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Mitt Romney started Bain Capital with help of offshore investors
WASHINGTON (LA Times/Denver Post) — When Mitt Romney launched Bain Capital in 1984, he struggled at first to raise enough money for the untested venture. Old-money families like the Rothschilds turned down the young Boston consultant.
So he and his partners tapped an eclectic roster of investors, raising more than a third of their first $37-million investment fund from wealthy foreigners. Most of the foreign investors’ money came through corporations registered in Panama, then known for tax advantages and unusual banking secrecy.
Previously unreported details, documented in Massachusetts corporate filings and other public records, show that Bain Capital was enmeshed in the largely opaque world of international high finance from its very inception.
The documents don’t indicate any wrongdoing, and experts say that such financial vehicles are common for wealthy foreign investors. But the new details come as President Barack Obama has criticized Romney for profiting from Bain Capital’s own offshore investment entities, which are unavailable to most Americans.
Offshore accounts and 173% annual return on investment funds
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. Years later, Lyons was convicted in an unrelated stock fraud scandal.
About $9 million came from rich Latin Americans, including powerful Salvadoran families living in Miami during their country’s brutal civil war. Named are Ricardo Poma & family (Barcel Corp., Katsura), Frank Kardonski (Universal Selling Co.), Diego Ribadeneira (Univeriones Ariea)and Francisco de Sola and family (Velof Trust). Kardonski bought the Key Biscaine Bank in 1990 from Charles (Bebe) Rebozo. Ricardo Poma could be linked to member Executive Council of Arena Party.
That first investment fund — used to invest in startup companies and leveraged buyouts — paid out a stunning 173 percent in average annual returns over a decade, according to a prospectus prepared by an outside bank. It was the start of the private equity powerhouse that ultimately fueled Romney’s political career. He now cites his experience at Bain as a chief qualification for the White House.
That strategy provided even greater tax advantages for foreign investors, allowing Bain to attract billions of dollars. Romney faced unusual complications when he launched Bain Capital, a spinoff of Bain & Co., the Boston consulting company he joined when he graduated from Harvard Business School.
At the time, U.S. officials were publicly accusing some exiles in Miami of funding right-wing death squads in El Salvador. Some family members of the first Bain Capital investors were later linked to groups responsible for killings, though no evidence indicates those relatives invested in Bain or benefited from it.
"But I will not let myself be reduced to silence."
