Romney Firm Invested In Chinese Company That Touted Low Wages, Low Tax Liability To Investors

Source: ThinkProgress

A firm run by Republican presidential nominee Mitt Romney invested in a Chinese company just a week after it touted the low wages it paid its employees, stringent working conditions, and the low tax liability it faced compared to American companies in a document to investors.

Romney has gotten tough on the Chinese government on the campaign trail, but in 1998, Brookside Inc., a subsidiary of Bain Capital, invested in Global-Tech Appliances days after it sent investors a document detailing the low wages it paid its workers and the low tax liability it faced, the Boston Globe reports:

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A leaked video from a Romney fundraiser showed the candidate giving an account of a trip to China to visit a factory in which Bain considered investing. Romney talked of the long hours worked by teenage girls who lived in dormitories on the premises and earned low wages. Spokespersons for both the Romney campaign and Bain Capital declined to comment for the Globe’s story.

Mother Jones reported in July that Global-Tech also depended heavily on the outsourcing of American jobs to China.

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Read more: http://thinkprogress.org/economy/2012/09/26/910371/romney-firm-invested-in-chinese-company-that-touted-low-wages-low-tax-liability-to-investors/

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From that Boston Globe article:

http://www.boston.com/politicalintelligence/2012/09/25/chinese-firm-promoted-its-low-wage-low-tax-liability-investors-shortly-before-mitt-romney-made-investment/RirurgPBGsVkVQb5KGoxSK/story.html

WASHINGTON – Less than two weeks before an investment firm controlled by Mitt Romney decided to invest in a China-based home appliance company, the company put out a detailed document to investors promoting itself as a low-wage, low-tax firm that would not be subject to taxes in the United States.

It used “inexpensive labor,” Global-Tech Appliances wrote in a prospectus meant to attract investors on April 8, 1998. Its location in China meant “an overall effective tax rate that may be less than that of US corporations.” It said its current operations would not be subject to “material US taxes because it should not be considered to have significant income effectively connected with a trade or business in the US.”

The company also noted its working conditions: peak production periods required six-day work weeks, and two 10-hour shifts per day in the case of the metal stamping department. The main manufacturing facility, located in Dongguan, China, included 14 buildings that served as dormitories accommodating up to 3,700 workers.

Nine days after the document was released – on April 17, 1998 -- an affiliate of Bain Capital called Brookside Capital Partners Fund acquired about 6 percent of Global Tech, according to Securities and Exchange Commission documents that were first reported by Mother Jones magazine.

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Emphasis added.


Romney was listed as the sole shareholder, director, president and CEO of that Bain affiiliate.

The Globe article goes on to mention Romney's comments in that infamous fundraiser video about the Chinese factory Bain looked at, where the female workers slept in dormitories, 12 to a room, and they were paid "a pittance."

According to the Globe, the Romney campaign is still refusing to say whether Romney was talking about Global Tech there.

Romney should be asked about this during the debates.