How Romney's Consulting Firm Helped an Ailing Russia Get Hooked on Cigarettes
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Mitt Romney’s time at the private equity firm Bain Capital has been covered extensively in the media. But less attention has been paid to Romney’s time at Bain & Co, the Boston consulting firm.
The Huffington Post, though, is paying attention--and they have discovered that “the consulting firm helped Philip Morris increase its revenues in the U.S., and aided two other tobacco titans as they vied to move forcefully into the Russian market.” The revenues from the tobacco work garnered Bain & Co. millions of dollars.
Indeed, as Huffington Post reporters Jason Cherkis and Zach Carter note, the consulting work with tobacco giants is radically different “from some of the deals Romney has used to position himself as the godfather of the big box -- investing in companies like Staples and The Sports Authority -- and a wholesome salesman to the middle class.” While the extent of Romney’s personal involvement in this specific part of the business remains unclear, he was CEO of Bain & Co. at the time. And “Romney was an advocate for the Russian tobacco work,” according to the article.
In March 1993, the U.S. government awarded Bain & Co. a $3.9 million contract to advise the government of Boris Yeltsin on the privatization of the Russian economy. The political context is that this was just after the collapse of the Soviet Union, and Yeltsin was moving towards a more liberalized economy. This liberalized economy enabled wealthy Russian oligarchs to buy previously state-owned enterprises, ensuring their dominance of the Russian economy.
“Romney's consultants helped foreign firms and aspiring oligarchs decide how to corral Russia's riches -- including writing a 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 Huffington Post reports.
Bain & Co. specifically worked with the company British American Tobacco (BAT), which is behind brands like Kool and Lucky Strike, to gain entry into the Russian market. According to the Huffington Post investigation, “BAT, largely locked out of the cigarette market before Bain got involved, now controls nearly a quarter of sales. BAT remains close with top [Russian] government officials.”
The consequences for Russia have been stark. Tobacco use has skyrocketed since the collapse of the Soviet Union, and BAT has played no small role in that.
Romney’s Bain & Co didn’t limit themselves to Russia, though. The firm worked with Philip Morris in the U.S. A Boston Globe investigation found that a month after Romney took over Bain & Co., they secured a $1 million contract to work with Philip Morris, a big tobacco company.