Rescued a large business: "By 1990, Bain & Co., the mother ship, was in dire straits because of excess debt. Founder William Bain asked Romney to return to the company as interim CEO to straighten things out. Romney tightened expenses, renegotiated loans, and improved morale. He returned the company to profitability within a year, before returning to lead Bain Capital."
Rescued the 2002 Olympics: "leaders approached Romney about taking over the scandal-ridden 2002 Winter Olympics... the Salt Lake Olympics Organizing Committee (SLOC) had a projected shortfall of $397 million."
"With Romney at the helm, the games ended with a surplus of $56 million. The surplus money went to fund future Olympics."
Rescued government: (from enormous debt) "Romney ran for governor of Massachusetts in 2002 on a platform of fiscal conservatism, promising to erase the state's $3 billion deficit. As the new governor, Romney consolidated state agencies, cut employees, and closed what he called loopholes in the corporate tax code. He also tackled the most difficult public policy issue of all, health insurance."
"After raising $37 million in startup funds, Romney founded Bain Capital" (sister firm to Bain & Co.) In addition to Staples, "Bain Capital went on to help launch or acquire Domino's Pizza, Sealy, Brookstone, and The Sports Authority... Bain Capital now manages $40 billion."
Stemberg is interviewed on Fox News - Jan 16, 2012
Stemberg (founder of Staples): After noting that Mitt Romney was on the Staples Board of Directors for about 15 years, stated, "I've been on some very good boards, with some great directors. I would still rate him as the single best corporate director I've ever worked with, he was an inspirational leader. While Staples may have existed without him, I doubt it would have been nearly as big or successful without him."
In answer to a question about jobs, Stemberg notes the number of employees in a few of the companies Mitt Romney helped get started and grow, stating:
"Mitt was instrumental in getting us going and helping us grow the business"
“This doesn't even take into account any of the job growth under other companies Bain Capital invested in during Mitt Romney's tenure.
“Some of the companies that Bain Capital invested in were struggling...
“The press has reportedly extensively on many of the cases where job losses occurred. While the campaign is not the source of these numbers, even looking at the totality of those numbers compared against just the four startups listed above, the net job growth is still over 100,000 jobs.
“Eighty percent of the companies Bain Capital has invested in from its founding to today have grown revenues. When companies grow, they are able to hire more workers and our economy grows.
“Bain Capital pursued an investment strategy that often included targeting companies in decline and trying to turn them around. In most cases, it held the companies for many years and invested a significant amount of human and financial capital into improving operations to help revive these struggling companies.
“When President Obama attacks Governor Romney’s record in the private sector, he’s also attacking our country’s greatest engine for job creation: the free enterprise system.
Most People Profited from Firm's Investments
“The major investment beneficiaries of Mitt Romney’s work in private equity – and private equity in general – are the investors in the fund.
“The investors include pension funds, charities, and universities. In fact, over half the money invested in private equity is from pension funds and charitable foundations alone. The success of private equity investments helps provide secure retirements for seniors, allows charities to serve their communities, and provides universities with the resources they need to educate our youth.
“In addition, state and local governments depend on higher returns from private equity investments to fund employee retirements without cutting into operating budgets. When investments don’t perform, state and local governments must offset gaps in investment returns by using tax dollars otherwise spent on local programs. In California, for example, one study has shown that a 0.25% decrease in investment returns could cost local municipalities and school districts $300 million per year. That’s $300 million less being spent on vital local programs.
“When private equity succeeds, it is not just companies that thrive -- it is retirees, charities, local communities, and universities that benefit the most.
“The GS Technologies plant that Barack Obama has used to attack Mitt Romney was scheduled to be closed if Romney and his colleagues hadn’t bought the plant and tried to help turn it around.
“In 1993, GS Technologies, a company Bain Capital had invested in, purchased a struggling Kansas City steel plant from Armco. Prior to this investment, Armco announced plans to close the Kansas City plant if a buyer could not be found.
“This investment – and $170 million in upgrades – kept the Kansas City plant competitive in a tough international market and saved the steel workers’ jobs for eight years.
“Two years after Mitt Romney left Bain Capital, the GS Technologies plant was closed because of foreign steel dumping into the U.S. market. Thirty-one other steel companies declared bankruptcy during the same period.
“During his three and a half years in office, President Obama has consistently failed to take the steps necessary to protect American manufacturing from unfairly-subsidized Chinese imports. On day one, President Romney will designate China a currency manipulator and take the steps necessary to make American manufacturing competitive again. [For more information, see GS Technologies section below.]
Marion, Indiana Paper Plant
“The paper plant in Marion, IN was losing money when Ampad bought it to try to turn it around.
“In 1992, Bain Capital invested in American Paper & Pad, or Ampad. Two years later – while Governor Romney was on a leave of absence to run for U.S. Senate against the late Ted Kennedy – Ampad purchased the assets of an unprofitable plant in Marion, Indiana from Smith Corona.
“This was not a healthy plant: In the year preceding Ampad’s purchase, the Marion plant lost more than $1.6 million dollars.
“Though the Marion plant would later close, Ampad added nearly 2,500 jobs at other plants between Bain Capital’s initial investment and the sale of its majority interest. During this same period, revenues grew dramatically from $8.8 million to more than $580 million.”
It is also worth noting that during the time Romney returned to Bain, Ampad thrived and this plant remained open. A year after Mitt Romney left Bain Capital to save the Olympics, while Mitt was on leave from Bain to fix the Olympics, Ampad suffered financially and the Marion plant closed. For more information on that plant, see here and here.
“...after reviewing numerous corporate filings with the Securities and Exchange Commission, contemporary news accounts, company histories and press releases, and the evidence offered by both the Obama and Romney campaigns, we found no evidence to support the claim that Romney — while he was still running Bain Capital — shipped American jobs overseas.”
“The Obama campaign complains that we got a key fact wrong in our June 29 article, “Obama’s ‘Outsourcer’ Overreach.” We strongly disagree. We find the Obama campaign’s evidence to be weak or non-existent, and contrary to statements Romney has made on official disclosure forms under pain of federal prosecution.
“The Obama complaint claims we erred in saying Mitt Romney gave up active management of Bain Capital in early 1999 to run the 2002 Winter Olympics...
“And after reviewing evidence cited by the Obama campaign, we reaffirm our conclusion...
“The Obama campaign’s objections are contained in a six-page letter sent to us (and — without notice to us — to other news organizations as well). It cobbles together selective news snippets and irrelevant securities documents in an attempt to show that Romney was still running Bain Capital on a part-time basis while he was also running the Olympics committee.
Fmr. Gov. John Sununu on Romney and Obama outsourcing - MSNBC with Andrea Mitchell - Jul 10, 2012
Mainstream media outlets agree, including the New York Times:
“ “It’s a disconnect between the ownership interest and managerial functions,” said Harvey L. Pitt, who served as S.E.C. chairman under President George W. Bush. “When Bain takes positions in public companies, they’re required to show anyone who has an ownership interest that could be the effective equivalent of control. So Romney has to be shown on those filings. If they didn’t show them on those filings, they would have broken the law. But it has nothing to do with who’s actually running Bain Capital.”
“Indeed, no evidence has yet emerged that Mr. Romney exercised his powers at Bain after February 1999 or directed the funds’ investments after he left... And financial disclosures filed with the Massachusetts ethics commission show that he drew at least $100,000 in 2001 from Bain Capital Inc. — effectively his own till — as a “former executive” and from other Bain entities as a passive general partner.”
“Facts don't support Obama's charges against Romney
“Editor's note: David Gergen is a senior political analyst for CNN and has been an adviser to four presidents. A graduate of Harvard Law School, he is a professor of public service and director of the Center for Public Leadership at Harvard University's Kennedy School of Government...
“As the New York Times reports Monday, there was an expectation at first that Romney might return to active management of Bain so he did not sever his ownership ties right away -- an additional reason why his name was not struck from documents for a while. The Times account goes on to say there is no evidence that during this interim he was actively engaged in managing the firm...
“FactCheck.org, a respected website that nails candidates for inaccuracies, earlier investigated the whole issue of Romney's departure and reached a conclusion that he was telling the truth. Last week, little noticed by Romney's critics, FactCheck went back, reviewed the evidence again, and based on what we know so far, reaffirmed its earlier conclusion. FactCheck's recent article was co-written by a man who was once a top investigative journalist for CNN. (The piece last week also recalled an Associated Press report on the Olympics that said in his early tenure at the Olympics, Romney was working 112-hour weeks to save the Salt Lake City games. Does this sound like a man who was also managing a private equity firm on the East Coast?)
“Last week, in another article that critics tend to ignore, Fortune reported that it had obtained confidential documents that Bain gave to prospective investors in advance of that seventh round offering in 2000. The prospectus is the way a company such as Bain informs possible investors who will manage their money. The prospectus listed 18 managers at Bain who would have responsibility. Romney's name was not among them.”
BILLIONS OF TAXPAYER DOLLARS USED TO CREATE FOREIGN JOBS:
“Obama handed over billions of dollars in loan guarantees and stimulus awards pursuant to his goal of putting one-million electric vehicles on the road... A $2.4 billion stimulus program to support battery production sent nearly half of its money to foreign firms, including two South Korean companies that used their awards to hire foreign nationals in Michigan to do work that Americans easily could have done...
“Obama's stimulus included over $8.5 billion in grants for wind farms that flowed overseas, despite Congressional criticism from both sides of the aisle. In total, over half of the money went to either foreign developers or foreign wind turbine manufacturers, creating thousands of jobs overseas with money that was supposed to create jobs within the United States. Even worse, hundreds of millions of dollars went to wind farms that began construction before the stimulus was passed. The end result of all this spending: the wind energy industry lost 10,000 jobs last year.
“As Obama was doling out over $2.3 billion in clean energy manufacturing tax credits that were supposed to create jobs in America, $880 million went to foreign firms. Worse still, some of those same recipients are now closing up shop and shipping jobs overseas...
“The largest recipient of Obama's program to jumpstart green energy projects was the Spanish Company Abengoa, which took in $2.7 billion in loan guarantees for three of its projects. Other projects importing foreign-made solar panels are, much in the same way as Fisker Automotive, choosing to make their products overseas.”
Country by country analysis of where Obama sent stimulus money, grants and federally granted and financed low interest loans is then documented.
Dozens of examples of stimulus money being granted to countries such as China, Russia and India are given, starting with this example:
“Swiss-Based Landis+Gyr Received Over $50 Million In Stimulus Contracts For Their Smart Grid Meters. Cathy Zoi, A Former Obama Energy Department Official, Held Over $250,000 Worth Of Stock In The Company As They Profited From Her Department's Policies. Zoi Had Previously Served As An Executive Director At Landis+Gyr Before Joining The Obama Administration.”
Obama's Job's Czar Jeffrey Immelt talking to India about outsourcing American jobs:
Interviewer: “What's the significance of 200 Americans landing on India soil? Exploring the big Indian market once again?”
Job Czar: “I think India is extremely exciting for all American business people today. I think that the notion that we are here at the same time the president is here is also quite exciting and quite historic... the infrastructure opportunities for companies like GE just makes India more exciting. I'm a globalist. So, basically I'm a big believer that it's a win-win game of global trade... and I believe the president sees it the same way.”
Interviewer: “So the debate of outsourcing in many ways is outdated because the concept of protectionism is more political than actually economic?”
Job Czar: “I actually believe that anytime the unemployment is almost 10% people are afraid. People are nervous. I understand that. I expect that... we also have to have a vision for our own country... but we live in a global economy. This notion of protectionism I think is not the way forward. It's the way backward. And therefore, we need to fight through that, and we need to make a better case for globalization.”
Dennis Kucinich, Democrat U.S. Rep. from Ohio: “The head of GE is the head of the President's jobs council, and he has a lot of expertise in creating jobs. Unfortunately, the jobs he's creating happen to be in China.
“And I'm concerned that GE has laid the groundwork to move more jobs to China, because they're right inside of NASA and the incubation of all kinds of new technology that the taxpayers are paying for, such as the technology that GE, famously now, have given to the Chinese. It was developed with U.S. taxpayers dollars. And that's going to have an adverse impact on our airline industry.
“The appearance and the fact of it are both terrible. There's no defense for this. Let's face it. If you want to have a jobs council, create jobs in America.”
Bill O'Reilly: “Why is the president doing it if it's ridiculous?”
Dennis Kucinich: “I can't explain why. Under Mr. Immelt GE moved 20% of its jobs out of this country.”
Rove: “We know the practice of these Chinese companies is to require as a price of doing business with them, of being their partner, that you surrender, that you turn over valuable technology... GE is talking of partnering with a company that does a lot of work with the Chinese military.
“So GE's sophisticated avionics is going to be put into a company that in essence supplies the Chinese military including its air force and its navy with vital aviation equipment.”
O'Reilly: “Jeffrey Immelt is responsible for the president's council on jobs and competitiveness. This takes jobs overseas to China, and it makes China more competitive against Boeing.”
Rove: “Are you surprised this administration is so tone deaf on this?”
O'Reilly: “This is a big deal. This is the top guy, and he takes the jobs and the competitiveness, and ships it over to China.”
Rove: “Be calm. Remember, this is the president who tried to put 3 people into his cabinet who didn't pay their federal income taxes. So why are you surprised that they have someone in charge of their jobs panel who is busy shipping jobs over to China? This is not the first example. They recently named, GE recently named, announced that they were going to take part of their medical equipment division, and move it to China. So yes, look, the administration is tone deaf on this.”
O'Reilly: “Are you saying that they just don't care about public perception? That the Obama administration doesn't care what these people do?”
Rove: “I think it's worst than that... I don't think that they think this is a problem.”
O'Reilly: “It is so outrageous, and so hypocritical.”
“The role of the jobs czar in this country is to get Americans back to work... But Immelt's success is only partially built on American jobs. Half his workforce is overseas and he is unapologetic for it...
“On Overtime, we take a look at some of GE's projects back home in the U.S., where Immelt has put an emphasis on research and development - R&D... One stop on Immelt's R&D tour: solar energy research. Seemingly unfazed by the unrealized promises and downright failures in the world of solar energy, Immelt thinks the technology holds great promise... On Overtime, GE tells Lesley that it will create 300-400 jobs when it builds the largest thin film solar plant in the country in the near future.
“That news might take a bit of sting off another recent announcement: GE is moving its 115-year-old x-ray unit from Waukesha, Wisconsin, to Beijing. It's all in a day's work for the U.S. jobs czar.”
Interviewer: “After receiving billions in bailout money, General Motors plans to move the Volt's technology to China...
“We've given them billions, billions of dollars for this project, and now China is going to be the beneficiary, not only of our technology, our money, but also our jobs.”
U.S. Rep. Joe Walsh, Illinois: “We have wasted millions and millions of taxpayer dollars on this notion of green jobs, and now here's the latest example of GM shipping Research and Development of electric vehicles over to China. It sure looks like and smells like eventually production of the Volt is going to be done over in China...
“This issue here with GM, Eric, is really troubling. We bailed out this company. Obama's Car Czar, Mr. Ratner, is still going around saying what a great success the auto bailout is. They had to revise their estimates up that it's going to cost the American taxpayer right now, still about $24 billion. And now we're finding out that these green jobs are going to develop over in China?”
Interviewer: “Yep, Congressman, by the numbers, we gave them $50 billion. They gave us back 20 or so, I'm not sure the actual cash number. But we're also now saddled with a stock that came public, which means we own it as taxpayers, at $31 a share, it's trading in the low 20s right now. We may never see the billions that we bailed GM out for. We've also given them "green energy" loans, it goes on and on, state and local loans and grants to GM. Martin Motica, one of the auto analysts, I believe in Michigan, came up with a 250 thousand dollar per unit cost for the Volt. We're just bleeding money to them.”
U.S. Rep. Joe Walsh, Illinois: “Most troubling, here is this president talking about it's make or break time for the middle class in jobs, and he continues to ship jobs overseas.”
Only 3.8 million jobs had been created over the last 27 months (not 4.3 million), and more importantly, the net total of jobs created since President Obama took office is —1.3 million jobs! (that's a minus number)
Yes, that's right. Overall, President Obama has lost over a million jobs since he took office!
“After losing jobs for 25 months in a row, our businesses have now created jobs for 27 months in a row, 4.3 million new jobs in all. The fact is, job growth in this recovery has been stronger than the one following the last recession a decade ago.”
Official government data shows that 4 of the previous 27 months had job losses totaling over 300,000, and most of the months reaching the positive side were anemic.
Furthermore, the official government data shows that following the job losses that occurred from 2001 through Aug 2003, the next 27 months had over 4.8 million jobs created, over 1 million more jobs than during the 27 months under Obama that he calls a recovery. (And in the next four months there was more than another million jobs added. In Obama's economy, he will not have a million new jobs in the next four months before the election. But Obama has repeatedly criticized Bush for his economic record, although Bush's is actually better.)
Official government data does show that the one thing Obama did get right is that the country did lose jobs for 25 months in a row (most while Barack Obama has been president).
“But the truth is... You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest... they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment.”
“His rivals wasted no time in attacking Barack Obama for comments made at a San Francisco fundraiser last weekend, and newly reported on the Huffington Post, in which he seemed to disparage working class people in Pennsylvania and across the Midwest — as Hillary Clinton and John McCain’s campaign both called Obama “out of touch” just minutes after the remarks came to light...
“McCain senior adviser Steve Schmidt said Obama’s remarks showed “an elitism and condescension towards hardworking Americans that is nothing short of breathtaking.” ...
“OBAMA: "So, it depends on where you are, but I think it’s fair to say that the places where we are going to have to do the most work are the places where people are most cynical about government. The people are mis-appre…they’re misunderstanding why the demographics in our, in this contest have broken out as they are. Because everybody just ascribes it to ‘white working-class don’t wanna work — don’t wanna vote for the black guy.’ That’s…there were intimations of that in an article in the Sunday New York Times today - kind of implies that it’s sort of a race thing.
“ "Here’s how it is: in a lot of these communities in big industrial states like Ohio and Pennsylvania, people have been beaten down so long. They feel so betrayed by government that when they hear a pitch that is premised on not being cynical about government, then a part of them just doesn’t buy it. And when it’s delivered by — it’s true that when it’s delivered by a 46-year-old black man named Barack Obama, then that adds another layer of skepticism...
“ "But the truth is, is that, our challenge is to get people persuaded that we can make progress when there’s not evidence of that in their daily lives. You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations." ”
“The troika of Bill Richardson, Tom Daschle and Timothy Geithner raises questions about Obama's commitment to making government reform central to his presidency...
“Supporters were surprised the investigation into Gov. Richardson's alleged pay-for-play schemes in New Mexico was not enough to call off his nomination as secretary of commerce...
“Geithner, who was confirmed as Treasury Secretary, failed to pay his taxes while working at the International Monetary Fund...
“Tom Daschle's appointment to head Health and Human Services was initially praised. But Daschle, we learned, never paid taxes... In addition, reporters have documented his work for health-care interest groups...
“President Obama needs to do some repair work. In June, Obama said...
“It's easy to become cynical... that this year is bound to be no different from the last...”
“Sen. Barack Obama (D-Ill.) said: "I'm in Washington. I see what's going on. I see those powers and principalities have snuck back in there, that they're writing the energy bills"...
“But not only did Obama vote for the Senate's big energy bill in 2005, he also put out a press release bragging about its provisions, and his Senate Web site carries a news article about the vote headlined, "Senate energy bill contains goodies for Illinois." ”
A movie was made claiming Romney would buy companies then fire people, cut pay, gut companies and so forth.
Two courageous men who were "used" to create the movie speak out:
Megan Kelly on Fox News interviews two employees who appeared in Bain film - Jan 19, 2012
Megan: “Your experience Tommy, at Unimac, your company, once Bain took over. Did you lose your job? Did you take a pay cut?”
Tommy (Employee): “No Ma'am, when Bain took over, actually, everybody at the company received raises when they took over, and I actually went through two promotions when it was under Bain.”
Megan: “Okay, I want to get to Mike on this. That clip of you, it's heartbreaking, Mike. They talk about about how they shut the doors, and your daughter got lukemia, and you didn't have insurance. Did that happen when Bain owned Unimac?”
Mike (Employee): “Absolutely not, Megan.”
This whole interview is interesting and exposes the deception of the movie. One of the men is even thinking of voting for Mitt Romney.
“Recently, the NYT ran an article, as a follow up to Gingrich's Sheldon Adelson sponsored acquisition of the film " When Bain Came to Town ". Most of the media have picked up on the NYT story and the anti Bain / Romney film, including Andrew Sullivan in The Daily Beast . All reprint the main points of the article and the film without the remotest effort to actually CHECK REAL FACTS...
“Romney was at Bain from 1984 to 1998 :
“The Daily Beast and Andrew Sullivan excerpt the following from the NYT story:
“Bain invested 22 % of the money it raised from 1987 to 1995 in five businesses and made $ 578 million in profit. Sullivan then goes on to identify FOUR companies [that made up half of that 22% investment's profit] and about $ 300 million in profit, on about $ 200 million in investment. I'm sure he knows the fifth and just forgot it from the NYT.[sarcasm] But, here are the four:
“1. STAGE STORES
“Bain invested $ 5 million in 1988.
“The company went public in 1996 and Bain took a nice profit of $ 100 million and left.
“The company went through bankruptcy reorganization in 2000, four years after Bain left...
“The bankruptcy allowed Stage Stores to restructure, close under performing Bealls Stores and performance substantially improved. Today, Stage Stores has 13,000 employees in 40 states and had sales of $ 1.5 billion in 2011...
“2. Case 2 from Sullivan and the NYT..... AMPAD
“1. Bain invested $ 5 million in a holding company that bought AMPAD from Mead paper in 1992. The new management team consolidated 13 manufacturing and distribution plants into 6, created a 53 % compound annual growth rate and took revenues from $ 8.8 million in 1992 to $ 200 million in 1996.
“2. The company went public in 1996 and Bain collected a profit of $ 100 million dollars....and left.
“3. Four years after Bain left, the company reorganized under bankruptcy law and is still operating profitably having been acquired by a foreign company. Bain had ZERO to do with these poor sad film folks losing their jobs. So, again, it is the return on invested capital that Gingrich and his friends at the NYT and the media , like Michael Moore, don't like.
“3. GS TECHNOLOGIES
“1. Bain acquired control , with GE Capital of GS Technologies in 1993 by investing $60 million.
“2. Bain and GE subsequently invested $ 100 million to improve and upgrade facilities. This is , of course, unmentioned in the NYT hit piece and in the film
“3. GS went through bankruptcy in 2001. Bain and GE both incurred substantial losses on their invested capital.
“4. Bain also invested, at the same time, in Steel Dynamics, a similar company that is a global leader today with revenues of $ 6 billion. Steel Dynamics and GS Industries also have one glaring difference. GS Industries was a union shop and Steel Dynamics is not. [For more information, see GST Steel section above.]
“4. DETAILS [Corporation], now owned by Steelcase
“1. Acquired by Bain and other investors in 1997 for $ 46 million.
“2. Went public in 1998; Bain took nice profit of $ 93 million and left.
“3. Details went through bankruptcy restructure in 2003 , five years after Bain [left].
“4. Company is currently owned by Steelcase.
“There are some other relevant investments that the NYT and Sullivan overlook:
“1. Bain invested $ 1 billion in Dominos Pizza in 1998. Dominos had 1000 stores and 16,000 employees. Dominos now has 9000 stores and 145,000 employees and is worth $ 1.5 billion.
“2. Bain invested in Sports Authority in 1987. Sports Authority now has 250 stores.
“3. Bain acquired financially ailing Sealy mattress in 1997. Sealy restructured and now has 5000 employees and $ 300 million in annual revenue.
“4. Bain invested in 200 + other companies including AMC Entertainment, Bombardier, Bright Horizons, Burlington Coat, Church's Chicken, Clear Channel Communications, Dominos, Gymboree, Harlem Globetrotters, Latrobe Specialty Steel, LinkedIn, Minute Clinic, Staples, The Weather Channel, Toys R Us , Vonage and about 190 more.
“Isn't this what American business is all about ?”
(For USA Today's report on DDi, KB Toys, Unimac and Ampad, see next section.)
The Washington Post's "The Fact Checker" gives a schlocumentary four pinocchios, stating:
"The 29-minute video “King of Bain” is such an over-the-top assault on former Massachusetts governor Mitt Romney that it is hard to know where to begin."
Excerpts from the Washington Post:
“First of all, it is a stretch to portray Romney as some sort of corporate raider, akin to Carl Icahn (whose image is briefly seen). Bain Capital initially was in the business of providing venture capital — seed money — for start-ups, such as Staples. Then it moved to the more lucrative business of private equity, in which Bain won control of firms, reorganized them and then sold them for profit. (Our colleague Suzy Khimm earlier this week did an excellent job of explaining the two sides of Bain Capital.) ...
“We can assess whether the four specific deals highlighted by the film are depicted with accuracy.
“The closure of the UniMac plant in Marianna, Fla.
“In the film, three former employees of UniMac, which makes commercial washing machines, appear to suggest that quality went down under Bain Capital’s management and that a plant in Marianna, Fla., was closed because of Romney’s actions.
“But the chronology is all jumbled. Bain Capital bought the business from Raytheon in 1998, and Romney left Bain [permanently] a year later to run the Winter Olympics in Salt Lake City. In 2005, Bain sold UniMac (also called Alliance Laundry) to a Canadian entity known as Teachers’ Private Capital. The factory was moved from Marianna to Ripon, Wisc., in 2006, after Bain’s involvement ended — a fact made clear on the Web site of a laundry repair business co-owned by the people featured in the film.
“In fact, Mike Baxley, who was interviewed for the film, said that he and his partner had “absolutely no idea” that the interviews were for a film about Romney and Bain...
“They said they wanted to know what it was like when the factory closed down,” he said, and he, his partner and his partner’s wife agreed to interviews after “they flashed a little money at us.” (Baxley, a Republican who said he had not yet thought much about the nomination contest, declined to reveal the amount.)
“After watching “King of Bain” at The Fact Checker’s request, he said: “We were pretty shocked. Our quotes were seriously taken out of context. There is a real lack of facts.” ...
“The film suggests that UniMac is out of business, but Baxley noted that UniMac is still going strong at its new headquarters in Wisconsin. He said that the same upper management team ran the company during the course of the various investments by outside partners such as Bain, and that Bain appeared to have little involvement in UniMac’s management.
“The bankruptcy of KB Toys
“Here again, the chronology is off. Bain Capital did not buy KB Toys until late 2000, more than a year after Romney left for the Olympics. But the film states, “Romney and Bain bought the 80-year-old company in 2000, loaded it with millions in debt.” It then attributes the failure of KB Toys in 2008 to that debt load, without noting that a horrible retail environment wiped out a number of chains, particularly toy stores.
“Then the film runs a snippet from a 2010 Romney appearance at Emory University, making it appear as if he is talking about KB Toys when he speaks of “creative destruction.” (This is not a Romney phrase but an economic term referring to the creation of new technologies.) The film does not include the rest of Romney’s remarks on the importance of helping people transition from jobs in outmoded industries to new ones.
“The bankruptcy of DDi
“Bain Capital under Romney’s leadership invested $46 million in DDi in 1997. It sold many of its shares for at least $93 million and received a $10 million management fee, but the newspaper said Bain retained a 14 percent stake in the firm that was wiped out when DDi filed for bankruptcy during the dot-com bust... Romney, who again was by then involved in the Olympics, also invested some of his own money in DDi...
“The film, while focusing on the 2,200 jobs that were lost during the technology bust, does not mention that DDi emerged from bankruptcy proceedings and is currently thriving.
“The demise of the Ampad facility in Marion, Ind.
“Finally, the film comes to a case that directly involves Romney...
“Bain assembled Ampad (formerly American Pad & Paper, supposedly the creator of the legal pad) through what is known as a “roll-up strategy,” in which similar companies are purchased in the same industry. One of these companies was the writing product firm SCM, based in Marion, which was purchased in 1994. The efficiencies of scale at first proved a success, and Bain made a fortune — some $100 million, according to the Globe.
“But the company floundered — ironically because of price pressure from companies such as Staples, which was started with help from Bain. Ampad filed for bankruptcy protection in 1999 but still exists today as part of Esselte Corp...
“Only one of the four case studies directly involves Romney and his decision-making, while at least two are completely off point. The manipulative way the interviews appeared to have been gathered for the UniMac segment alone discredits the entire film.”
(For Washington Post's report on DDi, KB Toys, Unimac and Ampad, see previous section.)
“The film talks about layoffs at DDi Corp. and discusses questionable manipulation of stock prices after the circuit board company went public. But Romney had left Bain Capital a year before any layoffs and a public stock offering that ultimately netted Bain and Romney a big payday. The company's subsequent bankruptcy filing came two years after Bain had largely divested from the company, and was the result of the dot-com bust. Moreover, the company emerged from bankruptcy, and its current CEO credits those early Bain investments for setting the foundation for the company's current success...
“With an investment of $40.5 million, Bain Capital — with Romney at the helm — led a group of venture capital firms that purchased a controlling interest in DDi Corp. in 1996. According to the "King of Bain" video: "A signature of Romney's Bain Way strategy, employees were quickly fired in order to pump up profits." It's true that in December 1999, DDi shuttered its Colorado facility and fired 275 employees as part of a consolidation with operations in Texas. Given that Bain made its initial investment nearly three years before that, though, it's a stretch to claim "employees were quickly fired in order to pump up profits." And again, Romney had left Bain in February 1999, prior to the layoffs.
“Moreover, DDi Corp. CEO Mikel Williams noted that DDi grew very rapidly during the years of Bain's involvement. The company had revenues of $59.4 million in 1995 — the year before the investments by Bain — and four years later, revenues topped $290 million. According to a 2003 story in the Orange County Register, DDi reached a payroll peak with 3,700 employees in 2000.
“ "No doubt that growth, which was very rapid, was fueled by the investments from the capital markets, not only Bain," Williams told FactCheck.org in a phone interview.
“Now, about the public stock sale...
“If he was watching at all, Romney was watching from afar. DDi offered a public sale of its stock on the Nasdaq in April 2000, more than a year after Romney had left Bain to head up the Olympic Organizing Committee. With an initial price of $14 a share, the IPO sale raised $170 million for DDi. Six months later, Bain began to cash out...
“ In May 2001, Romney sold his personal shares in DDi for $4.1 million, when the price was $22.90 a share...
“Lehman gave the stock its highest 1-Buy rating and a target price of $36. The Boston Globe noted that the stock traded at $22.5 per share two days after the rating, and closed a month later at $22, "but not before it reached more than $30 a share in mid-July." Bain and Romney cashed out long before the DDi stock tanked, but it was well after the immediate spike in stock price following the Lehman recommendation.
“The SEC never alleged any wrongdoing by Romney, nor was anyone at Bain Capital or DDi cited with any violations... The Winning Our Future video suggests, however, that it found smoking-gun evidence to the contrary. But did it? ...
“A May 10, 2001, filing with the SEC does show that Romney was a member of the Management Committee of a Bain trust that held over 1 million shares of DDi stock. But Bain maintains that Romney held no operational role at Bain after leaving, and that "the fund management committee listing was just a legacy signatory role that involved no actual decision-making capabilities," according to a CNN report.
“We asked two experts in venture capital if the SEC filing cited in the Winning Our Future video proves Romney was involved with running DDi at the time of the firings and IPO offering. Both said absolutely not...
“Romney was not listed among the directors, executive officers and key employees in the registration statement filed with the SEC in preparation for DDi's IPO offering (though five other Bain executives were). Nor was he named in subsequent proxy statements filed with the SEC as a member of DDi's board of directors.
“ "When a private equity firm is involved with a company, typically the people who have the influence and information are people on the board," Kaplan said. "To say that he has anything to do with that company at that time is wrong." ...
“ "Once he left active management of the company, whatever happens after that, he's an investor, or at most a silent partner," said Howard Anderson, a professor at MIT's Sloan School of Management. "When Mitt left, he left the day-to-day management to his partners."
“There's one other highly misleading aspect to the DDi segment. After highlighting the allegations of improper stock inflation, and that Bain quickly sold its stock for a large profit, the video then immediately cuts to the downward spiral of DDi, as if Bain's stock sales were the cause...
“In fact, the company simply fell victim to the dot-com bust. On August, 23, 2003, the Orange County Register reported: "At least $2 billion in stock value and money owed to creditors has been wiped out as a slump in the electronics industry and price-slashing by competitors in Asia helped force DDi to seek bankruptcy protection last week."
“Said current DDi CEO Williams: "We went through a difficult period, no doubt about it, when the entire tech market had a downturn."
“The DDi segment of the video ends with DDi in bankruptcy. But that's not the end of the story.
“DDi didn't remain in bankruptcy long. Its debt was restructured, and it maintained operations. Today, DDi is in "good shape," Williams reports. The company is profitable. It is paying dividends, and it has 1,600 employees.
“ "To have us portrayed as some slash-and-burn straw game is frustrating," Williams said.
“In fact, he argued, DDi could be held up as an American manufacturing success story. In 2000, Williams said, there were 2,000 printed circuit board manufacturers, most of them in the U.S. or Canada. Now, he said, there are 350 at most. DDi is the second largest.
“If not for the investments by Bain and others all those years ago, he said, "We wouldn't be where we are today. We wouldn't have the 1,600 jobs we have now in North America."
“In fact, he said, they might not be in business at all.
“KB Toys: A Distorted Toy Story
“The video's two minutes on KB Toys includes falsehoods, incorrect quotes and creative video editing. The segment's biggest deception is its sole focus: claiming Romney was involved with the acquisition, management and demise of the now-defunct KB Toys. He wasn't. Bain bought the toy company after Romney left Bain...
“As we mentioned above, the former Massachusetts governor left Bain in February 1999, almost two years before the firm bought KB Toys in December 2000...
“ "Mitt Romney and Bain saw a 900 percent return on their investment," the video said... Forbes and theNew York Times put the profit margin at 370 percent...
“Another untrue claim: "Romney and Bain's profits, at the expense of 15,000 jobs, was described by the Boston Herald as 'disgusting.' " The newspaper didn't describe anything as "disgusting." ...
“The article also doesn't mention Romney or 15,000 jobs... However, a Reuters article put the number at 10,850, [and] saying that more than half of those workers were seasonal.
“KB Toys emerged from bankruptcy in 2005, but went back into bankruptcy and liquidated its stock in 2008. Toys R Us purchased the KB Toys brand name for $2.1 million, but the company itself is out of business.
“UniMac: Who's to Blame for Plant Closure?
“The film starts in Marianna, Fla., at a factory owned by UniMac, a commercial washing machine manufacturer... The film's narrator blames Romney and Bain for the plant closing in 2006, saying: "Romney and Bain upended the company and gutted the workforce." But that's misleading:
“Romney's involvement in the company was minimal. Bain agreed to purchase UniMac's parent company, Raytheon Commercial Laundry, in February 1998, and the deal was finalized in May of that year. Romney left Bain in February 1999.
“Bain sold the parent company of UniMac, which was renamed Alliance Laundry Systems, to another private equity company in 2004. It was the new owner, not Bain, that closed the Marianna factory in August 2006 and moved its operations to Ripon, Wisc.
“About 400 jobs were lost in Marianna, but 250 jobs were added at the Ripon plant.
“Bain purchased Raytheon Commercial Laundry, which included UniMac, in May 1998 for $358 million. The company, now under the name Alliance Laundry Systems, employed 1,800 people and was headquartered in Ripon, Wisc.Romney left Bain Capital less than one year later in February 1999 to work on the 2002 Winter Olympics in Salt Lake City. He never returned to Bain...
“In December 2004, Alliance Laundry announced that it had agreed to sell the company, including its UniMac division, to Teachers' Private Capital, the private equity division of the Ontario Teachers' Pension Plan, for $450 million. That private equity house, not Bain, closed the Marianna factory and moved the UniMac line to the facilities in Wisconsin. That decision was announced in October 2005, and the plant closed in August 2006...
“Both Baxley and Tommy Jones [featured in the film] lost their jobs in 2006, when the factory closed, not under Bain, as the ad implies. The two men started up their own washing machine repair service, Washers-R-Us, using the skills acquired in the Marianna factory...
“The commercial laundry sector as a whole experienced job loss during that time. The total workforce in the commercial laundry sector fell from 4,204 employees in 1999 to 3,025 workers in 2002.
“AmPad: Bain's Big Payoff
“The film also revisits the closing of a paper products plant in Indiana — ... one caveat. Romney was on leave from Bain when it purchased SCM Office Supplies and was not part of AmPad's management team — despite a claim in the film to the contrary.
“Romney officially announced he would run for Senate on Feb. 2, 1994. AmPad bought SCM Office Supplies Inc., a subsidiary of Smith Corona, in July 1994. The labor problems started almost immediately after the sale...
“Despite its labor problems in Indiana, AmPad thrived under Bain — at least at first. When it went public in June 1996, AmPad reported that sales had grown at an annual rate of 34 percent every year since 1992, when Bain purchased the company from the Mead Corp. In 1995, the company's net sales were $617.2 million — up from $108 million in 1991...
“ By December 2000, the company ceased public trading. At the time, Bain held about 35 percent of the company's stock, which was now worthless.
“AmPad emerged from bankruptcy in 2003 under the ownership of Crescent Capital Investments. The company had 3,198 full-time employees when it went public and 3,834 full-time employees when it filed for bankruptcy, SEC documents show. It is now owned by Esselte, a privately owned company headquartered in Connecticut. We tried to obtain current employment figures for AmPad from Esselte, but have yet to hear back from the company.”
In 1988 Damon Corporation was purchased by Robert L. Rosen through American Magnetics Corp., at a price starting at $24 per share. "Among other things, Damon Corp. is the nation's largest builder of model rockets and one of the country's largest kite makers... whose main business is operating the nation's fifth-largest medical laboratory chain." (LA Times - Aug 23, 1988)
Mr. Rosen then divided the company and sold off pieces. The original American Magneitics business, which made card readers, was sold in April 1990. (LA Times - Apr 17, 1990)
About that same time, at the end of 1989, Rosen sold controlling interest in Damon Corp., the medical testing business, to Bain Capital, but Mr. Rosen stayed as the Chairman and CEO until the business was sold to Corning in 1993 for $16 per share. (TheFreeLibrary.com - Jul 2, 1993)
From the time Mr. Rosen became CEO and Chairman of Damon in 1988 until he left in 1993, the medical company put in place a billing practice that was similar to another lab called National Health.
National Health Laboratories, which almost purchased Damon in 1993 until Corning out bid them (LA Times - Jun 22, 1993), was fined $110 million for its billing practices in November 1992. (Getnicklaw.com)
When Mitt Romney learned of the National Health case, he "demanded that the Damon board in early 1993 hire a New York law firm to investigate the company's" billing practices, and noted "that based on the lawyer's findings, the board took corrective action." (Boston Globe - Oct 11, 2002)
"The National Health Laboratories settlement was followed by a number of additional qui tam cases against most of the nation's major clinical testing laboratories, ultimately recovering in excess of $1 billion. The single largest settlement in these cases -- $325 million -- arose from three qui tam cases... In 1989, a sales manager for one of the country's major clinical testing laboratories filed a qui tam case against his and other laboratories after they listened to his complaints alleging corrupt practices by a competitor -- and copied them. His lawsuit resulted in criminal charges, and civil recoveries totaling $149 million." (Getnicklaw.com)
Eventually, in 1996 "Damon Corp. pleaded guilty to defrauding the United States Government of $25 million—and paid a total of $119 million in what was, at that time, the largest penalty of its kind in Massachusetts history—Bain was long gone having sold the company in 1993 to Corning, Inc." (Forbes.com - Jan 21, 2012)
“The federal investigation never implicated Romney - who left the board in August 1993 after the company was bought by Corning - or other board members, other than company president Joseph Isola, who pleaded no contest to fraud charges two years ago.
“Romney said yesterday he was a proactive board member who helped to uncover the fraud. He said he and other board members became aware of the problem after another laboratory, in December 1992, was found to have committed fraud through use of a billing system similar to Damon's. Romney said the board used its New York law firm to investigate, and as a result, the board took ''corrective action'' months before Damon was sold to Corning...
“Romney insists he and the Damon board immediately investigated the company's billing system after National Health Laboratories pleaded guilty to fraud in December 1992 for a similar billing process...
“Damon's lawyer at the time, Stuart D. Freedman, a partner at Schulte Roth & Zabel, said the board asked his firm to conduct a review in early 1993 of the company's billing practices. He said the review was done immediately and changes were made. Because he no longer represents Damon, he said he could not provide any details of the changes. Asked why the changes and their potential impact on the company's revenues were not reported to the SEC, Freedman said: ''Obviously we made a determination'' of what the company needed to report. He said he is confident the board acted appropriately...
“A spokeswoman for Corning told the Globe in 1996 that her company knew when it acquired Damon that billing practices used by the labratory testing company would face scrutiny, but added: ''To the degree of detail, we would have no way of knowing.'' At the time of the purchase, the federal government had begun to aggressively review billing at laboratories industry-wide.
“It is not clear whether Corning's knowledge of the Damon billing fraud affected the sale price. Corning purchased Damon for $391 million. In 1994, Romney told the Globe that the sale yielded him $103,000 profit. His venture capital firm, Bain Capital, had an 8 percent stake in Damon. Romney also earned a 5 percent share of the Bain profit, or $370,000.”
“The law firm Schulte Roth & Zabel of New York recommended that the Damon board change its requisition orders and clarify its policies with doctors, so they do not unknowingly order unneeded blood tests. But the lawyers also said there were differences between the billing practices Damon used and the fraudulent scheme carried out by National Health, and therefore, the lawyers did not consider Damon to have committed any criminal wrongdoing.
“Schulte Roth & Zabel would not provide details of what it found to the Globe. But the minutes suggest the law firm told the board that, compared to National Health, the Damon billing system and its marketing efforts to doctors were decentralized, and therefore the firm was not commiting fraud.
“Romney said the board, based on the advice of lawyer Stuart Freedman of the firm, did not consider the billing problems to be fraudulent. “He told us exactly what to do, and we did exactly what he told us to do,” Romney said during a news conference this week.” ...
“Although Romney said the board uncovered “inappropriate billing” at Damon, neither he nor the board reported the matter to investigators who they knew were investigating the entire industry’s billing practices. The lawyers apparently viewed the changes as not significant enough for the company to report its findings and “corrective action” to shareholders in their annual report or financial statements to the Securities and Exchange Commission.
“Romney aides argue that Damon’s 1992 annual report was sufficient. It informed shareholders that federal inspectors were reviewing the industry’s bill systems and cited the National Health case.”
Opponents attempted to use the Damon case against Mitt Romney in his 2002 gubanatorial race and in the 2008 republican primary race (starting in mid-2007).
In 2012, democrat organizations and republican primary opponents attempted to use the case against Mitt Romney, spending millions advertising it in Florida, to no avail, but this will probably repeatedly be brought up.