American Sen. Mitt Romney’s investment firm Bain Capital profited billions between 1992 and 1997 by collecting huge dividends for investors that eventually resulted in layoffs for thousands of American workers. According to an estimate, Mitt Romney profited $20K for every American laid off via Bain Capital. After bankrupting American workers, will Mitt Romney’s Bain Capital bankrupt Indian workers as well?
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How Mitt Romney’s Bain Capital Bankrupted American Workers
In 1984, Mitt Romney left management consulting firm Bain & Company to co-found the spinoff private-equity investment firm, Bain Capital. For the next 15 years, Romney presided over Bain Capital’s operations, which made a series of investments in small and medium-sized American companies, only to turn a profit for investors and leave American workers without a job.
Most prominent are five companies that Romney’s Bain Capital invested in, reaping a profit for himself and investors, and then left to bankruptcy, layoffs, and closure, as was reported on the financial devastation that Romney’s Bain Capital put American workers through.
American Pad & Paper
Bain invested $5 million in the small paper company in 1992, and reportedly collected $100 million in dividends on that investment. AMPAD went bankrupt in 2000, laying off 385 employees.
Bain Capital invested $415 million in a leveraged buyout in 1994, borrowed an additional $421 million, and ultimately walked away with $1.78 billion. Dade filed for bankruptcy in 2002, and 2,000 workers lost their jobs.
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Bain Capital reportedly invested $46.3 million in 1997, reaping $85.5 million in profits and an additional $10 million in management fees. When the company later went bankrupt, 2,100 workers were laid off.
In a somewhat less profitable transaction, Bain Capital invested $60 million in 1993 and received $65 million in dividends. This company, too, went bankrupt in 2002, and 750 workers lost their jobs.
Bain invested $5 million to purchase the company and took it public in the mid-’90s, reaping $100 million from stock offerings. Stage filed for bankruptcy in 2000, and 5,795 workers reportedly were laid off.
Romney’s Profit – $20k/Worker Laid Off
Romney himself profited handsomely from his time running Bain Capital. Although the exact details of his personal finances are not available, news reports estimate his net worth at somewhere between $190 and $250 million, much of it derived from his Bain Capital days. Very rough math might suggest that Romney made as much as $20,000 per job lost.
Bain Capital bets Billions of Dollars on India
Bain Capital is looking to deploy around $1 billion in Indian companies over the next three years. The US-based PE investor, which raised its fourth Asia-focused fund, the biggest so far, at $4.65 billion, has been a major investor in the country.
“If you look at over the last seven years, we have invested over $2.5 billion and are one of the biggest investors in the country. There is no reason why we cannot keep investing in India at the same pace,” said Amit Chandra, managing director and chairman of Bain’s India office, on the sidelines of Sankalp Global Summit held in Mumbai.
Bain’s enthusiasm to deploy a billion dollars in Indian private equity over the next few years, comes at a time when markets have remained volatile with credit flow being impacted, consumption too slowed as well as the country’s gross domestic product (GDP) – looking to pick a huge chunk of assets at the rate of pennies.
What about Indian workers?
This may sound good to the investors of Bain Capital, but what about Indian workers? Will the Bain management grant the Indian workers the same type of treatment as the American workers? Or worse?
Randy Johnson, a former worker said of the layoffs which began in the mid-1990s after American Pad & Paper, acquired by Romney’s Bain Capital, bought the paper company:
I really feel he didn’t care about the workers. It was all about profit before people. They quickly fired every single employee. They walked the fired workers out of the building. Handing them applications as they left, telling the workers if they wanted to work for the new company, they were welcome to apply.
Similarly, a number of former Dade Behring employees recalled to the New York Times how their lives were upended when their employers were acquired by Dade at the behest of Romney’s Bain Capital:
Cost-cutting became a mantra inside the company. After his employer, DuPont, was bought by Dade, William T. Mowrey, a field engineer, said his generous pension plan was replaced by a 401(k); his salary was cut by $1 an hour, costing him $2,000 a year in income. When he filed for overtime, he said, his new bosses refused to pay it. “They were just trying to milk as much out of us as they could,” he said.
Mr. Mowrey, now 54, quit. Many workers, like Mr. Shoemaker, the Dade employee in Westwood, and his wife, a temporary employee at the same plant, did not leave on their own terms. When they lost their jobs in 1997, they had to abandon plans to buy their first home together. “It created a lot of stress,” said Mr. Shoemaker, 59, who had earned more than $80,000 a year.
Looking at the past record of Mitt Romney’s Bain Capital, Indian workers it seem are set for a rude shock. The only question is, will Indian authorities take preventive measures before its too late?
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