Roughly 100 days out from the general election, former Massachusetts Governor and presumptive Republican presidential nominee Mitt Romney finds himself increasingly entangled in questions regarding his personal wealth and how he achieved it, his tax history and his tenure at Bain Capital, the private equity firm he co-founded in Boston in 1984. Romney has derived most of his wealth, estimated to be upwards of $250 million, from Bain.
Bain-related issues and attacks have dogged Romney throughout his political career; television ads featuring workers laid-off after Bain took over their companies are largely seen as responsible for his crushing defeat by the late Sen. Ted Kennedy, D-Mass., in a 1994 senatorial bid. Romney’s 2012 GOP primary opponents, particularly former House Speaker Newt Gingrich, R-Ga., raised the same sort of arguments against Romney earlier this year.
Romney’s latest Bain headache began on June 21, when the Washington Post ran a story about companies Bain had invested in that had moved American jobs overseas. Citing filings with the Securities and Exchange Commission (SEC), the Post said Bain “owned companies that were pioneers” in outsourcing jobs to such places as China and India.
It has been a standard part of Romney’s stump speech to attack China—where many U.S. jobs have been sent—for killing American businesses. Romney declared at a Toledo, Ohio, fence factory in February, “If I’m president of the United States, that’s going to end.”
The Romney campaign’s response to the Washington Post piece was technical: “This is a fundamentally flawed story that does not differentiate between domestic outsourcing versus off-shoring nor versus work done overseas to support U.S. exports,” Romney spokesperson Andrea Saul said in a statement.
The Obama campaign pounced on the outsourcing theme, referring to Romney as the would-be “outsourcer in chief” in ads that went up within days in swing states Virginia, Ohio and Iowa, CBS News reported.
The president himself mocked Romney’s nuanced distinction on the campaign trail. “They tried to clear this up by telling us there is actually a difference between ‘outsourcing’ and ‘off-shoring,’” he said at a June 25 event in Massachusetts. “That’s what they said. You cannot make this stuff up.”
Romney demanded a retraction, but the Washington Post refused.
On July 11, the Romney campaign issued another Bain statement. “Mitt Romney retired from Bain Capital in February 1999,” it said. “He has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies, since that time.”
The timing of Romney’s departure from Bain is significant, because much (though not all) of Bain’s outsourcing activity—and many of the bankruptcies for which it is blamed—happened after February 1999 when Romney went to Utah to manage the foundering 2002 Salt Lake City Olympics. There is no dispute that Romney gave up the day-to-day management of Bain in early 1999. The wrangling centers on whether he retained any say in the firm’s investment decisions and management of the companies it owned or controlled after that.
The Bain attacks are potentially devastating for Romney because by far the chief argument for his candidacy is his claimed business experience as a “job creator” and “turnaround” specialist, and essentially all his business experience was with Bain. Being shown to have taken part in bankrupting U.S. companies and sending American jobs to China and India for personal gain would not advance the Romney narrative.
Romney’s unequivocal claim of “no involvement” in Bain’s management or investment activities took a major hit on July 12, when the Boston Globe ran an article detailing statements made by Romney and Bain in sworn government filings.
Public documents Bain filed with the SEC between 1999 and 2002 identify Romney as “sole stockholder, chairman of the board, chief executive officer and president” of Bain Capital, the Globe reported. Romney still owned 100 percent of the company in 2002, according to a Massachusetts financial disclosure form Romney filed in 2003. These forms also indicate that Romney received at least $100,000 in salary, apart from investment income, as a Bain “executive” in 2001 and 2002.
The SEC filings “do not square with common sense,” a Romney campaign official speaking anonymously told the Globe, adding, however, that Romney’s signature on such documents does not necessarily indicate active involvement with Bain.
But “you can’t say statements filed with the SEC are meaningless,” said former SEC Commissioner Roberta Karmel. “It doesn’t make a lot of sense to say he was technically in charge on paper but he had nothing to do with Bain’s operations. ... Are you telling me he owned the company but had no say in its investments?”
Romney did not finalize a severance agreement with Bain until 2002, which purported to relate back to 1999. The agreement was a 10-year deal whose terms were undisclosed, but which has permitted Romney to continue reaping investment income from Bain.
There is at least a certain tension between the SEC filings and Romney’s sworn June 1 Federal Election Commission (FEC) financial disclosure form filed in connection with the presidential race, where he stated, “Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way.”
Other evidence also seems to contradict Romney’s claim. For example, in 2002 testimony before the Massachusetts State Law Ballot Commission, when Romney was attempting to prove sufficient Massachusetts contacts to run for governor, he testified that while he was away at the Olympics there were “a number of social trips and business trips that brought me back to Massachusetts, board meetings, Thanksgiving and so forth,” Politico reported July 12. Romney also testified that he remained on the boards of companies Bain owned stakes in, including Staples, Marriott International and the Life Like Corporation. During the same proceeding, Romney’s attorney argued that Romney’s “private and public ties” to the state “continued unabated just as they had.”
The day after Romney took charge of the Olympics, the Boston Herald reported that “Romney said he will stay on as a part-timer with Bain, providing input on investment and key personnel decisions.”
A July 19, 1999, Bain release regarding the departure of two managing directors described Romney as CEO and “currently on a part-time leave of absence.”
The Romney campaign labeled the Globe report “inaccurate” in a July 12 statement. Romney’s subsequent demand for a retraction was rejected.
The Obama campaign jumped on the Globe story immediately and aggressively. In a July 12 conference call with reporters, deputy campaign manager Stephanie Cutter cast Romney’s dilemma in stark terms: “Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments.”
Certain fact-checking outlets, including FactCheck.org and the Washington Post’s own fact-checker, have sided with Romney, opining that there is no evidence of active involvement with Bain by Romney after he claims to have left in 1999. FactCheck.org, however, did state that Romney would be “guilty of a federal felony” if the statement in his FEC disclosure form that he left Bain in February 1999 were false.
As this latest Bain imbroglio has intensified, the Obama campaign and others have demanded that Romney disclose more of his tax returns. Responding to calls from his GOP primary opponents, Romney earlier this year released his 2010 return and an estimate for 2011. Since then, he has steadfastly refused to release any more.
Ironically, Romney’s father, former Michigan Governor George Romney, established the gold standard in his unsuccessful 1968 presidential bid by releasing 12 years of returns, explaining that a single year might be a “fluke.” Today, presidential candidates routinely release several years’ returns; President Obama has released his back to 2000.
The disclosures Romney has made show that he has deposited or invested millions in a Swiss bank account (closed in 2010) and in entities in Bermuda and the Cayman Islands, both known as shelters from U.S. taxation, according to a story in Vanity Fair.
On July 13, Romney gave five interviews to major TV news outlets reiterating his claim of absolute separation from management of Bain in February 1999 and said he would release no more tax data.
Since then, the chorus of calls for him to disclose more returns has crescendoed, and now includes many prominent Republican voices, including iconic conservative commentator George Will, former Republican National Committee Chairman Michael Steele, U.S. Representative and former GOP presidential contender Ron Paul, Alabama Gov. Robert Bentley, former Mississippi Gov. Haley Barbour and conservative journalist David Frum.
Prominent conservative commentator Bill Kristol called Romney’s refusal “crazy” on Fox News Sunday on July 15.
“There’s obviously something there, because if there was nothing there, he would say, ‘Have at it,’” said Republican political consultant Matt Dowd on ABC’s This Week on July 15. “So there’s obviously something there that compromises what he said in the past about something.”