Romney’s Bain Capital made millions from tobacco business in Russia in 90s

As the Soviet Union splintered in the early 1990s, Romney saw Russia as a lucrative market for cigarettes and tobacco, and was excited about the market, the investigation by the Huffington Post found. Romney sent consultants to Russia, which was on the brink of collapse, to explore the market and determine what Russian smokers wanted out of a cigarette. Bain’s Russian business was not about family-friendly products, but was 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 US, 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, Russian politician and the first President of the Russian Federation, administration on the privatization of the Russian economy, according to records detailing the arrangement.

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 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 and it worked. The documents show Bain's enthusiasm to help its client enter the Russian tobacco market, despite obvious and well-documented health hazards associated with smoking. Romney's personal involvement with Bain's tobacco business is unclear. But as CEO, he was responsible for the company's work, the report added.