The Crime of Felix Rohatyn
June 6, 2006 (EIRNS)—The following press release was issued today by the Lyndon LaRouche Political Action Committee.
New York bankruptcy court documents have revealed the personal signature of Felix Rohatyn—synarchist banker, "Democrat" power broker, enemy of Lyndon LaRouche—on the original May 1, 2005 plan for the outsourcing of Delphi Corporation and the destruction of its union jobs, wages, and benefits.
It is clear from these documents and other evidence that Rohatyn Associates and Rothschild, Inc., through Felix Rohatyn personally, started the Delphi debacle and planned Delphi's total "globalization by bankruptcy," as Business Week termed it on April 24.
This Delphi outsourcing and bankruptcy plan—which may have gone by the internal moniker "Northstar"—has been a disastrous example, international symbol, and trigger for bankruptcies and shutdowns in U.S. auto and other industries. It had been called "the end for auto" and the destruction of America's middle class by IUE (International Union of Electrical Workers) lead negotiator Henry Reichard, who passed away on June 6. Rohatyn launched that destructive plan, which has been linked with the name of Delphi's bankruptcy CEO, Robert "Steve" Miller—whom Rohatyn's plan brought in to head the company and take it into bankruptcy. In addition, Rohatyn has intervened repeatedly on Capitol Hill during 2005-06 with proposals for privatized "infrastructure corporations." He has directly opposed and sabotaged action on Lyndon LaRouche's emergency legislation to save the auto sector with Congressional credits and protection, "retooling" auto for infrastructure construction.
The Delphi debacle has opened the floodgates for the destruction of the entire auto industry remaining in the United States, including, since at least April, the auctioning off of entire closed plants and their machine tools, as if on eBay. It has already driven another 30,000 production workers out of auto employment in 45 days, with no end in sight. It has triggered Congress to react by forming an "auto caucus" and a "manufacturing caucus"—but not to act to stop the auto sector's ongoing destruction.
We lay this potentially fatal inaction by Congress at Rohatyn's door, and that of Congressmen who continue foolishly to regard him as a "leading Democrat" rather than a synarchist-fascist banker. LaRouche's is an "FDR-style" proposed action to save auto and build infrastructure. Rohatyn directly and publicly has opposed any return to Franklin Roosevelt's policies or "RFC methods," as he calls them.
And he directly devised the plan which is in the process of shutting down at least 21 major Delphi auto-supply plants, moving the company's entire production operations offshore.
The overlapping chronologies being published as documentation by the LaRouche Political Action Committee, go step-by-step, through the promotion of the Rohatyn/Rothschild strategy for Delphi, and its lamentable implementation over 2005-06.
Immediately after Lyndon LaRouche's April 13, 2005 memo, "Emergency Action by the Senate," told Congress it must intervene in the auto crisis signalled by General Motors' debt collapse, Felix Rohatyn—acting on behalf of his Rohatyn Associates investment firm and Rothschild, Inc.'s bankruptcy division—wrote Delphi a May 1, 2005 proposal to develop a strategy of merger, acquisition, outsourcing, or bankruptcy. Rohatyn Associates and Rothschild were retained, and developed a "strategic plan." Rohatyn's strategic plan was adopted, and then, the specification was made that when Delphi declared bankruptcy, Rohatyn would personally "withdraw," leaving Rothschild, Inc. in charge of bankruptcy advice.
Steve Miller was hired as CEO on July 1, pursuant to this strategic plan; and Miller described it when he filed for bankruptcy: "[Delphi] believes that a substantial segment of Delphi's U.S. business operations must be divested, consolidated, or wound-down through the Chapter 11 process.... In the meantime, the Company will preserve and continue the strategic growth of its non-U.S. operations and maintain its prominence as the world's premier auto supplier": Globalization and outsourcing by the device of "strategic bankruptcy."
In the same May-June 2005 period, Congressional sources have reported, Democratic Members of Congress "were being told" to avoid Lyndon LaRouche's memos for legislative action to save auto, because "LaRouche is proposing to nationalize the auto industry." And beginning early June 2005, Felix Rohatyn began to publish and give Members of Congress proposals for a "National Infrastructure Fund" at a negligible $50 billion, borrowed by Congress but administered by a National Commission led by bankers like himself. He has been joined in this by former Republican Sen. Warren Rudman and others.
Furthermore, the strategic plan adopted by Delphi from Rohatyn and Rothschild, specified that under a Delphi bankruptcy, many of the U.S. manufacturing plants of the corporation—a strategic asset for the economy of the United States—could be declared to be "de minimus" assets [assets of negligible value!] and their machine-tool capacity auctioned off over the Internet. That is exactly what has happened, since no later than early April 2006, pursuant to an order of the bankruptcy court entered Oct. 28, 2005. The purpose of these auctions was made crystal clear: To pay down Delphi's Debtor-in-Possession credit facility of $2 billion from JP Morgan Chase and Citicorp, a credit facility arranged before the bankruptcy by Rohatyn Associates and Rothschild. Delphi plants and machine tools are being auctioned off today for the loan accounts of those banks.
It is such auto-supply plants, and their versatile inventory of machine tools, being discarded by automobile manufacturers, which LaRouche's emergency legislative outline insists must be adopted by a Federal Public Corporation created by Congress, and used—directly or by contract—to produce critically needed new economic infrastructure of rail transportation, power, and water management.
And it is now established that Felix Rohatyn initiated the plan by which Delphi is auctioning these plants as if they were worthless but for some cash payments on their credit card from JP Morgan Chase. Persons familiar with the auctions report that many, perhaps a majority, of the Internet buyers of the machine tools, are foreign firms. Moreover, it is not only Delphi which has adopted this practice, directly destructive of U.S. technological potential and national security.
If this auctioning off of strategic machine tools is not stopped, the United States will become a Third World country industrially.
And not least of these moral crimes, Delphi's bankruptcy strategic plan included the so-called Key Employee Compensation Plan, by which certain Delphi executives were to receive $400 million in retention bonuses, while its production employees were to have their wages cut in half or their plants closed.
Rohatyn's "withdrawal" from Delphi's consultancy on the date of its bankruptcy, Oct. 8, 2005, may have been made necessary by his other role, acknowledged in Delphi court papers: Rohatyn led "due diligence" efforts for several private equity firms profiling Delphi and its operations; in other words, he is consulting with equity funds and/or hedge funds on buying up the wrung-out Delphi which results from "globalization by bankruptcy."
Keep the Plants Open, Fire Rohatyn!
Congress will be answerable if it does not act to stop this planned obliteration of the industrial and technological capabilities of the United States—not to speak of the loss of hundreds of thousands of skilled and productive jobs and the sacrifice of the wages and benefits of the American workers who remain in a decimated automobile sector.
This evidence makes clear that the same "Democratic" figure who has been advising or pressuring that Party's leaders against any "FDR-like" response to this crisis, is centrally involved in the shut-down/outsourcing plans for American industry, which caused the crisis itself.
Rohatyn is no Democrat, but a synarchist financier, in the peculiar tradition of the Lazard Frères bank which trained him, and which played a central role in the European fascist synarchism of the 1920s-40s.
For several hundred thousand American auto workers, it is immediately necessary that the criminal damage of his "strategic planning" for Delphi be undone.