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Fortune: Gingrich Bain Ad Gets Facts Wrong

From Fortune Magazine:

Gingrich’s ‘Bain bomb’ fizzles

By Dan Primack
January 12, 2012

The "Bain bomb" is full of wet fuses.

We’ve been keeping regular track of claims made about Mitt Romney’s business history over at our Mitt Meter, but today’s video "documentary" from the Gingrich-affiliated Winning Our Future PAC requires its own post. The ominous music, deep-voiced narrator and tales of worker woe were all to be expected. But I also thought that the video would get most of its basic facts correct (and then cover them in innuendo). I was wrong.

The video titled When Mitt Romney Came to Town discusses several Bain Capital companies that eventually went bankrupt or were shut down. What follows is a series of errors:


UniMac was a Marianna, Fla.-based laundry equipment manufacturer that had been around for more than 50 years. A former worker is quoted in the video as saying: "They pulled everybody together and told us we were being sold to Raytheon, which in turn turned out to be Bain." The worker adds that quality control was sacrificed, saying: "I just wish they’d left us alone in the early 90s… at the end they just decided to shut the doors."

The reality, however, is that Raytheon (RTN) and Bain weren’t the same thing. And Bain wasn’t involved in the early 1990s. Raytheon agreed to purchase UniMac in 1994, and later merged it into a broader commercial laundry unit that also included facilities in Wisconsin and Kentucky. Raytheon then sold that unit four years later to Bain Capital for $358 million, alongside another private equity firm.

Bain would then hold onto the company until December 2004, when it sold it to a Canadian pension system’s private equity division for $450 million. The Florida plant and some others would close under the Canadian firm’s stewardship, not under Bain’s, in October 2005. Moreover, Romney left Bain Capital in 1999, although he retained a financial interest.

The UniMac section also quotes a NY Magazine story about Romney saying that his Bain colleagues had a "high disdain" for "sloppy" American workers. It insinuates that these were Romney’s Bain Capital colleagues working on UniMac, but it actually referred to Bain & Co. consultants from decades earlier.

KB Toys

"Romney and Bain bought the 80 year-old company in 2000." Again, Romney left Bain in 1999 and had no operational role thereafter. It is true that he remained an investor, but so did dozens of university endowments, private foundations and pension systems. None of them played a part in Bain’s investment decisions or portfolio company management.

The video also plays a video of Romney speaking at Emory University in 2010, and suggests that he refers to the ultimate failure of KB Toys as "creative destruction." This is taken completely out of context. Romney’s Emory comment was pulled from a 45-minute interview that never once mentioned KB Toys. Instead, he was discussing broader economic productivity issues.

DDI Corp.

The video discusses the DDI Corp., a printed circuit board maker that Bain first acquired (alongside several other PE firms) in 1996. It suggests that "Romney and Bain" began firing DDI employees just before taking it public, including 275 Colorado workers. Again, there is a timing problem. Those Colorado employees were let go in early 2000, after Romney left Bain. The IPO also occurred after Romney had left.

The filmmakers later acknowledge that Romney had left Bain prior to the IPO, but then use a 13D filing to "prove otherwise." Fortune has reviewed the filing, which does place Romney on the management committee of a Bain fund that controlled DDI shares. Bain has insisted, however, that Romney had no operational role at Bain after leaving — with a source telling Fortune that Romney’s departure for the Olympic Games was hasty, and that the fund management committee listing was just a legacy signatory role that involved no actual decision-making capabilities.

More importantly, DDI didn’t file for bankruptcy until two years after its IPO, and two years after Bain had already sold all of its shares. The video insinuates that Bain knew the company was in trouble when it "dumped" its shares in 2001, but gives no evidence to support its claim.


To be clear, none of this is to suggest that Romney and Bain didn’t make some very real mistakes, or that they shouldn’t be criticized for situations in which they profited from financial engineering rather than from company growth. But the Winning Our Future PAC goes beyond that, intentionally obscuring the record in a way that makes such honest discussions more difficult. And for that, Winning Our Future deserves some scorn of its own.

For what it’s worth.

This article was posted by Steve on Friday, January 13th, 2012. Comments are currently closed.

11 Responses to “Fortune: Gingrich Bain Ad Gets Facts Wrong”

  1. tranquil.night says:

    I still don’t get why the polished and professional Team Mitt got blind-sided. The King of Bain hackjob would’ve been sold to the Left during the General. Wasn’t everybody super confoozed by Herman Cain’s unpreparedness when an allegation from his business record got blown out of proportion by the Ruling Class? Yes, I remember everyone leaping out in front to defend Cain’s character just as everyone leapt out in front to defend the supposedly capitalist Bain. Oh wait.

  2. proreason says:

    The article seems to have been written by the magazine’s private equity specialist. Surely he is objective about the matter, right?

  3. Laree says:

    Mitt Romney is not a conservative on his best day and he is trying to survive the primary. Americans need to Coalesce behind a strong conservative candidate. Maybe that’s begun in South Carolina?
    Newt and Romney in a statistical tie in one South Carolina poll. I don’t think it’s quite time yet to coronate the King of Bain.

    “The story of Bain’s failed investment in the Kansas City mill offers a perspective on a largely overlooked chapter in Romney’s business record: his firm’s brush with a US bailout.”

    The Lion, The Witch & The Wardrobe, Mitt Romney, I put the finger on you.


  4. proreason says:

    Rush had something interesting to say about Romney today.

    He said that he heard Romney say in private the he expects to be only a one term president because he will roll back so many liberal programs that they will drive him out of office after 4 years.

    I wouldn’t even pass it on if it wasn’t from Rush.

    It makes me feel a little bit better about the Massachusetts liberal.

    • tranquil.night says:

      I hope that’s a promise to which he will be held accountable and not just another sales pitch.

      Thing is, if that’s what he does, then he will not be run out of office. It will work, and people will get that. There’s no need to buy into the impression that stopping the Leviathan is uncompassionate.

  5. Steve says:

    Newt Gingrich: Pull Bain Capital ads if not factual – Ginger Gibson – POLITICO.com

    “I’m calling on them to edit out every single mistake or to pull the entire film,” he said in Orlando, adding that he cannot coordinate with the PAC but can make public statements about it. “I’ve said all along that these super PACs ought to have some sense of responsibility.”

    • proreason says:

      If Romney had done the same when he had the chance for his PAC’s spurious attack ads against Newt, we wouldn’t be in this brouhaha.

      But RoveRomney seem to have wanted it to come out like this.

      It’s good to hear that we have at least one ethical candidate.

    • Yota says:

      Gingrich is smart to dump a failed attempt to smear an opponent – so much for his first foray into negative attacks. However, does he have anything in his arsenal? This jousting now between Gingrich and Romney is good (no other candidates remain feasible). If Gingrich strikes a fatal blow to Romney, he will have my vote. If he can’t, it gives us good confidence that Romney should be the Republican candidate and will smack down Mr. Obama. The major backlash going on right now from the readership about Gingrich’s and Perry’s ill-advised attacks on capitalism will become a strength for Romney against Obama. Have you seen how many so-called “vulture capitalists” are in the Obama administration? Talk about the pot calling the kettle black.

    • tranquil.night says:

      “Have you seen how many so-called ‘vulture capitalists’ are in the Obama administration? Talk about the pot calling the kettle black.”

      Really good poing Yota. The whole issue has provoked a new hybrid term: vulture socialism, describing the auto/financial takeovers, green energy boondoggles, and Keynesianism in general. I’m more partial to calling them vampires. All of it fits for them. If one wants to go populist fashion big game hunting for predators of healthy economic growth and progress, you won’t find any more vicious than the critters of the fetid swamps of government and the Democrat Party.

      You ask if Newt has anything in his arsenal against Mitt? He’s been running strong critiques ads on Romney’s political record the whole time. It just seems that everyone else was as consumed by the Bain Bomb as his Pac was so that’s where all the media oxygen went. Mitt’s political record has been pretty thoroughly vetted at this point, so the pundits only care about the controvertial and the sensational.

      It’s my hope too this can be put to rest, especially enough so that it’s not harmful if it pops up again in the general.

      Dan Riehl has further thoughts on what Bain did that people didn’t like, taking into account the Fortune examination of the film. He quotes Warren Buffett, who probably isn’t the best support for his arguments since Buffett says anti-capitalists things alot, heh:

      “I don’t like what private-equity firms do in terms of taking out every dime they can and leveraging [companies] up so that they really aren’t equipped, in some cases, for the future.”

      The way I see it, there could be some merit to that in, as he said, some cases, but it’s a total crapshoot if the premise of the argument begins that the businesses are tanking and high risk to begin with. There are also some questions about to what extent Bain exploited government subsides and grants to offset their risk and still take profits even if their investment went under. But this is all a total political crapshoot too, and in the end for me it all points back to too much government intervention in the markets. The right doesn’t want to get that nuanced, and the Left would absolutely love to get that nuanced so they can distort the argument to their favor. So nothing positive much is being accomplished here (as if anything ever was going to be), especially when those leading the charge are losing credibility because of hasty rhetoric being tossed out whether in vengeance or out of opportunism.

    • proreason says:

      Bottom line for me is how sevrely Bain would damage Romney in the general election. In the heat of a political campaign, there is no way there will be a rational analysis of what Bain did and / or whether private equity companies in general meet the ethical standards of most voters. Declaring Bain and Romney to be paragons of virtue, the current RoveRomney strategy, is going to be completely ineffective in the general election.

      In a perfect world, Republicans wouldn’t have a private equity executive as the nominee. Of course, they also wouldn’t have a former Speaker who was formally convicted of an ethics charge (no matter how politically motivated it was).

      imho, in the current climate still so close to the financial crisis of 2008, Romney is extremely high risk. The campaign will become about venture capitalism rather than obamy’s socialist failures.

      Newt is high risk as well. But a lower risk than Romney, unless the fat-cat Republican ruling class is so vindictive and corrupt that they refuse to fund him. Because if he doesn’t have money, Newt doesn’t have a chance either.

      So it’s clear that RoveRomney’s overwheening ambition to reassert the Republican fat cats as the dominant criminals in DC may have uncontrollably damaged the countries ability to purge the marxists from the public square.

      Of course, Romney and the fat cats will do very well for themselves, no matter the outcome. As designed.

  6. canary says:

    Bain would then hold onto the company until December 2004, when it sold it to a Canadian pension system’s private equity division for $450 million.

    So, Mitt didn’t sell the laundry to a Teacher’s union in Canada? I watched it all but wanted to catch
    his actual quote on “Creative Destruction” so found the lecture at link below. It’s long.

    “Creative destruction does enhance productivity for an economy to thrive. There will be a lot of people to suffer for that.”

    so I found where he speaks to a business class at Emory University (link below 45 minutes) where Mitt Romney is asked by the admirer to this theory to explain it.
    to explain it.

    Mitt answered how it just so happened he was a “Layman Pastor” (he was once a Bishop) that he got the opportunity to counsel the very people who lost their jobs.

    Mitt said it was so interesting to study the people. Watch the way it affected their marriage and …
    watch who lost weight and gained weight.

    (no compassion from mormon Mitt who will probably continue Obama & Michelles controlling what you eat act.

    Mitt is said the government should pay $2000 a head for businesses.

    Mitt gave for example if they hire someone who hasn’t worked in a year.

    Obama’s deal is 40% felons & students who’ve never went to high school having priority over vets coming home from war.
    I’ve seen the wealthiest businesses in this country apply this
    at stores they have a small number of workers. Loop holes.

    He also said while he held Governor office he made changes that made him $ wealthier. Said the private sector needs the government. So, much for he was wealthy and did not need to rely on his pay. Duh, he got rich from being in office.

    He says he has no regrets as to Bain.

    He regrets joining the Navy and advices the listeners to not make the same mistake and join the military.
    (Mitt laughs about this big lesson he learned not to serve his country)

    He admits as Governor he had so many regulations in Massachusetts that companies said they’d never build there again but we already know Mitt micro regulated the hell out of Massachusetts citizens.

    And he says he didn’t increase taxes for his health care, but he did.

    He brags Obama modeled his Obama care after his own Mitt Health Care

    Mitt believes in “mandatory health care insurance by every person and taken from taxes, or not giving them a tax refund (same Obama b.s.)

    Mitt says once someone starts making millions they get greedy and that’s just how it goes. He should know.

    He also does not believe terrorism is spreading and that the good muslims will stop terrorism and see’s things as getting better.

    Scary is Mitt saying if chemical weapons are ever developed. He is clueless and not up on foreign affairs such as Russia and Middle-Eastern countries do have anthrax etc.
    (Mitt was to busy doing business with countries all over the world he just bragged about last week)

    Another point I’d like to make is his home in San Diego California. How does he live in San Diego where they keep finding enormous underground tunnels from Mexico where Hezbollah muslim terrorists, are using to enter the U.S. Recall the one who threatened iuse these very tunnels, and do nothing about the immigration problems in San Diego. Also, Russians are going through South America then Mexico and crossing into San Diego.

    Why hasn’t Mitt Romney been active in San Diego one of the hottest cities on the terrorists list?

    Romney’s advice and how he used to speak before he changed his speech style.

    ps Romney was founder and CEO of Bain. Did he leave it, sell it, or close it down?

    Here is Mitt Romney’s lecture proud of Bain

    The Wall Street Journal’s investigation of Bain


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