Monday, September 22nd, 2014

Checking the facts about Romney and Bain Capital

The Obama campaign released an ad attacking Mitt Romney.

Mitt Romney has presented himself as a candidate who understands free markets and getting the economy on track, and he’s pointed to his time at Bain Capital as evidence.

President Barack Obama’s campaign, meanwhile, had taken that point of ostensible strength and targeted it for relentless attacks.

Sorting fact from fiction isn’t always easy when it comes to private equity’s complex transactions and Romney’s far-reaching wealth. Many of these issues also have implications about job creation, regulation and taxation.

Here, we review our recent fact-checks to sort out Romney's Bain record.

Is it accurate to say Bain still Romney's company after 1999? In an ad, the Obama campaign said, "Mitt Romney's companies were pioneers in outsourcing U.S. jobs to low-wage countries." We looked at this question carefully, and the answers aren’t so clear cut. Romney left day-to-day management of the company in 1999, but he was Bain’s founder and assembled a team that looked to make high returns. Some of those returns were achieved by investing in companies that outsourced or promoted outsourcing. We rated Obama’s claim Half-True.

A corporation in Bermuda -- Obama’s former press secretary Robert Gibbs said that Romney, "has a corporation in Bermuda" but failed to disclose that on seven different financial disclosures. The corporation in question was the Bain-related Sankaty High Yield Asset Investors, Ltd. , and there were seven financial disclosures where it was not listed. We rated Gibbs’ statement True.

Swiss bank account -- Another Obama ad charged that Romney "had millions in a Swiss bank account." It’s accurate that Romney had about $3 million in a bank account Switzerland; the account is now closed. Swiss bank accounts have a reputation for secrecy, but we found nothing to indicate Romney did anything illegal or improper with the account. We rated the statement True.

Bain's investment in GST Steel -- Another Obama TV ad accused Bain of leaving GST Steel in poor shape. "Mitt Romney and his partners loaded it with debt, closed the Kansas City plant and walked away with a healthy profit, leaving hundreds of employees out of work with their pensions in jeopardy." We found that claim was largely accurate, but needed some clarification. The plant’s closure happened after Romney had left daily management at Bain, though he led Bain during six years of its majority investment in the plant. And other, outside factors were at work that made the steel industry a tough business. We rated this statement Mostly True.

Bain's investment in Damon Corp. -- Back in the primary, a super PAC supporting Newt Gingrich attacked the Bain record on Damon Corporation, a medical testing company. The super PAC, Winning Our Future, said Romney "supervised a company guilty of massive Medicare fraud." The company was defrauding Medicare, but Romney was serving on the board of directors, not managing the company’s billing practices. We rated this Half True.

The public employees union AFSCME was more precise in its claim: "While Romney was a director of the Damon Corporation, the company was defrauding Medicare of millions." We rated that Mostly True, noting that it was difficult to assess whether Romney knew about the fraud or should have known, and what he did to stop it.

Bain's investment in KB Toys -- The same pro-Gingrich PAC charged that Romney and Bain Capital drove KB Toys into bankruptcy  by loading it up with debt in a much-discussed video attack called "King of Bain." There are a lot of reasons we rated this Mostly False: Bain Capital bought KB Toys in 2000, after Romney retired. He wouldn't have been involved in financial decisions, though he would have profited from them. Also, toy industry analysts told us KB Toys  was a troubled company before Bain bought it, and Bain wasn't able to fix it.

Likewise, we rated Mostly False the claim that the Boston Herald called the KB Toys events "disgusting." The newspaper was quoting a laid-off worker, not speaking through an editorial as the claim implied.

Romney's net worth -- Finally, the "King of Bain" video said Romney is worth "at least a quarter billion dollars" and the bulk of his wealth "remains in blind trusts and overseas bank accounts." Romney’s wealth likely ranges somewhere between $190 million to $250 million. But we didn’t find good evidence that "the bulk" of Romney’s money is in overseas accounts. In fact, the documents we reviewed suggested a relatively small share of Romney’s wealth is overseas. We rated that claim Half True.

Finally, two Bain-related statements focused on more positive aspects of Romney’s record and received more positive ratings.

Missing teen -- A chain email claimed that in July 1996, Romney helped locate the missing teenage daughter
of a partner at Bain Capital. Romney did help find the girl, who disappeared after going to a rave party in New York City, where she took the drug Ecstasy. She had told her parents she was playing tennis. We rated the statement True.

Saving the Olympics -- The Romney campaign reminded voters of the reason he left Bain: to "help save" the 2002 Winter Olympic games. We rated that Mostly True. By all accounts, he did help the city’s Olympic committee reverse its fortunes after an embarrassing scandal.