Romney Persona Non Grata in Italy for Bain’s Deal Skirting Taxes - Bloomberg
Mitt Romney skipped Italy on his swing through Europe. That was probably prudent.
That’s because Bain Capital, under Romney as chief executive officer, made about $1 billion in a leveraged buyout 12 years ago that remains controversial in Italy to this day. Bain was part of a group that bought a telephone-directory company from the Italian government and then sold it about two years later, at the peak of the technology bubble, for about 25 times what it paid.
Bain funneled profits through subsidiaries in Luxembourg, a common corporate strategy for avoiding income taxes in other European countries, according to documents reviewed by Bloomberg News. The buyer, Italy’s biggest telephone company, now has a total market value less than what it paid Bain and other investors for the directory business.
Mitt Romney avoiding income taxes. Hey, I’ve heard this somewhere before.
As Bain’s CEO from 1984 to 2001, Romney was personally involved in the deal at various points, including the initial decision to invest. He attended at least one meeting about it in Boston, according to a participant. When Bain sold the directory business in 2000, Romney, while still holding the title of CEO, was in charge of preparations for the 2002 Winter Olympics in Salt Lake City. Romney has contended that he gave up management control of Bain in February 1999 to run the games.
Wait, I thought he was retroactively retired by then. But Romney, super-manager that he is, found enough time to fleece Italian taxpayers.
While Bain won’t disclose its precise return on the investment, Cuneo’s office said Investitori Associati’s return was almost 28 times the initial investment. Bain, like other private equity firms, enhances returns by using borrowed money to finance acquisitions.
Bain moved profits through a series of subsidiaries in Luxembourg, a country that makes it easy to get cash out without paying taxes, according to corporate filings. Corporate records in Luxembourg show Bain carried out technical steps for a tax- free repatriation of profits to the U.S.Seat was sold in 2003 for 3.7 billion euros to another group of private equity firms and today has a market value of 57 million euros. Today, all of Telecom Italia has a market capitalization of 12.5 billion euros. Since February 2000, shares in Telecom Italia have declined about 90 percent.
‘The government got ripped off,’ said Alessandro Fogliati, who led a Stet shareholder group that voted against the sale of Seat. ‘It was the beginning of the destruction of Italian industry.’
Swiss bank accounts, tax havens, and general corporate malfeasance! But what does the Romney campaign have to say about it?
‘With this investment, Mitt Romney and Bain Capital, with its consortium partners, partnered with a new management team to transform this company, and grow it into a tremendous success,’ said Michele Davis, a spokeswoman for Romney’s presidential campaign. ‘Mitt Romney is running for President to put that experience to work.’
So they’re admitting he was CEO at the time, at least!