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Entries in Bain Capital (38)

Thursday
Sep272012

Romney: Bain Builds Up, Then Harvests Companies

James Devaney/WireImage(NEW YORK) -- In a video made public Thursday, but recorded sometime in the summer of 1985, Mitt Romney explains in frank terms how his then-newly-minted private equity firm planned on making money.

“Bain Capital is an investment partnership which was formed to invest in startup companies and ongoing companies, then to take an active hand in managing them and hopefully, five to eight years later, to harvest them at a significant profit,” Romney tells employees of Bain & Company, the consulting firm that spawned the new venture.

The clip, which was given to Mother Jones by a former Bain employee, comes off a 1998 CD-ROM released to commemorate the parent company’s 25th anniversary.

Romney’s campaign staked itself early on to a simple argument:  Success in the private sector economy and, by definition, an understanding of how jobs are “created,” made Romney the best person to steer the country out of its economic malaise.

Campaign spokeswoman Amanda Henneberg defended Romney’s record at Bain, saying in an email Thursday that the candidate “helped build Bain Capital by turning around broken companies, creating and saving thousands of jobs.  The problem today is that President Obama hasn’t been able to turn around our economy in the same way.”

But the president’s campaign has for months argued that Romney actions at Bain showed a cold-blooded disregard for American workers, either by outsourcing jobs as companies were being restructured or simply selling off failing investments.

“If you’re head of a large equity firm or hedge fund, your job is to make money. It’s not to create jobs. It’s not even to create successful businesses. It’s to make sure you’re maximizing returns for your investor,” President Obama said during an interview with CBS in July, seeking to create a divide between Romney’s private success and his potential to manage public economic policy.

Romney faced similar criticism during the Republican primary debates, when Texas Gov. Rick Perry accused Bain of engaging in “vulture capitalism.”

Romney countered then, claiming that, “net-net,” the firm had actually added more than 100,000 jobs over more than 25 years.

“There’s a steel company called Steel Dynamics in Indiana, thousands of jobs there,” Romney said. “Bright Horizons Children’s Centers, about 15,000 jobs there; Sports Authority, about 15,000 jobs there, Staples alone, 90,000 employed. That’s a business that we helped start from the ground up.”

Fact-checkers have cast some doubt on those figures, noting that Romney doesn’t account for jobs lost when companies went bust, but Bain’s tangled web of interests and investments makes it almost impossible to calculate a defining statistic.

Copyright 2012 ABC News Radio

Thursday
Sep062012

Steelworker Featured at DNC Didn’t Work for Bain

Justin Sullivan/Getty Images(CHARLOTTE, N.C.) -- The Democratic National Convention on Wednesday featured three speakers billed as “former employees of companies controlled by Bain Capital.” They each told compelling stories about jobs lost, allegedly because of the actions of Bain under Romney’s leadership. But it turns out one of those employees never actually worked for a company controlled by Bain Capital.

David Foster was supposedly one of those former employees on the convention schedule. He told the story about 750 steelworkers who lost their jobs when the Bain-controlled company GST steel filed for bankruptcy in the early 1990s.

“In 2001, with GST bankrupt and Romney still CEO of Bain, I stood in front of hundreds of steelworkers in their 50s and 60s, and retirees in their 70s and 80s, and told them Romney and Bain had broken their promises. Jobs, vacation pay, severance, health insurance and pension benefits that were promised — they were all gone,” he said.

But Foster, according to a former spokesman for GST Steel, never actually worked for the company.

“David Foster was never an employee of GST Steel’s Kansas City plant. He was employed by the United Steelworkers of America as their regional union director to represent GST Steel, but was not employed at our facility,” according to BC Huselton, who was head of HR at GST.

Instead, Foster was a union organizer, who negotiated for workers that did work for the company.

Foster explained in his remarks that he was an organizer during his dealings with GST Steel. But it is not clear from the remarks that he never worked for a company controlled by Bain.

Foster was prominently featured in an Obama campaign video, “Romney economics,” where he is identified as lead negotiator for workers at GST Steel. In the video he explains that Bain executives took bonuses even as the company flailed. Politifact rated that Obama video “mostly true.”

An Obama campaign TV ad based on the story of a GST worker who suggests that his wife’s death from cancer years later was due in part to losing health insurance when the plant closed got a “false” from Politifact and drew criticism for being misleading.

But the Romney campaign has released its own version of what happened at GST Steel. The video features a former executive, Huselton, who says that Bain’s actions actually saved the company.

“There’s this vampire story that Bain comes in and shows its teeth and sucks the blood out of the operation,” says Huselton. “It’s really quite the opposite. We went out looking for a blood donor. Bain came in, and the way I look at it actually gave us a blood transfusion.”

Copyright 2012 ABC News Radio

Wednesday
Sep052012

Fact Checking Joe Biden’s Bain ‘Bailout’ Claim

JIM WATSON/AFP/GettyImages(WASHINGTON) -- Vice President Joe Biden recently made the claim that Mitt Romney received a “federal bailout” for Bain & Company, costing “the government and American taxpayers $10 million.”  But as the Washington Post reported, Biden’s assertion that the deal cost taxpayers millions of dollars is false since the money came from an institution that does not utilize taxpayer funding.

Biden’s claim stemmed from a recent Rolling Stone report that said “Romney was willing to go to extremes to secure a federal bailout to serve his own interests” in Bain & Company.

In 1990, Romney led the restructuring of Bain & Company, from which Bain Capital spun off in the 1980s.  Bain & Company developed problems after the partners drained $200 million of borrowed money from the firm.

The Federal Deposit Insurance Corp. (FDIC) was involved in the loan restructuring since it assumed the Bank of New England, to which Bain & Company owed $38 million.  The Boston Globe reported in 1994 that the FDIC agreed to lower the amount owed by $10 million, but the FDIC, a government agency, notably does not utilize taxpayer funding and instead is financed through deposit insurance payments, which negates Biden’s claim that the restructuring cost taxpayers millions of dollars.

In the 1994 Massachusetts Senate race, Romney’s opponent, Sen. Ted Kennedy, considered using this line of attack against Romney in an ad but never released the TV spot “because it turned out to be unnecessary,” Politico reported in July.

ABC News’ White House Correspondent Jake Tapper raised Biden’s inaccurate claim during an ABC News/Yahoo! News interview when he asked Obama campaign officials if making false assertions undermines the Obama campaign’s argument that the Romney team is telling lies.

“When it came to a challenge for the firm of himself and his partners he went to the federal government, to the FDIC, to get a bailout.  So I think we try very hard,” press secretary Ben LaBolt said.

“But that’s not taxpayer funds, the FDIC,” Tapper responded.

Deputy campaign manager Stephanie Cutter noted the FDIC is “taxpayer guaranteed.”

“I understand the conversation that we’re having about whether campaigns sometimes bend the truth.  And we try very hard to get it right.  As opposed to the Romney campaign, who’ve said they’re not going to run their campaign based on fact checks, which means facts don’t matter to them.  We do care about fact checks.  We do care about the honesty of our ads,” Cutter said.

“I think all of the examples you’ve brought up -- the FDIC bailout -- we presented the facts.  We made our case.  We -- we did everything we can that they’re accurate claims,” Cutter later added.

Copyright 2012 ABC News Radio

Friday
Aug242012

Romney's Offshore Investments Used 'Blockers' to Avoid Taxes?

Jeff Swensen/Getty Images(NEW YORK) -- The private equity firm founded by Republican presidential candidate Mitt Romney made use of arcane techniques in several of its Cayman Islands-based funds to avoid U.S. taxes, according to a trove of Bain Capital's private audit and finance records made public on the website Gawker Thursday.

The audited financial statements of one of the Cayman Islands funds make note of the use of "blocker" entities, which are used to help retirement accounts and nonprofit entities avoid some taxes.  Financial statements for another fund note that it "intends to conduct its operations so it will … not be subject to United States federal income or withholding tax ..."

Those details emerge on the statements of two funds in which Romney still holds a sizeable investment, according to the financial disclosure statements he filed when he announced his bid for president.

The publication of the Bain Documents on the Gawker website could rekindle debate about Romney's role at the company, and specifically about Bain's decision to domicile many of its funds in offshore locations known as tax havens.

Critics say Romney's investments in these funds offer just the latest example of how wealthy Americans can shelter their investments to limit the amount they pay in taxes.

"The only reason they structure it that way is to avoid tax," said Rebecca Wilkins, senior counsel with the group Citizens for Tax Justice.  "It just confirms what everyone already believes about the tax system -- that it's rigged.  That the rules are rigged to favor the well off."

Romney campaign officials did not immediately respond to questions about the newly published papers.  But when ABC News first reported on Bain's Cayman Islands accounts, campaign officials said the purpose of locating offshore was to help attract money from foreign investors.  The accounts provided no tax advantage to American investors like Romney.  Romney, the campaign said, has paid all U.S. taxes on income derived from those investments.

"The tax consequences to the Romneys are the very same whether the fund is domiciled here or another country," a campaign official said at the time.

The issue of Romney's taxes have plagued his campaign.  Just last week, a press conference set up to focus on Romney's Medicare plan turned into a back and forth about Romney's tax returns, and whether he had ever paid less than 13.9 percent.

Romney called the question "small-minded," lecturing reporters about the other issues facing American voters that he deems more important than his tax returns.

"I just have to say given the challenges that America faces -- 23 million people out of work, Iran about to become nuclear, one out of six Americans in poverty -- the fascination with taxes I paid I find to be very small minded compared to the broad issues we face," he said at the time.  "But I did go back and look at my taxes and over the past 10 years I never paid less than 13 percent.  I think the most recent year is 13.6 or something like that."

The admission by Romney came after he told ABC News in an interview that he wasn't sure if he'd ever paid less than 13.9 percent but said that he'd "be happy to go back and look."

Romney has so far released what is legally required of him, one complete year of tax returns from 2010 and an estimate for his 2011 returns.  He filed an extension on his 2011 returns and the campaign has said they will be released in full by October.

He has said that he will not release more than two years and is following the precedent set by Sen. John McCain during the 2008 election.

The newly released documents rekindle questions about one of the more technical tax questions that has emerged about Romney's investments -- the use of so-called "blocker" entities.  The blocker is a paper company that serves as a buffer between the investor and the fund holding the investments, Wilkins explained.  That means the investment income can be counted as a dividend and in some cases avoid income tax.

In the financials for the Bain Capital Asia Fund, for instance, the audit describes the establishment of blocker corporations to hold more than $92 million in contributions from the fund.

Some experts have pointed to the blockers to help explain how Romney has been able to amass between $20.7 million and $101.6 million in a tax-free IRA, many times more than the typical amount an IRA can hold.  Romney has not responded to questions about his IRA.

Copyright 2012 ABC News Radio

Thursday
Aug022012

Romney Hires PR Vet to Bite Back on Bain Attacks

Alex Wong/Getty Images(WASHINGTON) -- The Romney campaign is hiring a corporate public relations specialist to help guide their response to questions about the candidate’s time in the private sector with Bain Capital, Buzzfeed’s Ben Smith reports.

Michele Davis, currently with the D.C.-based Brunswick Group, has a long and colorful résumé Democrats are sure to seize on if and when she begins to publicly defend Romney’s work in private equity.

Critics have already begun to ask why it was necessary to hire anyone -- let alone one of the country’s most respected P.R. people -- to push back against attacks Romney aides insist have done nothing to hurt their cause.

“I think it’s very odd and unlikely to solve their problem,” said one Beltway Republican.

Davis’s time in Washington has taken her from Capitol Hill, where she worked with then Speaker Newt Gingrich to craft the 1994 "Contract With America," to Fannie Mae, where she worked as a vice president for regulatory policy; regulators eventually reported that the mortgage financing giant had been engaged in “extensive financial fraud.”

After Fannie Mae, Davis joined up with then Treasury chief Hank Paulson just in time to help push through and defend the 2008 bank bailouts.

“The secretary doesn’t do anything without talking to Michele,” an “insider” told New York magazine that fall. “She’s in every meeting Paulson goes to, and she tells him how to sell the bailout to the public.”

She was also, according to a Bloomberg report, present for a secretive meeting in July 2008, when Paulson told a number of financial executives that Fannie Mae, Davis’s old employer, and Freddie Mac were likely to be effectively taken over by the government.

Davis left Treasury after the 2008 elections to join the private Brunswick firm, where, AdAge explained, she took on yet another touchy cause: Defending BP as it tried in vein to staunch the flow of oil from its busted Deepwater Horizon well in the Gulf of Mexico.

It wasn’t the first time Davis had been tasked with quelling an angry public. In 2005, during the Iraq War, she was appointed deputy national security adviser for strategic communications and global outreach by the Bush White House. That role was to have its place within the administration’s working group called Team Charged With Winning Muslim Hearts And Minds.

Copyright 2012 ABC News Radio

Wednesday
Jul252012

Obama Super PAC Releases New Ad: Romney’s Offshore Olympics

Joe Raedle/Getty Images(WASHINGTON) -- Mitt Romney can leave the country, but he can’t get away from new attacks on his business record and personal finances.

Timed to coincide with Romney’s trip to London and the upcoming start of the 2012 Summer Olympic Games, the pro-Obama super PAC Priorities USA is launching a new, minute-long TV ad that features footage of Romney at the Salt Lake City Opening Ceremonies in 2002, waving to the processions of countries where Bain Capital-owned companies helped outsource jobs, and to others where Romney has invested or held money.

Priorities USA will run the ad in Florida, Ohio, Pennsylvania and Virginia during the Olympics as part of a $20 million TV and online ad campaign attacking Romney’s business record and economic policies.

The narrator’s script reads:

"Welcome to the Olympics.  There’s Mitt Romney, who ran the Salt Lake City Games, waving to … China -- home to a billion people.  Thousands owe their jobs to Mitt Romney’s companies.  India, which also gained jobs thanks to Romney, an outsourcing pioneer.  And Burma, where Romney had the uniforms made for the 2002 games.  We know the Swiss have a special place in Mitt Romney’s wallet -- er -- heart.  He kept millions in Swiss banks -- those Swiss sure know how to keep a secret.  Speaking of secrets, there’s Bermuda.  Home to a secretive corporation set up by Romney.  No one knows why.  And Romney won’t tell.  And the Cayman Islands.  Where Romney keeps millions to avoid U.S. taxes.  Ya gotta say this about Mitt Romney.  He sure knows how to go for the gold … for himself."

Democrats have relentlessly attacked Romney for the outsourcing activities of several Bain-owned companies, two of which reportedly specialized in helping other firms outsource jobs and expand in foreign countries -- although independent fact-checkers have found no evidence that any Bain-owned companies moved U.S. jobs overseas as Democrats have implied.

Romney’s personal finances, which have reportedly included a business vehicle in the Cayman Islands and a bank account held in a blind trust in Switzerland, have also come under intense criticism from Democrats over the past three weeks and have been the subject of well-funded Democratic ads.  Romney’s campaign has denied his active involvement with these investments.

Copyright 2012 ABC News Radio

Saturday
Jul142012

While President Obama Rallies, Mitt Romney Sits Lakeside With iPad

Chip Somodevilla/Getty Images(WOLFEBORO, N.H.) — Mitt Romney spent part of his Saturday morning sitting in a lawn chair barefoot on the beach of his New Hampshire lake house, iPad in hand, while President Obama was on the campaign trail.

It was the first glimpse of the presumptive Republican presidential nominee since Friday afternoon, when he arranged last-minute interviews with five television networks to deny claims by the Obama campaign that he lied about when he relinquished control of his private equity firm, Bain Capital.

All week, the attacks had plagued Romney, who had not come out himself against the accusations until the round of interviews Friday. Romney has said the attacks have distracted from the real issue of the campaign: the economy.

Romney, who last held a public event on Wednesday, does not have any events scheduled this weekend. He is expected to campaign next on Tuesday in Pennsylvania after a fundraising swing in Louisiana and Mississippi.

While President Obama is campaigning for a second day today in the battleground state of Virginia, a Romney aide said the candidate would be spending time at home.

On Friday evening, one of Romney’s senior adviser’s was spotted near the New Hampshire resort town, though it was not immediately clear whether a meeting had occurred with Romney.

Dressed in jeans, a blue dress shirt and his trusted iPad propped on his lap and headphones on, Romney sat on the shore of Lake Winnipesaukee, his son Josh and one of his 18 grand children next to him.

Romney then went back into his home and reemerged in workout gear — dark shorts, dark t-shirt, sneakers and white athletic socks — and could be seen roaming around his lawn where he retrieved a bike pump and a bike helmet, which he placed on his head as he walked around the house.

The candidate appeared to be helping his son and some of his grandkids prepare for a bike ride. It was not clear if Romney himself joined, but at least two Secret Service agents were also spotted on the property with bikes.

Ann Romney was also spotted at the home, dressed in workout clothes and picking up toys off the lawn before putting her arms around her grandson and helping him play golf.

One of Romney’s other sons, Matt, could be seen standing at one of the home’s bay windows with a pair of binoculars pointed toward the lake, where several passersby would slow their boats to snap photos of the home as they passed, a Coast Guard boat idling nearby.

Copyright 2012 ABC News Radio

Friday
Jul132012

Mitt Romney Responds to Bain Attacks, Demands President Obama's Apology

ABC/ Ida Mae Astute(NEW YORK) -- Mitt Romney wants President Obama to apologize for his campaign's suggestion that the Republican candidate could have broken the law by making inaccurate statements to the Securities and Exchange Commission.

Romney told ABC News' Jonathan Karl late Friday afternoon that Obama should clean up his campaign staff after officials coordinated an effort to imply that Romney committed a felony by saying he left Bain Capital in 1999, though The Boston Globe reported this week that Romney was listed as the company's CEO until 2002 on official files.

"The president needs to take control of these people," Romney said. "He ought to disavow it and reign in these people who are running out of control."

Romney added, "He sure as heck ought to say that he's sorry for the kinds of attacks that are coming from his team."

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Romney insisted that he abandoned the private-equity firm he founded to run the Olympics and that, after 1999, he had "no role whatsoever in the management" of Bain even though SEC documents listed him as president, chairman of the board and sole stockholder.

"I left any responsibility whatsoever, any effort, any involvement whatsoever in the management of Bain Capital after February of 1999," Romney said.

Romney didn't answer when he was asked if he thought there was anything wrong with being associated with Bain after 1999, a period that has been the source of Obama's attack ads on Bain-backed companies that either outsourced jobs or went bankrupt.

Obama told ABC News affiliate WJLA in Washington, D.C., that Romney should "absolutely" answer the questions that have been raised about Bain.

"My understanding is that Mr. Romney attested to the SEC, multiple times, that he was the chairman, CEO and president of Bain Capital, and I think most Americans figure if you are the chairman, CEO and president of a company that you are responsible for what that company does," Obama told WJLA. "Ultimately, Mr. Romney, I think, is going to have to answer those questions because, if he aspires to being president, one of the things you learn is you are ultimately responsible for the conduct of your operations. But again, that's probably a question that he's going to have to answer, and I think that's a legitimate part of the campaign."

Romney's campaign has been under siege by both the Obama campaign and media outlets that have obtained records showing Romney's ties to Bain after he ostensibly "left" in 1999. The left-leaning Huffington Post reported that between 1999 and 2001, Romney signed six Bain documents with the SEC.

Though the campaign said Romney didn't "participate" in management decisions during that time, the Boston Herald wrote then that "Romney said he will stay on as a part-timer with Bain, providing input on investments and key personnel decisions. But he will leave running day-to-day operations to Bain's executive committee."

Romney gave five brief interviews to TV networks Friday in a hastily arranged fashion as the Bain attacks dominated the media narrative, capping a week of bad press for Romney that also included rising calls for him to release more of his tax records.

In each interview, Romney tried to shine the spotlight back on the economy, accusing Obama of diverting attention away from the sputtering recovery by unearthing new attacks.

"Why the president continues, and his people continue, to make these kinds of charges and tried to turn this into something big is clear to the American people," Romney said. "Because the president's failed to do the job that he was elected to do, which was to get this economy turned around."

Copyright 2012 ABC News Radio

Friday
Jul132012

Virginia Gov. Bob McDonnell Calls Mitt Romney’s Bain Record ‘Fair Game’

Kris Connor/Getty Images(WILLIAMSBURG, Va.) -- After a blistering assault from Democrats on Mitt Romney’s record at Bain Capital over the last 24-hours, Virginia Gov. Bob McDonnell acknowledged that the presumptive Republican nominee’s time at the private equity firm was “clearly fair game.”

But at a news conference on Friday, McDonnell drew the line at Romney’s actions at the helm of Bain up until 1999 when his campaign says he took a leave of absence from the company to run the 2002 Salt Lake City Olympic Games.

“What he did while he was the managing director certainly, certainly fair game and I tell you that record is about 120,000 new jobs, prudent investments in a lot of startup companies,” McDonnell said at a news conference opening a meeting of state governors in Virginia. “In America , you have the freedom to succeed or fail. Sometimes you do both when you’re in business. That’s the story of the American dream.”

McDonnell, however, declared any attacks on Romney’s record at the firm after 1999 off limits despite Thursday’s Boston Globe story reporting that Romney remained chief executive of Bain and owned a 100 percent stake in the company until 2002.

“What’s absolutely wrong and it should not be part of this and it’s tremendously disingenuous on the part of the administration and their team in this campaign is to say that things happened after Mitt Romney left Bain Capital as the executive and managing director when he went to rescue the Olympics,” McDonnell said.

The Virginia governor, who is a top campaign surrogate for Romney and is often mentioned as a potential vice presidential contender, said that attacks on Romney’s dealings with Bain post-1999 were “not fair.”

McDonnell called on the Obama campaign to take down any campaign ads leveling such attacks.

“That’s not honest and if he’s got those things on the ad, he needs to pull them,” the Virginia governor said.

McDonnell’s office disputed reports that he said Romney’s record at Bain was out of bounds at an event organized by the Romney campaign earlier in the day. Obama campaign spokeswoman Lis Smith circulated a BuzzFeed story adding her own characterization: “McDonnell Declares Central Premise of Romney’s Candidacy Off Limits.”

“One of three things had to have happened here: Chicago only received half of the article, they have some reading comprehension struggles, or they just want another distraction from the President’s failed record,” McDonnell’s communications director Tucker Martin said in a statement. “Whatever the case may be, it was awkward to watch.”

Copyright 2012 ABC News Radio

Friday
Jul132012

Obama Says It’s ‘Appropriate’ to Question Romney’s Bain Record

Chip Somodevilla/Getty Images(WASHINGTON) -- President Obama defends his attacks on Mitt Romney’s record at Bain Capital, saying it is “entirely appropriate” to question his rival’s business experience.

“What he says is he understands the economy and the private sector,”  the president told CBS News in an interview that aired Friday morning.  “That’s his premise.  I think it is entirely appropriate to look at that record and see whether in fact his focus was in creating jobs, and if he successfully did that.  And when you look at the record, there are questions there that have to be asked.”

The president said he does not believe that Romney’s business experience “disqualifies him” but said it’s important to scrutinize his record, since “his basic premise is that ‘I’m Mr. Fix It on the economy, because I made a lot of money.'"

“He doesn’t talk about the fact that he was the governor of Massachusetts for four years very much. … I want us to make sure that we know what your theory is about how to grow the economy.  And that is a question that I think most Americans want to know as well.  This is the nature of running for president,” Obama said.

The president went on to question how Romney’s private sector experience would translate into job growth for the American people.

“If you’re head of a large equity firm or hedge fund, your job is to make money.  It’s not to create jobs.  It’s not even to create successful businesses.  It’s to make sure you’re maximizing returns for your investor,” he said.  “Now, that’s appropriate.  That’s part of the American way.  That’s part of the system.  But that doesn’t necessarily make you qualified to think about the economy as a whole.”

The president’s comments come on the heels of new allegations that Romney was the CEO of Bain Capital for longer than he previously admitted.  While the Romney campaign disputed the claims, published by the Boston Globe, the Obama camp pounced, questioning Romney’s transparency and openness with the American people.

The full CBS interview with the president and first lady, which was taped Thursday at the White House, is set to air this weekend on CBS Sunday Morning and Monday on CBS This Morning.

Copyright 2012 ABC News Radio







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