Boston Globe: Romney Stayed at Bain 3 Years Longer Than He Stated

Jul 12, 2012 by JOE GANDELMAN, Editor-In-Chief

The Boston Globe reports that presumptive Republican Presidential nominee Mitt Romney stayed at Bain Capital 3 years longer than he stated. The Romney camp has just called the report “inaccurate,” but in this kind of story it’ll probably have to offer specifically why and how it’s inaccurate. Until that happens, the story is likely to be troublesome for Team Romney for several reasons:

The Boston Globe:

Government documents filed by Mitt Romney and Bain Capital say Romney remained chief executive and chairman of the firm three years beyond the date he said he ceded control, even creating five new investment partnerships during that time.

Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”

Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.

The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.
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Contradictions concerning the length of Romney’s tenure at Bain Capital add to the uncertainty and questions about his finances. Bain is the primary source of Romney’s wealth, which is estimated to be more than $25o million. But how his wealth has been invested, especially in a variety of Bain partnerships and other investment vehicles, remains difficult to decipher because of a lack of transparency.

The Obama campaign and other Democrats have raised questions about his unwillingness to release tax returns filed before 2010; his offshore assets, which include investment entities based in Bermuda and the Cayman Islands and a recently closed bank account in Switzerland; and a set of “blind trusts” that meet the Massachusetts standards for public officials but not the more rigorous bar set by the federal government.

Romney did not finalize a severance agreement with Bain until 2002, a 10-year deal with undisclosed terms that was retroactive to 1999. It expired in 2009.

Gallup:

Three-quarters of registered voters say the fact that Republican presidential candidate Mitt Romney is worth more than $200 million makes no difference to their likelihood of voting for him. However, 20% of voters, mostly Democrats and independents, say Romney’s wealth makes them less likely to vote for him, while 4% say it makes them more likely.

The Obama campaign has targeted Romney’s wealth in recent weeks, stressing his net worth and how he earned it as head of Bain Capital, where he has invested it, and the fact that he has not released all of his tax returns from the last decade. Obama’s campaign is apparently using Romney’s wealth in its efforts to convince voters that Romney is not as well-equipped as Obama to understand the problems and needs of middle- and lower-class Americans. The Romney campaign has pushed back, stressing that voters are more interested in fixing the economy than in the candidates’ personal financial situations.

Gallup’s July 9-10 results show that most Americans say Romney’s wealth does not matter. Those who say it does make a difference tilt five to one toward saying it makes them less likely, rather than more likely, to vote for him for president.

Most of the 37% of Democratic voters who say Romney’s wealth is a negative are unlikely to vote for him to begin with. Gallup’s latest demographic analysis shows that 89% of Democratic registered voters prefer Obama, compared with 6% supporting Romney.

Independents, on the other hand, are more in play in the election, breaking 42% for Obama and 42% for Romney in Gallup’s latest three-week average. Their views on Romney’s wealth mirror the national average, with 19% saying Romney’s wealth makes them less likely to vote for him and 4% saying more likely. Republicans, perhaps not surprisingly, are slightly more likely to say Romney’s wealth makes them more likely (8%) rather than less likely (4%) to vote for him — but most say it makes no difference to them.

Mother Jones’s David Corn:

Last month, Mitt Romney’s campaign got into a dustup with the Washington Post after the newspaper reported that Bain Capital, the private equity firm the GOP presidential candidate founded, invested in several US companies that outsourced jobs to China and India. The campaign indignantly demanded a retraction, claiming that these businesses did not send jobs overseas while Romney was running Bain, and the Post stood by its investigation. Yet there is another aspect to the Romney-as-outsourcer controversy. According to government documents reviewed by Mother Jones, Romney, when he was in charge of Bain, invested heavily in a Chinese manufacturing company that depended on US outsourcing for its profits—and that explicitly stated that such outsourcing was crucial to its success.

This previously unreported deal runs counter to Romney’s tough talk on the campaign trail regarding China. “We will not let China continue to steal jobs from the United States of America,” Romney declared in February. But with this investment, Romney sought to make money off a foreign company that banked on American firms outsourcing manufacturing overseas.

On April 17, 1998, Brookside Capital Partners Fund, a Bain Capital affiliate, filed a report with the Securities and Exchange Commission noting that it had acquired 6.13 percent of Hong Kong-based Global-Tech Appliances, which manufactured household appliances in a production facility in the industrial city of Dongguan, China. That August, according to another SEC filing, Brookside upped its interest in Global-Tech to 10.3 percent. Both SEC filings identified Romney as the person in control of this investment: “Mr. W. Mitt Romney is the sole shareholder, sole director, President and Chief Executive Officer of Brookside Inc. and thus is the controlling person of Brookside Inc.” Each of these documents was signed by Domenic Ferrante, a managing director of Brookside and Bain.

The SEC filings do not reveal how much Romney initially invested in Global-Tech (which is now known as Global-Tech Advanced Innovations). But Brookside first acquired 748,000 shares at a time when Global-Tech was mounting an IPO at $19 a share. If that was the purchase price Brookside paid, then Romney’s firm originally invested $14.2 million in the company.

At the time Romney was acquiring shares in Global-Tech, the firm publicly acknowledged that its strategy was to profit from prominent US companies outsourcing production abroad. On September 4, 1998, Global-Tech issued a press release announcing it was postponing completion of a $30 million expansion of its Dongguan facility because Sunbeam, a prominent American consumer products company and a major client of Global-Tech, was cutting back on outsourcing as part of an overall consolidation. But John C.K. Sham, Global-Tech’s president and CEO, said, “Although it appears that customers such as Sunbeam are not outsourcing their manufacturing as quickly as we had anticipated, we still believe that the long-term trend toward outsourcing will continue.” Global-Tech, which in mid-1998 announced fiscal year sales of $118.3 million (an increase of 89 percent over the previous year), also manufactured household appliances for Hamilton Beach, Mr. Coffee, Proctor-Silex, Revlon, and Vidal Sassoon, and its chief exec was hoping for more outsourcing from these and other American firms.

The Romney campaign and Bain Capital have insisted that Romney departed Bain in February 1999 to head the troubled 2002 Winter Olympics in Salt Lake City and had no involvement in the private equity firm’s deals after that point—a contention that has been challenged by the Obama campaign. But the Global-Tech Appliances transactions occurred long before Romney jetted off to Utah.

Which goes back to the new Boston Globe report….

The Romney campaign has now responded:

Mitt Romney’s campaign said today a Boston Globe article reporting that he remained CEO of Bain Capital longer than he has stated is “inaccurate.”

“As Bain Capital has said, as Governor Romney has said, and as has been confirmed by independent fact checkers multiple times, Governor Romney left Bain Capital in February of 1999 to run the Olympics and had no input on investments or management of companies after that point,” said Andrea Saul, a Romney spokeswoman.

The Boston Globe story, in today’s editions, cites documents from the Securities and Exchange Commission that show Romney remained chairman and CEO of Bain for three years “beyond the date he said he ceded control, even creating five new investment partnerships during that time.”

Romney has frequently pointed to his work at Bain as an example of why he is better than Obama when it comes to creating jobs and boosting the economy.

The article is being circulated by President Obama’s campaign team as evidence that Romney should be blamed for job losses and bankruptcies at firms Bain invested in after 1999. Workers at a shuttered steel mill in Kansas City, for example, have appeared in Obama ads.

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