Firms rally as MPs probe private equity greed

Leading accounting firms, among the biggest beneficiaries of the private
equity boom, have thrown their support behind the industry, which has endured
sharp criticism from unions and politicians.

Both the GMB Union and Peter Hain, one of the leading candidates for the
Labour Party deputy leadership, have accused the industry of asset stripping,
greed and taking advantage of tax rules not available to rivals.

Ernst & Young and BDO Stoy Hayward, backed private equity firms against
the attacks this week.

Simon Perry, global head of private equity at Ernst & Young, said: ‘Tax
relief is not granted on interest paid by private equity firms alone. It is on
interest paid by any company and a function of the tax system in most developed
economies. Private equity firms paid more than £4bn of corporation tax in 2006.’

BDO Stoy Hayward managing partner Jeremy Newman, said: ‘There are a lot of
businesses in the UK that would not have survived, or not grown as much or been
as successful were it not for private equity. Private equity plays a very
important role in the UK economy,’ said Newman.

Perry added: ‘Private equity employs 20% of the UK working population. It has
been one of the main reasons for the economic and productivity boom in the UK.’

Newman and Perry acknowledged that the industry could improve its
transparency and public disclosure, but said steps were being taken to make

These moves come as the Treasury select committee announced an investigation
into the industry.

Despite the public comments from E&Y and BDO, other firms declined to
comment. Deloitte and KPMG offered no comment, when contacted by Accountancy Age
this week, while PricewaterhouseCoopers did not return calls

The British Private Equity and Venture Capital Association (BVCA), the
industry trade body, formed a working party last week headed by Sir David
Walker, a former Bank of England director, to ‘examine ways in which levels of
disclosure in companies backed by the UK private equity industry could be

Related reading