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"Do you have to cheat to be rich?"
The question came from the chocolate-smeared lips of my six-year-old son, Sam, as we licked fudgesicles at the end of another steamy day.
In the simplest sense, the answer is no, of course. But you can forgive a child--or an adult, for that matter-- for having such a thought in this particular election cycle.
After all, the Republican presidential candidate has made oodles of money doing something that--at best--is unclear, and--at worst--seems exactly like cheating. (I say oodles, not because I'm too lazy to look up the details of his fortune, but because Romney has refused to release the tax returns which would give us the figure--estimated to be anywhere between $150 and $250 million.)
His dad, George Romney, ran a car company. I get that. American Motors made money by turning metal into automobiles. Mitt, our would-be president, ran a company called Bain Capital, a "private equity firm" (already I'm on shakier ground) that bought and sold other companies.
How do you make money when you don't actually create anything? The standard answer is that you "eliminate inefficiencies." But what does that actually mean? And how does it affect companies' employees and their families?
To find out, I called Cindy Hewitt, who was the HR manager at Dade Behring, a company that Bain formed from another company it acquired in 1994, in part by laying off some 850 of its employees in Florida three years later--and sold in 1999 at a profit of $242 million.
The Dade Behring factory, which made pills and blood testing devices, was on the banks of the Miami River in Florida across the street from a small cluster of houses where many of the workers lived. Hewitt describes the place as "a working class community, nothing fancy," that was nonetheless remarkably close-knit and stable:
"What made this incredibly unique was the fact that so many people within that community worked there, walking to work across the street every day. Multiple generations, extended families were employed by the plant."
Unfortunately Hewitthad to give the people of this small, river-bank community the devastating news that they'd lost their jobs when Bain closed the plant in November of 1997.
"Usually, if someone gets laid off, others in the family can help each other out," says Hewitt," who was familiar with the ways of the corporate world, having previously worked at Pepsi and Exxon. "But here, because multiple members within families lost their jobs, there weren't those resources. There were families where multiple aunts and uncles and parents all worked at the plant."
Adding to the pain of losing well-paying jobs with decent benefits was the indifference with which the company handled the transition. Hewitt says the factory work came with health insurance and paid in the $15- to $20-an-hour range.
In September of 1997, before she had any idea the plant would close, Hewitt's bosses told her to bring over roughly a dozen skilled workers from a similar plant that was closing in Puerto Rico. The workers didn't initially want to come, she told me, and specifically worried about what might happen if they lost their new jobs in Florida.
Hewitt relayed their concerns to her higher-ups and was assured that there was absolutely no discussion of closing the facility. Yet, 60 days after they moved to Miami, these workers had their fears confirmed when they learned that the plant's demise was imminent. This was in November, after school was underway, and half of them had brought their children with them.
Dade Behring had paid the Puerto Rican employees' moving costs, which Hewitt estimates were about $10,000 each. As part of their contract, they had signed agreements that stipulated that the workers would repay these costs if they left the company before a certain amount of time had passed. Hewitt says most of the recruits from Puerto Rico asked to be released from their agreement before the plant closed so that they could return to their home to seek new jobs and restart their lives there.
"The only decent thing to do would be to release these employees from their relocation agreement," says Hewitt. But, despite the fact that Dade Behring was terminating their employment, the company threatened to collect the money from the employees if they left before the plant closed, and even threatened to go after them legally if they didn't pay it, according to Hewitt, who describes the workers' experience as particularly gut-wrenching.
"They had just gone through the plant closure in Puerto Rico and they come over here for what they believe is a continuing career only to find they have to go through the same horrific experience," she says. "All they asked was don't make us pay you back the thousands of dollars for relocation."
Perhaps these moving costs are some of the inefficiencies that Bain specialized in eliminating. Still, it's hard to see how a company would fight so hard to get $120,000 (to use Hewitt's estimates) from workers whose lives--and children's lives--they themselves had thrown into chaos. Had they made just this one concession toward decency, Bain would still have walked away with $241,880,000.
But, at least at Dade, executives didn't seem particularly concerned with decency or worker's feelings, as evidenced by another incident Hewitt described to me. This one took place after the announcement of the plant's closing, while workers were putting in mandatory overtime despite facing imminent job loss. It was a somber period, according to Hewitt:
"They know their job is ending," she says. "They understand that it's unlikely that they're going to find anything that will remotely sustain their families the way this job has. They also recognize they're going to have a harder time competing with workers in their twenties. But they're still working many hours."
And yet, one day during this awful time, the workers-- "people who are working their butts off, whose lives are in total disarray," Hewitt says--were treated to an extra helping of humiliation. As they made their way from the plant's production area to the break room, they passed by the executive suites where, through the glass wall that separated them, they could see their bosses practicing their golf strokes.
Hewitt remembers 20-or-so workers with their faces pressed against the glass wall, staring, open-mouthed as the men on the other side casually swung putters.
Romney has responded to some of the criticism around Dade Behring (which is just one of seven companies that went bankrupt after being taken over by Bain in the Romney era) by noting that he left Bain in 1999, which was two years after the plant's closing and the same year as the $242 million payout to the private equity firm.
But, in light of the news that Bain filed documents with the Securities and Exchange Commission listing Romney as the chief executive and chairman of Bain until 2002, that defense seems pretty crumbly. (Romney responded to that revelation by explaining that, despite being "the owner of an entity that is filing that information," he had no role in running the company.)
For Hewitt, the Dade Behring affair was traumatic enough to drive her from the corporate world. Days after seeing her co-workers stare at their golf-playing bosses, she quit. I reached her at an animal shelter, where she now tends to feral cats and enjoys the feeling that she can "make a difference."
For me, the sordid story of what happened to this small community in Florida is enough to convince me that, whether he broke the law or not, Romney is indeed a cheater in the sense that I think Sam meant it: someone who does the wrong thing to make money.
You don't have to cheat to be rich, I'm going to tell Sam when he's old enough to understand. But it appears that Romney did. And someone like that should never be President.