Romney's Italian Job
This might be the first case in history where a man who may become a sitting President of the United States has already declared war on a country (an ally, no less) as a private citizen. At least that's how many Italians see it.
That’s because 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.
Bain funneled profits through subsidiaries in Luxembourg, a common corporate strategy for avoiding income taxes in other European countries, according to documents reviewed by Bloomberg News. The buyer, Italy’s biggest telephone company, now has a total market value less than what it paid Bain and other investors paid for the directory business.
What happened was this: Bain (under Romney) bought a 16% stake in the Italian yellow pages, making them the second-largest shareholder behind the state-run Italian phone company itself. Two years later they sold the stake for 25 times what they paid for it when the phone company (again, state-run) bought out all the partners. It's estimated that Romney personally profited $50-60 million on the deal.
If that weren't enough, then Bain funneled the profits through Luxembourg to beat the taxes. Certainly not illegal, but definitely kinda shady, and you can see where the Italian people might feel like they got hosed. Especially considering the entire phone company is now worth less that what Bain paid for just the yellow pages in the late 90's.
“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.
Here's a video that goes into more detail:
So, if Romney gets elected, can we expect some pushback from Italy? Or are they so used to getting hosed by wealthy industrialists (ahem, Berlusconi) that they don't even notice it anymore?
Comments
Yeah its Romney's fault that
Yeah its Romney's fault that they overpaid on an acquisition, time to lynch that fker!
also minimizing tax payments by using Luxembourg is standard.
It looks like the italian
It looks like the italian treasury was trying to shed assets and reduce debt to make it easier to enter the Eurozone, investors came in and made a fool of the government on the price (go figure), then the government stupidly bought it back at the height and now wants to be made at Romney for making money off of them? That seems like a shady Italian deal, where the treasury got screwed because they bought in like everyone else to the telecom bubble and now want to blame someone else. I'd make that investment every single time, I'm not sure why people have a problem with this.
Also, I started cracking up when I saw that Mario Draghi, the current savior of the Eurozone and the world, was part of the Italian treasury at the time in 1997.
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The tax avoidance is
The tax avoidance is unsurprising. US companies do the same thing every day...I am sure Generali and Enel do the same thing. He would be irresponsible not to take the tax break.
As for the inflated sale price: well, I guess he's caught red handed. He must have lied to those poor executives. I mean, wouldn't it be hilarious if a company like Time Warner overpaid? But they wouldn't, because Mitt wasn't feeding them lies. US telecom/media companies never overpaid during the tech bubble.
Romney did nothing wrong -
Romney did nothing wrong - hell, Bain put in $40M out of $800+ group bid...
And while this was a horrible decision by the Italian gov, everyone who bought in at the height of the bubble got screwed, including tons of PE/VC firms.
The Italian Government, like many large corporations and groups preformed poor due diligence, overpaid and was stupid. You should probably be upset with them not the minority stake investor who was bought out. The taxes Italians are upset about would be a fraction of a hair compared to the governments money if it didn't decide to buy everyone out at an obscene multiple.
I applaud Bain for getting a 25x in 2 years -- a legendary deal for their investors and an example why private business usually works better then government.
"If you want to succeed in this life, you need to understand that duty comes before rights and that responsibility precedes opportunity."
Just for the record: I think
Just for the record: I think this was an absolutely baller deal by Bain all around, and I don't blame Romney or Bain in the least for any of it - including the legal tax avoidance.
It's the Italians who hate him.
It's a good thing the average
It's a good thing the average American voter neither reads, nor speaks Italian.
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
Italy, as you correctly point
Italy, as you correctly point out, is a corrupt kleptocracy with an idiot population and they all collectively deal with this by....heavy denial and reminiscing about the glory days of the Roman Empire. It is a foreign relations disaster for sure, but since Romney won't be president, it's not really an issue. I'm not taking a side...I'm just calling it like I see it.
YOU JUST GOT TROLLED
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In the words of Martin
In the words of Martin Lawrence "What da problem is??"
"When you expect things to happen - strangely enough - they do happen."
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This reminds me of Oakland.
This reminds me of Oakland. People don't seem to understand that yes, they can get shafted by corps if they make stupid decisions.
"You stop being an asshole when it sucks to be you." - IlliniProgrammer
What about George Soros
What about George Soros taking the BOE for a cool $1.1 billion overnight.
"The problem with Socialism is that eventually you run out of other peoples money"
- Margaret Thatcher
Italy sucks and this is
Italy sucks and this is coming from someone who is 1/4 Italian. World War II was the last showing of any Italian sack and if it wasn't an African colony they got their asses handed to them. Country of grown men living with their moms.
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Surely it will/has been spun
Surely it will/has been spun to ostracize a company for, god forbid, making a profit and knowing when to sell!
Here to learn and hopefully pass on some knowledge as well. SB if I helped.
Good businessman. Bad Italian
Good businessman. Bad Italian government
"If Henry Ford had asked people what they wanted, they would have said faster horses." -Steve Jobs
I don't know, it seems like
I don't know, it seems like we are getting to a point where any profit you make gives you a bad name, no?
Yeah, the tax bit might be shady, but if there is a loophole - it's regulator's fault.
Money makes the world go around...
"Every man should lose a battle in his youth, so he does not lose a war when he is old"
Its not shady, everyone who's
Its not shady, everyone who's anyone does it
"If Henry Ford had asked people what they wanted, they would have said faster horses." -Steve Jobs
So what? Sending money
CNBC sucks
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I think screwing the