus, John Magnier and Denis Brosnan, whose son Paul chairs CB Care; and they also include Irish Billionaire Dermot Desmond, who in 2007 and 2008 donated £100,000 to the Conservaitve party through another of his firms, Venson Automotive.

Having an offshore setup is, of course standard fare for private equity owhnership, which invariably entails stripping out as much profit from businesses as possible in the form of tax-deductible interest payments. This leaves margins in the companies that are supposed to be doing things like caring for people thin (to say the least) and makes decent management a luxury.

CB Care’s most recent accounts show it saddled with £233m bank debt and £195 subordinated debt, on most of which investors earn interest at, ahem, 15 percent. The total annual interest bill of £38m a year left the group with losses in 2008 of £19m and 2009 of £10m. Naturally it hasn’t paid a bean in tax. Even a move in April last year to convert £100m of the debt to an interest-free loan – quite possibly at the behest of the taxman – is unlikely to turn the business around.

More importantly, the figures reveal the priorities of private equity-owned care businesses: taking short-term profits out, not putting long-term care in. One of the crucial questions now facing the government is whether foreign foreign equity firms are the best stewards of British social care., As men like Desmond fund the Conservative party, it may be a question it will try to avoid.

* Castlebeck issued an immediate statement after Panorama, detailing its plans to deal with the matter. Unfortunately7, even after the story broke the company’s website was still displaying a logo proudly telling visitors it was the “overall winner of the 2010 Healthcare 100 Best Employers Award”. This bit of self-aggrandising has been quietly removed.’

This is the type of firm the Coalition has decided to sell the NHS Blood Plasma Service to. Still, no doubt they’ve got utter confident in the situation.