Mannerisms

Paul Myners, a former chairman of Marks and Spencer who headed up the 2001 Myners Review into intstitutional investing, said that the government should review the tax advantages enjoyed by private equity companies.

The attack on private equity funds comes within 24 hours of a similar attack by Brendan Barber, general secretary of the TUC. http://www.electronicsweekly.com/cgi-bin/mt/mt-tb.cgi/4506

In his criticisms of the private equity funds, Myners said that private equity activity gave rewards to a few 'principal participants' but employees "suffer an erosion of job security and a loss of benefits."

In the recent takeover of Philips' former semiconductor division, NXP Semiconductors, by a private equity consortium led by Kohlberg Kravis and Roberts, three principal participants shared a hand-out of $1.3m.

But, within a couple of months, NXP had been pulled out of a major European R&D project, the Crolles2 Alliance, which had been described as fundamental to continuing European economic prosperity.

Private equity companies claim they improve efficiency at the companies they buy. But Myners pointed to reports which suggest public listed companies often outperform private equity owned companies.

When the private equity industry launched a childrens' charity last month, a union leader likened it to Herod becoming a patron of the NSPCC.

The decision on the tax concession allowing private equity companies to set against tax the interest they pay on their borrowings, is in the hands of the UK Treasury, headed up by Gordon Brown.

Brown is a particular pal of one of the UK's leading private equity businessmen, Sir Ronnie Cohen, founder and former chairman of private equity company Apax Partners.