It started with faux billionaires in the Hamptons and a fat-cat tycoon (or at least an actor wearing a cat mask) in Washington. Now, a union-led campaign against wealthy private equity firms is going global. þþBeginning Wednesday, the Service Employees International Union, one of the country’s biggest unions, will call upon people to attend protests on July 17 in 100 cities in 25 countries. The rallying cry will be: Take back the economy from buyout firms that the union says have exploited tax loopholes to amass great wealth at others’ expense.þþ“We think the buyout industry and the way it operates are systematic of what’s wrong in this economy,” said Stephen Lerner, director of the union’s private equity project. “We want to make them responsible corporate citizens.”þþThe private equity industry counters that the union is using street theater and overheated rhetoric to bolster its membership rolls.þþ“They’re using a battering ram of increasingly extreme and hysterical attacks,” said Douglas Lowenstein, the president of the Private Equity Council, an industry lobbying group. “They’ve undermined any opportunity for constructive dialogue.”þþThe S.E.I.U.’s latest effort is an escalation of a fight that began last April, when it began a broad campaign against private equity firms with a study questioning the value that the leveraged buyout industry adds to the national economy.þþSince then, the union has trained its sights on two of the biggest private equity firms around — the Carlyle Group and Kohlberg Kravis Roberts — as it seeks to clamp down on the handsome profits that those companies reaped during the buyout boom.þþThe union argues that buyout executives like David M. Rubenstein of Carlyle and Henry R. Kravis of Kohlberg Kravis have gamed the tax code, reaping huge gains by piling debt on companies their firms have acquired, only to deduct the interest from their corporate taxes.þþS.E.I.U. officials acknowledge, however, that changing the tax code could upend the modern corporate regime and say they have not endorsed any specific proposals.þþThe union also argues that the attention on private equity firms has been justified by the huge role they now play in the economy. Companies owned at least in part by Kohlberg Kravis employ more than 816,000 people, according to the firm’s Web site — more than the population of San Francisco.þþThe fight has been contentious at times, notably during an altercation between an S.E.I.U. member and Mr. Rubenstein at an industry conference in Philadelphia. And the bulk of the S.E.I.U.’s campaign has taken place amid the credit squeeze, which has all but squelched private equity’s lifeblood of striking deals. þþTo the union, however, that same economic malaise has hurt ordinary workers more.þþ“We want to take back the economy from individuals like Henry Kravis and companies like K.K.R. who have made billions gaming the system while millions of Americans are having a hard time paying for their car,” Mr. Lerner said.þþFor its latest campaign, the S.E.I.U. has enlisted the irascible comic Lewis Black for a video professing bewilderment at how buyout executives make their living via financial engineering. It is teaming up with groups like MoveOn.org and Amnesty International to drum up participation in the July 17 mass protest. þþAnd in tune with the times, the union plans to introduce a political angle in its attack against private equity: The S.E.I.U. will highlight the fund-raising that Mr. Kravis, a longtime Republican donor, has done for Senator John McCain, that party’s likely presidential nominee. The goal, S.E.I.U. officials say, is to highlight the unwillingness of Mr. McCain to consider revamping the tax code and make a partisan appeal to a possible Democratic administration and more Democratic Congress.þþThe union will encourage supporters in other countries to support similar tax code measures.þþ
Source: NY Times
