Monday, January 6, 2014

All That Matters is Influence: Former Politicians and Private Equity

All That Matters is Influence: Former Politicians and Private Equity

In the past month I’ve run across a series of articles that serve as a reminder about the strong connections between private equity and politics.  While most of the former politicians have no expertise in mergers, finance, or corporate management, PE seems to find plenty of roles for these folks.

The Private Equity Growth Council, the lobbying arm of private equity, just appointed Ken Mehlman as chairman.[1]  Mr. Mehlman moves to his new position from KKR, where he ran public affairs.  The former chairman of the Republican Party and President George W. Bush’s re-election campaign will be responsible for preserving the tax preference afforded carried interest and fighting the new registration requirement contained in Dodd-Frank.
 
Sales Process (1996)
If your political tastes run toward independents you might be interested to know that former Senator Joseph Lieberman has become Chairman of Victory Park Capital.[2]  The firm is known for acquiring deeply distressed businesses.  During the 2012 political campaign these types of firms were derided as “vulture capitalists.”

Warburg, Pinkus recently selected former Treasury Secretary Timothy Geithner as its president.  According to The Wall Street Journal, Mr. Geithner will focus on “mapping the firm's strategy and management, investor relations and on matters related to the firm's investment.”[3]  Public funds make up a large portion of Warburg’s client base, and I’d expect the former Treasury Secretary will work his political connections to make sure they remain investors.

While Mehlman, Lieberman, and Geithner help to reinforce private equity’s influence in the United States, former President Clinton is helping to export the for-profit education model to the developing world.  According to Bloomberg,[4] Mr. Clinton is the honorary chancellor of Laureate, a firm financed by KKR, as well as George Soros, Paul Allen, and Steven A. Cohen.  Apparently Laureate engages in many of the same high-pressure sales tactics and educational practices used by the domestic for-profit universities.  Nonetheless, the former President has, since 2010, been traveling on behalf of Laureate to promote its business model.

Although private equity invests most of its campaign dollars in Republican candidates and causes, when it comes to buying influence private equity is totally non-partisan.  It turns out that politicians from across the ideological spectrum share a common respect for the power of money, especially when it winds up in their bank accounts.


[1] http://dealbook.nytimes.com/2013/12/19/k-k-r-partner-to-lead-private-equity-lobbying-group/?_r=0
[2] http://blogs.wsj.com/moneybeat/2014/01/02/joe-lieberman-just-the-latest-politician-to-join-private-equity/
[3] http://online.wsj.com/news/articles/SB10001424052702304243904579200323813063730
[4] http://www.bloomberg.com/news/2014-01-06/clinton-pitches-kkr-backed-college-chain-amid-controversy.html

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