Cole Stangler

cole.stangler@huffingtonpost.com

Mitt Romney Started Bain Capital With Money From Families Tied To Death Squads

Posted: 08/08/2012 9:38 am Updated: 08/08/2012 1:05 pm

In 1983, Bill Bain asked Mitt Romney to launch Bain Capital, a private equity offshoot of the successful consulting firm Bain & Company. After some initial reluctance, Romney agreed. The new job came with a stipulation: Romney couldn't raise money from any current clients, Bain said, because if the private equity venture failed, he didn't want it taking the consulting firm down with it.

When Romney struggled to raise funds from other traditional sources, he and his partners started thinking outside the box. Bain executive Harry Strachan suggested that Romney meet with a group of Central American oligarchs who were looking for new investment vehicles as turmoil engulfed their region.

Romney was worried that the oligarchs might be tied to "illegal drug money, right-wing death squads, or left-wing terrorism," Strachan later told a Boston Globe reporter, as quoted in the 2012 book "The Real Romney." But, pressed for capital, Romney pushed his concerns aside and flew to Miami in mid-1984 to meet with the Salvadorans at a local bank.

It was a lucrative trip. The Central Americans provided roughly $9 million -- 40 percent -- of Bain Capital's initial outside funding, the Los Angeles Times reported recently. And they became valued clients.

"Over the years, these Latin American friends have loyally rolled over investments in succeeding funds, actively participated in Bain Capital's May investor meetings, and are still today one of the largest investor groups in Bain Capital," Strachan wrote in his memoir in 2008. Strachan declined to be interviewed for this story.

When Romney launched another venture that needed funding -- his first presidential campaign -- he returned to Miami. "I owe a great deal to Americans of Latin American descent," he said at a dinner in Miami in 2007. "When I was starting my business, I came to Miami to find partners that would believe in me and that would finance my enterprise. My partners were Ricardo Poma, Miguel Dueñas, Pancho Soler, Frank Kardonski, and Diego Ribadeneira."

Romney could also have thanked investors from two other wealthy and powerful Central American clans -- the de Sola and Salaverria families, who the Los Angeles Times and Boston Globe have reported were founding investors in Bain Capital.

While they were on the lookout for investments in the United States, members of some of these prominent families -- including the Salaverria, Poma, de Sola and Dueñas clans -- were also at the time financing, either directly or through political parties, death squads in El Salvador. The ruling classes were deploying the death squads to beat back left-wing guerrillas and reformers during El Salvador's civil war.

The death squads committed atrocities on such a mass scale for so small a country that their killing spree sparked international condemnation. From 1979 to 1992, some 75,000 people were killed in the Salvadoran civil war, according to the United Nations. In 1982, two years before Romney began raising money from the oligarchs; El Salvador's independent Human Rights Commission reported that, of the 35,000 civilians killed, "most" died at the hands of death squads. A United Nations truth commission concluded in 1993 that 85 percent of the acts of violence were perpetrated by the right, while the left-wing Farabundo Martí National Liberation Front, which was supported by the Cuban government, was responsible for 5 percent.

When The Huffington Post asked the Romney campaign about Bain Capital accepting funds from families tied to death squads, a spokeswoman forwarded a 1999Salt Lake Tribune article to explain the campaign's position on the matter. She declined to comment further.

"Romney confirms Bain had investors in El Salvador. But, as was Bain's policy with any big investor, they had the families checked out as diligently as possible," the Tribune wrote. "They uncovered no unsavory links to drugs or other criminal activity."

Nobody with a basic understanding of the region's history could believe that assertion.

By 1984, the media had thoroughly exposed connections between the death squads and the Salvadoran oligarchy, including the families that invested with Romney. The sitting U.S. ambassador to El Salvador charged that several families, including at least one that invested with Bain, were living in Miami and directly funding death squads. Even by 1981, El Salvador's elite, largely relocated to Miami, were so angered by the public perception that they were financing death squads that they reached out to the media to make their case. The two men put forward to represent the oligarchs were both from families that would invest in Bain three years later. The most cursory review of their backgrounds would have turned up the ties.

The connection between the families involved with Bain's founding and those who financed death squads was made by the Boston Globe in 1994 and the Salt Lake Tribune in 1999. This election cycle, Salon first raised the issue in January, and the Los Angeles Times filled out more of the record earlier this month.

There is no shortage of unsavory links. Even the Tribune article referred to by the Romney campaign reports that "about $6.5 million of $37 million that established the company came from wealthy El Salvadoran families linked to right-wing death squads."

The Salaverria family, whose fortune came from producing cotton and coffee, had deep connections to the right-wing Nationalist Republican Alliance (ARENA), a political party that death-squad leader Roberto D'Aubuisson founded in the fall of 1981. The year before, El Salvador's government had pushed through land reforms and nationalized the coffee trade, moves that threatened a ruling class whose financial and political dominance was built in large part on growing coffee. ARENA controlled and directed death squads during its early years.

On March 24, 1980, Oscar Romero, the archbishop of San Salvador and an advocate of the poor, was celebrating Mass at a chapel in a small hospital when he was assassinated on D'Aubuisson's orders, according to a person involved in the murder who later came forward.

The day before, Romero, an immensely popular figure, had called on the country's soldiers to refuse the government's orders to attack fellow Salvadorans. "Before another killing order is given," he advised in his sermon, "the law of God must prevail: Thou shalt not kill."

In 1984, Robert White, the former U.S. ambassador to El Salvador, named two Salaverria brothers -- Julio and Juan Ricardo -- as two of six Salvadoran exiles in Miami who had directly funded death squads, repeating in sworn congressional testimony a claim he'd made earlier as ambassador. The group became known as the "Miami Six." White testified that a source close to the Miami Six had notified the U.S. embassy of their activities in January 1981.

White was pushed out of his job by the incoming Reagan administration in 1981; he was considered insufficiently supportive of the Salvadoran ruling class. (D'Aubuisson endorsed Ronald Reagan in 1984.) When contacted by phone recently, White reiterated his claim about the Salaverria brothers, but said he couldn't reveal his source's identity in order to protect the source.

"The Salaverria family were very well-known as backers of D'Aubuisson," White told The Huffington Post. "These guys were big-money contributors. ... They were total backers of D'Aubuisson and the extremist solution, including death squads." Alfonso Salaverria was a close associate of Orlando de Sola, a leading death-squad figure, and, like him, supported D'Aubuisson.

The Salaverria family also violently resisted land reform efforts. When the Salvadoran government seized about 140 of the country's largest farms in March 1980, 73-year-old Raul Salaverria was the only landowner to openly resist, the Washington Post reported at the time. A brief exchange of gunfire between government forces and Salaverria's people resulted in two injuries, and 1,500 weapons were allegedly found on the property.

Eight years later, workers in an agrarian reform co-operative whose land once belonged to the Salaverrias barely escaped an assassination attempt. "Members of the co-op suspect the former owners, the Salaverria family, were behind the violence," a 1988 Human Rights Watch report said. The family denied involvement.

Francisco de Sola and his cousin, Herbert Arturo de Sola, also invested early in Bain, according to the Los Angeles Times. Two other members of the de Sola family were "limited partners," according to the Boston Globe, but the Romney campaign declined to provide The Huffington Post with their names. The de Sola family was one of El Salvador's most powerful coffee growers and a financier of the ARENA party.

Herbert's brother was the notorious Orlando de Sola, who resisted the peace negotiations toward the end of the civil war. The Romney campaign acknowledges Orlando de Sola's connection to death squads but insists he is not representative of the de Sola family investors. While Romney told the Tribune in 1999 that the backgrounds of the families had been checked diligently, he had explained to the Boston Globe in 1994 that Bain's due diligence included only the backgrounds of the individual investors, not their family members. "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." Deflecting the association with Orlando, Strachan, whom Romney had charged with vetting the investors, described him that same year to the Globe as "the black sheep of the family. ... He was kicked out of the family business."

Yet there is strong evidence that Orlando was anything but a black sheep in the de Sola family. Indeed, he was a leading public face of the Salvadoran elites in Miami, speaking, for example, on behalf of the El Salvador Freedom Foundation, the organization which arranged a U.S. press conference for D'Aubuisson as part of its public relations activities on behalf of the oligarchs and ARENA. An Associated Press story from April 1981 includes Orlando de Sola and Alfonso Salaverria speaking on behalf of the oligarchs in exile. The story also makes reference to White's charges regarding the funding of death squads, indicating that the charges were already well known by that point.

But the ties run deeper still. In 1990, Orlando de Sola, D'Aubuisson and founding Bain investor Francisco de Sola allegedly assassinated two left-wing activists then in Guatemala, according to a report by that country's government, which cited its intelligence sources. The activists had just held a meeting with then-Sen. Chris Dodd (D-Conn.), who was attempting to broker a Salvadoran peace deal.

Francisco de Sola later pleaded his and his cousin Orlando's innocence to the U.S. ambassador. The Inter-American Commission on Human Rights looked further into the killings and concluded that elements of the Salvadoran right were indeed the mostly likely assassins, but said that it couldn't confirm the guilt of the de Solas or D'Aubuisson. It deemed the investigation incomplete and called for a deeper look. The three men were never charged.

Francisco de Sola is now president of the Salvadoran Foundation for Economic and Social Development. His assistant, Ada Chang, said that he was traveling and unavailable to comment, but she confirmed to HuffPost that he had been accused of murdering the two leftists in 1990. Whether he committed the crime or not, the fact that Guatemalan intelligence would associate him with Orlando de Sola and D'Aubuisson, and place them in Guatemala together, casts further doubt on Strachan's claim that Orlando de Sola was merely a "black sheep" who had been "kicked out of the family business."

Orlando de Sola, who is serving an unrelated prison sentence for fraud, told the Los Angeles Times that he did not personally benefit from the Bain investments. "I would say their relationship with Bain Capital was a step to diversify into foreign investments," he said of his family.

Ricardo Poma was the first investor Romney thanked when he traveled to Miami in 2007. The head of the Poma Group, he became one of the three members of the Bain Capital investment committee, according to Strachan's memoir. The Poma family were financiers of D'Aubuisson's ARENA party.

The Regalado-Dueñas family, like many of El Salvador's other powerful clans, amassed much of their wealth and political power through the coffee industry. Along with the Alvarez family, they also helped to found Banco Comercial, one of the biggest banks in El Salvador.

The Regalado-Dueñas and Alvarez families were leading supporters of ARENA. Arturo Dueñas "regularly supplied" the head of an ARENA-affiliated "paramilitary unit ... with a variety of official Salvadoran documents," according to a redacted 1984 CIA document, which uses the euphemism for death squad. (Salvadoran government documents were used by death squads to assemble lists of people to kill.)

Miguel Dueñas and Ricardo Poma did not respond to requests for comment. The Salaverria brothers are dead, according to Ambassador White. Jeffery Paige, author of "Coffee and Power: Revolution and the Rise of Democracy in Central America" and a professor at the University of Michigan, has studied the political economy of Central American oligarchies. Romney's claim to have checked out the backgrounds of the families and come away satisfied befuddles Paige.

"These people benefited from one of the most exploitative and repressive agricultural systems in Latin America. That's why they had a revolution," Paige said. "This money, certainly there wasn't much concern where it came from and what these people had done to make that money."

Sergio Bendixen, who now does polling for President Barack Obama, spent a significant amount of time in El Salvador in the early '80s, doing political polling for Univision. He said that he met D'Aubuisson on many occasions and found him to be one of the warmest, most charming and charismatic people he has ever met. But he said D'Aubuisson was also very upfront about what he saw as the justifiable use of death squads.

"There were 10 or 30 bodies in the street every morning," Bendixen recalled of his time there. "D'Aubuisson said it was necessary. The message needed to be sent [that] if you were associated with the communists or socialists, you had to be killed. He said it was an instrument in keeping the violence down, because others would see the consequences."

Bendixen suggested that a cursory look would have shown Romney what those families were involved with. "If anybody tries to tell you there was a line, a Chinese wall, between ARENA and the death squads, that's just not the way it was," he said.

The Salvadoran elite in Miami talked openly at the time, he said, of supporting the death squads battling the rebels. It wasn't a source of shame, Bendixen recalled, but a source of pride. "They were proud of the fact that they were supporting their country against the communists," he said.

As Romney now seeks support from the Latino community in his campaign for president, his knowledge of Bain's all-too-few degrees of separation from Salvadoran death squads may become a topic of interest.

"Under Ronald Reagan, the U.S. sent billions of dollars to the murderous regime, which utilized that aid to fund the military and death squads in an effort to preserve the unjust privileges of the Salvadoran oligarchy," said Arturo J. Viscarra, an immigration lawyer, who, like many other Salvadorans, emigrated to the United States in order to escape the civil war. He said his family left the country in 1980 after his father began receiving death threats.

"To now learn that a man that may become president of the U.S. deserves some of his success due to the incredible inequality that the U.S. helped to preserve in El Salvador is ironic," Viscarra said. "It's morbidly funny.” The U.S. involvement in the bloodshed is now seen as a black mark on the nation's record. When President Obama visited Central America in March 2011, he made a symbolic stop at Romero's grave, lighting a candle for the archbishop.

Romney, however, has shown no public remorse for signing up such investors, although the concept of culpability is not foreign to him. When he returned to Miami in 2007, he condemned those who had financed torture and other human rights abuses during the Salvadoran civil war -- just not those he was connected to.

"These friends didn't just help me; they taught me," Romney said. "Ricardo's brother had been tortured and murdered by rebel terrorists in El Salvador. Miguel himself had been chained to a floor in Guatemala for weeks and tortured. And their torturers were financed by Fidel Castro. I learned from these friends about the human cost when Castro has money."