On Romney's "Shadow Years"

The Boston Globe has a front-page story today showing that Mitt Romney remained chief executive and chairman of Bain Capital after he says he effectively left the firm in February 1999 to run the Salt Lake City Olympics.

The piece, building on reporting at Mother Jones and Talking Points Memo, is significant because the Romney camp has sought to disavow post-February 1999 Bain investments in companies that went bankrupt or laid off workers.

There's also a new Mother Jones piece showing that Bain invested, in 1998, in a Chinese manufacturer "that depended on US outsourcing for its profits—and that explicitly stated that such outsourcing was crucial to its success." This from a candidate who said, as recently as February, "we will not let China continue to steal jobs from the United States of America."

David Bernstein, my colleague at the Boston Phoenix, has been following Romney for years. Here's his analysis from this morning:

Today's front-page Globe story throws Mitt Romney's shadow years at Bain (as I called them last week) into the national media spotlight. That's a problem for the Romney campaign.

The Globe story adds some additional evidence to what has been pretty evident for many years: when he left for Utah in 1999, Romney handed over day-to-day operational duties to other executives at Bain Capital but retained full ownership of the company in every legal, fiduciary, and ethical sense until finalizing a separation agreement in 2002. Romney, and Bain Capital, have always claimed otherwise, but have never offered anything serious to support that.

Increased scrutiny of this discrepancy potentially hurts Romney in a number of ways.

First of all, there's Romney's "buck stops here" problem; the buck never seems to stop with him. Everything bad that's ever happened under him -- especially involving Bain -- he always blames on other people, and that just isn't very Presidential. The shadow years look like that in a huge way.

It also reinforces the image of Romney as part of the specially insulated corporate overlord class, who get to manipulate the rules so that they always end up the winner. (I have previously dubbed this "Romney's no-lose life"). He apparently was able to make a lot of money (or at least, what seems like a lot of money to most people) for being president, owner, and investor in a company while actually being off in Utah doing a completely different full-time job.

And, of course, he was apparently freely signing off on anything required of the president and owner, without, apparently, feeling like that meant he actually had any responsibility for anything happening at the company. It looks like legal, regulatory, and fiduciary responsibilities don't really mean anything to super-wealthy executive types -- not like when regular people sign employment documents, or mortgage documents, and so on.

The elevation of the shadow years issue will also increase pressure significantly for Romney to release additional personal financial information, including the tax returns that would indicate his income from Bain Capital sources during that time.

And finally, the shadow years controversy, in my opinion, just might finally bring some national scrutiny to the issue I've been asking about for many years: the conflicts of interest and other questions surrounding his deal-making at the Salt Lake City Olympics during those very years.

I included a section about that in this 2007 article. The gist is that those deals have never been disclosed -- Romney exempted them from his pledge for full transparency at the Olympics -- and many of them were made with companies that Bain Capital had relationships with, or later made deals with. Those negotiations look very, very sketchy even if he had really severed ties with Bain, but stink to high heaven if he was really still running the company.