UCU General Secretary Sally Hunt this week wrote to David Willetts calling on the government to change tack in its White Paper and ensure that no public subsidies go to any company whose first obligation is to its shareholders.
Her letter followed reports from the USA that Apollo, who own BPP University College, and Education Management Corporation, together with Corinthian Colleges, had been given a high-risk rating by the independent ratings agency GMI. GMI, which advises pension funds, insurance companies and other investors on the soundness of companies, described the three companies as at high risk of ‘outright failure’. The agency explained,
“Apollo Group, Education Management Corporation, and Corinthian Colleges have all been assigned poor ratings on the basis of their corporate governance, social impact and financial governance characteristics alone. But these are not just poorly governed companies; these are companies that seem to have been run with little regard for sustainable value, and are organized around business models that are entirely dependent on this industry’s ability to maintain a very high degree of regulatory capture. It is our view that the risk of outright failure for all three of these companies has reached a critical level, and is likely to rise even further. We strongly recommend investment fiduciaries consider the risks identified in this report before taking an active position in any of these three companies.”
Sally Hunt called on David Willetts, who met with both Apollo and Education Management Corporation in the run up to publishing his White Paper, to learn the lessons from the US and to rule out channelling public funding toward any company driven by the need to satisfy shareholders.
Read Sally’s letter to David Willetts here
You can read the full report from the agency here
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