A new US study found that at least US$5.3 billion stumped up by the US government for COVID pandemic relief went to 113 private equity-owned companies, which already had $908 billion in cash reserves available in 2020.
Many of these companies used their reserves to pursue aggressive new buyouts, and in many cases shed workers, according to the report by the Anti-Corruption Data Collective (ACDC).
The $5.3 billion in public funding was authorised by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the public health and economic crisis brought on by COVID.
The legislation imposed few conditions on recipients – such as requirements to support workers and maintain business operations – and failed to prohibit recipients from using public money to enrich investors.
“Public money not only went to companies that already had deep-pocketed backers, but also effectively allowed private equity owners to continue and even expand their predatory tactics during an economic and public health emergency,” the ACDC report said.
“With improved balance sheets shored up by government money, private equity firms were able to finance a buyout spree during the pandemic-driven economic downturn, as well as to extract dividends and fees from their portfolio companies.”
Over $4 billion, or 76 per cent of the total pandemic relief to the industry, went to just 10 private equity firms.