Clear Channel, the largest radio station operator in the country, is partially owned by Bain Capital, which is the company founded and previously run by former Republican presidential candidate Mitt Romney.
Debt-ridden Clear Channel, headquartered in San Antonio, has been quietly pruning its corporate structure since late 2011.
On-air talent and behind-the-scenes employees have been shown the door or programming has been eliminated in markets that include Los Angeles, Boston, Tampa, San Diego, Madison, Wis., Springfield, Mo., Oklahoma City, Nashville, and, most recently, Toledo.
Bain Capital and Thomas H. Lee Partners, two private-equity firms, finalized their $26.7 billion purchase of Clear Channel in July, 2008, loading the company with debt. According to Clear Channel’s Nov. 2 filing with the U.S. Securities and Exchange Commission, the company had $16.4 billion in debt.
The company’s debt must be repaid throughout the decade and comes due as soon as 2014. The 2008 sale was the catalyst for thousands of layoffs as Clear Channel restructured.
Clear Channel has been strategically firing employees in small numbers so it doesn’t appear that the company is undergoing large-scale layoffs, he said, adding that it would have looked bad for Mr. Romney if his former company fired Clear Channel’s workers en masse.
“They’ve been nipping and tucking a lot since last November,” Mr. Del Colliano said. “There has been a substantial number of people [let go]. I can’t estimate it, [but] a handful of people every week for 52 weeks.
“It’s my belief that what they wanted to do was keep attention off of their Bain founder, Mitt Romney.”
Dan Stroud, former co-host of a morning show on KXXY-FM in Oklahoma City, spent 31 years at the station before he was laid off in March. He said he was one of six people let go.
“It was the briefest, most concise meeting I’ve ever been to in my life,” he said. “They never mentioned why it was happening and if I’d done anything wrong; they just said my job was being eliminated — no ‘thank you’ for 31-plus years at the same station doing a great job. No handshake, no good-bye.
“I got off the air, went to a meeting, was escorted out, and that was the last day I worked.”
Mr. Stroud, who has not found work since he was laid off, said he most likely was targeted because he was one of the longest-serving employees at the station, which had garnered him a higher salary than other workers.
Mr. Stroud said the general manager who laid him off read from a highlighted script — the two had known each other since college. The general manager wasn’t allowed to deviate from the script, he said.
“I just think they could have done it a lot better,” Mr. Stroud said.
Mr. Del Colliano said Clear Channel’s future is on shaky ground as Bain Capital looks to turn the once-profitable business around, which could mean more cuts. Clear Channel most likely will be sold to another media company, but only time will tell how its employees fare, he said.
Please visit Bainport.com where the workers are telling their stories
A judge has ordered the release of testimony by Republican presidential candidate Mitt Romney in the decades-old divorce proceedings of one of his closest friends.
Maureen Stemberg Sullivan, the ex-wife of Staples co-founder Thomas G. Stemberg, had asked Norfolk Probate & Family Court Judge Jennifer Ulwick to unseal the records.
Sullivan, 61, of Charlestown, and Stemberg, 63, of Chestnut Hill, were involved in a notoriously nasty divorce with disputes over finances that stretched on for a decade. Stemberg filed for divorce in 1987 and it was finalized in 1994. The court papers have been impounded since 1989.
Romney’s Bain Capital helped Stemberg start Staples in 1986.
Kennedy campaign ad - “More Facts About Mitt Romney” (by HuffPostPolitics)
Six more protestors were arrested Wednesday while requesting a full severance package during a sit-in at the Sensata facility in Freeport. Last week, three protesters were arrested for failure to comply with a police order after refusing to move out of the way of a truck leaving the plant.“It was well worth it,” said Kathy Hoyer, who previously worked at the plant. She was arrested Wednesday along with her son, Wes.Protestors have tried various tactics for months in the hopes of saving the 170 jobs due to be lost by the end of the year.“I was scared to death,” said JoAnne Matthews, whose daughter, Mary Jo Kerr, is an employee at the plant. Kerr appeared on MSNBC’s “The Ed Show” on Monday.“I did this for my daughter, and she deserved it,” said Matthews. “I had never been in the back of a cop car before today.
Remember this? Romney Campaign calls police on workers being outsourced by Bain-owned Sensata (by Cheryl Randecker)
Three people protesting the closure of an Illinois plant run by a Bain Capital-owned company were arrested on Monday after an encounter with a truck driver hauling equipment out of the plant.
The protesters had been trying to prevent the removal of machinery from a Freeport, Ill. plant for Sensata Technologies, which manufactures electronic sensors for cars and employs nearly 200 people. The firm has been in the national spotlight because it is owned by Bain Capital, the private equity firm that GOP presidential hopeful Mitt Romney helped found, and it is outsourcing the Illinois jobs to China during a presidential campaign that’s often been focused on offshoring.
Mother Jones has obtained a video from 1985 in which Romney, describing Bain’s formation, showed how he viewed the firm’s mission. He explained that its goal was to identify potential and hidden value in companies, buy significant stakes in these businesses, and then “harvest them at a significant profit” within five to eight years.
The video was included in a CD-ROM created in 1998 to mark the 25th anniversary of Bain & Company, the consulting firm that gave birth to Bain Capital.
TRANSCRIPT: Bain Capital is an investment partnership which was formed to invest in startup companies and ongoing companies, then to take an active hand in managing them and hopefully, five to eight years later, to harvest them at a significant profit…The fund was formed on September 30th of last year. It’s been about 10 months then. It was formed with $37 million in invested cash. An additional $50 million or so of what I’ll call a call pool, which is money that we can call upon if the deals are large enough that they require more than a $2 or $3 million dollar initial investment. Why in the world did Bain and Company get involved in this kind of a business? We’re not particularly noted for having years and years of experience in financing. Three reasons. We recognized that we had the potential to develop a significant and proprietary flow of business opportunities. Secondly, we had concepts and experience which would allow us to identify potential value and hidden value in a particular investment candidate. And third, we had the consulting resources and management skills and management resources to become actively involved in the companies we invested in to help them realize their potential value.
More at: NEW ROMNEY VIDEO: In 1985, He Said Bain Would “Harvest” Companies for Profits (via Mother Jones)
The romance between Romney and Monsanto began back in 1977, when the recently minted Harvard Law and Business School graduate joined Bain, the Boston-based consulting firm launched in 1973, the same year Monsanto became one of its first clients. One of Bain’s founding partners, Ralph Willard, described to the Boston Globe in 2007 how “Romney learned the technical aspects of the chemical business so thoroughly that he sounded as if he had gone to engineering school instead of business school,” and that Monsanto executives soon began “bypassing” him to go directly to Romney.
John W. Hanley, the Monsanto CEO at the time, has said how “impressed” he was with the 30-year-old Mitt. Hanley became so close to Romney that he and Romney’s boss Bill Bain devised the idea of creating Bain Capital as a way of keeping Romney in the fold. Unless Mitt was allowed to run this spin-off venture firm, Hanley and Bain feared, he would leave. Hanley even contributed $1 million to Romney’s first investment pool at Bain Capital. Monsanto’s Hanley is in fact the only business executive outside of the Bain founding family to so shape Romney’s career—jumpstarting the two companies, Bain & Company and Bain Capital, that account for all but two years of Romney’s much-ballyhooed business experience. Bain and Romney whispered in Monsanto’s ear until 1985, when Hanley’s successor Richard Mahoney says he “fired” them and when Romney moved on to Bain Capital.
Oligarchs are the wealthy few who benefit from the government and for all intents and purposes call the shots behind the scenes. Oilprice.com considers five key oligarchs and oligarch families who will shape the future. They may not be the most powerful, or even the richest, but their influence is undeniable. Oh, and they are not all Russians. Turkey’s oligarchs deserve a place on the list because of the geopolitics of energy and conflict, and you’ve probably never heard of them. America has its own oligarchs, too; they are just less romanticized and devoid of the newsworthy “bling”, but their political power is no less formidable and the November presidential vote is arguably their playground.
The Koc Family, Courtesy Turkey
Let’s start with the most benign, the one you might not have heard of, but which is nonetheless extremely powerful by way of being the owners of the largest conglomerate in a country that holds many keys to near-future geopolitical energy dynamics. Koc Holdings has its hand in everything from oil refining and banking to car manufacturing and electronics, among other things. This is Turkey’s wealthiest family, which has always enjoyed government benefits, not the least from the ruling AKP party elite. Three generations of Koc’s have continued to amass wealth in Turkey, beginning with the family’s founder, Verbi Koc, in the 1920s.
Most notably, the Koc family own the Tupras refinery, which holds a dominant position in Europe’s fuel market, has managed amazing performance even in the midst of a global economic crisis. Tupras is also Turkey’s only refinery and it also controls most of the logistics, including major ports and storage facilities. Tupras also owns 40% of the country’s second-largest fuel retail chain. It also sets prices, where its European-Middle East-Africa colleagues do not enjoy this advantage. Middle Eastern and Russian suppliers favor Tupras for these reasons, though Iran has in recent years out-maneuvered Russian to this end. That said, sanctions against Iran have forced Tupras to diversify somewhat into Saudi, Libyan and Iraqi supplies.
Are they oligarchs or just billionaires? They are oligarchs who refrain from directly interfering in the work of the government, while the government agrees to ensure a certain amount of regulatory liberality that will not interfere with the Koc’s continued accumulation of wealth. To be more specific, Tupras gets to set fuel prices, with the acquiescence of the government, but at the same time, the government makes sure that Tupras supplies the domestic economy first.
If you are a foreign investor, you enter Turkey only through one its oligarch families. Still, these are not your typical Russian oligarchs; they are more concerned about their reputation and cannot afford to be blatant. They take care of their minority shareholders, and make plenty of investments in the country’s social welfare—from hospitals to nursing homes.
Roman Abramovich, Courtesy Russia
Russian oligarchs are of course the most colorful. They have rarely been able to resist the lure of over-the-top luxury as they fleeced the country of uncounted trillions, fleeing to resort islands here and there to run their fiefdoms from beach palaces or yachts. Or, alternatively, ending up behind bars for misunderstanding the consequences of biting the official hand that fed them.
While there are plenty of colorful Russian oligarchs to choose from, we’ll settle for now on Abramovich, largely because he just won a major legal battle with our favorite fleecer of post-Soviet Russia, Boris Berezovsky, his one-time mentor.
Abramovich is the owner of the Chelsea Football Club (Chelsea FC) and the Millhouse LLC private investment company, and is much the darling of oligarchs, especially when compared to Berezovsky, whose external appearance is just too sinisterly “mafia”. Last week, Abramovich won a $1.3 billion legal battle with Berezovsky, who had accused him of “intimidating” him into selling his shares of Sibneft oil—a company the two started together, now Gazprom Neft—at an undervalued price. This is what happens when you fall out of favor with on-again-off-again Russian President Vladimir Putin. Berezovsky fell out with Putin, and Abramovich took advantage of this. Berezovsky said it was extortion. A London court disagreed, of course.
According to Forbes’ 2012 hot list of the wealthy, Abramovich—a former Russian governor and Duma member, is currently the 9th richest person in Russia and the 68th richest person in the world. His fortune is estimated at around $12.1 billion.
The Koch Brothers, Courtesy USA
Yes, there is such a thing as an American oligarch; in fact, to a very great extent, presidential elections are oligarch elections. And the 6 November election is nothing without the Koch Brothers (no relation, apparently, to the Koc family of Turkey, though we appreciate the similarity).
The Koch Brothers, led by David Koch and Charles Koch, have built their fortune on oil derivatives speculation. The family’s wealth was launched by Fred C. Koch, who founded Koch Industries, the second-largest private company in the United States. The family has long contributed massive amounts of money to the Republicans and Libertarians, and also wields its influence through millions in donations to free-market and other advocacy groups through the Koch Family Foundations.
While the Koch brothers have tended to shift their funds to Republican presidential efforts through their foundations, so that they are not directly traced to them, in July they sort of stepped out of the funding shadows by hosting a $50,000-plate dinner for Romney in the Hamptons.
David Koch’s net worth? About $25 billion—and counting.
The Salverria Family, Courtesy El Salvador
We cannot ignore the Salverria family of El Salvador, due to their connection to Romney, who called on their assistance to raise funds for Bain Capital, the currently controversial private equity firm. This story begins in 1983, when Romney headed to Miami where he would win $9 million in pledges that would amount to 40% of Bain’s start-up capital. It was here that Romney, to borrow a dramatic page from the liberals, sold his sole to the devil; or more precisely, to the managers of Latin American death squads, the Salaverria family key among them.
The Salaverria family (and other oligarch families in El Salvador) has been accused of directly funding Salvadorian right-wing paramilitaries who were responsible for a majority of the some 70,000 executions that took place in El Salvador in the 1980s.
The Salverria family has made its fortune in cotton and coffee production, helped along by the right-wing Nationalist Republican Alliance (ARENA), which is a political party founded in 1981 by death squad leader Roberto D’Aubuisson. The reason for the death squads—in 1980, the government of El Salvador moved to implement some sweeping land reforms that called for the nationalization of the coffee trade. Essentially, this would have removed the coffee oligarchs from political power.
Harold Hamm, Courtesy of USA
We will avoid treading on the overwhelming territory of Big Oil and the power of Chevron, Exxon, the American Petroleum Institute and all their combined oil moguls who make the Koch Brothers look like car salesmen. Instead we will focus on one particular oil baron who stands out for his Bakken ambitions.
Hamm is the mastermind of Continental Resources, which is leading a massive campaign for drilling North Dakota’s Bakken formation. During the first quarter of 2012, Continental Resources “completed the equivalent of 43 wholly owned wells into the Bakken,” according to Forbes, and “unlocking those reserves helped Continental boost its proved reserves nearly 50% in the past year to 610 million barrels”.
Hamm is the 76th richest person in the world, with his 68% stake in Continental worth $7.7 billion. He plays a sizeable role in what we will call the “Romney Energy Team”, and has donated (on the record, at least), almost $1 million to the Restore Our Future Foundation, which is directly supporting Romney’s presidential bid.
For Hamm, it’s all about the Bakken oil boom, and of course, the Keystone XL pipeline, which will ensure a transit route for Hamm’s oil.
The New York attorney general is investigating whether some of the nation’s biggest private equity firms have abused a tax strategy in order to slice hundreds of millions of dollars from their tax bills, according to executives with direct knowledge of the inquiry.
The attorney general, Eric T. Schneiderman, has in recent weeks subpoenaed more than a dozen firms seeking documents that would reveal whether they converted certain management fees collected from their investors into fund investments, which are taxed at a far lower rate than ordinary income.
Among the firms to receive subpoenas are Kohlberg Kravis Roberts & Company, TPG Capital, Sun Capital Partners, Apollo Global Management, Silver Lake Partners and Bain Capital, which was founded by Mitt Romney, the Republican nominee for president. Representatives for the firms declined to comment on the inquiry.
Mr. Schneiderman’s investigation will intensify scrutiny of an industry already bruised by the campaign season, as President Obama and the Democrats have sought to depict Mr. Romney through his long career in private equity as a businessman who dismantled companies and laid off workers while amassing a personal fortune estimated at $250 million.
Some executives at the firms said they feared that Mr. Schneiderman, a first-term Democrat with ties to the Obama administration, was seeking to embarrass the industry because of Mr. Romney’s roots at Bain. Others suggested that the subpoenas, which were issued by the attorney general’s Taxpayer Protection Bureau, might be part of an effort to recover more revenue for New York under state tax law. The attorney general’s office does not have the power to enforce federal tax laws.
A spokesman for Mr. Schneiderman declined to comment.
The tax strategy — which is viewed as perfectly legal by some tax experts, aggressive by others and potentially illegal by some — came to light last month when hundreds of pages of Bain’s internal financial documents were made available online. The financial statements show that at least $1 billion in accumulated fees that otherwise would have been taxed as ordinary income for Bain executives had been converted into investments producing capital gains, which are subject to a federal tax of 15 percent, versus a top rate of 35 percent for ordinary income. That means the Bain partners saved more than $200 million in federal income taxes and more than $20 million in Medicare taxes.
The subpoenas, which executives said were issued in July, predated the leak of the Bain documents by several weeks and do not appear to be connected with them. Mr. Schneiderman, who is also co-chairman of a mortgage fraud task force appointed by Mr. Obama, has made cracking down on large-scale tax evasion a priority of his first term.
As a retired partner, Mr. Romney continues to receive profits from Bain Capital and has had investments in some of the funds that documents show used the tax strategy.
The campaign issued a statement saying that Mr. Romney did not, however, benefit from the practice. “Investing fee income is a common, accepted and totally legal practice,” said R. Bradford Malt, a lawyer for Mr. Romney who manages his family’s investments and trusts. “However, Governor Romney’s retirement agreement did not give the blind trust or him the right to do this, and I can confirm that neither he nor the trust has ever done this, whether before or after he retired from Bain Capital.”
Managers at a typical private equity firm or hedge fund collect from their investors management fees based on the size of the fund. But most of their compensation comes as a share of the profits earned by the fund. The Internal Revenue Service allows those profits to be considered “carried interest,” taxed at the capital gains rate typically reserved for investments.
The tax strategy used by Bain and other firms to convert management fees — the compensation normally taxed as ordinary income — into capital gains is known as a “management fee waiver.” The strategy is widely used within the industry: 40 percent of the 35 buyout firms based in the United States surveyed in 2009 by Dow Jones said their partners used at least some of the firm’s fees to make investments in their funds.
But some prominent firms appear to avoid the practice. The Carlyle Group and Blackstone Group have stated in regulatory filings that their partners have not diverted management fees into investments in their funds.
In the varied world of private equity, some firms may have lawyers who are not aware of the strategy or have steered their clients away from it, said a lawyer at one firm who has used the strategy for his clients. Others, he said, may not have the operational capabilities to handle the complex transactions.
Mitt Romney decries the national debt, but his career was made by running up debt on companies on their last lifeline.
“The result has been a brilliant comedy: A man makes a $250 million fortune loading up companies with debt and then extracting million-dollar fees from those same companies, in exchange for the generous service of telling them who needs to be fired in order to finance the debt payments he saddled them with in the first place.”
Mitt Romney shirked military service.
“I longed in many respects to actually be in Vietnam and be representing our country there,” he claimed years after the war. To a different audience, he said, “I was not planning on signing up for the military. It was not my desire to go off and serve in Vietnam.”
Mitt Romney’s Bain was using the same trick as two-bit mobsters — the ‘bust out’.
“Fans of mob movies will recognize what’s known as the “bust-out,” in which a gangster takes over a restaurant or sporting goods store and then monetizes his investment by running up giant debts on the company’s credit line. (Think Paulie buying all those cases of Cutty Sark inGoodfellas.) When the note comes due, the mobster simply torches the restaurant and collects the insurance money. Reduced to their most basic level, the leveraged buyouts engineered by Romney followed exactly the same business model. “It’s the bust-out,” one Wall Street trader says with a laugh. “That’s all it is.”“
Mitt Romney coldly rebuffed a worker who wrote him a hand-written letter asking Romney to save his job.
“Romney has always kept his distance from the real-life consequences of his profiteering. At one point during Bain’s looting of Ampad, a worker named Randy Johnson sent a handwritten letter to Romney, asking him to intervene to save an Ampad factory in Marion, Indiana. In a sterling demonstration of manliness and willingness to face a difficult conversation, Romney, who had just lost his race for the Senate in Massachusetts, wrote Johnson that he was “sorry,” but his lawyers had advised him not to get involved.”
He loves to manipulate people, even his own employees.
“Over the years, colleagues would anonymously whisper stories about Mitt the Boss to the press, describing him as cunning, manipulative and a little bit nuts, with “an ability to identify people’s insecurities and exploit them for his own benefit.” One former Bain employee said that Romney would screw around with bonuses in small amounts, just to mess with people: He would give $3 million to one, $3.1 million to another and $2.9 million to a third, just to keep those below him on edge.”
Mitt Romney’s Bain still got paid, even when it’s acquisitions were floundering.
“In a typical private-equity fragging, Bain put up a mere $18 million to acquire KB Toys and got big banks to finance the remaining $302 million it needed. Less than a year and a half after the purchase, Bain decided to give itself a gift known as a “dividend recapitalization.” The firm induced KB Toys to redeem $121 million in stock and take out more than $66 million in bank loans – $83 million of which went directly into the pockets of Bain’s owners and investors, including Romney. “The dividend recap is like borrowing someone else’s credit card to take out a cash advance, and then leaving them to pay it off,” says Heather Slavkin Corzo, who monitors private equity takeovers as the senior legal policy adviser for the AFL-CIO.”
Mitt Romney’s Bain financed one of its first takeover deals, with department stores Beals Brothers and Palais Royale with money dirtied by Michael Milken.
“…one of Romney’s first LBO deals, and one of his most profitable, involved Mike Milken himself. Bain put down $10 million in cash, got $300 million in financing from Milken and bought a pair of department-store chains, Bealls Brothers and Palais Royal. In what should by now be a familiar outcome, the two chains – which Bain merged into a single outfit called Stage Stores – filed for bankruptcy protection in 2000 under the weight of more than $444 million in debt…But here’s the interesting twist: Romney made the Bealls-Palais deal just as the federal government was launching charges of massive manipulation and insider trading against Milken and his firm, Drexel Burnham Lambert. After what must have been a lengthy and agonizing period of moral soul-searching, however, Romney decided not to kill the deal, despite its shady financing. “We did not say, ‘Oh, my goodness, Drexel has been accused of something, not been found guilty,’ ” Romney told reporters years after the deal. “Should we basically stop the transaction and blow the whole thing up?”“
Mitt Romney’s Bain sidled Dunkin’ Donuts with crushing debt.
“In 2010, a year after the last round of Hertz layoffs, Carlyle teamed up with Bain to take $500 million out of another takeover target: the parent company of Dunkin’ Donuts and Baskin-Robbins. Dunkin’ had to take out a $1.25 billion loan to pay a dividend to its new private equity owners. So think of this the next time you go to Dunkin’ Donuts for a cup of coffee: A small cup of joe costs about $1.69 in most outlets, which means that for years to come, Dunkin’ Donuts will have to sell about 2,011,834 small coffees every month – about $3.4 million – just to meet the interest payments on the loan it took out to pay Bain and Carlyle their little one-time dividend. “
Mitt Romney’s fortune was gained by gaming the government.
“Which brings us to another aspect of Romney’s business career that has largely been hidden from voters: His personal fortune would not have been possible without the direct assistance of the U.S. government. The taxpayer-funded subsidies that Romney has received go well beyond the humdrum, backdoor, welfare-sucking that all supposedly self-made free marketeers inevitably indulge in.”
Mitt Romney ran a super wasteful Olympics.
“Not that Romney hasn’t done just fine at milking the government when it suits his purposes, the most obvious instance being the incredible $1.5 billion in aid he siphoned out of the U.S. Treasury as head of the 2002 Winter Olympics in Salt Lake – a sum greater than all federal spending for the previous seven U.S. Olympic games combined. Romney, the supposed fiscal conservative, blew through an average of $625,000 in taxpayer money per athlete – an astounding increase of 5,582 percent over the $11,000 average at the 1984 games in Los Angeles.”