When in 1983, Bill Bain asked Mitt Romney to launch Bain Capital, a private equity offshoot of the successful consulting firm Bain & Company, Romney couldn’t raise money from any current clients, because if the private equity venture failed, he didn’t want it taking the consulting firm down with it.
So Romney and his partners tapped an eclectic roster of investors, raising more than a third of their first $37-million investment fund from wealthy foreigners.
According to the article in The Huff Post, Bain executive Harry Strachan suggested that Romney meet with a group of Central American oligarchs who were looking for new investment vehicles as turmoil engulfed their region.
“Over the years, these Latin American friends have loyally rolled over investments in succeeding funds, actively participated in Bain Capital’s May investor meetings, and are still today one of the largest investor groups in Bain Capital,” Strachan wrote in his memoir in 2008.
At the time, U.S. officials were publicly accusing some exiles in Miami of funding right-wing death squads in El Salvador, writes Los Angeles Times. Some family members of the first Bain Capital investors were later linked to groups responsible for killings, however, no evidence indicates those relatives invested in Bain or benefited from it.
Romney has said that he thoroughly checked the foreign investors’ backgrounds. “Romney confirms Bain had investors in El Salvador. But, as was Bain’s policy with any big investor, they had the families checked out as diligently as possible,” the Tribune wrote. “They uncovered no unsavory links to drugs or other criminal activity.”
But nobody with a basic understanding of the region’s history could believe that assertion.
Mitt Romney said at a dinner in Miami in 2007, when he launched another venture that needed funding — his first presidential campaign: “I owe a great deal to Americans of Latin American descent.”
“When I was starting my business, I came to Miami to find partners that would believe in me and that would finance my enterprise. My partners were Ricardo Poma, Miguel Dueñas, Pancho Soler, Frank Kardonski, and Diego Ribadeneira,” Romney said.
Among founding investors in Bain Capital were also members of two other wealthy and powerful Central American clans — the de Sola and Salaverria families.
“The Salaverria family were very well-known as backers of D’Aubuisson,” Robert White, the former U.S. ambassador to El Salvador told The Huff Post. “These guys were big-money contributors. … They were total backers of D’Aubuisson and the extremist solution, including death squads.”
From 1979 to 1992, some 75,000 people were killed in the Salvadoran civil war, according to the United Nations, 85 percent of the acts of violence were perpetrated by the right, while the left-wing Farabundo Martí National Liberation Front, which was supported by the Cuban government, was responsible for 5 percent.
In 1982 El Salvador’s independent Human Rights Commission reported that, of the 35,000 civilians killed, “most” died at the hands of death squads.
Jeffery Paige, a professor at the University of Michigan and author of “Coffee and Power: Revolution and the Rise of Democracy in Central America”, has studied the political economy of Central American oligarchies. Romney’s claim to have checked out the backgrounds of the families and come away satisfied befuddles Paige.
“These people benefited from one of the most exploitative and repressive agricultural systems in Latin America. That’s why they had a revolution,” Paige said. “This money, certainly there wasn’t much concern where it came from and what these people had done to make that money.”
Moreover, a lot of the foreign investors’ money came to Bain through corporations registered in Panama, then known for tax advantages and unusual banking secrecy, reports Los Angeles Times.
The first outside investor in Bain was a leading London financier, Sir Jack Lyons, who made a $2.5-million investment through a Panama shell company set up by a Swiss money manager, further shielding his identity.
Records show the first investment in Bain Capital — $1.25 million in June 1984 — was in the name of Jean Overseas Ltd., registered in Panama by Marcel Elfen, a Swiss money manager.
The Panamanian shell company apparently was a vehicle for Lyons, the British businessman and philanthropist. Lyons died in 2008.
His son, David Lyons of Quebec, said that he had never heard of Jean Overseas, but he confirmed that his father was “absolutely” an early investor in Bain Capital and said that Elfen, who died last year, was his father’s money manager.
As Mitt Romney said in an interview earlier this week: “The world of finance is not as simple as some would have you believe.”