No, seriously. It is the Financial Times, and they are suggesting that private equity is fundamentally corrupt in their business practices:

It is too early to say whether the $30bn leveraged buyout of First Data in 2007 on the eve of the financial crash was a bad deal. KKR, the private equity group with a controlling stake, could yet recoup its investment, which it has written down by 20 per cent: the payment processing specialist will attempt to go public, possibly this year.

But one thing is certain: the Atlanta company, which has struggled under $24bn of debt since the KKR acquisition, will have paid its owner more than $100m in fees for a range of advisory, transaction and consulting services – including some that may never be required.

For the past three years alone, total fees to KKR-related parties amounted to $117m, according to First Data’s yearly regulatory filings. The bulk was an annual charge of about $20m that the company has to pay until 2019 for being “monitored”. If KKR, run by Henry Kravis and George Roberts, decides to sell or float its stake before that date, it is entitled to a termination fee.

First Data also paid KKR’s capital markets unit $21m for financing and underwriting services, and $35m for consulting work to Capstone, a company that works exclusively for the New York buyout house.

Such arrangements, struck with companies that can hardly say no to their majority owners, are coming under growing scrutiny by regulators. They are also sparking frustration among some investors, although few have incentives to reform the system.

“Those fees pump substance out of portfolio companies. It is the sort of greed you would typically see in investment banking,” says Georges Sudarskis, an industry veteran who advises Asian and Middle Eastern sovereign wealth funds.

The US Securities and Exchange Commission is taking a hard look at the industry’s fees. Andrew Bowden, a director at the SEC, said in May that his team had identified “violations of law or material weaknesses in controls over 50 per cent of the time” when reviewing payments from portfolio companies to their private equity owners.

(emphasis mine)

I just love the phrase, “It is the sort of greed you would typically see in investment banking.”

BTW, private equity do not deliver higher rates of return that would justify these fees.

I’m beginning to think that if we simply threw everyone who worked on Wall Street in jail, you would have a wrongful conviction rate in the single digit percentiles.