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Mitt Romney's role at Bain Capital fuels Obama campaign attacks

The dispute over how long Mitt Romney ran Bain Capital becomes the focus of Obama campaign attacks, diverting attention from criticism of the president's economic record.

July 13, 2012|By Melanie Mason and Kathleen Hennessey

WASHINGTON — President Obama's campaign pounced on the chance to spend another day questioning Mitt Romney's business record, lobbing personal attacks on the former chief executive and derailing Republican attempts to keep voters focused on Obama's economic record.

The issue Thursday, at least among the chattering classes, was precisely how long Romney sat at the helm of Bain Capital, the Boston-based venture capital group that he founded in 1984 and that provided the bulk of his fortune.

The Obama campaign has sought to saddle Romney with the political baggage of bankruptcies and outsourcing of jobs at companies that Bain owned and ran in the early 2000s. Romney's campaign says such attacks are inaccurate because Romney left the firm in February 1999 to run the Winter Olympics in Salt Lake City.

But Romney's departure was not a clean break. Bain filed documents with the Securities and Exchange Commission as late as 2002 that identified Romney as the "sole stockholder, chairman of the board, chief executive officer, and president." Moreover, financial disclosure forms in Massachusetts show Bain paid Romney at least $100,000 in salary in 2001 and 2002, according to a report Thursday in the Boston Globe.

It has long been known that Romney reaped income from Bain long after he had moved on to other ventures, including his election as governor of Massachusetts in 2002. Romney's severance package with Bain was not settled until 2011.

On Thursday, the Romney campaign sought to dismiss the discordant state and federal filings as not representing Romney's true role at Bain after 1999.

"People want to conflate ownership with management authority. That's the distinction here," said a Romney advisor who was not authorized to speak on the record.

The advisor said the formal transfer of ownership of Bain took several years because Romney's departure to run the Olympics was so sudden.

"There was no succession plan," the advisor said. "When it was clear that he wasn't coming back to Bain, they figured out what his retirement package would be."

Bain Capital released a statement saying Romney "has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure" in February 1999.

"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," the statement said. "Accordingly, Mr. Romney was reported in various capacities on SEC filings during this period."

The issue is politically potent because several companies acquired by Bain saw layoffs or were shut down between 1999 and 2002. GSI Industries, for example, a steel company with plants in Missouri and South Carolina, went bankrupt and fired more than 700 workers in 2001.

The Romney campaign and Bain Capital declined to disclose details about the transfer of power at the privately held company, including who took over the daily duties of chief executive, how long Romney remained the sole shareholder, and Romney's severance agreement.

Robert Jackson Jr., a professor of corporate governance at Columbia Law School in New York, said he did not see a contradiction between the language in the SEC filing and Romney's actual role, even if they appeared inconsistent.

"All this securities filing does, as a matter of law, is say that he has some policymaking authority over the company," Jackson said. "It doesn't mean that he exercised it — it doesn't mean he was spending a lot of time on it. It just means that as a matter of law, he was one of the people who had policymaking authority."

Still, in the dog days of summer campaigns, the dispute was enough to launch a new round of mudslinging and an escalation of charges of secrecy, possible illegality and lying.

"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," Stephanie Cutter, Obama deputy campaign manager, told reporters.

Romney campaign manager Matt Rhoades fired back that Cutter's comment "was so over-the-top that it calls into question the integrity of their entire campaign. President Obama ought to apologize for the out-of-control behavior of his staff, which demeans the office he holds."

The back and forth feeds into the Obama campaign's preferred narrative — that Romney is a corporate looter hiding sketchy finances. Romney's campaign contends that Obama is lying about Romney's record and is seeking to divert voters from the president's record in office.

melanie.mason@latimes.com

kathleen.hennessey@latimes.com

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