Shareholders of the Automobile Association (AA) have come under attack from Britain’s General Union, the GMB. The Union has launched a personal attack on Damon Buffini, managing partner of Permira, and CVC, joint owners of the business, for their management of AA since it was acquired from Centrica for £1.75bn in July 2004. The lobbying by the GMB is a sign of the increased political and media scrutiny faced by the private equity industry as it enters the mainstream.
GMB, which ceased to be the AA’s recognized trade union in March 2005, launched its campaign in April this year after the private equity firms refinanced the business to the tune of £1.85bn and accused the firms of “asset stripping and destroying the AA because of sheer greed.” A series of road shows lobbying against the private equity firms’ actions have taken place and more will be taking place in June.
The GMB is campaigning to remove the limited liability privileges from VCs and make them personally responsible for their activities and is attacking tax deduction on acquisition loans that it points out are ultimately funded by the UK taxpayer. This is an area that is regularly under scrutiny and one that the British Venture Capital Association has lobbied hard to retain. A parliamentary motion 2079 has been tabled as part of the campaign. Maloney says: “GMB wants to see an end the taxpayers subsidy for asset stripping by denying tax deductions on loans used for acquisitions. We are asking MPs to support Early Day Motion 2079 in Parliament.”
Paul Maloney GMB National Organiser for the AA, said in a statement: “Since they took over in 2004 they have sacked one in three workers, specifically targeting the disabled. AA costs are up by 30% for some motorists and the AA has fallen in the Which? rankings from first to third.”