(Updated after jump) It looks like the SEIU is doing more to Carlyle than just disrupting David Rubenstein’s speeches. The Washington Post reports on two pieces of SEIU-supported legislation that could cause headaches for the private equity giant.
The first is a federal bill introduced by Chuck Grassley (R-IA) and Herb Cohl (D-WI), which would increase regulatory oversight of nursing home operators. Specifically, the bill would increase the maximum civil fines for operators found to have committed severe care abuses. It also would developer a federal monitoring program for corporate-level problems. The Carlyle relevance here is the recent purchase of nursing home operator Manor Care, which is what most of the SEIU protesters were chanting about at Rubenstein’s recent speech.
The second bill is also aimed at Carlyle, but would become far more wide-reaching: A California legislator has filed to ban state pension funds from investing in firms partially-owned by nations with poor human rights records. Carlyle recently sold an ownership stake to sovereign wealth funds of Dubai, which does indeed have some serious human rights issues to address. But this would also extend to Apollo, Blackstone (China) and that VC firm in negotiations to sell a piece of itself to Dubai (fyi: Tim Draper says it’s not DFJ).
I’m holding off commenting on either bill this morning, because I’ve not yet had a chance to read them. That’s what three-day weekends are for. But my gut reaction is that the former is needed (at least the fine increase). I’ve seen some nursing home horrors, including a blind resident whose kitchen cabinets were jammed full of cockroaches. Not saying Carlyle is a bad actor here, just that a $10,000 maximum penalty (the current system) is not enough for egregious neglect.
My opinion on the California bill will come down to its specificity. Human rights violations are difficult to qualify, as even the U.S. has been accused of such things by international watchdog groups. If some of those abuses occurred in California, would the bill prevent CalPERS from investing in a fund partially owned by CalSTRS? And is this just about “ownership interests,” or do limited partner positions also count? Again, more on this once I actually read the bills. But send in your thoughts in the meantime…
Update: I still haven’t read it, but here is the California bill: CA_Bill.pdf