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Romney’s Bain Years: New Evidence, Same Conclusion

New reporting cites strong evidence that Mitt Romney wasn’t actively managing Bain Capital while he was running the Olympics, despite what the Obama campaign (and some news reports) would have voters believe.

Dan Primack, a senior editor at Fortune Magazine, reports on previously confidential “offering documents” that Bain circulated to potential investors in June 2000, September 2000 and again in January 2001. And he says that in each of those three documents Romney’s name is conspicuously absent from lists of senior investment managers at Bain.

Dan Primack, July 12: [T]he contemporaneous Bain documents show that Romney was indeed telling the truth about no longer having operational input at Bain…

This has become a key point of contention, because Obama TV ads accuse Romney of shipping U.S. jobs overseas. We reported that the Obama campaign had failed to back up its claims (“Obama’s ‘Outsourcer’ Overreach,” June 29), partly because Romney had left Bain in February 1999 to run the 2002 Winter Olympic and wasn’t actively in charge of the company at the time.

But the Obama campaign objected, claiming that Romney remained a part-time manager even while he was living in Utah and running the Olympics. We responded, finding the campaign’s evidence “weak or non-existent.”

Since then some other reporters have weighed in on Obama’s side. Articles in Mother Jones magazine and the Talking Points Memo website, and most recently a front-page Boston Globe story on July 12, all cite documents filed by Bain with the Securities and Exchange Commission.

The TPM piece noted that in documents from July 2000 and February 2001 Romney listed his “principal occupation” as “Managing Director” of Bain, for example. And the Globe story reported that Bain repeatedly listed him on government filings as the man in charge.

On a media conference call about the Globe story, Stephanie Cutter, Obama’s deputy campaign manager, said the story proves that Romney had “full control” of Bain during this time and “therefore directly responsible” for decisions made at companies in which Bain invested. “Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony. Or he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments,” Cutter said.

But we see little new in any of these SEC filings, and a University of Pennsylvania Law School professor we spoke to sees no basis for the Obama campaign’s claim that Romney committed a felony.

None of the SEC filings show that Romney was anything but a passive, absentee owner during that time, as both Romney and Bain have long said. It should not surprise anyone that Romney retained certain titles while he was working out the final disposition of his ownership, for example. We see nothing to contradict the statement that a Bain spokesman issued in response to the Globe article:

Bain Capital, July 12: Due to the sudden nature of Mr. Romney’s departure, he remained the sole stockholder for a time while formal ownership was being documented and transferred to the group of partners who took over management of the firm in 1999. Accordingly, Mr. Romney was reported in various capacities on SEC filings during this period.

Jill E. Fisch, a professor at the University of Pennsylvania Law School and co-director of the Institute for Law and Economics, said Romney would not have committed a felony by listing himself as managing director — even if he now claims he had no role in running the company after February 1999. There is no legal obligation to describe how active one is in the day-to-day management of the company, she said. And just because he held title of managing director doesn’t necessarily mean that he’s responsible for decisions like layoffs or outsourcing.

“If that really mattered to investors, they might consider that a civil liability, but we wouldn’t be talking about a felony,” she said.

We would reassess our judgment should somebody come up with evidence that Romney took part in specific management decisions or had any active role (not just a title) at Bain after he left to head the Olympics. But nothing we’ve seen directly contradicts Romney’s statements — which he has certified as true under pain of federal prosecution — that he “has not had any active role” with Bain or “been involved in the operations” of Bain since then.

And we wish to note, we’re not alone in this judgement. Others include:

  • Fortune’s Dan Primack — who covers Wall Street “deals and dealmakers” — addressed the Mother Jones reporting in a July 2 article that came to the same conclusion we do. Primack’s more recent reporting we’ve already noted.
  • The Washington Post‘s Fact Checker, Glenn Kessler, rebutted the Boston Globe story in a July 12 piece. “Just because you are listed as an owner of shares does not mean you have a managerial role,” Kessler writes. We agree.
  • Before the Globe story broke, the Columbia Journalism Review’s Brendan Nyhan stated: “[T]he specific cases cited by the Obama campaign largely concern actions taken by those companies during a period in which Romney was not making operational decisions at the firm. Journalists must be clear about this distinction.” After the Globe story, CJR’s Greg Marx wrote “there’s less new in the Globe article than the attention it has drawn suggests.”
  • ABC News’ Devin Dwyer reported July 12, after the Globe‘s story appeared: “Team Obama does not provide any specific evidence to back up claims that Romney was actively managing Bain between 1999 and 2002.”

Dishonest Campaigns

The Romney campaign cited our work in a recent ad to accuse President Obama of running a “dishonest campaign.” The term “dishonest” is theirs, not ours, however. And we make no judgments about the personal character of either candidate, or their campaigns.

And we’ll just note for the record that FactCheck.org has also found numerous instances in which Romney has also strayed from the facts in accusations against Obama. He also claimed that he created 100,000 jobs at Bain Capital — a claim we found lacked support because it took credit for jobs added by companies long after Romney had left the Bain.

But that’s no excuse for the Obama campaign trying to saddle Romney with responsibility for decisions Bain made while Romney was somewhere else.

Update, July 13: The Post’s Kessler awarded three of his “Pinocchios” to the Obama camp’s claim that SEC filings show Romney might be guilty of a felony.

Kessler notes (among other things) that Romney’s time at the Olympics was the subject of hearings before the Massachusetts Ballot Law Commission in 2002, when Democrats sought and failed to disqualify Romney as a candidate for governor on grounds that he had been living in Utah.

After holding hearings for three days, during which Romney testified, the bipartisan ballot panel unanimously adopted “findings of fact” that said Romney was employed in Massachusetts “until 1999” when he left for Utah.

Ballot Law Commission, June 25, 2002: On or about February 11, 1999, the Respondent [Romney] became an employee of the Salt Lake Organizing Committee for a fixed term of three years. While so employed, the Respondent worked, on average, over 12 hours per day, 6 days per week.

During this time Romney remained on the boards of Staples and another company in which Bain had invested, LifeLike Co., a company that made dolls. As evidence of his continued ties to Massachusetts, the report states that Romney “returned to Massachusetts from Utah to attend meetings at Staples.” But there’s no mention of Romney attending any business meetings at Bain itself or any of Bain’s investment funds.

We note for the record our disagreement with a July 12 Huffington Post report, which cites Romney’s membership on the LifeLike board as evidence that his claim to have had no active involvement with Bain or any Bain entity is “false.” No so, in our judgment.

We think the term “Bain Capital entity” on Romney’s disclosure forms could only refer to Bain’s various investment funds, not to companies in which it invested. And in the three days that Romney sought to document his continued ties to Massachusetts, so he could run for governor, he made no mention of attending any meetings at Bain itself or any of the various Bain partnerships.

LifeLike was one of Bain’s smaller investments, and a failure. A Jan. 9 Wall Street Journal report says that in 1996 Bain had invested $2.1 million in the privately held Colorado firm  for a stake of “unknown size,” but sold those shares in late 2001 for $15,000. The company was later liquidated, the Journal reported.

On the broader question of Romney’s involvement with Bain during this time, we concur with Kessler’s conclusion. “The Obama campaign is blowing smoke here,” he says, adding “the weight of evidence suggests that Romney did in fact end active management of Bain in 1999.”

— Brooks Jackson, with Rob Farley and Eugene Kiely

sees no basis for the Obama campaign’s claim that Romney committed a felony