Controversy over when Mitt Romney actually discontinued responsibilities with Bain Capital now threatens to resurrect a news item which could seriously damage his support from anti-abortion constituencies. In 1999, Bain Capital invested $75 million in a company called Stericycle. They’re a medical-waste disposal firm which disposes of aborted fetuses from family planning clinics, such as Planned Parenthood.
Details on this investment were reported early this year by the Huffington Post, but the story seemed to get defused at least temporarily by a Bain Capital statement that Romney had left the firm in February 1999. Now that Romney’s departure date is questionable at best, the facts of the case suggest his being materially involved in any number of decisions concerning the Stericycle investment.
Forms filed at the time with the Securities and Exchange Commission, both by Bain and by Stericycle, named Romney as an active participant in the investment. At least one document filed was signed by Romney himself. Undoubtedly the Bain-Stericycle deal culminated after considerable due diligence on the part of Bain’s principals. The Bain deal helped lift Stericycle into profitability despite a sub-par safety record, and generated tens of millions of dollars in profits for Bain Capital partners.
In November 1999, Bain Capital and another private equity firm, Chicago-based Madison Dearborn Partners, filed their acquisition with the SEC. Besides Bain Capital (BCI) itself and Madison Dearborn, other Bain entities named in the filing included Bain Capital Partners VI (BCP VI), Bermuda affiliate Sankaty High Yield Asset Investors, and Brookside Capital. That filing notes that Romney was the “sole shareholder, Chairman, Chief Executive Officer and President of BCI, BCP VI Inc., Brookside Inc. and Sankaty Ltd.”
Stericycle turned out to be a profitable business for Romney et. al. Stericycle had started in the medical-waste business about ten years earlier. The company utilized irradiation technology, and later low-frequency radio waves, to sterilize medical waste before transporting it for incineration. Fortune ranked Stericycle as No. 10 on its list of the 100 fastest growing companies in the nation at one point.
But the company had its woes, accumulating a troubling safety record along the way. In 1991, the Occupational Safety and Health Administration cited its Arkansas operation for 11 workplace safety violations. The facility had not provided employees with sufficient protective gear, and it had kept body parts, fetuses, and dead experimental animals in unmarked storage containers, placing workers at risk. In 1995, Stericycle was fined $3.3 million—later decreased to $800,000—by Rhode Island for knowingly exposing workers to life-threatening diseases at its medical-waste treatment facility in Woonsocket.
Two years later, workers at another of Stericycle’s medical-waste processing plants in Morton, Washington, were exposed to tuberculosis. In 2002 and 2003—after Bain and its partners had bought their major interest in the firm—Stericycle reached settlements with the attorneys general in Arizona and Utah after it was accused of violating antitrust laws. It paid Arizona $320,000 in civil penalties and lawyers’ fees, and paid Utah $580,000.
In 2001, the Bain-Madison Dearborn partnership sold 40 percent of its holdings in Stericycle for about $88 million. By 2004, it sold its remaining stock holdings, ultimately earning $49.5 million on the venture.