Kohlberg Kravis Roberts recent partnership with Transparency International was the first tie up that the Berlin-based civil society organisation made with a private equity firm. Karen Egger, head of private sector programs at Transparency International in Berlin, discusses the nature of the partnership.
Who sought who in this partnership?
KKR approached us with an interest in developing in this area. They are interested in reaching out in the area of corporate and social responsibility and they are developing partnerships with leaders in those areas. We are interested in what we can contribute by engaging and involving the corruption-related indicators in their investment process and especially in their portfolio.
Private equity is private and exclusive. Transparency is open and public. With directly opposed philosophies, will it be a challenge to work together?
If it weren’t challenging it wouldn’t be worth doing. We don’t want to walk only through open doors, we want to push the envelope. By engaging with us, KKR shows commitment to being more transparent and we like to encourage moves toward greater transparency. Private equity is different by definition; public companies have certain [disclosure] obligations. That said, we’d like to see all businesses be more transparent — they need to be. Obviously private equity is more challenging but the fact they’re not required by [regulations] to be more transparent doesn’t necessarily in our view make it less appealing for them to be so.
How exactly will Transparency International work with KKR?
We’re not involved in their business, but with more high-level policies, procedures and business principles for combatting corruption. For example, getting feedback on how local [portfolio] companies are implementing anti-bribery programs. We won’t be in any meetings where confidential information about a business decision is discussed.
I want to make clear we are not in a consultant agreement. We will not manage their business per se, but we’ll combine our expertise and engage Transparency’s chapters with portfolio companies. It’s more than a symbolic agreement, but far from consulting.
Transparency International has a widely-known, valuable brand name. If it’s associated with a private equity firm, that could be particularly comforting to potential investors. Are you bracing yourself for more firms around the world to seek this same reputational boost?
We’re aware that that’s a potential risk. But in no way should [a partnership] be seen as an endorsement of any firm or their activity.
Any kind of engagement with a private firm is subject to our own rigorous due diligence process. We’re very concerned about making sure we’re partnering with people or organisations that value our commitments through words and deeds. That’s an important hurdle.
We’re not expecting a flood of private equity firms to enter into partnerships with us. That being said, more and more we are finding interest [in what we do] from the investor community.