We keep hearing the same stories over and over again. And we’re supposed to believe that Mitt Romney and his Band of Merry Capitalists would be GOOD for America?
In the August issue of Vanity Fair, Nicholas Shaxson investigates Romney’s offshore accounts and tax loopholes. In the course of the investigation, he reports on another business which was cannibalized by Bain Capital and, under Romney’s management, whose employees were brutalized in the process — for the profit of a few:
“Dade Behring is a cause célèbre for Romney’s and Bain’s critics, and it illustrates the leverage problem clearly. In 1994, Bain bought Dade International, a medical-diagnostics company, then added the medical-diagnostics division of DuPont in 1996 and a German medical-testing company called Behring in 1997…
“[Bain] closed a Puerto Rico plant in 1998, a year after harvesting $7.1 million in local tax breaks aimed at job creation…”
“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.”
“[...] In 1999, generous pensions were converted into less generous benefits, wages were cut, and more staff members were laid off… “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.
“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…”
“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… 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.”
The GOP / tea party base really needs to explain how Romney’s and Bain’s business model is in any way commendable, inspiring, or helpful to more than a handful of people who figured out how to get even richer than they were off the suffering of other people.
And if the GOP base can’t explain it, and if they plan to vote for Mitt Romney regardless of this knowledge, then these voters should admit they’re not concerned for America or its people — they’re only concerned about getting someone labeled “Republican” into the White House. They’re suicidal and want the rest of us to suffer with them.