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A Project of The Annenberg Public Policy Center

Gillespie Twists the Facts on Bain Capital

A letter Bain Capital sent to its investors is now becoming a talking point for Mitt Romney surrogates. But once again the company letter, which boasts of Bain’s success, is being misrepresented — this time by Ed Gillespie, a senior adviser to the Romney campaign.

  • Gillespie claimed that “less than 5 percent” of Bain’s investments “ended up in bankruptcy.” But that’s what Bain claims occurred over its entire 28-year history. The Wall Street Journal reported that 22 percent of companies “Bain invested in while Mr. Romney led the firm” filed for bankruptcy or went out of business, and another 8 percent lost all of the money that Bain had invested.
  • Gillespie said “80 percent of the companies [Romney] invested in grew.” Again, Bain was referring to its entire 28-year history — not just the 14-year period when Romney was in charge. There is no separate accounting of revenue growth at Bain-owned companies during Romney’s years.

A former chairman of the Republican National Committee, Gillespie appeared May 27 on “Face the Nation,” where he defended Romney’s record at Bain Capital. He was responding to Robert Gibbs, a senior adviser to President Obama’s reelection campaign, who was attacking Romney’s years as the top man at Bain Capital.

Gillespie: So lot of different things to — to talk about there, Bob. But, number one, let’s start with the attack on Governor Romney as, you know, in terms of his experience in the private sector. The fact is that Bain Capital — there were a number of investments that didn’t perform well. In the case of Bain, it was less than 5 percent of the investments that ended up in bankruptcy. The fact is 80 percent of the companies he invested in grew.

Gillespie gets his figures from a March 13 letter that Bain Capital sent to its investors. Romney cofounded Bain in 1984. But the letter covered Bain’s entire 28-year history, not just the 14 years (1984 to early 1999) when Romney was in charge. Also, Bain’s figures cannot be independently verified and its information is presented in the best possible light for the company.

Let’s take the bankruptcy claim.

Bain, March 13: Through more than a generation of investing, less than 5 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.

Bain is referring to 350 companies that it invested in over a 28-year period, and it is including only companies that filed for bankruptcy “while under our control.” But the Wall Street Journal tracked the success or failure of 77 companies in which Bain invested from 1984 to February 1999, when Romney was in charge. Also, the Journal tracked the performance of those 77 companies for eight years, so it includes some companies that filed for bankruptcy after Bain relinquished control.

As a result, the Wall Street Journal found that a far higher percentage of companies filed for bankruptcy or went out of business.

Wall Street Journal, Jan. 9: The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward.

Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost.

Likewise, Gillespie misrepresented Bain’s letter when he said of Romney: “The fact is 80 percent of the companies he invested in grew.” Once again, the Bain letter referred to its entire 28-year history.

Bain, March 13: [T]he facts are that revenues grew during our ownership in 80 percent of the more than 350 companies in which we have invested.

This is the second time in less than a week in which a top Romney surrogate has misrepresented the Bain letter in defense of Romney.

As we previously reported, former New Hampshire Gov. John Sununu wrongly claimed in a campaign conference call with reporters that Bain Capital was “able to save jobs … about 80 percent of the time” at companies in which it had invested. In that case, Sununu completely flubbed the talking point. Bain’s letter said revenue grew at 80 percent of the companies in which it invested. Companies can grow revenues without necessarily saving or creating jobs. Bain’s letter did not provide a net jobs figure. In fact, Bain said “experts agree that calculating net job growth across a portfolio of companies is difficult to do with precision.”

— Eugene Kiely