Romney's Shadow Bain Years

When did Mitt Romney really leave Bain Capital -- in February 1999, as he and the company claim, or in 2002, when his separation agreement took effect?

 That question, asked by me and many others for years, is raised again in today's article by David Corn at Mother Jones. Corn, writing about a fetus-disposal firm Bain Capital invested in, argues that SEC documentation belies Romney's claims of having severed ties with Bain in early 1999.

 The only evidence to the contrary is that Romney and the company say so -- which, as I've argued before, is not a very good reason to believe something.

It certainly appears to me that Romney removed himself from day-to-day operations of the business when he moved to Salt Lake City, but retained ultimate authority, as well as his financial stake as owner. In other words, he was where the buck stopped. And, in my view, the other Bain executives took advantage of his absence from daily operations to enter into deals that the notoriously risk-averse and reputation-guarding Romney would not have approved. 

It's a matter of judgment whether, or to what degree, voters should hold Romney responsible for those deals and decisions, that he was ultimately responsible for (and profited from) but for which he was not actively involved in the vetting or decision-making. Obviously a strong case could be made that this is exactly what Presidents do. But on the other hand, Presidents don't take time off to run another business.

However, Romney remaining in actual control of Bain Capital during those years does make his deal-making for the Salt Lake games look awfully dubious.

I wrote about this five years ago, in a larger piece about Romney's history of leveraging things to his personal advantage. I think it's worth sharing here that section in its entirety:

Romney’s business career ended in 1999, when he accepted the post of CEO of the Salt Lake Organizing Committee (SLOC) for the struggling 2002 Winter Olympics. But he utilized the same strategy of drawing on his network of wealthy contacts that he used at Bain Capital — and is using to build his campaign.

And while in Salt Lake, he still had powerful levers at his disposal. Although he claimed to have severed his ties to Bain Capital, SEC documents show that Romney retained 100 percent operational ownership of the company and its subsidiaries through 2001 (his campaign insists this was just a paper formality) and maintained his financial stake in Bain’s portfolio of companies.

Romney has insisted that he had no thoughts of politics when taking on the Winter Olympics in 1999, but there have been reports to the contrary — including a comment by David D’Allesandro, CEO of John Hancock, in the Boston Globe’s recent seven-part profile, saying that Romney appealed for Hancock’s Olympic sponsorship by saying that his own political career depended on a financially successful Winter Games. D’Allesandro, an ally of Romney’s in Boston, initially threatened to withdraw his company’s sponsorship after the International Olympic Committee (IOC) bribery scandal, but, after Romney joined the SLOC, re-signed. It was not the only such instance.

The Olympics were emerging from an international bribery scandal. To launch his political career, Romney needed to financially rescue them. To do that, he needed corporate sponsorships. And he got many of those sponsorships by working his business connections, and his skill at finding ways to make deals worthwhile to the person across the table.

The details of those deals were never disclosed: Romney exempted them from his “total transparency” pledge regarding the SLOC’s finances and business arrangements.

One story told by Romney himself suggests his methods. In Turnaround, his 2004 book about his Olympics experience, Romney tells of the deal he offered to his friend Thomas Stemberg, founder and then-CEO of Staples, for that company’s sponsorship: his Olympics staff “would get to work lobbying SLOC board members and other corporate contacts to switch their office-supply contracts to Staples.”

Romney was on the Staples board at the time, and holding a financial stake in the company, as he was offering to use his SLOC leverage and staff to drum up business for the company, an apparent conflict of interest.

But before Stemberg accepted, SLOC’s outside-sales firm landed Office Depot for the sponsorship. Romney wanted it to go to Staples. As he writes in Turnaround, he arranged for Stemberg to offer a million dollars more than Office Depot had — and then had his SLOC staff offer Office Depot a million dollars to back out of the sponsorship deal. Office Depot declined, and kept the sponsorship.

In other cases, generosity to the Winter Olympics was followed closely by lucrative deals from Bain Capital, which do not prove a quid pro quo but do raise questions.

Utah billionaire Jon M. Huntsman ponied up a cool million dollars to the Olympics — and in July 2001, Bain Capital invested roughly a quarter-billion dollars in Huntsman’s international-holdings company. Huntsman is now a national finance co-chair for Romney’s presidential campaign.

Gateway, too, signed on as a sponsor; in September 2001, it made an agreement for unpaid consulting services from Bain Capital, in exchange for certain underwriting opportunities.

Others of the final tally of 53 corporate sponsors were already under Romney and Bain Capital’s influence. Marriott is led by close family friends — now campaign finance co-chairs; plus, Romney was sitting on the company’s board at the time. Sealy, which Bain Capital owned, became a sponsor. So did, where one of Romney’s sons worked as a consultant. The vice-chair of General Motors was on Marriott’s board of directors with Romney, as were the directors of Blue Cross/Blue Shield and Sears; all became sponsors. Many other sponsors had extensive business dealings with Bain Capital companies, or had top-ranking executives with past connections to Bain Capital companies. And most of them have come through for Romney again, by donating to his campaign.


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