Peter Kotz has uncovered more stories of horror from the vaults of Mitt Romney's Bain Capital.
However, once again he has missed how and why Romney did this and got away with it. I mentioned it before on this blog, discussing the Dade and Damon deals, but the bottom line theme seems to be escaping people.
ROMNEY IS AN ANTICAPITALIST
Bain Consulting prided itself on only representing one firm in an industry to avoid conflicts of interest. Bain Capital took this one step farther by using equity capital to destroy competition within an industry. They would buy a company and split its different businesses up; or combine a series of companies in one industry. Bain would damage and loot those companies, but they were still able to sell at a profit. How?
Because the buyers were the competitors of these companies. The buyers would then either close the companies or fit them into their models, and they didn't care if Bain had looted them. The point was to reduce their own competition so they could raise prices and be more profitable. Bain was their hit man, able to buy when the owners of a company would never sell out to a competitor.
That is the essence of the Bain Capital model. Their goal in buying control of companies was the same as that of the monopolists in the Gilded Age. Reduce competition and make everyone pay more. Defeat the competitive nature of capitalism by using its own weapons against it.
However, in their frantic search for profits, Bain engaged in no little dollop of fraud. Every time they went into a company, stuffed it with debt to pay themselves and abandoned it to bankruptcy, they were guilty of defrauding the banks who loaned that new money to companies thinking it would be used to improve operations. Instead the money went directly to Bain's pockets and the company was left to repay the new creditors, if it could. Many could not.
Therefore there were three sets of victims in these Bain operations: the employees of the acquired company; the public and customers who had to pay more money for the same or inferior products as competition was curtailed; and the lenders who were fooled by the credit worthiness of the companies purchased into throwing money into the pockets of Bain and its investors.
In one deal, Dade International, the creditors complained to the bankruptcy judge that Bain was guilty of "unjust enrichment," a peculiar way of saying "fraud." It was to get Romney out of this business and away from having his methods land him in jail or a lawsuit, that he was made director of the Salt Lake Olympics after it was too late to move them anywhere else and they looked like a winner. As mentioned elsewhere in this blog, the Olympics saved him from bearing the consequences of white collar crime. He did not save the Salt Lake games, they saved him.