Romney's Bain Gave Italy the Business

I wrote earlier today about the economic dangers in the Eurozone, and the negativity of Italy's Prime Minister Mario Monti, who told Der Spiegel that Europe is going through a "psychological dissolution." Wow - that's a strong statement. But some of their problems stem back to the 1990s, when the Italian government was selling off assets to raise money to enter the Eurozone. One of those investors was Mitt Romney's Bain Capital.

Bloomberg has the story about Bain buying up Italy's telephone directory, then selling it back to them a few years later at a huge profit. This is a good insight into the way Romney did business - and yes, he was involved through his offices in Boston at the same time that he supposedly wasn't the CEO while working on the Utah Olympics.

Oh, and the profits? Most were hidden in the tax-shelter country of Luxembourg.

This past history in Europe is not as easily etch-a-sketched as Mitt's Olympic excesses or his absent tax returns in the U.S.

Bloomberg: Romney Persona Non Grata in Italy

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.

. . . Romney himself probably earned more than $50 million, and possibly as much as $60 million from the Italian directory sale of Seat Pagine Gialle SpA, according to a person familiar with the matter. The deal turned into one of the biggest windfalls of his tenure.

. . . 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.

“Mitt Romney and Bain played the role of successful financial speculators at the peril of the Italian government and the small stock-market investors who were burned by the sharp decline in Seat (PG) shares,” said Giovanni Pons, a journalist for la Repubblica and co-author of “L’Affare Telecom” (2002), which recounts details of the Bain deal.

. . . 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.