In the first two articles in this series we looked at Mitt attacking The President for not “cracking down on China’s currency manipulation” but he seems unable to see any hypocrisy in his investing with them for his own benefit. Indeed he will receive a huge payout from the future sale of Sensata Technologies. You know them as the company Bain Capital bought last year then closed all US manufacturing operations and moved them to China.
But Romney’s campaign trail faux outrage, masks a decades long love affair with China marked by several personal investments in highly questionable companies.
Indeed even his signature claim of being a ‘job creator’ does not pass the smell test for someone wanting to be President. Former Reagan Budget Director David Stockman eviscerated that Romney claim in this piece in Newsweek’s The Daily Beast:
“Mitt Romney claims that his essential qualification to be president is grounded in his 15 years as head of Bain Capital, from 1984 through early 1999. According to the campaign’s narrative, it was then that he became immersed in the toils of business enterprise, learning along the way the true secrets of how to grow the economy and create jobs. The fact that Bain’s returns reputedly averaged more than 50 percent annually during this period is purportedly proof of the case—real-world validation that Romney not only was a striking business success but also has been uniquely trained and seasoned for the task of restarting the nation’s sputtering engines of capitalism.
Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.”
Mitt made more than $90,000 of profit in businesses in China on investments off $500K (almost 20% over three years when most investors lost everything) in Chinese companies via his and Ann’s ‘blind’ trusts.
Of the ten companies the Romneys invested in, several set off alarm bells.
- China Life Insurance contributed $20K in profit to the Romneys after China’s National Audit Office found the firm embezzled $172 million dollars by overstating sales and lining executive pockets.
- The China National Offshore Oil Corporation or CNOOC is doing business with the country Mitt says we should bomb at the request of Israel… Iran. Seems CNOOC are helping Iran develop their North Pars natural gas fields.
- New Oriental Education also earned the Romneys $20K in profit from their $60K share investment by… stealing US University admissions tests and reselling them.
- The one investment though that best fits the Bain philosophy is Li & Fung Limited. They are supply chain managers for many large US companies. And what exactly IS a supply chain manager? Why that’s a fancy industry term for outsourcing as much of the workflow, a.k.a. jobs as possible to… China.
Toys R Us, Target, Walmart and Timberland all use them but the biggest non surprise? Liz Claiborne sold its entire manufacturing operation to them for $83 million.
The only satisfaction? The Romneys only made $1,000 on their $15K investment.
So yeah, Romney says he’s all for cracking down hard on China whilst out on the campaign trail, but in practice?
He loves being able to fire people and hire new ones for $1 a day.
Romney insists he has no role in the day-to-day management of his money in these blind trusts. But a quick revisit to his words when running against Ted Kennedy for the Senate show how he really feels.
“The blind trust is an age old ruse, if you will, which is to say, you can always tell the blind trust what it can and cannot do. You can give a blind trust rules.”
Yes you can Governor, yes you can. So we should just trust you when you did not trust Senator Kennedy in 1994?
ThePoliticalCarnival.net gave the best and simplest explanation to date of how Mitt gets his money back into the US and pays about 9% in total taxes:
The Cayman Island thing goes this way: (which by the way is legal, though to what degree legal and moral overlap in this will always be fodder for debate)
Mitt deposits money from business dealings around the world, some in the US, many in foreign lands into off-shore banks. (This is done through foreign corporations his ‘blind trust’ controls/owns. Some of these banks he uses, BTW, are just post office boxes or storefronts, not a bank like we in the states think of them.
He then takes out money from that account, but in a foreign currency — for example, Cayman Dollars.
When he brings that money into the states, it’s taxed at a lower rate and he’s given credit as if he’s bringing in a foreign investment.
Then he reconverts the currency into American money in his US banks but it’s already been taxed as a foreign investment and he gets to write off additional conversion charges so the reduced money is already taxed, free and clear. It’s coming from his foreign corporation.
Then he ships the American money to China (through his blind trusts investments) to purchase energy or other companies, takes an investment tax credit to further reduce his tax liability or redeposits it back into the Swiss or other foreign banks, which give him a premium interest rate because he’s using American dollars.
It’s all legal, but by doing this, he’s avoiding paying some American corporate taxes and getting a write-off against any money he stores here, accruing interest. He can even back foreign currencies against the dollar using that money, which again, isn’t illegal, just a bit immoral — an American hedging against the US dollar.
So goes the Romney cycle. By using the Caymans he avoids much of the US corporate taxes which are around 37% and he still gets to write off the houses, boats, travel, meals, clothes, haircuts — just about everything he spends money on. It’s a write-off against his businesses here.
So America should vote for you Mitt because:
- You are a wizard at moving money around like a game of 3-card Monty to avoid paying US taxes.
- Your fundamental claim for Presidential readiness is only you can jump start an economy already growing and even that is based on the lie that you are a ‘job creator’ when, in fact, you are a real estate house/company flipper.
- You attack The President for not being tough on China when you regularly and cosily deal with every aspect of their corrupt government and business system AND have no problem moving American jobs there?
Oh yeah, one more, and YOU accuse THE PRESIDENT of being untruthful? Governor Romney, I was born at night. It just wasn’t last night.
Denis G Campbell is the author of 6 books including 'Billionaire Boys Election Freak Show,' 'The Vagina Wars' & 'Egypt Unsh@ckled.' He is the editor of UK Progressive Magazine and provides commentary to the BBC, itv Al Jazeera English, CNN, MSNBC and others. His weekly 'World View with Denis Campbell' segment can be heard every Thursday on the globally syndicated The David Pakman Show. You can follow him on Twitter via @UKProgressive and on Facebook.
Email this author | All posts by Denis G Campbell