The United Auto Workers and Service Employees International Union filed an ethics complaint against Mitt Romney for illegally hiding profits he made during the US auto bailout yesterday.
According to news reports and the investigative reporting of Greg Palast, Mitt and Ann Romney invested $1 million dollars in GOP guru and mega-donor Paul Singer’s hedge fund — Elliott Management. Elliott then bought out major US auto parts manufacturer Delphi nearing bankruptcy at pennies on the dollar — 67 cents per share. As the US government began to bail out auto manufacturers GM and Chrysler, Singer demanded that Delphi also be bailed out saying “because if you don’t, we’ll shut you down.” This hostage taking of a key US industry by Singer resulted in shock from the government committee tasked with saving the US auto industry which described Singer’s actions as treating the US as a dictator would a third world country.
The government, seeing no other way to save the US auto industry without a parts supplier, acquiesced to Singer’s demands and Singer, who now was essentially in control of Delphi, used the funds to make Delphi profitable again. But only for investors. He cut workers pensions and went public with the corporation pushing share values to over 22 dollars. Delphi also profited by utilizing a number of other unsavory practices. The first was taking a page from Romney’s Bain Capital and shipping US jobs to China. Of the 25,000 well-paying union jobs that Delphi once employed, zero remain. Further, under the republican Singer, Delphi liquidated its US presence. Of the 29 factories Delphi once operated in the US, four remain. The rest all operate on foreign shores — in Mexico or China. Under Singer, Delphi continued its hostage-taking practices demanding exorbitant high prices for the parts it sold to GM. Singer’s combination of predatory market cornering, blackmailing the government for a bailout, shipping US jobs overseas, and destroying unions resulted in larger profits for his fund and his clients, the Romneys.
These profits were then taken and hidden in a tax haven on the Isle of Jersey.
Before we move on to the Romneys role in this action, it is important to note how critical the US automobile industry is to both the US economy and to US national security. The industry serves two major purposes in this respect. First, it results in the employment of millions of Americans through its direct manufacturing facilities and through its supply chain. And, second, it serves as an emergency industrial capacity in the event of a major war. During World War II, the US relied on this manufacturing might to become the ‘Armory of Democracy.’ Though somewhat diminished, this indigenous capacity remains a bastion of American strength in the world. Singer’s actions not only harmed workers and the larger US economy, they also directly harmed US national security — in favor of the Chinese.
Moving on, it is estimated that the Romneys made anywhere between 15 and 115 million dollars off of Singer’s predatory actions against a critical US Industry, the US government auto bailout, and against working Americans. And while this may be as unsavory as many of Romney’s other vulture capitalist ventures, Singer’s almost certainly criminal activities have, thus far escaped legal action.
That’s where the Ethics filing against Romney comes into play. The Romneys have not disclosed these profits. Under the Ethics in Government Act of 1978 politicians are legally obligated to make public all profits related to holdings that may be affected by a government action. In other words, it is illegal for politicians to keep secret investments that may benefit or may have benefited from government action, like the bailout Singer extorted for Delphi.
The Romneys predatory benefit from the auto bailout in the case of their Elliott/Delphi investment is just such an instance, while their failure to disclose this information is almost certainly breaking the law. So the US auto worker filing may just catch the Romneys by the tail of their heinous venture.
Romney’s own endless political and rhetorical attacks against the US auto industry, taken in this context seem ever more dark, underhanded, and vicious. Romney had called for Detroit to go bankrupt. Romney has cynically and viciously profited by preying on the bailout he opposed, further weakening the industry and hampering its recovery. And now Romney engages in a smear campaign waged against the US auto industry and the workers themselves. The only surprise is that workers and the US auto industry didn’t fire back at Romney sooner. Now, at least, it appears Romney’s vicious and self-serving acts have made him a determined enemy out of a great US industry. One wonders if the American people will be next to join in the fray?