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Steve Pagliuca built his reputation and fortune in private equity. As a managing director at Bain Capital, he takes credit for helping to build Bain into a venture capital company with $60 billion in assets. Pagliuca is hoping his private sector record will propel him into the Senate. He believes that "what we desperately need in Washington are people who actually worked building businesses."
But in 1994 when Bain CEO Mitt Romney challenged Sen. Ted Kennedy, Romney was pegged as a “robber baron."
Dana Callow, managing partner for Boston Millennia Partners, another VC firm, said that "As a director of a company public or private your first responsibility is the shareholders. As a politician it’s a different responsibility of course."
Callow has not done business with Pagliuca, but said working with private corporations could leave any candidate open to the same criticisms once leveled against Romney. In 1994, Kennedy slammed Romney over Bain's move to cut wages and jobs at a paper company it bought.
Callow thinks Pagliuca may fall into the same scenario as Mitt Romney did. "Even though some of the deals that Mitt was involved in were very, very successful, they did rub some elbows and bruise a few people around the table who had different agendas," Callow said.
Pagliuca's business expertise is in information technology and health care companies. Since declaring his candidacy, Pagliuca has taken a leave from Bain and stepped down from the corporate boards he served on to avoid conflicts of interest. He had served on the board of a company with great interest in the biggest issue before the U.S. Senate — universal health care.
Bain bought a share in the Hospital Corporation of America, the largest for-profit hospital chain in the country. HCA could see a major surge in revenue if the expense of treating the uninsured at the 163 hospitals it operates in other parts of the country is eliminated.
The decisions of any corporation Pagliuca was involved with could hurt him politically. "It would be unfair to say that a managing general partner or managing partner of one of these firms is directly responsibly for breaking apart or for some of the values that might be political values. Their goal is financial success," Callow said.
Pagliuca's experience also gives him a record quite distinct from other candidates. For example, for the past six years he has been chairman of the board of the Massachusetts Society for the Prevention of Cruelty to Children. Mary Lou Sudders, head of the organization, said Pagliuca brought his business savvy to the charity in a positive way.
"He’s very comfortable as a business man. I believe that what he brings to this election is business thinking and a business application to our problems that we face," Sudders said.
Pagliuca is best known for his co-ownership of the Boston Celtics. Celtics CEO Wyc Grousbeck credits Pagliuca with helping to build the team’s relationship with the community and forming the organization that brought about the team’s first championship in 22 years.
"Steve has been a fantastic guy to work with for the past seven years at the Celtics . He’s only available part time but when we get Steve with his Celtics hat on, he is ... extraordinarily helpful both on business and basketball matters and has been a fantastic co-owner," Grousbeck said.
Grousbeck, who is also a venture capitalist, called Pagliuca’s business record strong.
"He should be judged on his record of achievement in business. And no business portfolio is 100 percent perfect, but I think he and his partners are known actually for being thoughtful as well as successful investors, and they’ve created a lot of jobs."
Pagliuca’s business decisions have made him wealthy. He’s believed to be worth more than $400 million. His political future may hinge on whether his private-equity experience turns out to be an asset or a liability.
This program aired on September 24, 2009. The audio for this program is not available.
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