01/10/2012 11:51 am ET

Newt Gingrich Served On Board Of Forstmann Little, Leveraged Buyout Firm

Former House Speaker Newt Gingrich has ramped up his attacks in recent days on Republican rival Mitt Romney over his tenure as co-founder and CEO of private equity firm Bain Capital. However, Fortune reported Monday that Gingrich served on the advisory board of a rival private equity firm, Forstmann Little & Co., after leaving the speakership in 1999.

Gingrich argues that there's a difference between capitalism and the leveraged buyouts that Bain Capital specialized in. "There's a big difference between people who go out and create a company -- even if they fail -- if they try to go in the right direction, if they share in the hardships, if they're out there with the workers doing it together. That's one thing. But if someone who is very wealthy comes in and takes over your company and takes out all the cash and leaves behind the unemployment?" said Gingrich on Fox News Tuesday. "I think that's not a model we want to advocate, and I don't think any conservative wants to get caught defending that kind of model."

Gingrich attended twice-yearly advisory board meetings, discussed potential investment opportunities especially in health care and made investments in Forstmann Little's companies, according to The New York Times. Gingrich's spokesman told the Times that he served on the board from 1999 to 2001 and was paid.

Forstmann Little, founded by Theodore Forstmann, pioneered the leveraged buyout model. The firm made more than $10 billion for investors by turning around companies such as Gulfstream Aerospace, Dr. Pepper and General Instrument.

Forstmann, however, became critical of the over-leveraging of deals in the late 1980s, saying, "Watching these deals get done is like watching a herd of drunk drivers take to the highway on New Year's Eve." He also coined the phrase "barbarians at the gate," later the title of a book about the firm losing the buyout of RJR Nabisco to Kohlberg Kravis Roberts.

The firm largely wound down operations in 2006 after losing billions in the telecommunications industry. A jury ruled in favor of the state of Connecticut's pension fund lawsuit against the firm over $125 million lost in its failed investments, but awarded no damages.