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GOP Candidates
Mitt Romney and Bain: a Fact Checker collection
Posted by Glenn Kessler at 06:02 AM ET, 07/20/2012
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(Nicholas Kamm/AFP/GETTY IMAGES)
“I had no role whatsoever in the management of Bain after I went off to the Olympics and that`s been demonstrated by people who work at Bain, by all of the documents but I still retained an ownership interest. . . . I had no involvement with the management of Bain Capital after February of 1999.”
— Former Massachusetts governor Mitt Romney, interview with CBS News, July 13, 2012
Given the extensive interest in the question of when Mitt Romney stopped managing Bain Capital, we have compiled a summary of 11 Fact Checker columns that assessed claims that, at least in part, needed to deal with this question. We evaluated each claim on a case-by-case basis, so the Pinocchio count has varied depending on the importance of the 1999-2002 period to the facts at hand.
At the end of this column we also provide some additional commentary on this question, especially in light of Romney’s assertion that that he had “no role whatsoever” in the management of Bain after February, 1999.
“Mitt Romney and 100,000 jobs: an untenable figure” (Jan. 10. 2012)
Claim: Romney said that businesses in which Bain had invested had created “net-net” more than 100,000 jobs.
Findings: Bain was about wealth creation, not job creation. Moreover, the claim is based on the current employment of some companies, long after Bain owned them or Romney managed the firm. We concluded: “The Romney campaign needs to provide a real accounting of how many jobs were gained or lost through Bain Capital investments while the firm managed these companies — and while Romney was chief executive. Any jobs counted after either of those data points simply do not pass the laugh test.”
Rating: 3 Pinocchios
“Four Pinocchios for ‘King of Bain’” (Jan. 13. 2012)
Claim: A 25-minute attack ad by a pro-Newt Gingrich Super PAC claims Romney was involved in “stripping Americans business of assets, selling everything to the highest bidder and often killing jobs for big financial rewards.”
Findings: Highly misleading. We found that interviews for one segment were conducted under false pretenses. “Only one of the four case studies directly involves Romney and his decision-making [before 1999], while at least two are completely off point.”
Rating: 4 Pinocchios
“The Obama campaign’s suspect claim about Romney’s role in store closings.” (Jan. 18. 2012)
Claim: Romney closed more than 1,000 plants, stores and offices.
Findings: This mostly concerned the bankruptcy of KB Toys, and this was the first time we delved deeply into the Securities and Exchange Commission documents that have become an issue in recent days. Bain invested in KB Toys in 2000, and the company went bankrupt in 2004, past the period when Romney appeared to be actively managing Bain. “The financial filings suggesting Romney still had some measure of control at Bain from 1999-2001 give the Obama campaign opportunities to raise doubts. … Romney’s record when he was running Bain is certainly fair game, but any deals made after 1999 just shouldn’t count.”
Rating: 3 Pinocchios
“Mitt Romney: Medicare fraud allegations and ‘Blood Money’” (Jan. 30. 2012)
Claim: An attack ad by pro-Gingrich Super PAC alleges a Medicare scandal at a firm partly owned by Bain.
Findings: The case is certainly a valid subject for scrutiny of Romney’s business record, since it took place entirely before 1999. He was on the company’s board at the time criminal fraud was taking place, and his statements about his knowledge of the federal investigation have been inconsistent. But the film goes too far in suggesting that Romney was responsible for running the company — or that he sold it to avoid a federal probe.
Rating: 2 Pinocchios
“Does Mitt Romney love outsourcing?” (May 4, 2012)
Claim: Obama campaign ad alleges, among other things, that “as a corporate CEO, Romney shipped American jobs to places like Mexico and China.”
Findings: The outsourcing examples cited by the Obama campaign largely occurred in 2000 and 2001, after Romney had left to run the Winter Olympic Games in Salt Lake City. There were other assertions that we had previously debunked, though one was deemed “technically right.”
Rating: 2 Pinocchios
“Romney and Bain Capital: the Obama campaign’s newest ad” (May 15, 2012)
Claim: Obama campaign attack ad focuses on a steel company that Bain invested in — and then it went bankrupt.
Findings: Bain Capital was clearly involved in the company’s decisions to greatly add to its debt load — decisions that were made while Romney was actively running Bain. That debt may have contributed to the company’s failure to weather a steep decline in steel prices, but it was not the only factor that led to the company’s bankruptcy filing. Although the bankruptcy occurred in 2001, when Romney was at the Olympics, we determined that his decisions set the company on its course.
Rating: 1 Pinocchio
“Mitt Romney’s claim that 100,000 auto jobs have been lost under Obama” (May 18, 2012)
Claim: Romney says that he created 100,000 jobs in the private sector but that Obama lost 100,000 jobs in the auto industry.
Findings: Not only is his claim of creating 100,000 jobs at Bain untenable, because it includes jobs created after 1999, but also his assertion that 100,000 jobs have been lost in the auto industry “on the president’s watch” does not add up. Auto jobs have actually grown under Obama.
Rating: 4 Pinocchios
“An out-of-context view of Romney’s time at Bain Capital” (May 24, 2012)
Claim: Obama campaign video about Bain’s investment in Ampad alleges that Bain cut workers’ pay and benefits after it took over the company, which then went bankrupt.
Findings: The Obama campaign ad depicts the facts fairly straight. It is not entirely clear how much Romney was responsible for the decision to treat the workers in this manner, but he was the chief executive, so he certainly has the ultimate responsibility. “The Ampad transaction, until its final days, also largely tracks with Romney’s active leadership of Bain, making it fair game for scrutiny of his record as a business executive.”
Rating: 1 Pinocchio
“The latest Romney claim about Bain Capital” (May 30, 2012)
Claim: Romney quotes Bain Capital as saying 80 percent of its investments grew their revenues during its ownership.
Findings: The statistic is dubious, because it appears to count companies that had early revenue growth but then collapsed under a heavy debt burden after Bain unloaded them. Bain refused to say how the statistic was developed. The statistic also does not shed light on Romney’s career there.
Rating: 3 Pinocchios
“4 Pinocchios for Obama’s newest anti-Romney ad” (June 21, 2012)
Claim: Obama campaign ad calls Romney a “corporate raider” who shipped jobs overseas as a businessman, and did so again as governor.
Finding: We had debunked many of these claims before, partly on the grounds that the outsourcing took place after 1999. The term “corporate raider” was sourced to a single Reuters report that the editor said had been a mistake.
Rating: 4 Pinocchios
“More tenuous claims about Romney’s Bain Capital record” (July 11, 2012)
Claim: Pro-Obama Super PAC alleges that “for every company he drove into the ground, Romney averaged a $92 million profit” and that Romney was responsible for 14,000 layoffs.
Findings: Only a relatively small portion of the supposed 14,000 layoffs occurred during Romney’s time with Bain, before 1999, and it’s impossible to know how much blame to pin on the former executive for the remaining losses. Furthermore, the ad misleadingly suggests that Romney himself collected $92 million in profits from bankrupt companies, but all the Bain partners would have shared that money.
Rating: 3 Pinocchios
The Bottom Line
We thank our readers for the many e-mails, comments, tweets, phone calls and letters considering this issue.
We have previously laid out the evidence, pro and con, concerning Romney’s management of Bain after 1999. Our position has been that he effectively stopped managing Bain when he left for his Olympics job. Most important, without direct evidence, we have been reluctant to grant carte blanche to the Obama campaign or Romney’s GOP rivals to assert that Romney had a direct role in Bain deals between 1999 and 2002 (“Romney closed 1,000 stores…”).
However, a case could be made that, with his ownership role shown in SEC documents, he still bore some responsibility. (As far we can tell, Romney has never said that the Bain deals done in that period had problems.)
We strive for the greatest level of accuracy in attack ads. While we cannot definitely prove that Romney did not play a role in Bain deals in 1999, neither can the Obama campaign prove that he did. Our general position has been that the burden of proof rests with the campaign.
But Romney has failed to provide sufficient evidence that he had “no role whatsoever” at Bain. Over the past few days, we have repeatedly asked Bain Capital whether the firm could provide a statement that a review of Bain board meetings had shown that Romney did not attend any such meeting, either in person or by phone. We are still waiting for a response.
[UPDATE: The Boston Globe on July 20 published a lengthy article looking into this period. The reporters did not find evidence Romney was involved in specific deals but reveal a Palm Beach, Fla. meeting that he attended with his partners. The newspaper reported that “by remaining CEO and sole shareholder, Romney held on to his leverage in the talks that resulted in his generous 10-year retirement package…Before he left, tasks were doled out to other partners, including work on an investment committee and a compensation committee. He was not a partner in the new private equity funds launched in 2000 and 2001, meaning he had no role in assessing new investments, his partners said, a departure from his having previously had the final say on every deal….But Romney still had a lot of money on the table; much of his personal wealth was tied up in Bain. And he was still technically in charge.”]
Moreover, as we have previously noted:
— a news release was issued by Bain Capital in July 1999 quoting Romney on the departure of Bain partners. The news release described him as being on “part-time leave of absence.”
— the 1999-2001 annual reports of Staples and Marriott International, on whose boards Romney served, continued to list him as heading Bain and various Bain funds. The descriptions are based on a questionnaire that the board director must personally provide.
So we are at an impasse. Because of the ambiguity, there is considerable room for interpretation of known facts. Going forward, unless new evidence emerges, on a case-by-case basis we may withhold the awarding of Pinocchios when the claim rests mostly on the question of when Romney stopped managing Bain Capital.
