While Romney likes to tout is business experience, “rescuing” the Salt Lake City Olympics and as Governor, the truth is much darker. He has done his best to cover his tracks. At each step along the way there are destroyed documents. His version of the story keeps changing as new information comes available. In his wake he has left the government holding the bag on his failed business. Healthy companies looted for cash, loaded with debt and left to fail. The story is of unbridled greed with no regard for the people and communities harmed in the process.
Following in roughly chronological order of Romney’s career are excerpts from the links I’ve found. Also included are videos detailing some of Romney’s low lights. There is a lot here, but there is much more if you take the time to follow the links. But know this; the very reasons that Romney is saying we should vote for him, are the same reason that we should not. Romney represents everything that is wrong with our country. You’ll see a repeating pattern of behavior over 25 plus years. Please read, share and discuss.
Mitt Romney likes to say he won’t “apologize” for his success in business. But what he never says is “thank you” – to the American people – for the federal bailout of Bain & Company that made so much of his outsize wealth possible.
The trouble began in 1984, when Bain & Company spun off Bain Capital to engage in leveraged buyouts and put Romney in charge of the new operation. To free up money to invest in the new business, founder Bill Bain and his partners cashed out much of their stock in the consulting firm – leaving it saddled with about $200 million in debt. (Romney, though not a founder, reportedly profited from the deal.)
In fact, government documents on the bailout obtained by Rolling Stone show that the legend crafted by Romney is basically a lie. The federal records, obtained under the Freedom of Information Act, reveal that Romney’s initial rescue attempt at Bain & Company was actually a disaster – leaving the firm so financially strapped that it had “no value as a going concern.” Even worse, the federal bailout ultimately engineered by Romney screwed the FDIC – the bank insurance system backed by taxpayers – out of at least $10 million. And in an added insult, Romney rewarded top executives at Bain with hefty bonuses at the very moment that he was demanding his handout from the feds.
In the end, the government surrendered. At the time, The Boston Globe cited bankers dismissing the bailout as “relatively routine” – but the federal documents reveal it was anything but. The FDIC agreed to accept nearly $5 million in cash to retire $15 million in Bain’s debt – an immediate government bailout of $10 million. All told, the FDIC estimated it would recoup just $14 million of the $30 million that Romney’s firm owed the government.
The great criticism of Mitt Romney, from both sides of the aisle, has always been that he doesn’t stand for anything. He’s a flip-flopper, they say, a lightweight, a cardboard opportunist who’ll say anything to get elected.
The critics couldn’t be more wrong. Mitt Romney is no tissue-paper man. He’s closer to being a revolutionary, a backward-world version of Che or Trotsky, with tweezed nostrils instead of a beard, a half-Windsor instead of a leather jerkin. His legendary flip-flops aren’t the lies of a bumbling opportunist – they’re the confident prevarications of a man untroubled by misleading the nonbeliever in pursuit of a single, all-consuming goal. Romney has a vision, and he’s trying for something big: We’ve just been too slow to sort out what it is, just as we’ve been slow to grasp the roots of the radical economic changes that have swept the country in the last generation.
The interests of PE firms and their investors do not coincide with the companies that have been taken over, not in the way that Romney and his adherents would have you believe. In fact, they’re often at cross-purposes. You invest in a PE deal to make money – not to grow businesses. And not to create jobs.
Prior to releasing the documents, the FDIC allowed Bain & Company to scour and redact the records. Dozens of pages were blacked out entirely, on Bain’s claim that these nearly two-decade-old records contain secret “commercial or financial information.”
The documents also illuminate, for the first time, the reckless measures that Romney resorted to in order to secure a lifeline from the federal government.
Almost immediately, however, it became clear that Romney’s path to recovery was a complete failure. Bain’s revenues continued to decline, and the company was soon bleeding red ink.
The documents reveal that Romney had perverse leverage: The terms of the 1991 deal gave Bain the authority to reward its executives with massive bonuses, regardless of performance. If creditors refused to allow the firm to pay down its debt at a fraction of the legal value, in other words, Romney could begin to loot the firm’s cash reserves by doling out unmerited bonus pay.
Even though the firm was deeply in debt and losing money, Romney decided to place executive compensation above fiscal responsibility, paying out big bonus checks beginning in April 1992.
In May 1992, an analyst warned the FDIC that Romney’s firm had defaulted on the revenue targets of the 1991 loan agreement.
Worse, the bonus payouts had put Bain & Company on a path to bankruptcy
Attempting to cut its losses, the FDIC explored the option of selling its stake in Bain & Company. But by August 1992, analysts reported to the agency that Bain & Company had “no value as a going concern.”
By December 1992, Bain & Company had returned to its creditors, proposing a new bailout with even less favorable terms: The firm asked to repay its debts at “up to $.30 on each dollar.”
If creditors didn’t agree? Management would once again raid the company’s coffers to pay themselves fat bonus checks.
…government documents obtained by Rolling Stone reveal that Romney remained in an official capacity with Bain & Company well into 1993, and that he was intimately involved in finessing the firm’s bailout.
In the end, the FDIC — in concert with other creditors — capitulated, agreeing to Romney’s demands to do away with much of Bain’s debt.
The FDIC ultimately agreed to give Bain & Company a $10 million bailout (in the form of “debt forgiveness”). The reason: analysts working for the agency — through a company called RECOLL — believed that Romney’s firm would otherwise “fail,” and the government would see very little money from the firm’s dissolution after Romney doled out the final round of bonus pay.
To secure his bailout, Romney wrote a personal appeal on Bain & Company letterhead dated March 23, 1993, assuring balky creditors that his latest scheme would lead the firm back to “long term financial stability.”
The government records show that Bain & Company’s final agreement with the FDIC was signed just a week later, on March 31, 1993.
The SLCOC signed deals with corporations connected to Bain, including a deal with Sealy Mattress to supply mattresses for Olympic athletes. Bain held a majority ownership in Sealy. The SLCOC also made a deal with Marriott Corp. to become the official losing supplier and sponsor. Romney served on the board of Marriott.
When conflicts arose between Bain-affiliated companies and others, Romney attempted to remove obstacles. Romney served on the board of Staples, a company that agreed to spend $1 million more supplying the games than Office Depot — but Office Depot had already signed a deal. Romney offered the company $1 million to back out, which it refused.
Romney also cut perks to benefit Bain companies. He canceled the organizers’ free lunches to save money, but then brought in Bain-owned Domino’s and charged board members $1 per slice, a fact he doesn’t mention when bringing up the savings.
Mattel was another company to be brought on board, paying the SLCOC a fee of $1 million to produce likenesses of the Olympic mascots. Mattel had merged with The Learning Company, in which Bain owned a principal stake.
When Mitt Romney transitioned from working full-time at Bain Capital to running the Salt Lake Organizing Committee, he did not fully leave the private equity firm. That’s not just because he continued to sign documents and take a salary, or because he described himself as Bain’s CEO on the Olympics’ website, but because he brought with him Bain’s personnel, ethos and, most importantly, its clients.
In the fall of 1999, Romney signed the Provo-based nutritional supplements company Nu Skin to be a sponsor of the games. A Nu Skin subsidiary, Pharmanex, also inked a deal to dispense dietary supplements to the athletes and carry the Olympic rings on its products. The International Olympic Committee raised red flags — Nu Skin had settled several lawsuits and a Federal Trade Commission case over false advertising and claims that the company operated a pyramid scheme — and advised athletes not to take the supplements “because of concerns that they may be adulterated with steroids,” Mother Jones reported in 2011.
Romney insisted Nu Skin’s pills were clean. The company’s employees and bigwigs later returned the favor, donating tens of thousands of dollars to his campaigns. Two shell corporations with ties to Nu Skin gave $1 million each to the Romney-backing super PAC Restore Our Future.
In a 2012 campaign video titled “Leader,” Romney declared that he “worked at one company, Bain, for 25 years” before leaving “to go off and help save the Olympic games.”
Fonnesbeck quibbled with that description.
“I have no complaints except for his attitude that he had come to save us,” she said. “My problem came when he just insisted on taking all the credit, and his attitude towards us in Salt Lake was ‘Oh you poor people, here I am.’”
The archivists involved in preparing the documents for public review told ABC News that financial documents, contracts, appointment calendars, emails and correspondence are likely not included in the 1,100 boxes of Olympic records, and will not be part of the collection that will ultimately be made public.
“We don’t have that stuff,” said Elizabeth Rogers, the manuscript curator at the University’s Marriott Library. The decisions about what records to donate to the library were made by Olympics officials before they were shipped in 1,100 boxes to the university, she said. “That was done before we got it. I just know it wasn’t a decision we made. Everything we have will be available.”
“…some who worked with Romney describe a close-to-the-vest chief executive unwilling to share so much as a budget with a state board responsible for spending oversight. Archivists now say most key records about the Games’ internal workings were destroyed under the supervision of a staff member shortly after the flame was extinguished at Olympic Cauldron Park, after Romney had returned to Massachusetts.”
“Transparency? There was none with [the Salt Lake Organizing Committee] when he was there,” said Kenneth Bullock, a committee member who represented the Utah League of Cities and Towns. “Their transparency became a black hole. It was nonexistent.”
“Any time there has been a breach of trust by people at the top, that organization is going to be placed under a microscope, and that is appropriate,” Romney said at a news conference on Feb. 11, 1999, the day he was named chief executive of the Salt Lake Organizing Committee. “We will be viewed much more carefully than any other organizing committee, perhaps in the history of the Olympics, and we deserve to be so viewed. I believe we will come through with flying colors.”
Even within the organizing committee, access to information was sometimes restricted, according to Bullock, the committee member.
“Everything should have been accessible to the board, but it wasn’t because that’s not what Mitt wanted,” he said.
“It’s not about the inner workings of anything,’’ said Elizabeth Rogers, the library’s curator of manuscripts. “I haven’t seen anything particular to Mitt Romney.”
Salt Lake Organizing Committee officials confirmed to the Globe that most administrative records were destroyed in the months after the Games concluded.
Romney did not oversee the destruction of organizing committee documents. That task fell to Fraser Bullock (no relation to Kenneth Bullock), the committee’s chief operating officer and a former Romney colleague at Bain Capital, who took over as the Games’ chief executive when Romney left to run for governor of Massachusetts.
“Mitt didn’t have anything to do with any of those decisions,” Fraser Bullock said. “He was long gone, and it was really left up to the people left behind to decide what to keep and what not to keep.”
The move during the final weeks of Romney’s administration was legal but unusual for a departing governor, Massachusetts officials say.
When Romney left the governorship of Massachusetts, 11 of his aides bought the hard drives of their state-issued computers to keep for themselves. Also before he left office, the governor’s staff had emails and other electronic communications by Romney’s administration wiped from state servers, state officials say.
Those actions erased much of the internal documentation of Romney’s four-year tenure as governor, which ended in January 2007. Precisely what information was erased is unclear.
Among paper records which Romney was granted permission to destroy were boxes whose labels indicated they contained material relating to criminal pardons and commutations and what are described as “Litigation Files (closed).”
Files in these categories which Romney was granted permission to destroy covered the years 1991-2006, which meant that they covered records generated by governors before Romney and also during Romney’s 2003-2007 term.
Also included were boxes containing material generated only during Romney’s tenure, including requests by individuals for appointments, a card index containing information about a summer job program and boxes described as containing a “Status Investigation File.” The was no indication of what the investigation file contained.
Eleven of Romney’s gubernatorial aides also were allowed to purchase the hard drives of the computers the state had leased for them and a central computer server in which governors’ office emails were routinely stored was also wiped clean before Romney left office.
Romney’s aides have also insisted that other governors had engaged in similar records cleanups.
However, Theresa Dolan, former director of administration for the governor’s office, said that in her 23 years as an aide to successive governors “no one had ever inquired about, or expressed the desire” to purchase their computer hard drives before Romney’s tenure.
The new story? Gillespie: Romney ‘retroactively’ retired from Bain Capital
The UBIT does not apply to IRAs and nonprofit groups if their holdings are with offshore investment funds, which is why the offshore blockers became such a popular mechanism.
An individual with Romney’s wealth and connections has plenty of reason to invest in the Cayman Islands or put his money in Swiss bank accounts. As Hines mentioned, the fact that the former Massachusetts governor has done so does not prove that he avoided taxes.
However, experts agree that blockers are an incredibly common vehicle for investors with holdings in the Caymans, and some doubt that Romney wouldn’t have taken advantage of them to protect himself from taxes on his IRA, especially given his history.
The statements from Romney and his campaign suggest at different times that the former governor might have used blockers to maintain his IRA’s tax-deferrable status and that he positively did not use such an investment vehicle — “there was no reduction, not one dollar of reduction in taxes, by virtue of having an account in Switzerland or a Cayman Islands investment.”
These conflicting statements alone suggest an attempt to shade the facts and mislead voters, even if we don’t have definitive proof that Romney avoided taxes on his IRA.
While the Romneys’ spokespeople insist that the couple has paid all the taxes required by law, investments in tax havens such as Bermuda raise many questions, because they are in “jurisdictions where there is virtually no tax and virtually no compliance,” as one Miami-based offshore lawyer put it.
Bain Capital is the heart of Romney’s fortune: it was the financial engine that created it. The mantra of his campaign is that he was a businessman who created tens of thousands of jobs, and Bain certainly did bring useful operational skills to many companies it bought. But his critics point to several cases where Bain bought companies, loaded them with debt, and paid itself extravagant fees, thereby bankrupting the companies and destroying tens of thousands of jobs.
A full 55 pages in his 2010 return are devoted to reporting his transactions with foreign entities. “What Romney does not get,” says Jack Blum, a veteran Washington lawyer and offshore expert, “is that this stuff is weird.”
A $3 million Swiss bank account appeared in the 2010 returns, then winked out of existence in 2011 after the trustee closed it, as if to remind us of George Romney’s warning that one or two tax returns can provide a misleading picture. Ed Kleinbard, a professor of tax law at the University of Southern California, says the Swiss account “has political but not tax-policy resonance,” since it—like many other Romney investments—constituted a bet against the U.S. dollar, an odd thing for a presidential candidate to do.
Romney’s defense is that he never broke the rules: if there is a problem, it is in the laws, not in his behavior. “I pay all the taxes that are legally required, not a dollar more,” he said. Even so. “When you are running for president, you might want to err on the side of overpaying your taxes, and not chase every tax gimmick that comes down the pike,” says Sheppard. “It kind of looks tacky.”
The Romneys’ blind trust was created when Mitt was elected governor of Massachusetts. Curiously, the Romneys appointed Bradford Malt as their trustee. It’s certainly true that under Malt the trusts don’t appear to be as blind as they might be: for instance, in 2010 the Romneys invested $10 million in the start-up of the Solamere Founders Fund, co-founded by their eldest son, Tagg, and Spencer Zwick, Romney’s onetime top campaign fund-raiser; Solamere is now in the Ann Romney blind trust.
It is hard to know the size of these investments. Romney’s financial disclosure form lists 25 of them in an open-ended category, “Over $1 million,” including Solamere and Elliott, and they are not broken down further. Romney hides behind a disclaimer that the fund managers “declined to provide such information” about their underlying assets. Many of these funds are set up in tax havens such as the Cayman Islands, where a confidentiality law states that you can be jailed for up to four years just for asking about such information.
The Washington Post summarized the opinions of experts across the political spectrum by saying Romney’s disclosures were “the most opaque they have encountered.”
“This should not mean retired from the mother ship 10 years out and getting profits you had nothing to do with,” Sheppard says, adding that Romney can get away with it because of excessive “administrative indulgences” that have allowed a “perversion of the law in favor of a small class of overcompensated investment managers.”
Romney’s I.R.A. appears to have employed this lawful escape route, and his campaign has used language suggesting that it has. But that would mean the Romney camp’s claim that Mitt’s tax consequences of investing via the Cayman Islands is “the very same” as it would have been had he invested directly at home is simply not true. (Romney spokesperson Andrea Saul says Romney “gets the same benefit anyone would get from an I.R.A.,” but she did not respond to questions on whether his I.R.A. had used blockers or avoided taxes by investing via tax havens.)
His work at Bain was unquestionably good for himself and for Bain, but was it also good for the businesses he acquired, for their workers, and for the economy, as he claims?
Then brutal cost cutting began. Bain cut R&D spending to an average of 8 percent of sales, a little more than half what its competitors were doing. Cindy Hewitt, Dade’s human-resources manager, remembers how the firm closed a Puerto Rico plant in 1998, a year after harvesting $7.1 million in local tax breaks aimed at job creation, and relocated some staff to Miami, then the company’s most profitable plant. Based on reassurances she had received from her superiors, she told those uprooting themselves from Puerto Rico that their jobs in Miami were safe for now—but then Bain closed the Miami plant. “Whether you want to call it misled, or lied, or manipulated, I do not believe they provided full information about what discussions were under way,” she says. “I would never want to be part of even unintentionally treating people so poorly.”
Bain engaged in startling penny-pinching with the laid-off employees. Their contracts stipulated that if they left early they would have to pay back the costs of relocating to Miami—but in spite of all that Dade had done to them, it refused to release the employees from this clause. “They said they would go after them for that money if they left before Bain was finished with them,” Hewitt recalls. Not only that, but the company declined to give workers their severance pay in lump sums to help them fund their return home.
In 1999, generous pensions were converted into less generous benefits, wages were cut, and more staff members were laid off. Some employees contacted Norman Stein, then the director of the pension-counseling clinic at the University of Alabama law school, with a view to challenging the conversions. Stein says the employees were “extraordinarily nervous,” so fearful, in fact, that they refused to let lawyers even make copies of pension documents. “I have been dealing with pensions issues for over 25 years and I never saw anything like this,” recalls Stein. The spooked employees did not go to court. Stein says that, while breaking pension contracts like this was not unheard of, the practice at that time was “questionable,” adding that Dade may have saved $10 to $40 million from converting its pensions.
The beauty—or savagery—of leverage is that it can magnify any and all cash-flow boosts, such as this one. Take $10 to $40 million squeezed from a pension pot, then use that to create new, rosier financial projections to borrow several times that amount, and then pay yourself a big special dividend from the borrowed funds, many times the size of the pension savings. That is just what Bain Capital did: the same month it converted the pensions, it created new financial projections as a basis to borrow an extra $421 million—from which Bain, its co-investor Goldman Sachs, and top Dade management extracted $365 million in dividends. According to Kosman, “Bain and Goldman—after putting down only $85 million … made out like bandits—a $280 million profit.” Dade’s debt rose to more than $870 million. Romney had left operational management of Bain that year, though his disclosures show that he owned 16.5 percent of the Bain partnership responsible for the Dade investment until at least 2001.
Quite soon, however, a fragile Dade faced adverse conditions in the currency markets, and it had to start in effect cannibalizing itself, cutting into the core of its business. It filed for bankruptcy in August 2002 and Bain Capital departed. When Dade emerged from bankruptcy, its new owners invested in long-term R&D, and it flourished again.
Nor was this an isolated incident: Kosman lists five other “formerly healthy” companies—Stage Stores, Ampad, GS Technologies, Details, and KB Toys—Bain helped drive into bankruptcy, while making big profits.
Many Americans might react with a shrug to the idea of shady foreign money such as Robert Maxwell’s being invested here. But, says Rebecca Wilkins, of the Washington, D.C.–based nonprofit Citizens for Tax Justice, “It is shocking that a presidential candidate should think that is O.K.”
Ann Romney said in an interview airing Wednesday that her husband has no plans to release additional tax returns, saying “it’ll just give them more ammunition” and insisting that “there’s nothing we’re hiding.”
“We have been very transparent to what’s legally required of us. But the more we release, the more we get attacked, the more we get questioned, the more we get pushed. And so we have done what’s legally required and there’s going to be no more, there’s going to be no more tax releases given,” she said in the interview by NBC News. “And there’s a reason for that, and that’s because of how, what happens as soon as we release anything”.
“Our church doesn’t publish how much people have given,” Romney tells Parade. “This is done entirely privately. One of the downsides of releasing one’s financial information is that this is now all public, but we had never intended our contributions to be known. It’s a very personal thing between ourselves and our commitment to our God and to our church.”
Or could this be the problem with his Church?
Pointing out that his donation of $1,525,000 to the church reflected on his 2010 return was a mere 7 percent of the $21,646,507 million in adjusted gross income reported, Nevada political blogger Justin McAffee calculates that if “he made the same amount of income he reported in his 2010 tax return, every year for the past ten years . . . he would have made over $200 million,” and, if the percentage was consistently as low as in 2010, Romney may have “shortchanged the Mormon Church out of $6 million.”
I wonder why they didn’t say that in January? I wonder why Mitt’s Dad didn’t have a similar problem releasing 12 years of tax returns?
Another peek into the character of Romney can be seen in his handling of dissent and heavy handed approach to managing the convention and setting rules.
There Was Major Drama At The GOP Convention Friday, And It Ended With John Sununu Fleeing The Building
According to one source who was at the meeting, the saga ended with former New Hampshire Governor John Sununu, the committee chair, hightailing it out of the building before committee members could submit dissenting minority opinions, or “minority reports.”
“The rules say that you have an hour after the meeting, but within 15 minutes, we couldn’t find [Chairman Sununu] anywhere,” Ryan, a Ron Paul supporter and member of Maine’s delegation, said. “Finally, we asked an RNC official if they had seen former New Hampshire Governor John Sununu. He said, ‘John Sununu! Everyone’s looking for him! But he left the building.’”
“He is systematically trying to prevent minorities from having even any remote opportunity of being heard,” followed Virginia delegate Morton Blackwell to rave applause from the committee. “This is wrong, it’s gonna hurt us, it’s gonna hurt our presidential candidate.”
What about any of this suggests that Romney would be good for the country?