Thursday, July 12, 2012

Some wispy hints that Romney was not 100% hands-off at Bain, 1999-2002

Personally, I think that the charge that Romney as CEO and owner of Bain Capital "shipped jobs overseas" is meaningless, except insofar as it offsets Romney's hypocritical and bogus charge that Obama is substantially responsible for further loss of manufacturing jobs to China and elsewhere. Offshoring is inevitable: to cope, the U.S. must improve its education system and upgrade jobs currently considered low-end, which means strengthening workers' hands relative to management.

Further, Factcheck.org and other truth-squaders have a point in calling out the Obama campaign for claiming that Romney "shipped jobs overseas" when alluding to the activities of Bain portfolio companies that occurred after Romney took over the Winter Olympics in early 1999.  Today's Globe story documenting Romney's maintenance of formal or nominal control during his Olympic years really doesn't affect the argument between the Obama campaign and Factcheck, as Stephanie Cutter's letter to Factcheck, like the Globe article, alluded to numerous Bain SEC filings listing Romney as CEO, President, and owner of various Bain entities, including the parent company. Factcheck retorts that there is no positive evidence that Romney ever took an active role in any Bain decision or action during his Olympic gig. And Fortune's Dan Primack has been supplied with offering documents for funds that Bain started after Romney went to Utah that don't list Romney as a fund manager.

The Obama campaign also has a point, however -- that Romney remained legally responsible for Bain's activities and investments until he formally resigned in 2002.  The baby is divided: Romney from 1999 to 2002 was probably more or less hands-off but also in the loop, and in a position to object if he found any Bain decisions imprudent or a danger to his future political viability.

Romney did assert, when he needed to establish Massachusetts residency in 2002 to run for governor, that he had still been engaged during his leave from Bain in Massachusetts business as a board member of present and past Bain portfolio companies. Later, of course, he asserted that he had no management role in any Bain entity. This is not a contradiction, since "Bain entity" presumably refers to Bain investment vehicles as opposed to portfolio companies owned wholly or partly by Bain, but a characteristic Romney emphasis shift.[UPDATE: Bain issued a statement yesterday that does contradict this testimony: Romney " “has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure” in 1999].   Moreover, the claim that Romney had no role in Bain during his Olympic tenure appears to have evolved during that tenure -- perhaps naturally enough, as the job swiftly became all-encompassing.  Below are a few clips from 1999--2001 alluding to Romney's status at Bain, extracted from Westlaw, in reverse chronological order. I have highlighted intimations that Romney still played a role at Bain.
PROVIDENCE JOURNAL BULLETIN (RI)
August 26, 2001
Biz Bits & Quips
Romney to venture back into politics

W. Mitt Romney, the Republican businessman who failed to unseat U.S. Sen. Edward M. Kennedy, D-Mass., in 1994, is quitting Bain Capital, the Boston-based investment firm he owns, to get back into politics. Romney, 54, said he wants to run for office in either Massachusetts or Utah, where he is helping to organize next year's Salt Lake City Winter Olympics. Romney is giving up 100-percent control of Bain Capital to 26 managing directors. The company he started with $35 million in 1984 has grown into a $13-billion venture and buyout firm that has invested in a broad mix of businesses, such as Domino's Pizza, Staples and the Sports Authority

BOSTON GLOBE
November 11, 2000
Living
[subhead]: West wings sprout

A vigorous philanthropist who was among the leading figures in Boston's social scene, [Ann Romney] began developing symptoms of MS in late 1998. "It's been good for me," she said of the move. "From that perspective, Mitt's just delighted that we did this - once we got over the initial shock over how bad" the Olympics situation was. The project is running smoothly now, though still requiring so much of Mitt Romney's time that he has had to lessen his involvement with Bain Capital, his investment firm [Stephanie Cutter cited this one in her letter to Factcheck].

[Press release] Geoffrey S. Rehnert and Marc B. Wolpow Team Up to Start New Private Equity Firm

BOSTON, Jul 19, 1999 (BUSINESS WIRE via COMTEX) -- Geoffrey S. Rehnert and Marc B. Wolpow announced that they have resigned as Managing Directors from Bain Capital, Inc. and will become Special Limited Partners of the firm..... Bain Capital CEO W. Mitt Romney, currently on a part-time leave of absence to head the Salt Lake City Olympic Committee for the 2002 Games said, "Geoff and Marc have each made very significant contributions to the growth of our business... While we will miss them, we wish them well and look forward to working with them as they build their firm."
None of these are anything like a smoking gun. But nor do they entirely support the Romney campaign's assertion that "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."

Oh, and about Romney's Massachusetts residency, which Democrats challenged in June 2002: does this snippet (NY Times, 6/8/02) awake a certain ethical deja vu?
Mr. Romney insisted until Thursday that he had paid his taxes as a Massachusetts resident during his three years in Utah. Then he acknowledged that in 1999 and 2000 he paid his state taxes as a Utah resident and listed himself as nonresident of Massachusetts.

In April, after deciding to run for governor here, Mr. Romney admitted having amended his tax returns for those two years to say he was really a resident of Massachusetts
The trouble seems to have stemmed from tax cleverness:
A multimillionaire venture capitalist with stock ownership through numerous funds, trusts, and companies, Romney has acknowledged saving $54,000 on his property taxes by claiming his Park City, Utah, home as a primary residence. But he said the designation was due to a clerical error, and that he will repay the taxes at the higher rate (Globe, 6/8/02, Tax Benefit Unclear and Candidate Mum, Scott Bernard Nelson and Rick Klein).
Clerical error, uh huh. We should all be so lucky.  If you want to assess Etch-a-Sketch Fehrnstrom's storytelling on this one, with help from a Summit County, Utah official, check out this Times story.


Democrats and reporters naturally wondered whether Romney also saved on his income taxes by declaring residency in Utah, where capital gains taxes are lower. Guess how Romney responded? First he said he was answer questions posed in writing, and then (back to the 6/8 Globe story cited above):
But after a reporter submitted written questions to a campaign aide, Romney's spokesman, Eric Fehrnstrom, said that Romney would not be responding because "he values his privacy and his wife's privacy."

A few minutes later, pressed on whether he benefited financially in Utah by filing as a resident there and a nonresident in Massachusetts, he said: "That's as far as I'm telling you, that's it. That's the answer I'm going to give you, and that's all I got."
 Credit him at least with consistency of character.

UPDATE: The Romney campaign did perjure Romney on July 12 by citing as authoritative the Bain statement (cited above) to the effect that Romney had "absolutely no involvement" with any of Bain's portfolio companies once his Olympic tenure began.

1 comment:

  1. Why Mitt Romney & his camp need to avoid issues after February 1999 - are the issues The Learning Company merger with Mattel in 1999. As well as the germane issues of Stage Stores (and who/ what was there) in 2000.

    Finally, the complex/ massive frauds in 2001 of eToys that involved the parties from The Learning Company, Stage Stores and Kay Bee Toys colluding & conspiring to defraud a public company/ federal estate.

    ReplyDelete

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