WASHINGTON (AP) — A week after Republican presidential candidate Mitt Romney disclosed his wealth at nearly $250 million and revealed $2 million in new income from Bain Capital, the private equity company he co-founded, his campaign said Wednesday that he plans to put his holdings in a federal blind trust if he is elected president.
A Romney campaign official said there have been long-standing plans to shift the candidate’s assets from a trust overseen by a Boston attorney to a stricter blind trust overseen by federal officials if he wins in November. Some assets might be disclosed or sold off before such a move, campaign spokeswoman Andrea Saul said.
In a divisive presidential campaign where Romney’s vast fortune and his association with Bain Capital have become central issues, the move could serve to insulate Romney politically from criticism about his wealth as well as possible ethics conflicts. But the move might not stop his continuing payments from Bain, which has been both lionized for its record of successful investments and vilified for mass layoffs at some of the companies it bought.
Finance and taxation experts said this week that the new Bain payments raised the prospect that Romney could continue receiving income from his former company over the next several years. A Romney campaign official, speaking on condition of anonymity to discuss his finances, said the campaign’s analysis of his income stream indicated that any future Bain income pay-outs were unlikely but that such payments were out of his control.
Saul disclosed the plans for a federal blind trust after The Associated Press raised questions about how Romney would deal with any future Bain Capital income. In his latest federal financial disclosure, filed last week, Romney’s trustee revealed that the candidate made $1.9 million from a single “Bain Capital Inc.” payment as well as more than $200,000 from three other Bain entities. None of the Bain entities had previously been listed on Romney’s 2011 financial disclosure.
“If Gov. Romney is elected president, his blind trust will be terminated and a new federal blind trust will be created,” Saul said. “Any assets that are not fully compliant with federal disclosure and other rules applicable to the office of the presidency will be disposed of.”
Critics have warned that concerns about the steady flow of income from Bain are made more acute by Romney’s long-standing decision to withhold crucial details about his separation agreement, leaving voters with little information about his continuing ties to Bain.
“While he may not be actively managing the business anymore, he remains financially linked to them,” said Victor Fleischer, a University of Colorado law professor and private equity expert who has testified before Congress on complex finance issues. “The point of financial disclosure is to communicate the full extent of one’s potential conflict of interest, and until he discloses the severance agreement, we don’t know whether he’d manage the country on our behalf or be influenced by his ongoing relationship with Bain Capital.”
Romney negotiated a separation agreement with his partners at Bain when he left the firm in 1999, and that agreement expired three years ago. The details of the confidential agreement have largely remained secret, but experts in private equity finance and taxation say that the financial fallout from Romney’s retirement plan will continue to reverberate.
Romney’s holdings are in what his campaign describes as a blind trust, preventing him from having direct control over his investments. But although the trust would qualify as a blind trust in Massachusetts, where Romney served as governor, critics have complained that the candidate is not totally blind to its contents. Romney’s trustee, Boston lawyer R. Bradford Malt, has said that he buys and sells investments that he believes would be consistent with Romney’s public policy positions.
Malt bought and sold off a number of investments over the last several years that appeared to conflict with Romney’s political positions. Since 2010, as the presidential election neared, Malt has sold off a number of stocks in companies based in China and others that traded with Iran and backed stem cell research — all stances that Romney has opposed as a candidate.
The broad outlines of Romney’s portfolio were signed off by him in annual disclosures in 20111 and 2012 to the federal Office of Government Ethics and the Federal Election Commission, and then shared with the media and with voters.
A federally “qualified diversified” blind trust would have much stricter standards, preventing Romney — and the American public — from knowing what is contained in his portfolio. The OGE would qualify both the trust and any nominee for trustee to make sure that the trust’s contents were not disclosed.
“In order to be truly blind, an official cannot really know what investments are held in the blind trust,” said Stephen D. Potts, an OGE director in the first Bush and Clinton administrations who later served as deputy White House counsel for President George W. Bush.
