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Romney tax returns detail funds not identified in ethics forms

January 26, 2012|By Matea Gold and Tom Hamburger
(Chip Somodevilla/Getty…)

Reporting from Washington — Some investments listed in Mitt and Ann Romney’s 2010 tax returns – including a now-closed Swiss bank account and other funds located overseas – were not explicitly disclosed in the personal financial statement the GOP presidential hopeful filed in August as part of his White House bid.

The Romney campaign described the discrepancies as “trivial” but acknowledged Thursday afternoon that they are undergoing an internal review of how the investments were reported and will make “some minor technical amendments” to Romney’s financial disclosure that will not alter the overall picture of his finances.

A review by the Los Angeles Times/Tribune Washington Bureau found that at least 23 funds and partnerships listed in the couple’s 2010 tax returns did not show up or were not listed in the same fashion on Romney’s most recent financial disclosure, including 11 based in low-tax foreign countries such as Bermuda, the Cayman Islands and Luxembourg.

The campaign has stressed that Romney has paid all required U.S. taxes on his foreign funds.

Many of the funds are affiliated with Bain Capital, the Boston-based private equity firm Romney ran for 15 years. Several others are apparently unrelated offshore entities with mysterious names such as Babson 2006-1, which is based in the Cayman Islands, and Barracuda Investments, which has an address in Dublin, Ireland, but appears to be solely owned by Golden Gate Capital, a private equity firm based in San Francisco.

Among the assets omitted is a Swiss bank account in Ann Romney's blind trust that campaign officials said held $3 million of the couple's money until it was closed in 2010. The account was listed on a financial disclosure Romney filed in 2007, but it was mistakenly named as an asset held by the couple, not as part of Ann Romney's trust. The campaign said it is filing an amendment to the most recent report to reflect $1,700 worth of interest earned in the Swiss bank account in 2010, as well as another amendment to move the account to the appropriate category in the 2007 report.

The Romney campaign dismissed the omission of information as inadvertent and inconsequential, noting he has released more than 600 pages of information about his finances.

But the discrepancies between Romney’s tax returns and his personal financial statement speak to a broader challenge facing the longtime private equity chieftain: convincing voters that he can relate to their economic distress despite the incredibly complex architecture of his immense fortune.

The former Massachusetts governor -- who made his money running a private equity firm that specialized in leveraged buyouts -- has displayed a tin ear when answering questions about his personal wealth.

He described his net worth as “between $150 [million] and about $200 and some odd million” Wednesday when pressed by Univision anchor Jorge Ramos about how much money he has. Earlier in the month, Romney characterized the $374,000 he made in speaker’s fees in 2010 and 2011 as “not very much.”

The fact that a small fraction of Romney's extensive holdings may not be reported correctly could reinforce an image of the Republican candidate as elite and out of touch.

All presidential candidates must disclose their personal financial holdings to the Office of Governmental Ethics, a step mandated by the 1978 Ethics in Government Act, passed to discourage real or perceived corruption. Romney’s filing is supposed to detail his assets and income from Jan. 1, 2010, through Aug. 12, 2011, when he filed the report. 

The campaign has spent the last week furiously doing its own due diligence to try to figure out the reasons for the discrepancies and plans to consult with officials from the OGE and Federal Election Commission.

Many of the inconsistencies appear to stem from the different reporting requirements of the Internal Revenue Service and the OGE. Some of the undisclosed foreign funds, for example, are part of larger investment portfolios that were reported on the financial disclosure form, but required individual reports in the Romney tax returns because they were overseas companies, a Romney associate said.

In other cases, the assets did not meet the minimum threshold of value required to be reported on financial disclosure forms. And some funds did not provide the required paperwork at the time the report was filed.

But other assets, the associate acknowledged, may have fallen through the cracks.

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