Remember the horrible murders in 1978 of San Francisco Mayor George Moscone and Supervisor Harvey Milk? At the killer’s trial, his lawyer argued for leniency, saying that a steady diet of junk food had addled his client’s brain – a claim that entered the annals of jurisprudence as the “Twinkie Defense.”
Even less defensible is a recent claim by Ripplewood, a private equity firm that had bought out Hostess Brands three years ago, including Twinkies. Just before Thanksgiving, the firm asserted that it had been forced by greedy labor unions to kill off Hostess Brands. Far from greedy, however, the 18,500 unionized workers are quite reasonable and very loyal – in fact, they had previously given back $100 million in annual wages and benefits to help the company survive.
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The true greed in this drama is inside Ripplewood’s towering castle of high finance in Manhattan. Rather than modernizing Hostess’ factories and upgrading its products, as the unions had urged, the equity hucksters plundered the company to feather their own nests. For example, they siphoned millions of dollars out of Hostess directly into their corporate pockets by paying themselves “consulting and management fees,” which did nothing to strengthen the company.
But it was this year that the rank managerial incompetence and raw ethical depravity of the vultures of Ripplewood fully surfaced. While demanding a new round of deep cuts in worker’s pay, healthcare, and pensions – they quietly jacked up their own take. And by a lot! The CEO’s paycheck, for example, rocketed from $750,000 a year to $2.5 million.
Like a character in a bad Agatha Christie whodunit, Ripplewood – the one so insistently pointing the finger of blame at others – turns out to be the one who killed the Twinkie. Along with the livelihoods of 18,500 workers.
“It turns out Twinkies don’t last forever,” Washington Post,” November 17, 2012.
“Back When Chocolate Puck Tasted Guilty, Like America,” The New York Times, November 17, 2012.
“A Push to Save the Twinkie,” The New York Times, November 17, 2012.
“Goodbye to My Twinkie Days,” The New York Times, November 17, 2012.
“Private Equity And Hostess Stumbling Together,” The New York Times, November 20, 2012.
“Court Allows Liquidation Of Hostess,” New York Times, November 22, 2012.
“At Judge’s Urging, Hostess and Union Agree to Mediation,” New York Times, November 20, 2012.
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