Rehashing the debate about when Romney left Bain

After a much-discussed Boston Globe story, FactCheck.org stands by its take

This post has been updated.

The big political story of the day is a front-page article in The Boston Globe presenting evidence that Mitt Romney remained chief executive and chairman of Bain Capital until 2002, three years after Romney claims to have stepped down—a distinction that matters because numerous Bain deals in the 1999-2002 period have come in for criticism. The Globe story was burning up the political world on Twitter this morning. And some journalists saw it as refuting a report by FactCheck.org, cited here at CJR, which found that—while it’s clear Romney retained his ownership stake in Bain after departing to run the Salt Lake City Olympics—there’s no evidence he continued to play an active role.

I asked Brooks Jackson, the director of FactCheck.org, what he made of the Globe story. He replied over email:

We see little new in the Globe piece. So far nobody has shown that Romney was actually managing Bain (even part-time) during his time at the Olympics, or that he was anything but a passive, absentee owner during that time, as both Romney and Bain have long said.

We would reassess our judgment should somebody come up with evidence that Romney took part in any specific management decision or had any active role (not just a title) at Bain after he left to head the Olympics. But in our considered judgment, nothing in the Globe story 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.

I agree with Jackson that there’s less new in the Globe article than the attention it has drawn suggests. The story leads with numerous SEC filings after Romney’s claimed 1999 departure that list him as the “sole stockholder, chairman of the board, chief executive officer, and president.” But the existence of such filings has already been reported—as the Globe acknowledged both in an update to its story and in a statement to Politico’s Dylan Byers, who was also in touch with Jackson today. Indeed, they were at the core of the Obama campaign’s objection to FactCheck.org’s report, to which the factchecking site posted a lengthy reply.

The issue, then, is how to understand those filings, and how to reconcile them with Romney’s subsequent statements, on federal disclosure forms, that since February 1999 he “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.” Here, the Globe article does add something new: comments from Roberta Karmel, a former SEC commissioner, who says that the earlier filings should be taken at face value, and that if Romney was only a figurehead after 1999—as he and Bain have said—those filings “could be considered a misrepresentation to the investor.”

But this, again, is a version of the argument that journalists like Mother Jones’s David Corn and TPM’s Josh Marshall have previously advanced. And, again, counterarguments have already been made—explicitly in reply to Corn by Fortune’s Dan Primack here, and much earlier, by The Washington Post’s Glenn Kessler, here. (That Kessler post includes what may be a telling detail about how investors saw Romney’s role during this period: when Bain was sued in 2006 over actions taken in 2002, six Bain-controlled entities and three executives were named as defendants—but Romney was not.)

FactCheck.org is in the Primack/Jackson camp, which is why Jackson sees no reason to reassess his conclusions today. For what it’s worth, on the narrow question of whether Romney personally directed decisions by Bain or its companies during the period in question—which is the initial claim that the Obama campaign made, and which FactCheck.org was checking—I’m in that camp, too.

The available evidence still supports this picture: When Romney left to run the Olympics, he intended to continue his work at Bain in a limited role. But the Olympic gig took up more time than he anticipated, and the part-time work at Bain didn’t happen. Still, Romney and Bain expected he’d return to the company once the Olympics were over. He was even compensated in his role as an executive after 1999, as both the Globe article and the Obama campaign note. But his success in Salt Lake City raised his profile and created new opportunities in politics—and when he decided to pursue them, his de facto departure from Bain was formalized.

Admittedly, that picture is murky. To the extent that the truth about this period matters—because of Bain’s actions, or because Romney’s claims speak to whether he’s trustworthy—there’s plenty here to warrant further investigation. Maybe Karmel, the former SEC commissioner, has the better of the argument, after all. And, as Marc Ambinder notes on Twitter, it’s about time for Romney or Bain to identify who was making the decisions if he wasn’t. More reporting can help here.

Meanwhile, there’s a case to be made that Romney bears an ethical responsibility for Bain’s actions during this period, even if he wasn’t directly involved. He was, on paper, in charge of many of Bain’s investments—and being paid for that role. (Business Insider’s Henry Blodget has been tweeting up a storm this afternoon arguing that that makes him responsible.) And he was, indisputably, profiting from those investments—a line of attack that Jackson, in a phone call today, agreed would put the Obama campaign “on better footing,” and that some in the president’s camp have in fact recently leaned on.

No doubt to some observers, the question of Romney’s responsibility in this larger sense is the only issue that matters, and the factcheckers’ objections seem pedantic. But it’s the job of factcheckers to be pedantic about what politicians are saying, while leaving political debates to the political sphere. In this case, the factcheckers have done that job. And while future reporting may prompt a reassessment, their conclusions—about the specific claims under scrutiny—look sound so far.

Update: Before this post was published, Primack posted a new item, which sheds some light on, at the least, how Bain was portraying Romney’s role to investors during this period. Primack obtained offering documents for a Bain fund from 2000 (from whom is not specified). Regarding the section on fund management, he writes:

It then goes on to list 18 managers of the private equity fund. Mitt Romney is not among them. Same goes for an affiliated co-investment fund, whose private placement memorandum is dated September 2000.

Then there is Bain Capital Venture Fund — the firm’s first dedicated venture capital effort — whose private placement memorandum is dated January 2001. Romney also isn’t listed among its “key investment professionals,” or as part of its day-to-day operations or investment committee.

Why these documents are just now finding their way to a reporter, I have no idea. And these details won’t change the minds of people who believe Romney, even if not operationally involved, bears responsibility for Bain’s actions. (As Primack notes, “no longer having operational input at Bain… is different from no longer having legal or financial ties to the firm.”) But they do seem to add more support to the picture painted by the available evidence.

Second update: FactCheck.org has now published its own follow-up post, which cites Primack’s item and adds this:

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 [another of the titles that appears on the SEC filings] — 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.

Third update: The Huffington Post has a report this evening that offers new evidence challenging Romney’s account. Jason Cherkis and Ryan Grim got a hold of Romney’s testimony from a 2002 hearing in Massachusetts held to determine his residency status as he prepared to run for governor. They write:

Romney has consistently insisted that he was too busy organizing the 2002 Winter Olympics to take part in Bain business between 1999 and that event. But in the testimony, which was provided to The Huffington Post, Romney noted that he regularly traveled back to Massachusetts. “[T]here were a number of social trips and business trips that brought me back to Massachusetts, board meetings, Thanksgiving and so forth,” he said…

Romney testified that he “remained on the board of the Staples Corporation and Marriott International, the Life Like Corporation” at the time.

Yet in the Aug. 12, 2011, federal disclosure form filed as part of his presidential bid, he said, “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.”

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Greg Marx is an associate editor at CJR. Follow him on Twitter @gregamarx.