Romney’s Bain Capital Leadership Attacked as Exploiting Companies for Cash
For months, Mitt Romney has seldom been challenged on his claim that his leadership at Bain Capital LLC offers evidence that he knows how to create jobs. That has ended as his Republican rivals are accusing him of exploiting companies and firing workers in a quest to make millions.
“Those of us who believe in free markets and those of us who believe that, in fact, the whole goal of investment is entrepreneurship and job creation, would find it pretty hard to justify rich people figuring out clever, legal ways to loot out a company,” former U.S. House Speaker Newt Gingrich told reporters in Manchester, New Hampshire, yesterday, ahead of the state’s Jan. 10 presidential primary.
Gingrich’s charges will be amplified in South Carolina, the next primary state, with a 30-minute, independently produced television advertisement bought by a political action committee run by his former aides called “Winning Our Future” and funded by supporters, according to Rick Tyler, an adviser to the PAC and onetime Gingrich campaign spokesman. The trailer for the ad posted on a website calls Romney a “corporate raider” and says he’s akin to others on Wall Street motivated primarily by greed.
The Gingrich attack, echoed during the weekend by other Republican candidates, marks the first time the field of a half- dozen contenders has taken aim at him on this issue. Romney, who also sought the nomination in 2008, won the Jan. 3 Iowa caucuses by eight votes and is favored to win in New Hampshire.
Romney, speaking to business leaders in Nashua, New Hampshire, this morning, extolled the virtues of the free market, in a comment likely to be seized upon by his opponents.
“I like being able to fire people who provide services to me,” he said, speaking about the need to change the delivery of health care in the U.S. “If someone doesn’t give me a good service that I need, I want to say I’m going to go get someone else to provide that service to me.”
Gingrich is seeking to stop Romney’s momentum before the primaries in South Carolina on Jan. 21 and Florida on Jan. 31. Enhancing the Gingrich-aligned PAC’s ability to run the ad is a $5 million donation to Winning Our Future from Sheldon Adelson, a longtime supporter of the former speaker. That contribution was confirmed yesterday, on condition of anonymity, by a person close to Adelson, chairman of Las Vegas Sands Corp. (LVS)
Tyler said no date has been scheduled for when the attack ad will run in South Carolina.
“Mitt Romney is not a capitalist,” Tyler said of the former private-equity executive and onetime Massachusetts governor. “He is a predatory corporate mugger. If you ever wonder why so many manufacturing jobs are overseas, you need to look no further than Mitt Romney. He can claim thousands of jobs created, only those jobs were created in Mexico and Southeast Asia.”
Adelson was the biggest donor to Gingrich’s former political committee, American Solutions for Winning the Future, contributing $7 million, according to the Center for Responsive Politics, a Washington-based research group. He already gave the maximum $2,500 to Gingrich’s presidential campaign.
Eddie Mahe, a Republican strategist not associated with any campaign, said Adelson’s donation could be a game-changer for the underfunded Gingrich.
“They can buy prime time with that kind of money on every station in South Carolina two or three times,” Mahe said. “Clearly, they have the financial capacity to saturate South Carolina and maybe even through Florida.”
‘Happy to Discuss’
A Romney aide said the criticism by Gingrich is similar to that aired by President Barack Obama and groups such as Moveon.org that oppose Republicans.
“It’s surprising that it’s coming in the Republican primary, but that’s fine,” said Romney strategist Stuart Stevens. “We’re happy to discuss it anytime.”
The Gingrich assault is a moment of payback. He was rising in the polls before the Jan. 3 Iowa caucuses until an outside committee run by former Romney aides, Restore Our Future, began running negative ads. Overall, the PAC and the Romney campaign spent an estimated $3.7 million on ads through Jan. 5, according to New York-based Kantar Media’s CMAG. Gingrich and Winning Our Future spent $628,640 in the same time frame.
In December, 45 percent of all ads airing in Iowa criticized Gingrich. After leading opinion polls from mid- November to mid-December, he finished fourth in Iowa.
‘Insult’ to Campaign
Gingrich isn’t the only Republican to seize on Romney’s Bain experience for criticism.
Former Pennsylvania Senator Rick Santorum questioned whether Romney’s business background prepared him for the presidency during a debate in Manchester on Jan. 7. And onetime Utah Governor Jon Huntsman Jr., campaigning in New Hampshire today, described Romney as out of touch with “the economic realities.”
Speaking today in Anderson, South Carolina, Texas Governor Rick Perry said it was an “insult” for Romney to campaign in the southern state after Bain’s work caused the downsizing of companies there.
In an effort to neutralize the attacks, Romney is seeking to cast himself as an average worker who had, at times, feared losing his job.
“I know what it’s like to worry whether you’re going to get fired,” he told voters in Rochester, New Hampshire. “There were a couple of times I worried whether I was going to get a pink slip.”
‘Other People’s Money’
His campaign was unable to provide examples of when Romney -- a multimillionaire whose father, George, was chief executive officer of American Motors Corp. and a former Michigan governor -- was afraid of getting fired.
Romney, who spent most of his career at Bain, has begun detailing some of his work at the firm, a period of his life that he’s previously referred to only in vague terms.
Addressing hundreds of voters gathered in the Rochester opera house, Romney focused on the venture capital investments he made, rather than the private equity buyouts for which his firm is best known.
“For a while I worked in what’s called venture capital -- what is that?” he asked the crowd of voters, describing how he used investment capital to develop small companies. “When you have other people’s money and your own invested in something, you’re very careful with it.”
He recounted stocking shelves in the first Staples store and the company’s early office, a low-budget affair with naugahyde chairs and an old table.
Bain invested a total of $5 million in Staples, said Romney. The firm made $13 million when the company went public in 1989. Today, Staples is the world’s largest office supply company with 90,000 employees and a presence in more than 26 countries.
Romney has also argued that he created more jobs than he eliminated through Bain’s deals.
In a Jan. 6 interview with Bloomberg Television, Romney said he had created “well over 100,000 more jobs than those that were lost.”
That number is an estimate, since Bain doesn’t track the total jobs created by its investments and won’t release complete information about the deals made during Romney’s time there.
A Bloomberg News review of several Bain deals during Romney’s tenure found that not all Bain’s investments were beneficial for workers. Several companies ran into trouble, laying off hundreds of workers, filing for bankruptcy, facing federal fines, or lawsuits from shareholders who said they were misled by management. One example was Dade Behring Inc., a Deerfield, Illinois-based medical-testing company, where Bain cut least 1,600 jobs after taking over the company.
The Wall Street Journal reported today that it looked at 77 businesses in which Bain invested during Romney’s time there to assess his record. It found that 22 percent of the companies either filed for bankruptcy or shut down by the eighth year after the Bain investment. The newspaper also found that Bain produced excellent returns for its investors, although most of the gains came from just 10 deals.
At the Romney event in Nashua, today, union officials questioned whether Romney understood the impact of layoffs.
“There are real people working at those companies,” said Julie Kushner, an executive with the United Auto Workers. “When their jobs fail they have nowhere to go. I don’t think he gets that part.”
‘Story of Greed’
Allies of Gingrich are seizing on stories of job losses. The almost three-minute trailer for the web-video, now on a Winning Our Future website, kingofbain.com, calls the movie “a story of greed” and includes interviews with people who worked at companies taken over by Bain.
The ad was made by Republican strategist Jason Meath, a former partner in a firm that made commercials for Romney’s 2008 campaign. Tyler said the PAC bought the film from Meath.
“Wall Street’s corporate raiders made billions of dollars,” the narrator says. “This film is about one such raider and his firm.”
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