Romney's refusal to fully disclose all of his financial holdings and income raises red flags.
Romney’s refusal to fully disclose all of his financial holdings and
income raises red flags. There are no allegations of illegality, but
there are an awful lot of questions. Romney still receives residual
income from Bain and its holdings though he officially (though
apparently not literally) left years ago. His Bain income and holdings
are the most cloaked, and considering that Bain profits by moving money
around in clever ways, the most sought-after.
Even as governor, Romney held his financial cards as close to his
vest as Massachusetts law allowed. One day before he was sworn in as
Governor of Massachusetts in 2003, Romney transferred to his wife’s
blind trust ownership of Bermuda-based Sankaty High Yield Asset
Investors, Ltd. Sankaty is a hedge fund created by Bain in 1977 to
facilitate its Domino’s Pizza acquisition. A Bermuda shell corporation
like this allows investors to avoid U.S. taxes on earnings (and can
facilitate money laundering). By Massachusetts law, once it was in the
blind trust, he did not have to disclose ownership or control of
Public officials use blind trusts to avoid the appearance (and fact)
of conflict of interest. A blind trust is supposed to be run by an
independent trustee and its contents unknown to the owner. Thus, the
official is not aware whether he owns part of any company that the
government is doing business with. The trustee for the Romney blind
trust is Mitt’s personal lawyer.
The Sankaty shell company remained undocumented until Romney released
his 2010 tax returns recently. Funny thing, but in the 2010 tax
return, Sankaty was listed as directly owned by both Romneys, not by
Ann’s blind trust.
Romney did not disclose ownership of Sankaty on his presidential
campaign filings because it did not meet the minimum $1000 value
required in campaign disclosures. Mitt’s tax returns confirm that
Sankaty was valued at zero. However, it was not a worthless company. Its
assets and its debts were each $10,000. Knowing how Bain killed
companies it bought–by loading them up with debt—it is easy to see that
Sankaty is still a useful business tool. It is also worthwhile to
remember that shifting debt among real and shell companies and not
reporting it accurately was what got Enron in trouble. With a fortune
and legal and accounting team the size of Romney’s, there could be any
number of things going on behind his financial veil.
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