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A Project of The Annenberg Public Policy Center

FactCheck to Obama Camp: Your Complaint is All Wet

The Obama campaign complains that we got a key fact wrong in our June 29 article, “Obama’s ‘Outsourcer’ Overreach.” We strongly disagree. We find the Obama campaign’s evidence to be weak or non-existent, and contrary to statements Romney has made on official disclosure forms under pain of federal prosecution.

The Obama complaint claims we erred in saying Mitt Romney gave up active management of Bain Capital in early 1999 to run the 2002 Winter Olympics, insisting we were then wrong in saying Romney was not responsible for shipping U.S. jobs overseas.

In fact, if the Obama campaign were correct, Romney would be guilty of a federal felony by certifying on federal financial disclosure forms that he left active management of Bain Capital in February 1999.

And after reviewing evidence cited by the Obama campaign, we reaffirm our conclusion that Romney left the helm of Bain Capital when he took a leave of absence in 1999 to run the Salt Lake City Organizing Committee for the 2002 Winter Olympics — as he has said repeatedly — and never returned to active management. The Obama campaign’s recent ads thus mislead when they point to investments made by Bain, as well as management decisions made by companies in which Bain invested, after that time.

The Obama campaign’s objections are contained in a six-page letter sent to us (and  — without notice to us — to other news organizations as well). It cobbles together selective news snippets and irrelevant securities documents in an attempt to show that Romney was still running Bain Capital on a part-time basis while he was also running the Olympics committee.

In a nutshell, the Obama campaign is all wet on this point.

Romney Committing Felonies?

If the Obama campaign is correct, then Romney is guilty of lying on official federal disclosure forms, committing a felony.  But we don’t see evidence of that.

Here’s what Romney has said:

Mitt Romney Public Financial Disclosure Report, Aug. 11, 2011: Mr. Romney retired from Bain Capital on February 11, 1999 to head the Salt Lake Organizing Committee. 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.

Romney’s signature appears on the line that states: “I certify that statements I have made on this form and all attached schedules are true, complete and correct to the best of my knowledge.”

Making false statements to the federal government is a serious crime (under 18 USC 1001) carrying possible fines and up to five years in federal prison. But we don’t see that the Obama campaign has come close to showing that Romney has committed any such crime.

Romney is supported by the current management of Bain. We re-checked with Bain spokesman Alex Stanton, who released a statement about Romney’s departure date:

Bain Capital, July 2: Mitt Romney retired from Bain Capital in February 1999. He has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies since that time.

Where’s the Evidence?

So what does the Obama campaign have in rebuttal? Very little, and none of it convincing in our judgment.

Much of the Obama campaign’s letter is devoted to quoting portions of documents filed with the Securities and Exchange Commission. In summary, the letter states there are “at least 63 filings with that agency after March 1, 1999 that list various Bain entities and describe them as ‘wholly owned by W. Mitt Romney.'” That’s true, but not relevant.

We have never disputed that Romney remained the owner of Bain while he was running the Olympics committee. The issue always has been, who was running Bain? Nothing in the SEC documents contradicts what Romney has certified as true.

On that point, the Obama campaign cites snippets of a few news clippings to make a case that Romney was still a part-time manager of Bain after he left to run the Olympics. But a close reading shows these news accounts don’t contradict Romney either.

For example, the Obama letter quotes from a Boston Herald story (“Romney looks to restore Olympic Pride”) that cites a partial quote from Romney saying that he intended to stay on at Bain as a part-timer. Here’s the quote in a fuller context.

Boston Herald, Feb. 12, 1999: Romney said he will stay on as a part-timer with Bain, providing input on investment and key personnel decisions. But he will leave running day-to-day operations to Bain’s executive committee.

First, the Obama campaign simply ignores Romney’s stated intent to “leave running day-to-day operations” to others. And in any case, Romney’s statement that he would remain a “part-timer” is merely a statement of intent, issued just as he was leaving for the Olympics job and before he knew how much time it would consume. It is not evidence of what actually happened.

And as to what happened later, the evidence is clear. According to an Associated Press story that ran just two months later, Romney quickly discovered that he was working 16-hour days on the Olympics, leaving no time for Bain (or even his own wedding anniversary).

The AP story (which we retrieved from the Nexis database) began this way:

The Associated Press, April 4, 1999: Sixty days ago, Mitt Romney was preparing to take time off work — one week a month — so he could travel with his wife while her health would still allow it. Now, he can’t even get free for their 30th anniversary celebration, and the trip to Hawaii for her 50th birthday has been canceled.

“I have a lot to learn, and a lot to catch up on. So I am going full-bore,” says Romney, who has been working 16-hour days, seven days a week. “It is a more intense experience than I had anticipated.”

His wife, Ann, is more blunt: “It’s like he walked into an empty elevator shaft.”

The AP story goes on to say that Romney “immersed himself in books on sports management” and “has answered about two dozen e-mails and letters a day, spent a quarter of his time dealing with the media, and juggled meeting requests from city officials, board members and business owners.”

It also quotes an accountant friend who was assisting Romney, Bob White, as saying “Right now he’s doing two, maybe three full-time jobs” running the Olympics.  Romney’s wife, Ann, is quoted as saying that her husband had been working 112 hours a week at first, causing her to move to Salt Lake City to be with him. Since her arrival, she said, he had cut his Olympics work to 84 hours a week.

The Obama campaign’s letter says a reporter learned in a 2000 interview with Ann Romney that her husband was “dividing his time between running Bain and running the Olympics,” but in fact those words don’t appear in the news clip it cites.

The Nov. 11, 2000 Boston Globe story (which we read in full via Nexis) paraphrases Ann Romney this way: “The [Olympics] 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.” And he did indeed “lessen” his involvement, giving up all management control according to what he has certified repeatedly. The Globe story goes on to quote Ann Romney as saying the couple is still living in Salt Lake City and that “[w]e’re still coming home [to Boston] for Thanksgiving.” Nowhere is she quoted as saying he has spent any time managing Bain.

Similarly, the Obama campaign cites a Washington Post story from 2007 that quotes a Romney lawyer, R. Bradford Malt, as saying that he “finally resigned and reduced his role at the company to that of a passive investor in 2001.” That’s true, but we read that to mean only that Romney went from being an absentee owner to being a passive investor. Nowhere was Malt quoted as saying Romney took any active role in managing Bain after leaving to run the Olympics.

And just to be sure, we checked with Malt. He said:

R. Bradford Malt, July 2: After leaving Bain Capital in February 1999, Mitt Romney devoted 100% of his time and energy to the overwhelming task of rescuing the Winter Olympics, which were in a state of disarray when he took the job. Because of the demands of this job, Mr. Romney was not involved in the management or activities of Bain Capital or any of its portfolio companies in any way.

When it became clear that he would not be returning to Bain Capital, Mr. Romney entered into a retirement agreement formalizing transfer of control based on his February 1999 separation date from Bain Capital.

Another example of the weak evidence cited by the Obama campaign is a Salt Lake Tribune story from the time Romney left the Olympics to run for governor of Massachusetts. The campaign quotes Romney as saying he was then giving up control of all Bain’s voting stock, and paraphrases Romney as saying that the divestiture affected “only the management and control of the company.”

That’s true, but it’s not evidence that Romney had been running the company, even on a part-time basis. A full reading of the article makes clear that Romney said he did not intend to “resume” his managment duties, and wanted to let his partners know that they would not have to “move over one office” to make room for him.

Salt Lake Tribune, Aug. 21, 2001: The transition was ensured when Romney informed the 26 managing directors of Bain Capital recently that he was “going limited.” That meant he no longer intended to resume his duties as managing partner and chief executive of the company, which started or took part in 140 corporate acquisitions since 1984 and has more than $ 12 billion in assets.

In doing so, he gave up control over all of Bain Capital’s voting stock, dividing the shares between the two dozen directors. The divestiture had no financial ramifications, Romney said, affecting only the management and control of the company.

The split was finalized now, Romney said, so that Bain Capital’s directors would not have to wonder whether they would hear “We’re back . . . everyone move over one office” after the 2002 Olympics and Paralympics are over.

For all these reasons, we respectfully reject the Obama campaign’s request that we amend our original story.

We re-state our conclusion that “some of the claims in the [recent Obama] ads are untrue, and others are thinly supported.” And we suggest that should Obama campaign officials discover any actual evidence that Romney personally participated in any management decisions at Bain after February of 1999, they should produce it to a federal prosecutor.

— Brooks Jackson and Robert Farley, with Eugene Kiely