Auto Workers File Ethics Complaint Against Romney; Did Mitt Romney Break the Law While Preying on US Industry?

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?

Links:

http://www.thenation.com/article/170644/mitt-romneys-bailout-bonanza#

http://www.gregpalast.com/uaw-files-charges-against-romney-on-his-auto-bail-out-profiteering/

http://www.salon.com/2012/10/19/how_mitt_romney_made_a_fortune_off_the_auto_bailout/

http://www.thedetroitbureau.com/2012/10/romney-accused-of-personally-profiting-as-1000s-of-delphi-retirees-lost-pensions/

http://www.clevelandleader.com/node/19289

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“Let Detroit Go Bankrupt” Romney Attacks GM in Final Days of Election; GM Defends Record From Romney Lies, Calls Them ‘Fantasy’

Before we get into the new morass of mud and muck dredged up by the Romney campaign and slung at the US auto industry, it’s important to establish a few facts. This effort is useful as the Romney campaign, with its almost daily distortions and flip-flops, has been the most fact-free bid for the Presidency of any election cycle in modern memory. Romney’s most recent smear campaign, waged against the US auto industry and, by extension, American workers, is just the newest in a daily stream of distortions, gimmicks, smears, and attempts to terrorize the US electorate.

First, in an op-ed to the New York Times entitled “Let Detroit Go Bankrupt,” Mitt Romney, in his opening sentence, stated:

IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye.

Coming into office and facing the worst economic decline since the Great Depression left behind by the Bush Administration, President Obama decided to act to save over 2 million American jobs by directly supporting the auto industry bailout. Though far less expensive than the TARP program to bail out the US financial sector, the auto bailout provided much more direct support to the US middle class by ensuring that auto industry and supply chain jobs were not lost and that key US industries did not collapse. Conservatives of every stripe immediately howled that such government intervention would result in an US auto industry ‘doomsday.’ And Mitt Romney added his voice to those claiming US automakers would fail if they accepted government assistance during the worst of times.

As the years passed, Mitt Romney and conservatives have been proven drastically wrong. The US auto industry has recovered. GM is again the number 1 seller of automobiles in the world. And the industry is in the process of adding US jobs and repatriating jobs from overseas. This dramatic success belies republican and Romney drama to the contrary. It shows that the leadership role Obama took to save the US auto industry is now beginning to pay off. And, most glaringly, it shows the deep, systemic, failure of the current, rigid republican economic ideology.

Meanwhile, the corporation Romney built — Bain Capital — is now preparing to dismantle a factory that manufactures sensors for the auto industry in Freeport Illinois and ship their jobs overseas. Nearly 200 workers at the Sensata factory which Bain bought-out will find their jobs outsourced to China before the end of this year. This is a result of the outsourcing and off-shoring legacy that Romney pioneered while head of Bain Capital. (See more about Sensata here.)

This dual narrative of Obama’s leadership and success combined with Romney still profiting from liquidating US factories and sending the jobs overseas has had devastating effect for Romney in states like Ohio, Pennsylvania, Wisconsin and Michigan who know all too well how damaging outsourcing and off-shoring have been to their economies. Loss of critical factories like the one at Sensata has resulted in the gutting of entire communities. Whole neighborhoods in Detroit are now ghost towns as a result of the kind of outsourcing Mitt Romney pioneered at Bain Capital. Some of these lost jobs may never come back, captured by 99 cent an hour Chinese workers and a country that is unwilling to establish laws to protect its own people from the abuses of vulture capitalists like Romney. China may as well have foisted a sign emblazoned ‘Robber Barons R’ Us.’ And, Romney, among many others, came flocking to exploit the slave wage labor there by dismantling US factories and sending them overseas.

Perhaps too late, Romney has realized how damaging these methods of employing equities firms and off-shoring practices to accumulate personal profit have become. But the realization appears to have now stuck with a vengeance. And, in typical Romney fashion, Romney is now waging a media campaign against the very business Obama was so successful in saving and that, since late 2009, has directly added thousands of US jobs.

The Romney campaign is now running a malicious and false advertisement claiming that Jeep plans to ship US jobs overseas to China. The ad comes as Jeep revealed plans to build two manufacturing plants in China over the coming years. But, contrary to Romney’s false assertion, Jeep’s China expansion is not coming at the cost of any US manufacturing. Unlike Romney’s Sensata, no Jeep facilities are being shut down. No workers are being forced to train their Chinese replacements, as Romney’s Bain is forcing Sensata workers to do so. In fact, Jeep and GM have pledged to take profits from the Chinese operation and use it to create more jobs in the US. It’s almost the exact reverse of the Romney model. Call it in-sourcing, or re-sourcing, or repatriating, or even re-shoring. But it’s definitely not the Romney/Bain model for outsourcing and off-shoring.

Since late 2009, Jeep alone has added over 4600 US jobs, showing, in fact, that Romney’s claims are patently false.

GM was quick to defend its record from Romney’s false attacks:

“We’ve clearly entered some parallel universe during these last few days,” GM spokesman Greg Martin said. “No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the U.S. and repatriating profits back to this country.”

Crysler CEO Sergio Marchionne in an email to employees refuted Romney’s claims by simply laying out the facts:

“Jeep production will not be moved from the United States to China,” Marchionne stated in the e-mail. “The numbers tell the story,” followed by specific investments Chrysler has made in Detroit, Toledo and Belvidere, Ill. “Those include more than $1.7 billion to produce the successor of the Jeep Liberty and hire about 1,100 workers on a second shift by 2013.”

The additional 1100 jobs are on top of the 4600 jobs Jeep has already added. In contrast, Romney’s Bain will, in the next couple months, send another 200 jobs to China. So the contrast couldn’t be more stark.

And the media is starting to pick up on Romney’s egregious assault of lies against the US auto industry and US workers. The Atlanta Journal Constitution recently called the Romney advertisements attacking the auto industry ‘economic terrorism.’ The Detroit Free Press has published this in-depth piece exposing Romney’s false claims. The conservative-leaning US News and World Report posted an analysis showing how the US auto expansion in China was helping to support jobs expansion at home. And FactCheck.org labeled Romney’s recent advertising blitz “flat wrong” stating:

“It’s misleading to suggest that Chrysler’s decision to expand into China will cost U.S. jobs — especially after the company has said it would have no impact on its U.S. operations.”

The fact-checking website noted a report from Bloomberg that Chrysler was considering “adding Jeep production sites rather than shifting output from North America to China.” Meanwhile Chrysler, in a dramatic refutation of Romney’s doomsday prediction for the US auto industry, just reported a third quarter profit of $381 million, up 80 percent from a year ago.

It seems likely that the Romney misinformation machine may have just bitten off more than it can chew. Considering the wide-ranging backlash taking shape from both the US auto industry and the broader media, it appears that Romney’s false attacks against GM and Jeep are about to erupt in his face. The US auto industry is firmly on its path to recovery, with each new report showing positive results. Further, the US auto industry is in the process of adding thousands of jobs here in America. Both of these points prove Romney dramatically wrong. Wrong in his ‘Let Detroit go Bankrupt’ op-ed and wrong now. Finally, these attacks only serve to call attention to Romney’s own record of sending US jobs overseas, the most recent example of which is Sensata.

Links:

http://www.freep.com/article/20121031/NEWS15/310310091/GM-and-Chrysler-Romney-is-wrong

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=0

http://blogs.ajc.com/jay-bookman-blog/2012/10/31/gm-on-romney-campaign-politics-at-its-cynical-worst/

http://www.usnews.com/news/blogs/rick-newman/2012/10/31/memo-to-mitt-romney-gms-success-in-china-is-good-for-america

http://www.cbsnews.com/8301-34222_162-57542993/gm-like-chrysler-refutes-romneys-auto-industry-ad/

http://www.politico.com/blogs/burns-haberman/2012/10/gm-aide-romney-ads-part-of-parallel-universe-147753.html

http://www.upi.com/Top_News/US/2012/10/30/GM-Gap-between-Romney-ad-and-reality/UPI-56761351637557/

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