Is The Romney Denial On Bain A Case Study In Corporate Governance?

Mitt Romney has stated that he left Bain Capital in 1999 and had nothing to do with the company after that. However, regulatory filings tell a different story. Is there a corporate governance lesson here?

The Presidential election debate in the US between Obama and Romney has for the past several weeks centered on the latter’s involvement in Bain Capital. The questions that have arisen relate to the actual period during which Romney served at Bain including the precise timing of his departure and therefore by definition what actions of that private equity firm could he or should he be made accountable for.

Romney’s denial of any involvement in Bain post 1999 when he went off to run the 2002 Winter Olympics was perhaps best summed up by a comment to a blog post:

“I did not have fiduciary relations with that company.”

Quite apart from any questions surrounding why Romney would want to completely disassociate himself from a very successful private equity company, the issue has to be highly relevant from a corporate governance perspective. This is because while Romney denies any involvement in Bain Capital post 1999, documents registered with the SEC listed him as CEO, President and Chairman of that organization until 2002.

While Bain is a private company and its directors and executives are in no way as accountable as their public counterparts post the passage of Sarbanes Oxley (SOX), if Romney was so registered with the SEC then at the very least the following questions should arise:

Who was responsible for signing off on the financial statements in the period between 1999 and 2002?

Alternatively, on whose behalf would these financial statements be signed off if indeed Romney was not available?

Who was ultimately responsible or answerable to the SEC in respect of the financial statements, governance or any other matters arising?

Should the regulator be concerned that the registration of corporate officers was inconsistent with the actual management of the organization for all of three years?

How did the communications of the firm, letterheads and legal correspondence reflect the management status?

Did the minutes of the Board reflect the management changes?

Would HR and Compliance not act to ensure that SEC filings properly reflected the actual management structure?

Romney spokesperson Ed Gillespie stated that Romney resigned in 1999 retroactively. Can any of the above be done retroactively and what would be the legal implications?

All comments are welcome.

Jonathan Ledwidge is the author of the book Clearing The Bull: The Financial Crisis and Why Banks Need a Human Transformation. Use this link to give your opinion on the performance of banks post the financial crisis.

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One response to “Is The Romney Denial On Bain A Case Study In Corporate Governance?

  1. His comment sounds like something we heard before :i.e. ” I did not have any relations with that woman.” …. how long did that hold up ?
    Indeed governance is an excellent question in general these days and I am sure that internal departments have some pressure not to get too involved in those matters.

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