A tip of The Audit’s green eyeshade to The New York Times for fighting to get this look inside the private-equity “club deals” of the bubble era.

The paper brought a motion two months ago to unseal a lawsuit that alleges private-equity firms used those club deals to collude to drive down deal prices. The PE lawyers had gotten the publicly filed complaint heavily redacted to remove all the best parts—presumably to avoid the very kind of press focus the NYT is bringing to the case.

Yesterday the paper reported that the judge ordered the full complaint unsealed, and we get a look at what Blackstone, KKR, Bain and the rest didn’t want us to see: damning emails between top executives of competing firms.

In this one, Blackstone president Hamilton James talks about his firm’s Freescale Semiconductor deal:

“Henry Kravis just called to say congratulations and that they were standing down because he had told me before they would not jump a signed deal of ours,” Mr. James wrote.

Two days later, Mr. James sent an e-mail to Mr. Kravis’s cousin and co-founder, George R. Roberts. “We would much rather work with you guys than against you,” Mr. James wrote. “Together we can be unstoppable but in opposition we can cost each other a lot of money.”

“Agreed,” responded Mr. Roberts.

Hamilton James is a big-time Obama donor who hosted a $36,000 a head fundraiser with the president earlier this year at his Park Avenue pad. Some thought he might be in line to replace Tim Geithner as Treasury Secretary.

I hate to quibble with such a good piece of work, but the NYT doesn’t note that James is a big Obama donor, a miss that would look a lot better if it didn’t spent five graphs on Mitt Romney.

The Times, again, writes about Mitt Romney’s very tenuous connection to this burgeoning scandal, reporting that one plaintiff’s lawyer says “he clearly profited” from the collusion. That’s true, but it doesn’t mean anything since there’s no reason to believe Romney had any role in the deals, much less the collusion over them. Anyone with a mutual fund in their 401(k) profits off their investments’ bad behavior. We don’t hold them accountable for that, and Romney shouldn’t be, either.

There’s another big name in these emails, though, too: General Motors CEO who at the time was a Carlyle Group partner. Here he writes to colleagues after Henry Kravis’s KKR asked its competitors to ““step down on HCA,” which it bought in a $32 billion LBO.

“All we can do is do [u]nto others as we want them to do unto us,” Jonathan Coslet, a TPG executive, wrote. “It will pay off in the long run even though it feels bad in the short run.”

These look like smoking guns to me, a view that’s backed up by the private equity flacks’ weak defenses quoted in the piece. I’d assume that the Department of Justice’s antitrust people are following this, and it would be good to see some reporting on that.

 

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.