Tag Archives: CaterAir

More on Mitt Romney’s tax returns, more ties with the Bushes

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More reasons for Mitt Romney to release tax returns, or maybe another reason why he hasn’t released his tax returns

Ties with Team Bush, part 1

 

Bush endorsing Romney

To be clear, the foremost reason why a candidate for the White House should release financial records is principle. The public has a right to know of any encumbrances and influences borne by someone running for the presidency, and for a presidential candidate, especially a major candidate, to dismiss or to downplay this principle is unworthy.

Descending swiftly to less exalted planes of argument, it should be apparent by now that there are also political reasons for presumptive-GOP nominee Mitt Romney to release his income tax returns. He seems to be concealing something, and even aside from the principle enunciated above it’s making him look bad. Admittedly the widespread buzz about Romney’s secretiveness may be playing into the hands of the Romney campaign. Possibly the campaign has made a tactical decision to refuse to release the IRS returns right up to the point when it about-faces and releases them, showing once and for all that there’s nothing there.

 

Romney, spoofed

In the meantime, however, that possibility has done nothing to deter speculation about Romney’s paper trail or financial track record. Time and space preclude an exhaustive list of speculations voiced so far about what Romney might be hiding, but here are a few:

  • Did Romney pay no income tax at all some years, despite his wealth? Raised in January, this possibility has also been discussed in Bloomberg News and in the Washington Post, among other outlets.
  • Are Romney’s effective tax rates just embarrassingly low, compared to the taxes much poorer people pay in the United States? Think Progress discussed this one early, followed by other outlets including money.cnn.com and The Daily Beast.
  • Would his IRS returns reveal more about Romney’s embarrassing offshore accounts and assets? The newest issue of Vanity Fair has more on this.
  • Then there is the overlapping issue of tax havens and tax shelters, wherever they may be. Has Romney been even more closely associated with them than the public has yet been made aware?
  • Are there more discrepancies in Romney’s own bookkeeping, as between his IRS filings and his company’s SEC filings, or between his records and his public statements?

 

Here is another question.

A plethora of SEC filings and other sources indicate that Romney and his cronies in the business community, including Marriott, helped GWBush and the Bush team over the years. As has been noted elsewhere, in this eloquent piece by Joe Conason for example, the Bush administration and Team Bush are not looking good in electoral politics in 2012. It is politically understandable that Romney wouldn’t want to be linked with the Bush image. But  even a quick overview of George W. Bush’s track record in business corroborates  Ralph Nader’s comment in 2000 that George Bush was “a group of corporations running as a man,” and prominent among those corporations was Marriott–closely tied to Romney, Romney’s family, and Romney’s companies. Marriott ties not only gave Mitt Romney his first name (after the Willard in Marriott) but also gave Dubya his business career.

 

An early Carlyle Group acquisition

The Marriott clan’s ties to the Romney team, past and present, are too extensive and too well reported to need belaboring here. Romney-Marriott closeness is a political and financial given. That Marriott enterprises also provided George W. Bush the platform for his business career has not been widely reported–none of the major media outlets touched it, or thoroughly vetted Bush’s business career, in 2000–although I sketched part of the story in 2004. One minor entity was an unsuccessful airline food company named Caterair International Corporation, a spin-off from Marriott Corporation, which founded the airline-food industry in the thirties. As written previously, CaterAir  was started in 1989 by a private investors group including Bush supporters Daniel J. Altobello and Frederic V. Malek, who then brought Bush on. George W. Bush became a director at CaterAir officially in 1990, the company got an additional boost from the Carlyle Group, where George H. W. Bush came on board after leaving the White House in 1992, and Bush left in 1994 to run for Governor of Texas.

 

Former Texas Gov. Ann Richards

Romney-Bush family ties in Virginia

 

Coleman Andrews, second from left

The Marriott company or cluster of interests, however, is not the only Romney-Bush link. If we really want to know more about ties between Romney interests and Bush interests over the years, we can cut out the Marriott middleman and go straight to, among others, T. Coleman Andrews III, co-founding partner of Bain Capital and brother of Scott Andrews, who co-founded the investment firm Winston Partners with George W. Bush’s youngest brother, Marvin Bush. The family ties in politics and finance run deep. The Andrews’ late grandfather, Thomas Coleman Andrews, a founder of the John Birch Society, resigned from his position as IRS commissioner under Eisenhower. Scott Andrews served as an executive in two air transport companies, Presidential Airways and World Corp–where Coleman Andrews was chair. Both went bankrupt; Coleman Andrews left WorldCorp in 1998. A brother-in-law of Jack Kemp, he also became CEO of South African Airways.

Side note: Called in by Nelson Mandela as a consultant for South African Airways, Coleman Andrews reportedly spent hundreds of millions on consultants including Bain Capital. Andrews himself left SAA in 2001 with a golden parachute reported at $14 million. There is no indication at this time that the Romney campaign plans to include a stop in South Africa for one of its international fundraisers.

Space precludes an extensive history of WorldCorp here. Suffice it to say that Bain Capital and Bain alumni, or directors and officers, were all over the company and its bankruptcy, as shown here and here and here among numerous documents. WorldCorp and Bain were all over the problems at South African Airways, as noted. They were thick on the ground in the bankruptcy of World Airways–owned by WorldCorp and headed by Coleman Andrews–which also purchased consulting from Bain Capital. They were also extensively connected with a series of mergers and buy-outs through which a lesser known company called US Order became part of ever larger financial services firms. For example, see this SEC filing dating from the 2005 merger of InteliData and Corillian Corporation. InteliData, with Bain alum John Backus on board, became Coriallian; Corillian bought CheckFree, now FISERV.

“ Patrick F. Graham, age 65, has served as a director of InteliData since 1996 and was a director of US Order, Inc. from 1993 until US Order and Colonial Data Technologies Corp. merged to form InteliData in November 1996. Since October 2001, he has been the Vice President of Business Development and Strategic Projects for The Gillette Company, a consumer products marketer of personal care and personal use products. From July 1999 until October 2001, he was the Director of the Global Strategy Practice of A.T. Kearney, Inc., a management consulting firm. From 1997 until June 1999, he served as Chief Executive Officer of WorldCorp, Inc. On February 12, 1999, WorldCorp, Inc. filed a voluntary petition and a proposed plan of reorganization under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the district of Delaware. He was previously a director of Bain & Company, Inc., a management consulting firm Mr. Graham co-founded in 1973. In addition to his primary responsibilities with Bain clients, he served as Bain’s Vice Chairman and Chief Financial Officer. Prior to founding Bain, Mr. Graham was a group Vice President with the Boston Consulting Group. Mr. Graham is also a director of Stericycle, Inc., a provider of medical waste services and OSHA compliance services.”

A co-founder of Bain, Graham served on the board of InteliData with an alumna of CaterAir and as stated another alumnus of Bain Capital as well as of US Order. The ties extend farther. This SEC filing from World Air Holdings, the holding company of World Airways and WorldCorp, lists as directors John Backus, A. Scott Andrews and Daniel J. Altobello. Again, sponsors of Bush family interests and of George W. Bush, respectively, in the realms of finance and of politics have been working hand in corporate glove for years with Romney cronies and partners. This is no far-fetched, diffuse, stretched set of associations; it’s partners and relatives with longstanding political and financial ties, serving in the same boardrooms–boardrooms, be it noted, that were key in some spectacular bankruptcies and other failures at a considerable human cost. Furthermore, the ties extend to some political views that are considered weird by any reasonable criterion.

It’s that simple.

Romney’s reluctance to release his detailed IRS records is not mystifying. It will be a little mystifying if he gets away with not doing so.

Today’s history lesson: CaterAir, George W. Bush (and Marriott)

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Today’s history lesson: CaterAir, George W. Bush (and Marriott)

In July 2003, the founder of the Carlyle Group, David Rubenstein, chatted with company investors and made several tape-recorded comments about a former director at one Carlyle subsidiary. The subsidiary was an ill-fated airline-food company named CaterAir International Corporation, a spin-off from Marriott, and the director was George W. Bush:

“But when we were putting the board together, somebody came to me and said, look there is a guy who would like to be on the board.  He’s kind of down on his luck a bit.  Needs a job.  Needs a board position.  Needs some board positions. Could you put him on the board?  Pay him a salary and he’ll be a good board member and be a loyal vote for the management and so forth.”

“I said well we’re not usually in that business.  But okay, let me meet the guy. I met the guy.  I said I don’t think he adds that much value.  We’ll put him on the board because–you know–we’ll do a favor for this guy; he’s done a favor for us. We put him on the board and spent three years.  Came to all the meetings.  Told a lot of jokes.  Not that many clean ones.  And after a while I kind of said to him, after about three years–you know, I’m not sure this is really for you.  Maybe you should do something else.  Because I don’t think you’re adding that much value to the board.  You don’t know that much about the company.”

“And I said, thanks–didn’t think I’d ever see him again.  His name is George W. Bush.  He became President of the United States.  So you know if you said to me, name 25 million people who would maybe be President of the United States, he wouldn’t have been in that category.  So you never know.  Anyway, I haven’t been invited to the White House for many things.”

Audio of Rubenstein’s becoming candor can be found at Pacifica among other sites.

CaterAir was founded in 1989, spun off partly from Marriott Corporation by a private investors group including prominent Bush supporters Daniel J. Altobello and Frederic V. Malek.  Auspices were poor. Airline-food jokes aside, Marriott, which had founded the airline catering industry, reportedly let its airline catering division go because of thin profits and uncertainties in the airline industry. However, it also provided a place for the future candidate for Texas governor and the White House.

George W. Bush

The Carlyle Group, where George H. W. Bush joined the board after leaving the White House, gave George W. Bush the directorship at CaterAir in 1990.  Bush left in 1994 to run for Governor of Texas.  Here is a partial chronology of CaterAir’s bumpy career:

  • February 1990:  CaterAir restructures its longterm debt, withdrawing an earlier SEC filing for $110 million and going for $40 million more.  Eastern Airlines, which went bankrupt, was one earlier CaterAir client.
  • May 1990:  Merrill Lynch, a large brokerage firm with its own ties to the Bush clan, shops $250 million in refinancing for CaterAir, characterized in the business press as a high-risk, high-yield junk bond.
  • August 1990:  CaterAir completes its refinancing with a bridge loan.  Following the collapse of the junk bond market, two senior Merrill Lynch executives who led the company’s foray into junk bonds resign.  Bridge loans like the one to CaterAir are expected to become fewer.
  • December 1990:  CaterAir awards a contract to a California company to develop “a robotics system for its in-flight catering operations” including wrapping food.
  • March 1991:  Carlyle Group persuades Saudi Arabia’s Prince al-Walid bin Talal to spend a half-billion purchasing part of America’s largest banking company, Citicorp, earning a commission.  David Rubenstein says of Carlyle’s CaterAir purchase, “Despite the fact that the airline business is in trouble, the company is worth an enormous amount more than what we paid for it.”  Malek is quoted by NYTimes as saying, “I thought George W. Bush could make a contribution to CaterAir.”
  • December 1991:  CaterAir freezes or rolls back wages on most of its 20,000 employees, in spite of winning 66 new contracts in 1991.  Contracts with 48 air carriers in 28 cities include Virgin Atlantic at Boston’s Logan, All Nippon at JFK in New York, and Aerolineas Argentinas at Miami’s airport.
  • June 1992:  CaterAir among other companies campaigns against a bill in the California state senate to tax airline food, saying the tax will hurt their ability to employ workers.
  • August 1992:  CaterAir says it is not restructuring its debt in spite of flat sales.  Its joint ventures include Russia’s Aeroflot, the former national airline of the Soviet Union, operating a kitchen that caters to all flights through Moscow.
  • August 1992:  a former Marriott official pleads guilty to embezzling $1.4 million over 14 years, using fraudulent invoices from several vendors including CaterAir.
  • October 1992:  Carlyle buys part of General Dynamics Corporation, part of a two-year process becoming one of the nation’s largest military contractors.  Carlyle also completes purchase of a Washington, DC, radio station and two stations in Virginia; is said looking to buy more stations after FCC expansion of allowable number of stations in a market to 18 for one owner, up from 12.
  • December 1992:  an article in the Journal of the American Medical Association describes an outbreak of illness suffered by passengers including several Minnesota Vikings back in 1989.  Federal and state epidemiologists trace the problem to Marriott food handlers who did not wash their hands.  Shigellosis, from bacteria found in human feces, confirmed or probable in about 240 cases of passenger illness.  This division became CaterAir.
  • December 1992:  CaterAir’s St. Croix facility is closed down by the Food & Drug Administration (FDA) for five days, until it cleans up its kitchen and complies with FDA sanitation regulations.  The St. Croix is given a poor 57% rating and classified “Not Approved.”  Problems identified include “rodent pellets on a tray of salad plates” and elsewhere; “live flies throughout the kitchen”; “cockroaches on the kitchen floor and tray assembling room”; “old food and grease encrusted on the stove and food storage shelves”; etc.
  • January 1993:  George H. W. Bush leaves office.
  • April 1993:  CaterAir is now the nation’s largest airline caterer.
  • May 1993:  George W. Bush resigns from CaterAir.  The FDA’s magazine, FDA Consumer, publishes an article about its five-day closing down of the St. Croix catering operation back in December, titled “Caterer Cleans Up, Flies Right.”
  • July 1993:  company sells an Orlando, FL, property for $3.4 million.
  • August 1993:  CaterAir files with the SEC to sell another $230 million in notes.
  • November 1993:  company announces it will relocate its corporate headquarters to Bethesda, MD, from Potomac, MD.  Bush resigns from board of Harken Energy.
  • April 1994: a federal court rules against CaterAir in company’s appeal of an NLRB decision.
  • June 1994:  at a Chief Executive Roundtable, CaterAir International’s Altobello discusses his company’s “passport for success” program, said to recognize employees who provide exceptional service.
  • September 1994:  Governor Ann Richards’ reelection campaign runs an ad criticizing GWBush’s business experience, saying that companies where Bush served lost a combined $371.6 million.  The campaign publishes a handout titled The Bottom Line:  The Business Career of George W. Bush.  While the companies lost $371 million, the campaign says, Bush made $1.3 million.  CaterAir lost $285.1 million during Bush’s stint on board; Bush received $75,000.  The Bush campaign responds within hours, complaining about Richards’ “personal attacks.”
  • September 1994:  Daniel Altobello says Bush cannot be held responsible for losses at the company.
  • October 1994:  business experts, unnamed, defend Bush on grounds that his company role was limited to attending quarterly meetings.
  • August 1995:  Carlyle’s purchase of CaterAir is described as a “disaster.”
  • February 2001:  George W. Bush, now President, signals willingness to get involved in airline mechanics union negotiations with Northwest Airlines.  A former president of Northwest is Frederic Malek, who put Bush on CaterAir’s board; Malek is still a major Northwest shareholder.
  • Et cetera.

Be it noted that senior and longtime GOPer Malek’s ties with Republican presidential campaigns continue to the present.

Malek on television

Be it also noted that the counter-arguments, if you call them that, rolled out to obscure George W. Bush’s business record in the 1994 election–in Texas–strongly resemble those being used in the 2012 election by Mitt Romney. He’s No Longer With the Company, He Had Nothing to Do With Those Decisions, He Didn’t Do All That Much To Begin With etc.

Moving forward–

Is this another reason why Romney hasn’t released his tax returns? –That they would disclose yet more of Romney’s ties to the Bush team and to GWBush’s business and political career, now in some ill favor?

Romney with Bush

Then there is the larger problem, larger, that is, than one man’s political career. We report, you decide:  who is mainly responsible for the airlines’ troubles?  Minimum-wage-paid ill-trained lower-level employees?  Or overpaid and under-performing ‘managers’ who spent decades lobbying for every conceivable tax break, government giveaway, and executive privilege, while resisting every improvement in security, safety, and even cleanliness–and simultaneously using the existence of government agencies as a way to claim that their food, for example, is safe?

As in the article linked, one of the company’s first claims about food-borne illness is that the FDA helps it prevent same.