Our prayers at BCI go to the victims of the Newtown, CT shooting last Friday and their families. This horrible tragedy is still weighing heavy on our hearts.
The Boston Globe reported today that guns used to kill people and Catholic hospitals may seem an unusual pairing in an investment portfolio, but not for Cerberus Capital Management.
BCI readers know that Cerberus Capital, a private equity firm, purchased Caritas Christi Healthcare from the Boston Archdiocese back in 2010. At the time, we knew that Cerberus owned a gun company. Today we learned that gun company was the manufacturer of the semi-automatic rifle used in Newtown, Connecticut killings last Friday, and Cerberus has now decided to sell their investment in the company.
The Globe reported first the ownership situation this morning:
The New York investment firm that controls the Steward Health Care System hospital chain in Boston also owns the company that makes the semiautomatic rifle that Adam Lanza used to kill 20 children and six adults at Sandy Hook Elementary School in Newtown, Conn., last Friday.
Cerberus is one of the most powerful forces in the gun business. It owns Freedom Group Inc., a Madison, N.C., company that is the nation’s largest seller of firearms and the number two seller of ammunition. Freedom, according to its annual report, sold 1.1 million long guns and 2 billion rounds of ammunition that generated $775 million in sales last year.
Freedom’s chief executive, George Kollitides, worked previously for Cerberus, where he focused on buying companies in the firearms and defense businesses for the firm. Described as a “lifelong hunter, shooter, and firearms enthusiast” on the company’s website, he is also a trustee for the NRA Foundation and serves on several of the group’s committees.
Kollitides led the charge to acquire Bushmaster Firearms Inc. from Windham, Maine, native Dick Dyke in 2006. The gun used in the Newtown shootings, a Bushmaster .223 semiautomatic rifle, contained a 30-round ammunition clip that allowed the gunman to fire continuously inside the school.
That same model Bushmaster was also used in the 2002 Washington sniper shootings, in which 10 people were killed, according to published reports.
Dr. Robert D. Sege, director of ambulatory pediatrics at Boston Medical Center and coauthor of a policy statement on gun control by the American Academy of Pediatrics, said he strongly favors reinstituting the assault weapons ban. If Cerberus is not working for laws to make guns and the community safer, he said, “At the very least it calls into question the overall aims of Cerberus Capital.”
An executive at Cerberus did not return requests for comment Monday, and Ralph de la Torre, chief executive of Steward Health Care, was traveling and unavailable to comment, a spokesman said. An official from Freedom Group could not be reached for comment.
When Cerberus created Steward in Boston, by acquiring the former Caritas Christi hospitals, de la Torre conducted a public relations tour to present Cerberus as the best hope for saving a cash-strapped community hospital group. The Catholic hospital group includes St. Elizabeth’s Medical Center in Brighton and Carney Hospital in Dorchester.
While Cerberus’s wooing of the local hospital group was highly public, its amassing of gun companies was less well known.
If new gun controls are proposed in the wake of the Newtown tragedy, Freedom and Cerberus will have much at stake. In the past, company executives have said in earnings calls that when “political rhetoric heats up,” the furor typically dies down quickly.
But this week, gun critics expressed outrage that a company could both own hospitals and gun makers. “How can you promote good health and unrestricted access to deadly weapons at the same time?” said John Rosenthal, a Boston developer and cofounder of Stop Handgun Violence. “It’s clear to me all they care about is the profit motive.”
Well, the furor did not die down quickly. This afternoon, the Globe reports that Cerberus plans to sell investment in gunmaker after Connecticut school shootings:
Cerberus Capital Management, the investment firm that controls the Steward Hospital Health Care System hospital chain in Boston, said that it will sell its investment in Freedom Group, the company that makes the rifle that was used in the Connecticut school killings.
“We have determined to immediately engage in a formal process to sell our investment in Freedom Group,” the New York firm said in a statement. “We will retain a financial advisor to design and execute a process to sell our interests in Freedom Group, and we will then return that capital to our investors.”
Together with its gun brands, from Bushmaster to Remington, Freedom is a major contributor to the National Rifle Association and the fight against gun control, according to the Violence Policy Center, a Washington group that tracks corporate funding of gun advocacy.
Reuters reported that pressure mounted on Cerberus as the California State Teachers’ Retirement System (CalSTRS) said on Monday it was reviewing its investment with the private equity firm after the Connecticut school shooting.
Indeed, it does not make sense at all how a firm can promote good health at the same time they are promoting unrestricted access to deadly weapons. How could they even fathom investing in a company in 2006 that made the weapon used to kill 10 people just four years earlier? That is Cerberus, which gets its name from the three-headed dog that guards the gates of hell in Greek mythology. We are glad to hear they are selling their investment in Freedom Group. But it is an investment that never should have been made in the first place. With principals of the firm whose code of ethics did not stop them from investing in the gun manufacturer, how exactly are they guiding what remains of the Catholic hospital network.
Boston Catholic Insider 
Thank you for this piece on the Cerberus involvement in gun manufacturing. Shortly after the Coalition To Save Catholic Health Care was formed to prevent the acquisition by them of the Caritas Christi 6-hospital system, we pointed out that these two organizations were “unevenly yoked”. It should have been stopped in its tracks by the Archdiocese and is still fraught with questions relative to the financial reporting. Your reference to Caritas Christi being a “a cash-strapped community hospital group.” is far off the mark as the Ernst and Young LLC independent audit revealed so glaringly. We took it to the FBI level and are still expecting a Congressional look at the internals There are a multitude of questions still to be answered.
Ray,
You are most welcome, and thank you for the feedback. Just for clarity, our reference to Caritas Christi being “cash-strapped” was a direct quote from the Boston Globe article, not the perspective of BCI. Indeed, though Ralph de la Torre “conducted a PR tour to present Cerberus as the best hope for saving a cash-strapped community hospital group” as you indicated, the financials revealed Caritas was not in nearly as severe financial condition as positioned in the PR effort. We commend you for your efforts to have stopped the acquisition.
This is weak!! Because Cerberus Capital owns fire arms companies somehow that makes them bad? The Caritas sale was a fiasco for sure, but the Globe exposing this issue is typical Globe—Dumb!!!
Is there a move to demonize the producers of violent movies, video games, and rap music? That’s what caused this tragedy not the AR-15 or gunmakers !!
I have generally agreed with your reports ever since I have encountered them. However, I think that you are grossly in the wrong in atteacking Cerberus for their arms companies. These are legitimate enterprises that sell legal products to the citizens of this country.
I have agreed with your comments on the Archdiocese and its cozy arrangements with individual and groups that work contrary to the Catholic Church. Keep up the good work!!
Peter, Thank you for your feedback. BCI is glad that you have generally agreed with us!
As a blog where the bloggers share their own opinions, we will never agree with everyone all the time. Often we learn from the perspectives of our readers.On this topic, obviously, the citizens of this country have a constitutional right to bear arms, and a gun company is a legitimate enterprise that sells legal products. Still, supporting or profiting from the sale of military-style semi-automatic assault rifles crosses a line for us, given the history with this product:
http://www.huffingtonpost.com/2012/12/16/school-shooter-adam-lanza_n_2312818.html
The company’s semiautomatic rifles were used in at least four high-profile mass shootings since 1999, including a 2009 rampage that left 10 dead across southern Alabama, and a 2010 shooting spree in Virginia that killed eight people over 19 hours.
Most notoriously, a Bushmaster .223 rifle was used by the so-called Beltway snipers, John Allen Muhammed and Lee Boyd Malvo, who murdered 15 people in 2001 and 2002.
BCI would not feel comfortable having such an investment in our puny portfolio. And we agree with the cofounder of Stop Handgun Violence who asked, How can you promote good health and unrestricted access to deadly weapons at the same time?
Perhaps on this particular issue, we will simply have to agree to disagree.
We appreciate the good wishes on our work and ministry here at BCI, and will keep it up!
I likewise agree with most everything you post and have often thanked you for your relentless pursuit of the truth. But I think When you use terms like “military-style semi-automatic assault rifles,” you have become an unwitting victim of a very subtle and effective propaganda campaign. It is easy to fall into this trap given the overwhelmingly disturbing and sad details of the crime.
Why is it called an “assault weapon?” What other kind of firearm is there? If the government can possess such a weapon, why do you suggest the law-abiding, civilian population should be prevented from access to such weapons?
Why do we pick and choose which incidents we will have a knee jerk reaction to? For example I don’t remember anyone suggesting that a bad NY City cop’s criminal behavior (in the 90’s), using his government issued police baton, meant we as a society shouldn’t allow any cops to possess a police baton (for their own self defense)? Why then do we now demand that law-abiding citizens give up their weapons of self-defense?
You ask “How can you promote good health and unrestricted access to deadly weapons at the same time?” While I understand your point, I do not agree with your careless use of some of the words you chose. There was not any “unrestricted” access to any weapons in Connecticut. The shooter tried to get a access to a semi-automatic rifle and when he found out his access was restricted, he chose to shoot his mother in the head in order to gain access to her legally held weapons.
The use of the term “deadly weapons” is also interesting. Could not automobiles, knives, glass bottles, and chain saws also be considered “deadly weapons,” as well? Do we demand that everyone give up their cars after the New Years Eve incident in Boston years ago where a lunatic drove into a large crowd of people?
Our founding fathers’ opinions on the possession of firearms for personal safety are worth reviewing. You might reconsider the need for law-abiding citizens to possess weapons of self-defense. Our individual right to possess firearms is THE insurance for our first amendment right to freedom of speech and freedom of Christian religious views. According to our founding fathers, without exercise of the right, we have no liberty.
The right to possess “assault” weapons also would come in quite handy if, God forbid, a foreign enemy decides to invade. If the government can possess such weapons, the law-abiding civilian population likewise has a right (and possibly a duty) to possess such weapons. Doing so may bolster one’s good health in some deadly situations.
Michael, Thank you for your comments. BCI is digesting your reasoned perspective and those of others.
We read the piece you referenced. As an aside, two aspects presented as facts are in question. First, it is not confirmed that the shooter tried himself to buy a gun. Second, as worded, it does not make sense that he shot his mother with a gun to get access to her guns. He already had access to her gun in order to have shot her. How would her being dead provide greater access than he already had?
That said, BCI fully supports the rights of citizens to bear arms. We would still prefer to not hold investments in a gun manufacturer such as this one, even if those guns are legal.
just found this at market-ticker.org …
“Connecticut already has an assault weapons ban and it did not prevent the crime! … But beyond the proved inability to be effective, gun bans are nothing more than an outrageous demand by our political leadership that we submit not only ourselves but our children to slaughter by criminals, promoted by politicians dancing in dead childrens’ blood and upon their still-warm corpses, while they hide behind their armed guards, bullet-proof windows and armored vehicles.”
The entire article is worth reading:
http://market-ticker.org/akcs-www?post=215107