Ronald Kessler reporting from Washington, D.C.
— Pension funds, endowments, and private investors trust Mitt Romney’s former company Bain Capital enough to hand it billions of dollars in assets. But the media are intent on showing that Bain is a money-losing proposition.
First, The Wall Street Journal reported that of 77 businesses Bain invested in while Romney headed the firm, 22 percent filed for bankruptcy reorganization or were liquidated by the end of the eighth year after Bain first invested.
As a former Wall Street Journal reporter, I can tell you that the paper never would have run such a foolish story when I was there.
Even well-established companies can fold within a matter of months. A few years ago, Research in Motion’s BlackBerry was the rage. Now the company is losing money and in danger of being sold off in pieces.
Ground beef processor AFA Foods, which processes more than 500 million pounds of ground-beef products annually, recently filed for bankruptcy protection, citing the impact of an uproar over a meat filler dubbed by critics “pink slime.”
Walk around any shopping mall and you will see stores and restaurants opened six months ago and are that are now closing. In the life of a company, eight years is an eternity.
Bain specializes in investing in start-ups and troubled companies that it tries to rejuvenate and sell. Thus, if Bain invests in a company that is still going strong a few years later, that counts as a big success. Moreover, the Wall Street Journal comparison included companies no longer under Bain's control.
A more reasonable measure of success is how many companies were still in business while Bain was still in control. Bain, which Romney headed until 1999, made just such a comparison in a letter sent to its investors in March.
“Through more than a generation of investing, less than five percent of our companies filed for bankruptcy while under our control, a figure that is consistent with the broader economy and compares favorably considering the risks associated with private investing,” the letter said.
“In the vast majority of these cases, our work resulted in better, more competitive companies,” Bain said. In fact, “revenues grew during our ownership in 80 percent of the more than 350 companies in which we have invested.”
But Glenn Kessler, who writes The Washington Post’s Fact Checker column, smelled a rat.
“The operative words in the Bain statement are ‘under our control,” Kessler — no relation — wrote. “As long as Bain owned less than 50 percent — often the case if there had been a public share offering — then the success or failure apparently would not end up in Bain’s statistics.”
While Bain “generally has a good story to tell,” the company “should not disguise their performance behind suspect statistics,” Kessler concluded. He gave Bain’s claim — cited by Romney and his advisers — three pinocchios.
Kessler is not a partisan. He comes out against both Republicans and Democrats and has criticized some of the Obama campaign’s previous attacks on Bain. As noted in my story Washington Post Has Become a Model for the Media, under publisher Katharine Weymouth and Executive Editor Marcus Brauchli, the paper has become fair and balanced.
But in this case, Kessler is off base. If another company acquired The Washington Post, who would be responsible if it closed its doors a few years later — the previous management or the new company?
The answer is obvious — but apparently not to The Washington Post’s arbiter of truth.
The answer to whether Bain Capital has been successful is equally obvious: Companies Bain started or acquired now employ more than a million people. Staples, a company which Romney invested in before it opened its doors, alone employs 90,000 people in 2,000 stores.
If journalists don’t get it, funds and investors do. Today they entrust $60 billion of their assets to Bain Capital.
Ronald Kessler is chief Washington correspondent of Newsmax.com. He is the New York Times bestselling author of books on the Secret Service, FBI, and CIA. Read more reports from Ronald Kessler — Click Here Now.
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