Buffini tries to defuse union backlash

Permira boss to meet GMB. Private equity fights back. Criticism within Labour party grows
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The Independent Online

One of the biggest players in the notoriously secretive private-equity world is to take the unusual step of defending the industry to one of Britain's biggest trade unions.

Damon Buffini, the managing partner of Permira, Europe's most powerful investment house, wants to put his case to the GMB, which has sought to trash his firm's reputation, in a meeting with the union's general secretary Paul Kenny.

The GMB, furious at sweeping job cuts in a number of high-profile companies backed by Permira, is waging a battle against the private-equity industry. It has written to more than 100 Labour MPs seeking support for a campaign calling for greater openness and for tax laws that benefit privately owned companies to be rewritten.

In a letter to Mr Kenny sent yesterday, Mr Buffini said: "I understand that some confusion and apprehension exists regarding the way companies such as Permira operate and I am eager to set the record straight."

The GMB has attacked Permira for axing staff at the AA and Bird's Eye, claiming that the cuts have damaged the service that the automobile recovery service can offer its members. It told MPs that tax relief for interest payments on loans used by venture capitalists to buy companies is costing the Exchequer hundreds of millions of pounds a year.

Mr Buffini intends to spell out to Mr Kenny just how "tax regulations relate to private equity". He also wants to list Permira's achievements. "We are proud of what Permira has achieved; as a result of the investments that we have made the futures of numerous companies in the UK, and across Europe, have been secured and strengthened," he wrote.

The Permira boss has been singled out by the GMB, which said it had been trying to fix a meeting for the past two years. Last summer union protesters turned up outside Mr Buffini's church in Clapham, London, with a camel. The stunt was intended to draw attention to Permira's "asset stripping". Protesters handed out leaflets with Mr Buffini's image and held up a giant sign pointing out it is "easier for a camel to go through the eye of a needle than for a rich man to enter heaven".

Mr Buffini, a grammar school boy who was brought up in a Leicester council flat, told Mr Kenny in his letter that Permira was "committed to having an open and constructive relationship with trade unions". He added: "As such, I would be keen to hear your views on private equity and on how Permira can continue to play a positive role in securing the futures for businesses and workers in the UK and across Europe."

A GMB spokesman welcomed Mr Buffini's overture but warned: "On behalf of the many thousands of GMB members who were sacked by Permira at the AA and Bird's Eye, we sincerely hope this is not a PR stunt." He said the GMB would "look forward to hearing Mr Buffini's justification for needing a subsidy from the taxpayer to maintain his venture capitalist industry".

In a separate move, Peter Linthwaite, the chief executive of the British Venture Capital Association, is also seeking a meeting with Mr Kenny.

Although the GMB has been waging its war against the industry for some time, it is the mooted £10bn takeover of J Sainsbury by a quartet of private-equity firms that has thrust the debate into the open. Permira is not one of the groups interested in the supermarket chain. The Transport and General Workers union is separately seeking talks with Alistair Darling, the Secretary of State for Trade and Industry, over the possible buyout offer.

The GMB's campaign is gaining traction in prominent Labour circles. Alan Johnson and Jon Cruddas, two contenders for the deputy leadership, have voiced concern about the impact of buyouts.

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