The private equity industry is heading for another showdown with the Treasury Select Committee after it emerged last night that many of the firms that have signed up to a voluntary industry code on transparency are not complying with it. The issue is gaining momentum because so many private equity-backed companies are facing bankruptcy.

The Guidelines Monitoring Group (GMG), which monitors compliance with the code that was drawn up in 2007, said that fewer than half the firms that signed the code are complying with it fully.

The GMG, which is chaired by Sir Michael Rake, chairman of BT, also found that more than a third of the private equity-owned companies covered by the code were breaking it.

Despite promises by Sir David Walker, who drew up the code, that offenders would be named and shamed, Sir Michael refused to identify the rulebreakers.

John McFall, the chairman of the Treasury Select Committee, said: “Walker promised a naming and shaming and Sir Mike has drawn back from that. This appears to be a dilution of Sir David's proposals.” Sir Michael declined to comment.

The GMG, which published its first report yesterday, said: “The efforts made by the private equity industry so far are encouraging, but improvement in some areas is both possible and necessary.”

Private equity sources said that much of the failure to comply was down to minor administrative errors, saying that all 32 private equity houses who signed up to Walker fulfilled most of the code's requirements. Some of the firms involved also submitted extra information voluntarily.

Sir Michael also disappointed observers of the private equity industry by declining to call publicly on individual private equity-type investors, such as sovereign wealth funds, to adopt the code voluntarily.

One such fund, Dubai International Capital, has signed up, but the Qatar Investment Authority (QIA), which bought out Four Seasons healthcare, a care homes business with tens of thousands of employees and 15,000 customers, has not. The QIA also owns a stake in Barclays Bank.

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