Sir Michael Rake, the chairman of BT, will be given the high-profile task of ensuring that the world’s biggest private equity firms stick to a new code of conduct, The Times has learnt.

Sir David Walker announces his long-awaited code for the controversial industry tomorrow, aimed at making the private financiers open up and become more transparent. The code is voluntary, although private equity firms will be asked to implement the guidelines on a comply-or-explain basis.

Sir Michael, a former chairman of KPMG, where he worked for more than 30 years, will chair the oversight committee. The committee will sift through the reams of papers - mostly about the companies that private equity firms own - that will be generated as a result of the code.

The committee, working with the British Venture Capital Association (BVCA), the industry’s main lobby group, will also appoint two nonexecutive directors and name two industry practitioners to work alongside Sir Michael. The group will appoint an accounting firm and will meet three times a year to review the implementation of Sir David’s code and make sure that private equity firms are fully complying with the guidelines.

This year has been a bad one for the millionaire buyout industry. Unions and politicians have criticised firms such as Kohlberg Kravis Roberts, Blackstone and Permira for buying companies on the cheap, cutting jobs sharply and exploiting tax loopholes to maximise their profits.

Then the credit crunch hit and wiped out supplies of cheap debt that had fuelled the buying.

In the wake of the storm, the BVCA appointed Sir David to conduct a review of transparency in the industry and devise a code of conduct that would force the secretive millionaires to divulge more about their deals. The industry is also the subject of a continuing investigation by the Treasury Select Committee.

Even before Sir David’s code has been announced officially, however, some have expressed concern that its focus on annual reviews and detailed reports of portfolio companies will do little to force private equity to open up on a day-to-day basis. One private equity executive said that he thought that firms would make a huge fuss about complying and produce the required data and reports – but he thought that after all the noise had died down “it will probably ultimately be all ignored”.

Sources said that Sir David would include plans to make buyout firms publish an “attribution analysis” that would provide details of exactly where their profits were coming from. The move is designed to address a key criticism of buyout firms that it is financial engineering, not underlying improvements to the profits of the companies that they own, that is responsible for their cumulative billions in profits.

They will also have to agree to better communications with employees of their portfolio companies, particularly on issues such as job cuts, although it is understood that there will be no requirement for them to be more transparent on a deal-by-deal basis.

Paul Kenny, general secretary of the GMB, which has fought a strong campaign against private equity, complained that the industry should face more scrutiny. He said: “Are the Government not listening when Guy Hands - a top private equity man - says that the losses racked up by the financiers in the sub-prime debacle will amount to more than £140 billion. These are the people who brought us the Northern Rock fiasco and their reckless and heedless pursuit of multimillion bonuses could spill over into a recession.”

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