For His Eyes Only: Mitt Romney’s Financial Shell Game

How fitting that as we celebrate what makes America great, news is trickling out about Mitt Romney’s foreign holdings, especially tax sheltered assets in Bermuda and the Cayman Islands.

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 Sankaty.

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.

Sankaty is just one example. Now consider:

  • Bain Capital has at least 138 funds in the Caymans alone, and Romney is known to have interest in at least 12.
  • 55 pages of Romney’s 2010 tax return cover his foreign dealings.
  • Last month, Bain paid Romney $1.9 million—not as annual income but as “catch up”—the difference between Romney’s estimated earnings from Bain and his actual earnings.

There are opaque blind trusts, income from unclear sources, and unexplained earnings. In short, each worm unearthed seems to open a new can of worms.

In addition to shielding investment money from U.S. tax eyes, another use of offshore tax havens is to “park” money earned by foreign companies (including American businesses with a foreign incorporation address). Until this money is brought into the U.S. officially, it is not taxable in the U.S. In 2005, President George W. Bush declared a tax holiday, meaning that all the offshore money could be brought into the U.S. for a special low, low rate of 5.25%. $312 billion came into the country under the tax holiday. That gave us an extra $16 billion in tax that year, but think how much was lost.

If the term tax holiday feels more recent than 2005, it is because a year ago, corporations were lobbying hard for another tax holiday. “Foreign corporations” like Apple, Microsoft, and Google have billions offshore, and Mitt Romney? Who knows how much he has. His financial disclosure lists 25 investments as simply “worth more than $1 million.” Do you suppose President Mitt Romney would be in favor of a tax holiday?

Since 1967, presidential candidates have voluntarily disclosed years of tax returns. The first to do so was George Romney, Mitt’s father. The first since then to refuse is Mitt Romney.


10 Replies to “For His Eyes Only: Mitt Romney’s Financial Shell Game”

  1. Willard is hiding his finances because if exposed, voters will see him for what he really is; a wealthy cretin who epitomizes what most Americans detest about the ultra-rich. Chances are he will never follow his father’s example.

  2. If people have not been following the huge bank scandal in the UK, they should it concerns interest rate rigging, could go global and has led to the resignation of two Romney financiers & friends who had been ready to host a fund raiser in London for him (now not so much).These people set interest rates which affected retirement plans, municipals &
    perhaps all of us.
    I keep wondering if the one Romney account in the Cayman Islands (it records no assets) that is bound in secrecy is where his ill gotten gains from the collusion is hidden. It’s reported this could have made them trillions and I think Romney would get insider info!

  3. I did read about the one fellow who was Romneys friend and had to resign. The Dems need to use this as well

  4. Welcome to this year’s Summer Soap Opera: BAINGATE.

    I was a child when Watergate happened. This “gate” is gonna be interesting.

    Meanwhile, the plot sickens…

  5. unfortunatly a lost Americans (myself included) are somewhat financially illiterate..the problem being that for years we have been fleeced, the fact which of course was the idea..

    one thing that the rightwing media does with amazing dexterity, is getting concepts out in bumper sicker sized soundbites..

    whats wrong with making the phrase “Slick Willard” go viral.. easy enough to repeat, and a certain justice remebering 92..

    folks i am dyslexic, so please forgive any typos

  6. I like “Slick Willard…” Good one! I also think the term “RomneyWorld” to refer to his .01% lifestyle should be used by the Dems during the fall’s campaign.

  7. When Mitt’s father ran for president in 1968, he released 12 years of tax returns. He stated “one year could be a fluke, perhaps done for show.” Mitt has released one year, and that revealed he had declared accounts in Bermuda, The Cayman Islands and Switzerland. All countries that are tax havens and have secrecy laws to protect depositors. Not illegal, but highly suspect. Why not Germany, France or Italy? He may and I repeat may release a later year tax return, but he can’t release a previous year. You see Mitt doesn’t like to pay taxes. When he worked for Bain, they lobbied for the tax break that allows them to pay 15% on carried interest. When they wanted to close the loophole, Bain spent millions again on lobbying. When he was on the board of directors of Marriott, he was Audit Chairman. He reduced their tax rate to 6.8% through offshore tax dodges and sleazy loopholes. Enough of this, the real story starts below.
    In 2009 the IRS had a tax amnesty for people that had money in undeclared Swiss bank accounts. The IRS was given a list of 4,500 names, and let the financial world know they were going to go after these people. More than 30,000 people came forward and the government collected 2.7 billion in taxes and penalties. The company that came forward with these names was UBS, the same company that Mitt has his “declared” account with. Some believe up to 10 trillion dollars are stashed in tax havens by Americans. His staff was sweating bullets in January when he released his tax release. Now that there are calls for him to release his previous tax returns, they are back in panic mode. They have no way to explain the mysterious appearing accounts and the sudden surge in assets. If he does release them, look for white out and a copy of Photo Shop at his campaign office.

  8. Depositing money in off-shore back accounts is tax evasion which is illegal, I have heard of people being prosecuted for it.

  9. It is not the offshore account itself that is illegal–that just raises a red flag. Offshore accounts are certainly used to hide taxable income, but it’s not illegal because it is offshore. It is illegal because it is undeclared taxable income.

  10. I think the US will soon be more aware of the LIBOR
    scandal, it does not just involve Barclays but major banks around the world.

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