A Global Response To A Global Threat

SEIU International protests investment firm KKR throughout California, across the US and in Europe. UNITE, the largest trade union in England, also participated in worldwide protests that took place in 100 cities in 27 countries on July 17th to expose the underside of corporate double-dealing that uses Union pension money—and puts it at risk in questionable investment strategies similar to those used to create current housing debacle.

Bring to mind the purple onions in your garden. The ones I like are great in Greek salad. I was working in my garden one day and turned over a bulb to find a huge worm eating the center of it. In horror, I impulsively took my garden tool and cut the worm in half. No matter, the worm managed to reconstitute itself and kept on eating.

The worm in this case is the LBO, Leveraged Buy Out, a financial tool used by KKR, Kohlberg, Kravis and Roberts to gut companies like Kinder Care, Nabisco, and Toys R Us. Like parasites, they borrow the money they use to leverage company buyouts. That’s right, they don’t use their own money, they borrow our pension money to gain operating control of target companies, and then they mount huge dept. After gutting the company to leave it a shell of its former self, they move on. Their cut of the take is minimally taxed thanks to tax loopholes.

What’s our beef? Sorry to mix metaphors here. Our beef is that it’s our money that is used in these risky deals. Our money is risked in principal investments schemes used to put people out of work, lower environmental, community and labor standards.

According to the SEIU researchers, ”KKR gets companies to borrow the money it uses to buy them, often tripling their (the company’s debt) but enabling them to take the debt interest as a tax deduction, reducing their tax liability often to zero. (That’s the key, triple the debt, and limit the tax liability.)

You and I pay for that (tax) deduction as higher personal taxes and reduced public services. The Washington Post called KKR's buyout of RJR Nabisco a ‘gigantic transfer of wealth from the U.S. Treasury to a small group of investors skilled in manipulating the tax code.’

Companies that KKR owns but hasn't had time to destroy yet have been accused of employment discrimination, been ordered to pull lead-tainted children's toys from shelves, dumped potentially dangerous chemicals into communities, and been cited repeatedly for workplace safety violations.”

Last Thursday, busloads of Union activists showed up to shine a light on what was happening behind closed doors on the lush grounds of a KKR headquarters at a corporate complex in Menlo Park.

At first our bus was turned away and it didn’t look like they were going to let us park. I hadn’t seen such a wide array of cop uniforms in a long time. Close to five hundred SEIU members from all over California made one of many stops that day to corporate offices in Oakland, San Francisco and other targets in San Rafael, throughout Northern and Southern California before gathering in Menlo Park.

Finally, bus after bus from as far as Bakersfield was unloaded and we gathered to present KKR Corporate Officers with a check for the millions of dollars of un-taxed profits made by KKR on these investments.

Delores Gholar, a City of Berkeley retiree spoke at the rally about of the current economic hardships faced by working families.

“We are worried about the economy and have had to make life style changes. For instance, I don’t drive anymore. I used to go to the movies but now I watch from home. When I go to the store, I stick to the basics. People are struggling. Its unfair and immoral for the greedy to take advantage of tax loopholes, and use our money at our expense to do it.”

After the rally, as the group began a march toward offices obscured by well manicured greenery, the Atherton Police, San Carlos, Menlo Park Police, City of San Mateo Police, Rented Police, and the CHP with a Canine Unit on its way mobilized a barricade to stop us. After a standoff, we left, but not before making sure they knew what we wanted.

We want the buyout industry to play by the same rules as everybody else. We let them know that through our Capital Stewardship programs we will be making sure we have voice in the deals and benefits realized by our income. We will be working with Community Stakeholders to make sure that the Community at large has a voice in the deals and benefits from their outcome.

Back at my garden (now a much smaller one) I was able to appreciate how we have taken this first global collective step to stop corporate crooks from eating us out of house and home.

Carlos Rivera and Jerry Fillingim contributed to this story.