[jeffkrol]

Mitt Romney's Bain Made Millions On Big Tobacco In U.S., Russia

Capitalism knows no "enemies" .. only markets.............

Bain's Russian business wasn’t about family-friendly products. Those deals were about cigarettes. And that work sent Bain into the shadows of the post-Soviet economy -– including helping to orchestrate anonymous, convoluted cash transactions to keep major deals hidden from regulators and competitors. It was part of a free-for-all that involved wholesale looting of major industries, as Western technocrats helped facilitate the transfer of Russia's wealth into the hands of a few oligarchs. That set in motion a populist backlash that helped sweep Vladimir Putin into power, giving the Kremlin dominance over a country Romney has lately called our "number one geopolitical enemy."

Bain was in the middle of all of this, putting to work the same skills it had sharpened in the U.S. -- using taxpayer money to help it gain footholds in Russia. In March 1993, the American government gave Bain & Co. a $3.9 million contract to advise Boris Yeltsin's administration on the privatization of the Russian economy, according records detailing the arrangement uncovered by The Huffington Post. Romney's consultants helped foreign firms and aspiring oligarchs decide how to corral Russia's riches -- including writing an official manual that outlined how best to navigate the process. At the same time, Bain leveraged its contacts with senior Russian officials to arrange sweetheart deals for its tobacco clients.

The Soviet Union's downfall meant rich rewards for any company able to move quickly, and the timing was right for U.S. and British tobacco companies eager to control the cigarette market. Under pressure at home for marketing an addictive and deadly product, domestic sales were shrinking. It was a dilemma Bain and Romney knew well, having worked extensively on behalf of Philip Morris in the U.S. beginning in 1990. In 1992, Bain approached British American Tobacco -- the international conglomerate behind Kool, Lucky Strike, Pall Mall and Benson & Hedges -- offering a lucrative partnership in Russia. It worked.

Documents chronicling Bain's tobacco work are housed at the University of California at San Francisco's Legacy Tobacco Documents library. Following a tip from a reader who wrote to OffTheBus@huffingtonpost.com, The Huffington Post reviewed hundreds of Bain documents from Legacy's digital archives, along with materials gathered from industry experts and government databases. The Huffington Post also interviewed former Bain employees who worked on the tobacco projects, additional American experts, tobacco control advocates in Moscow, and those with experience with Russia's early, unbridled privatization years.

[lesmore49]

Wasn't Bain the company that contributed significantly to Obama's campaign ?

[jeffkrol]

Wasn't Bain the company that contributed significantly to Obama's campaign ?

That's the only interesting thing you got out of this??????????????????

Privatization in Russia was supposed to be a democratic exercise. Citizens would be given vouchers worth a certain stake in local businesses, which could then be traded in for cash, a stake in that actual business, or a stake in a Wall Street-style investment fund that bought and sold Russian assets. But through rigged auctions and other dubious land grabs engineered by the Russian government and its financial advisers, Russian citizens quickly found themselves with almost no stake in the post-Soviet economy, while a few politically connected elites took over nearly everything.

"The voucher program traded people's de facto property rights in their enterprises for vouchers worth a few bottles of vodka, so the enterprises could then be sold to foreigners or oligarchs," notes economist David Ellerman, who worked at the World Bank on privatization issues in Russia and Eastern Europe during the early-1990s. "Russia was like a conquered province with Bain et al. as the carpetbaggers to help divvy up the prizes."

Willard said he had left Bain before the privatization racket really took off, but he kept in touch with his former colleagues, and believed at the time that Russia's voucher system had potential to be abused. "You'd have to say that some regrettable people ended up on top," he admitted, adding that he believed it would be easy for "some operator to buy up these vouchers at a big discount and assemble enough vouchers to gain control. I remember thinking, 'Why are we doing that?'"

A dark chapter of economic history soon unfolded, in which nearly all of the superpower's assets were steered into the hands of a few local oligarchs and cutthroat Western corporations.

"Privatization was basically totally corrupt in most of Russia," Nobel Prize winning economist Joseph Stiglitz told HuffPost in an interview. Stiglitz served as chief economist at the World Bank during the final phase of Russia's privatization project, after Bain's activities in the region. "The whole thing was a criminal charade."

As the Russian government's "principal adviser" on privatization transactions, Bain was tasked with compiling the official government manual laying out the rules for bringing state resources into the marketplace.

The post-Soviet scramble was about much more than government contracts, and Bain pursued every profitable angle. In addition to overseeing thousands of voucher privatizations, Bain pitched its Russian team to multinational corporations as experts on Russian privatization, promising big profits squeezed from its connections with Russian authorities. By working both sides of the deal, Bain epitomized the corrupt nature of Russia's privatization swindle -- taking government money to secure an efficient public offering, and then locking in below-market terms from that deal for a corporate client. The USAID performance review and dozens of confidential memos between Bain and BAT reveal that while Bain was under contract to push privatization in the Russian region of Saratov, Bain was also advising BAT on purchasing a Saratov tobacco factory.

"I have never come across an instance of 1990s privatization in Russia without deep conflicts of interest," said Princeton history professor Stephen Kotkin. "Theft was colossal, but there was no one to prevent that theft, just people –- including some foreigners, but mostly domestic types -– to abet the theft."

USAID told HuffPost it could not determine whether Bain violated any American conflict-of-interest rules by working simultaneously with a private corporation and the Russian government. The agency said the answer would depend on whether Bain informed USAID about its work with BAT. Bain and BAT declined to comment on the matter.