Kansas Republicans are going after independent Senate candidate Greg Orman on one of his most-cited strengths: his business record.
In particular, they’re highlighting Orman’s role as a director and major shareholder in a company that defaulted on $250 million worth of loans.
In his campaign against Republican Sen. Pat Roberts, Orman frequently touts his business acumen and negotiating abilities, partly because he has never held elected office.
Now, just weeks before Election Day, members of the Kansas GOP are arguing that Orman’s record is not what it seems. Exhibit A is his position with the Bracknell Corp., a Minnesota telecommunication company.
The company, which has since shut down, was sued by the Royal Bank of Canada for defaulting on part of a loan. The lawsuit was settled out of court in 2006, and allegations of wrongdoings against Bracknell’s directors were withdrawn.
But Republicans maintain that details of the suit show a pattern of conduct in business that undermines Orman’s claims to be an experienced problem-solver.
“The recent news that Greg Orman is business partners with a Wall Street felon and is supported by Missouri’s liberal Democratic Sen. Claire McCaskill just scratches the surface on his record,” Roberts campaign manager Corry Bliss said. “There are many reasons Greg Orman hasn’t been honest with voters in Kansas about his real background.”
On Aug. 15, 2002, RBC filed suit in a Minnesota court that charged gross mismanagement of Bracknell by the corporation’s directors, and additionally said that senior management committed fraudulent, “unlawful acts,” according to copies of court documents reviewed by the Washington Examiner.
Among RBC’s allegations: Bracknell’s senior management team diverted assets from the corporation’s successful businesses to rescue failing entities in a bid to mask the firm’s financial problems; and that senior management gave themselves huge salary increases just before they resigned from the company because they knew the $800 million concern was on the brink of going under.
“As a result of the unfavorable economic circumstances and bad management decisions … Bracknell Group and the individual entities within it became insolvent no later than July 2001, and ultimately defaulted on their entire indebtedness,” reads the legal complaint filed against Bracknell and the corporation’s other directors.
The complaint continued: “The former directors and/or officers of Bracknell Corporation who (i) aided and abetted in the foregoing breaches of duty by the directors and/or officers of the Bracknell U.S. subsidiaries and (ii) fraudulently transferred in violation of Minnesota law valuable assets of the Bracknell Group for their own personal benefit.”
For Orman, 45, the criticism comes as he has pulled ahead in most polls of Roberts, who faced criticism for not keeping ties to his home state and had to overcome a brutal Republican primary.
The terms of Bracknell’s settlement with Royal Canadian Bank prevent him from commenting on the Bracknell episode, his campaign said Tuesday in an interview with the Examiner. But staffers charged the Roberts campaign with pushing a misleading account to rescue a losing campaign.
“Greg has a strong record as a successful businessman and has created jobs and opportunities throughout his entire career,” Orman campaign manager Jim Jonas said. “We’re happy to compare Greg’s successful record as a businessman creating jobs with Senator Roberts’ failed record as a Washington politician any day.”
Orman climbed from modest roots to amass a fortune of as much as $86 million through a career of buying, selling and investing in companies, often with associates. The real story behind Bracknell, the Orman campaign said, is one of the businessman saving jobs.
In 2000, a successful company Orman created, Nationwide Electric, was purchased by Bracknell, a telecommunications holding company. Later on, Bracknell bought another firm, Able Telecommunications, which made fiber optic cable for WorldCom, at the time one of the giants of the telecommunications industry. When WorldCom went bankrupt, it essentially pulled the financial rug out from under Bracknell.
The firm was also hurt by economic aftershocks caused by the Sept. 11, 2001, terrorist attacks, the Orman campaign said.
With Bracknell falling apart, the firm searched for financing to keep the company afloat. At one point, it negotiated an $80 million investment from the Ontario (Canada) Teachers Union. But when the stock value of Bracknell plunged, the teachers’ union was forced to pull out because it was not permitted to hold any more than a 25 percent stake in any company. At that point, Orman found financing for Nationwide Electric, ensuring its survival.
Meanwhile, the settlement reached in the lawsuit filed by RBC specified that “there was no finding or admission of liability on the part of any of the outside directors” and that the bank would therefore “withdraw all allegations of wrongdoing against the outside directors made in the action.”
Still, Orman has absorbed his share of business failures — in many cases punctuated by lawsuits from individuals and institutions who felt intentionally misled or criminally wronged. The RBC suit against Bracknell was not isolated, but rather fit a pattern, Orman’s Republican critics argue.
In December 2001, months before that lawsuit and around the time Enron was making headlines, Bracknell was “shedding businesses,” a move that jeopardized jobs, a report in the Minneapolis/St. Paul Business Journal said at the time. Many of Bracknell’s subsidiaries reported a return to fiscal health only after they were freed from their former parent company.
Since August, as Orman’s Senate candidacy has gained traction, similar stories have come to light.
On Monday, Politico reported on Ganix Biotechnologies, a firm Orman ran that secured federal loan guarantees and state tax breaks to build and operate a shrimp farm in Nevada. The plan never took off, and Ganix, where, like with Bracknell, Orman served as a director, ended up defaulting on a $725,000 bank loan.
