In response to corporate governance scandals of the early 2000s, a 10-point plan issued by then-President George W. Bush called on CEOs to “personally vouch for the veracity, timeliness, and fairness of their company’s public disclosures, including their financial statements.” The Business Roundtable said in a statement its “the responsibility of management to run the company on a day-to-day basis, and senior management needs to have a deep understanding of the company’s business and risks.”
Recent comments questioning the relevance of Securities and Exchange Commission (SEC) documents suggest a number of fact-checkers suffer memory loss about America’s political and business climate during that post-Enron era of scandals which included names like Tyco, and Global Crossing, and harsh criticisms of the SEC. Throughout our economy, the pattern repeated: CEO power run amok, “legal” tax evasion schemes, corporate governance failures, millions extracted for CEO and senior executive 1 percenter in bonuses as their companies went bankrupt, while 99 percenter employees lost everything — healthcare, pensions, 401(k)s. Those “job-creators” whined about the ills of over-regulation while board members and corporate officers feared personal consequences of increased accountability and transparency for actions they were required to sign off on.
Tyco’s intricate web of “legal” tax evasion unraveled in 2002, revealing extensive efforts to avoid tax obligations, estimated around $600 million, including its 1997 incorporation in Bermuda and subsidiaries in tax-friendly Barbados and the Cayman Islands. Extracting millions, former CEO Dennis Kozlowski used Tyco as his personal ATM; in the aftermath 7,200 jobs were lost. Global Crossing simultaneously laid off 2,000 employees and forgave an $8 million loan to then-CEO Thomas Casey; when the company finally crashed in January 2002, $15 million in payouts went to top executives while 9,000 employees were laid off with worthless 401(k) plans and lost medical benefits, some left bankrupt.
This is the backdrop for Mitt Romney’s ever-changing story about his relationship with Bain. Working in the private sector around that time, it’s hard to forget the ferocity of public anger driving demands for changes to the corporate governance structures that determine everything from the flow of power and responsibility to strategic decisions, cash flow, resource allocation, compensation, pension systems and retirement plans. CEOs, corporate boards and officers expected, feared and tried to avoid scrutiny. Making it harder to believe Romney and Ban would be so careless with legal documentation filed with the government in this period.
The Boston Globe reported Bain listed Romney as an executive for three years and he drew a salary even after he claimed to have given up an active role there. A new document from December of 2002 reported by The Huffington Post lists Romney as one of two managing members of Bain Capital Investors, LLC, “authorized to execute, acknowledge, deliver and record any recordable instrument purporting to affect an interest in real property, whether to be recorded with a Registry of Deeds or with a District Office of the Land Court.”
Romney is asking Americans to believe that while he signed documents affirming he was president, CEO and sole shareholder of a company, he had no involvement in it, and Bain and its investors were comfortable with that arrangement.
While most Americans don’t know much about the SEC, they do understand signing their name on a tax form, loan agreement or other legal document makes them legally responsible for its accuracy.
Posted: Monday, 16 July 2012