Mitt Romney and the Bain Capital partners pose with dollar bills
The Tory government has just sold off state-owned NHS blood supplier Plasma Resources UK to US private equity company Bain Capital for £230 million. Hang on – Bain, that name rings a bell…
Bain Capital is perhaps best known for having been set up by former US presidential candidate Mitt Romney in 1984, as a spin off from management consultants Bain & Company. It became infamous for taking over companies, saddling them with large amounts of ‘leveraged’ debt and forcing them to make big payments back to Bain. When Romney ran for president last year, horror stories came spilling out about the firm’s practices.
One such story was the fate of American Pad & Paper—known as ‘Ampad’—which Bain bought in 1992, planning to make it ‘leaner’ to extract profits. When the Bain-run firm bought up an Indiana paper plant in 1994, within hours it laid off 250 workers and cut wages and pensions, sparking a bitter strike. As Randy Johnson, a former worker at the plant, remembered last year, ‘They came in and said, “You’re all fired. If you want to work for us, here’s an application.”’
Another former employee, Mike Earnest, said that out of the blue one day the workers there were told to construct a 30 foot stage, not knowing what it was for. ‘Just days later, all three shifts were told to assemble in the warehouse,’ he said. ‘A group of people walked out on that stage, and told us that the plant is now closed, and all of you are fired. Turns out that when we built that stage, it was like building my own coffin.’
Profiting from sackings
Romney and partners squeezed out more than £60 million from the firm, much of it in hefty ‘management fees’. It was unable to keep up interest payments on its debts, started sacking workers and eventually collapsed in 2000. 1,500 jobs were lost in all. In 2007, when he was asked about the layoffs, Romney replied, ‘Sometimes the medicine is a little bitter but it is necessary.’ As he later slipped up and said during the presidential campaign, ‘I like being able to fire people.’
This was a consistent pattern. At GST Steel, Bain made £5 million and 750 jobs were lost. At medical equipment company Dade Behring it was £150 million and almost 3,000 jobs. And at clothing firm Stage Stores they pocketed £100 million at the cost of nearly 6,000 jobs.
Marc Wolpow, a former managing director at Bain, thinks Romney tried to ‘whitewash’ his career to run for president. ‘We had a scheme where the rich got richer,’ says Wolpow. ‘I did it, and I feel good about it. But I’m not planning to run for office.’
Though Romney left Bain in 1999, he has continued to receive big payments from it, including £1.25 million last year. He paid just 15 percent tax on that cash. Today it is unclear just how much money Bain has made for Romney and co, but his fortune is widely thought to top £150 million. According to Nicholas Shaxson, the author of tax havens book Treasure Islands, Romney has up to £18 million stashed in the Cayman Islands alone.
What might Bain have in store for our plasma? If its track record is anything to go by, there’s going to be blood on the carpet.