The roots of Bain Capital in El Salvador’s civil war

Romney tapped El Salvador's wealthy families, including one linked to right-wing death squads

Topics: Mitt Romney, Bain Capital, 2012 Elections, War Room, Latin America, Editor's Picks, ,

The roots of Bain Capital in El Salvador's civil warMitt Romney (Credit: Jessica Rinaldi / Reuters)

A significant portion of the seed money that created Mitt Romney’s private equity firm, Bain Capital, was provided by wealthy oligarchs from El Salvador, including members of a family with a relative who allegedly financed rightist groups that used death squads during the country’s bloody civil war in the 1980s

Bain, the source of Romney’s fabulous personal wealth, has been the subject of recent attacks in the Republican primary over allegations that Romney and the firm behaved like, in Rick Perry’s words, “vulture capitalists.”One TV spot denounced Romney for relying on “foreign seed money from Latin America” but did not say where the money came from. In fact, Romney recruited as investors wealthy Central Americans who were seeking a safe haven for their capital during a tumultuous and violent period in the region.

Like so much about Bain, which is known for secrecy and has been dubbed a “black box,” all the names of the investors who put up the money for the initial fund in 1984 are not known. Much of what we do know was first reported by the Boston Globe in 1994 when Romney ran for U.S. Senate against Ted Kennedy.

In 1984, Romney had been tapped by his boss at Bain & Co, a consulting firm, to create a spin-off venture capital fund, Bain Capital.

A Costa Rica-born Bain official named Harry Strachan invited friends and former clients in Central America to a presentation about the fund with Romney in Miami. The group was impressed and “signed up for 20% of the fund,” according to Strachan’s memoir. That was about $6.5 million, according to the Globe. Bain partners themselves were putting up half the money, according to Strachan. Thus the Central American investors had contributed 40 percent of the outside capital.

Back in 1984, wealthy Salvadoran families were looking for safe investments as violence and upheaval engulfed the country. The war, which pitted leftist guerrillas against a right-wing government backed by the Reagan administration, ultimately left over 70,000 people dead in the tiny nation before a peace deal was brokered by the United Nations in 1992. The vast majority of violence, a UN truth commission later found, was committed by rightist death squads and the military, which received U.S. training and $6 billion in military and economic aid. The Reagan administration feared that El Salvador could become a foothold for Communists in Central America.



The notorious death squads were financed by members of the Salvadoran oligarchy and had close links to the country’s military. The death squads kidnapped, tortured, and killed suspected leftists in urban areas fueling an insurgency that retreated to rural areas and waged war on the government from the countryside. The war, which lasted 12 years, triggered an exodus that brought more than 1 million Salvadorans to the United States.

There is no evidence that any of Bain Capital’s original investors were involved in these sorts of activities. But the identities of some of the investors remain secret, and there are family names that raise questions.

Four members of the de Sola family were among the original Bain investors, or “limited partners” in the company, the Globe reported. Their relative and “one-time business partner,” Orlando de Sola, was an important figure in El Salvador. A well-known right-wing coffee grower with an (in his words) “authoritarian” vision for the country, de Sola spent time living in Miami but was also a founding member of the right-wing Arena party, lead by a U.S.-trained former intelligence officer named Roberto D’Aubuisson.

Craig Pyes, an investigative reporter then with the Albuquerque Journal, wrote a series on the rightist death squads based on extensive on-the-ground reporting in El Salvador in the early 1980s with Laurie Becklund of the Los Angeles Times, while the death squads were still active.

Pyes, who has since won two Pulitzer Prizes and is now a private investigator in California, says that no one has produced any proof that de Sola directly funded death squads.

“However,” Pyes says, “he was in the inner circle of the group around D’Aubuisson at the time that D’Aubuisson was well known to be involved in the death squads. De Sola’s name appears in a December 1983 FBI cable as one of 29 people suspected by State Department officials of furnishing funds and weapons to Salvadoran death squads.”

De Sola’s name also turned up in a notebook, seized from an aide to D’Aubuisson named Saravia, that detailed the finances of D’Aubuisson’s terrorist network, according to Pyes.

The Saravia notebook, reviewed by U.S. officials, listed weapons purchases, payments, and what appear to be descriptions of violent plots by rightists, including the assassination of El Salvador’s Archbishop Oscar Arnulfo Romero in 1980. Asked about the notebook by the New York Times in the late 1980s, de Sola denied that he had ever helped finance political violence. De Sola could not be reached for comment for this story.

Romney, for his part, who was much more accessible to the press in 1994, told the Globe that year that “we investigated the individuals’ integrity and looked for any obvious signs of illegal activity and problems in their background, and found none. We did not investigate in-laws and relatives.” He also said that Bain had checked the names of the Bain investors with the U.S. government. Given the policy of the Reagan administration at the time, though, it’s not clear going to the government would have been the most effective vetting mechanism.

It’s impossible to fully explore the backgrounds of the original Bain investors because we don’t know all their identities, including the names of the four members of the de Sola family mentioned by the Globe. Neither the Romney camp, Bain Capital, nor Strachan — the Bain executive who recruited the Central Americans — responded to requests for comment.

During his first presidential bid in 2007, Romney more than once touted the Central American investors in Bain while trying to woo Hispanic voters. In a speech in March of that year to the Miami-Dade Lincoln Day Dinner, Romney actually specified five of the original “partners” in Bain Capital — but the de Sola family was not among those he named.

And that August he told the Miami Herald, “The investments for the company that I started, Bain Capital, came largely from Latin America. My largest single investors came from El Salvador, Ecuador, Colombia and Guatemala. And so I feel a deep kinship to people in Latin America.”


Justin Elliott is a reporter for ProPublica. You can follow him on Twitter @ElliottJustin

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    Ten spectacular graphic novels from 2014

    Beautiful Darkness by Fabien Vehlmann & Kerascoët
    Kerascoët's lovely, delicate pen-and-watercolor art -- all intricate botanicals, big eyes and flowing hair -- gives this fairy story a deceptively pretty finish. You find out quickly, however, that these are the heartless and heedless fairies of folk legend, not the sentimental sprites beloved by the Victorians and Disney fans. A host of tiny hominid creatures must learn to survive in the forest after fleeing their former home -- a little girl who lies dead in the woods. The main character, Aurora, tries to organize the group into a community, but most of her cohort is too capricious, lazy and selfish to participate for long. There's no real moral to this story, which is refreshing in itself, beyond the perpetual lessons that life is hard and you have to be careful whom you trust. Never has ugly truth been given a prettier face.

    Ten spectacular graphic novels from 2014

    Climate Changed: A Personal Journey Through the Science by Philippe Squarzoni
    Squarzoni is a French cartoonist who makes nonfiction graphic novels about contemporary issues and politics. While finishing up a book about France under Jacques Chirac, he realized that when it came to environmental policy, he didn't know what he was talking about. "Climate Changed" is the result of his efforts to understand what has been happening to the planet, a striking combination of memoir and data that ruminates on a notoriously elusive, difficult and even imponderable subject. Panels of talking heads dispensing information (or Squarzoni discussing the issues with his partner) are juxtaposed with detailed and meticulous yet lyrical scenes from the author's childhood, the countryside where he takes a holiday and a visit to New York. He uses his own unreachable past as a way to grasp the imminent transformation of the Earth. The result is both enlightening and unexpectedly moving.

    Ten spectacular graphic novels from 2014

    Here by Richard McGuire
    A six-page version of this innovative work by a regular contributor to the New Yorker first appeared in RAW magazine 25 years ago. Each two-page spread depicts a single place, sometimes occupied by a corner of a room, over the course of 4 billion years. The oldest image is a blur of pink and purple gases; others depict hazmat-suited explorers from 300 years in the future. Inset images show the changing decor and inhabitants of the house throughout its existence: family photos, quarrels, kids in Halloween costumes, a woman reading a book, a cat walking across the floor. The cumulative effect is serene and ravishing, an intimation of the immensity of time and the wonder embodied in the humblest things.

    Ten spectacular graphic novels from 2014

    Kill My Mother by Jules Feiffer
    The legendary Pulitzer Prize-winning cartoonist delivers his debut graphic novel at 85, a deliriously over-the-top blend of classic movie noir and melodrama that roams from chiaroscuro Bay City to Hollywood to a USO gig in the Pacific theater of World War II. There's a burnt-out drunk of a private eye, but the story is soon commandeered by a multigenerational collection of ferocious women, including a mysterious chanteuse who never speaks, a radio comedy writer who makes a childhood friend the butt of a hit series and a ruthless dame intent on making her whiny coward of a husband into a star. There are disguises, musical numbers and plenty of gunfights, but the drawing is the main attraction. Nobody convey's bodies in motion more thrillingly than Feiffer, whether they're dancing, running or duking it out. The kid has promise.

    Ten spectacular graphic novels from 2014

    The Motherless Oven by Rob Davis
    This is a weird one, but in the nervy surreal way that word-playful novels like "A Clockwork Orange" or "Ulysses" are weird. The main character, a teenage schoolboy named Scarper Lee, lives in a world where it rains knives and people make their own parents, contraptions that can be anything from a tiny figurine stashable in a pocket to biomorphic boiler-like entities that seem to have escaped from Dr. Seuss' nightmares. Their homes are crammed with gadgets they call gods and instead of TV they watch a hulu-hoop-size wheel of repeating images that changes with the day of the week. They also know their own "death day," and Scarper's is coming up fast. Maybe that's why he runs off with the new girl at school, a real troublemaker, and the obscurely dysfunctional Castro, whose mother is a cageful of talking parakeets. A solid towline of teenage angst holds this manically inventive vision together, and proves that some graphic novels can rival the text-only kind at their own game.

    Ten spectacular graphic novels from 2014

    NOBROW 9: It's Oh So Quiet
    For each issue, the anthology magazine put out by this adventurous U.K.-based publisher of independent graphic design, illustration and comics gives 45 artists a four-color palette and a theme. In the ninth issue, the theme is silence, and the results are magnificent and full of surprises. The comics, each told in images only, range from atmospheric to trippy to jokey to melancholy to epic to creepy. But the two-page illustrations are even more powerful, even if it's not always easy to see how they pertain to the overall concept of silence. Well, except perhaps for the fact that so many of them left me utterly dumbstruck with visual delight.

    Ten spectacular graphic novels from 2014

    Over Easy by Mimi Pond
    When Pond was a broke art student in the 1970s, she took a job at a neighborhood breakfast spot in Oakland, a place with good food, splendid coffee and an endlessly entertaining crew of short-order cooks, waitresses, dishwashers and regular customers. This graphic memoir, influenced by the work of Pond's friend, Alison Bechdel, captures the funky ethos of the time, when hippies, punks and disco aficionados mingled in a Bay Area at the height of its eccentricity. The staff of the Imperial Cafe were forever swapping wisecracks and hopping in and out of each other's beds, which makes them more or less like every restaurant team in history. There's an intoxicating esprit de corps to a well-run everyday joint like the Imperial Cafe, and never has the delight in being part of it been more winningly portrayed.

    Ten spectacular graphic novels from 2014

    The Shadow Hero by Gene Luen Yang and Sonny Liew
    You don't have to be a superhero fan to be utterly charmed by Yang and Liew's revival of a little-known character created in the 1940s by the cartoonist Chu Hing. This version of the Green Turtle, however, is rich in characterization, comedy and luscious period detail from the Chinatown of "San Incendio" (a ringer for San Francisco). Hank, son of a mild-mannered grocer, would like to follow in his father's footsteps, but his restless mother (the book's best character and drawn with masterful nuance by Liew) has other ideas after her thrilling encounter with a superhero. Yang's story effortlessly folds pathos into humor without stooping to either slapstick or cheap "darkness." This is that rare tribute that far surpasses the thing it celebrates.

    Ten spectacular graphic novels from 2014

    Shoplifter by Michael Cho
    Corinna Park, former English major, works, unhappily, in a Toronto advertising agency. When the dissatisfaction of the past five years begins to oppress her, she lets off steam by pilfering magazines from a local convenience store. Cho's moody character study is as much about city life as it is about Corinna. He depicts her falling asleep in front of the TV in her condo, brooding on the subway, roaming the crowded streets after a budding romance goes awry. Like a great short story, this is a simple tale of a young woman figuring out how to get her life back, but if feels as if it contains so much of contemporary existence -- its comforts, its loneliness, its self-deceptions -- suspended in wintery amber.

    Ten spectacular graphic novels from 2014

    Through the Woods by Emily Carroll
    This collection of archetypal horror, fairy and ghost stories, all about young girls, comes lushly decked in Carroll's inky black, snowy white and blood-scarlet art. A young bride hears her predecessor's bones singing from under the floorboards, two friends make the mistake of pretending to summon the spirits of the dead, a family of orphaned siblings disappears one by one into the winter nights. Carroll's color-saturated images can be jagged, ornate and gruesome, but she also knows how to chill with absence, shadows and a single staring eye. Literary readers who cherish the work of Kelly Link or the late Angela Carter's collection, "The Bloody Chamber," will adore the violent beauty on these pages.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>