Were two private equity buyouts the real cause of the horse meat scandal?

A series of buyouts went all the way up the food chain.

A note on the horse meat scandal that only seems to have flagged up so far: Findus, the most recent company under fire for horsemeat-contaminated products, was bought out by private equity firm Lion Capital in 2008.

Private equity firms make companies more efficient then re-sell, turning a profit in the process. They are also known for piling the companies they buy with debt and forcing them into radical cost-cutting measures - and a quick scan of Findus's last half decade suggests this is exactly what happened here. Findus struggled after the buyout, and recently needed a £220m cash injection to stay afloat. It was also forced into "major restructuring" last year. Was there a point at which using cheaper meat became necessary?

On Friday attention turned to Comigel - the company that supplies meat to Findus, as well as Aldi, another company which is even now hastily clearing its shelves of "mislabelled" bolognaise and lasangne. Surprise, surprise: in 2007, Comigel was bought by French private equity firm Céréa Capital.

Private equity firms are used to being the villain of the piece: post 2008, some argued that their penchant for cheap credit would be the cause of the next financial crisis. It's not all bad though - as this Moody's report suggests, companies which have been bought out are much more likely to survive when the going gets tough.

But the key point here is that some companies can't afford to be radically restructured to the point at which the product is compromised. And this includes food companies. Forget DNA tests - we should be keeping an eye out for food with chains of bought-out companies in their supply lines - that's where the next food scandal'll come from.

Horse meat scandal could be rooted in private equity. Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

Photo: Getty
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Commons Confidential: George Osborne puffs away

Your weekly dose of gossip from around Westminster.

The Tory bouncer Iain Duncan Smith is licking his wounds after Labour’s sisterhood reclaimed the blokey bar of the House. The former army captain liked to glower at opponents with a gang of men by the line opposite the Speaker’s chair.

Before the summer recess, the front row was occupied by the MPs Jo Stevens, Tracy Brabin, Cat Smith and Yasmin Qureshi, who refused to budge when IDS tried to push through. Labour is determined to make life uncomfortable for the majority-less Tories.

Signs of Ukip’s tentacles extending into the tragic Charlie Gard case include the press officer Gawain Towler using the party’s official email account to distribute “for a friend” campaign statements. Meanwhile, the defeated parliamentary candidate Alasdair Seton-Marsden has surfaced as a spokesman. He is accused by TV news shows of tricky behaviour and of trying to exploit the tragedy. His big idea was to have Nigel Farage interview the parents. Ukip likes to keep everything in its own family.

The baronet’s son George Osborne – the vengeful sacked chancellor pretending that everything from Brexit to pay caps has nowt to do with him, now that he edits a London free sheet – is a secret smoker. My snout whispers that the Chancer favours Vogue Menthol, an appropriately upmarket brand of cigarette. He was always too grand for fags.

Many Labour MPs are reluctant to sit on select committees. An internal report from the Parliamentary Labour Party identifies one vacancy on science, two on public administration, Wales and petitions, plus three on environment.

The list shows Keith Vaz switching from justice to international trade. Jim the washing machine salesman would doubtless approve.

Parliament’s expensive programme to protect MPs after the assassination of Jo Cox isn’t going entirely to plan. Workers installing an intruder alarm at an MP’s home in northern England apparently caused £1,400 of damage drilling through a water pipe. The company responsible should brace itself for questions about subcontracting and unskilled labour.

The Tory right-whinger Peter “dry as a” Bone spent four nights on an inflatable mattress in a room next to the private bill office to table a forest of draft legislation that, fortunately, has no chance of becoming law. Mrs Bone probably enjoyed the break.

The party’s over for the SNP, with the Nats abandoning parliament’s Sports and Social Bar since losing 21 seats in June. Westminster staff celebrated with a drink. SNP MPs cheering for whichever country played England was an own goal. 

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue