Last Friday the administrator brought in to wind down the collapsed electrical retailer chain Comet announced that 330 staff would be made redundant with immediate effect, with all 236 stores set to close with the loss of 6,500 jobs.
With this massive jobs loss and with customers being told that already paid for gift vouchers will not be honoured, this bankruptcy of an 80 year old company has been treated in the media as an unfortunate but inevitable disaster in the highly competitive retail sector.
Behind the scenes, however, it turns out that one small group is going to reap huge profits from the demise of Comet and the brutal treatment of its workers.
These are the private equity vultures who actually own Comet and look set to cream millions off as a result of its closure.
This is a story of the asset-strippers, the private equity firms that dominated the world capitalist system prior to the onset of the economic crash of 2007, who specialised in ‘leveraged’ buy-outs of ailing companies that were then stripped to the bone, saddled with unsustainable debt and then quickly sold-on at a vast profit.
They were fuelled by the insane levels of credit available from the banking system in the period before the crash, but that does not mean that as credit has become more difficult to obtain they have died out, as the Comet deal shows.
Comet was bought from its previous owners in February this year for the sum of £2 by an outfit called OpCapita, owned by American investment banker Henry Jackson.
In return for his £2 Jackson got not just Comet but a £50 million ‘dowry’ from its previous owners which he promptly lent to Comet – Comet of course then had to pay interest on this loan back to OpCapita.
OpCapita lent a further £35 million to Comet, again getting interest plus management fees paid to them for arranging this loan.
Jackson will retain ownership of Triptych, an insurance company based in the Caribbean, which runs the Comet warranty business (those useless extended warranties that staff are pressurised into selling at all costs to customers). Triptych made a £30 million profit in 2011, so another nice little earner for him.
In addition, as a ‘secured lender’ OpCapita will have first call on any money left over from the closure of Comet.
All in all, Jackson and OpCapita stand to cream off many millions of pounds out of their eight-months ownership of Comet while the workers face a future on the dole.
But this saga is not just one of corporate greed that can be regulated out of existence as some claim – this is how capitalism actually operates in its advanced stage of degeneration.
While manufacturing industry collapses in country after country, capitalism is desperate to make profits any way it can.
The big prize for the venture capitalists today is undoubtedly the NHS, a service that is in constant high demand, has a huge budget and is ripe for plunder.
Already we have seen how it works in the case of Southern Cross, a private equity firm that took over homes for the elderly, sold off the properties and then rented them back, pocketed the money and when the homes could not afford the sky-high rents, just walked away leaving residents in misery and suffering.
The same trick is now being applied in Hinchingbrooke hospital and will spread across the entire NHS as the privateers go all-out to grab the opportunities provided by Cameron and the coalition to asset-strip the entire health system.
There is only one way to put an end to this pillaging of companies and services and that is to bring down this government and replace it with a workers government and socialism.
