Ten days ago, the New York Times ran a pretty damning story on its front page: even as Mitt Romney was lambasting President Obama on the trail for being too soft on China's human rights abuses and trade violations, the company he used to run, Bain Capital, was profiting from its ownership of a company, Uniview Technologies, that sells surveillance technology to the Chinese government. Romney's wife Ann, reported Andrew Jacobs and Penn Bullock, has an investment of as much as $250,000 in the specific Bain fund that includes the Uniview holding.
It seemed like a classic case of a candidate's rhetoric being at odds with his personal stake and associations. But not to Times public editor Arthur Brisbane, who sharply criticized the article yesterday, arguing that it was unfair to Mitt Romney and at the very least did not deserve front-page play. His main beef with the piece? That Bain's ownership of Uniview came about in the years after Romney left the firm, in 1999.
The article’s emphasis on the Romney connection in the lead paragraph and headline treatments came in for criticism from Tim Kelly, who served at different times as editor and publisher of The Lexington Herald-Leader.
“Romney’s record during his time at Bain is fair game,” Mr. Kelly wrote in an e-mail. “To associate him, even by inference, with an action by a company he has long since departed is a stretch. Worth noting? Sure. A main focus in the first paragraph? I don’t think so.”
A stretch? Um, no. Apparently neither Kelly nor Brisbane read another remarkable front-page story in the Times in December, in which Nick Confessore, Christopher Drew and Julie Creswell reported that Romney left Bain with an unusual retirement deal: that he would continue to collect a significant cut of Bain Capital's winnings for years to come, even on deals that developed after his departure. That is, Romney's stake in Bain Capital is not just a matter of investments that he holds in a blind trust, managed by his trustee, as Brisbane described it by way of minimizing Romney's ongoing association with the firm. No, he is also collecting a major share of Bain's ongoing profits as if he were still an executive there. As the December article puts it:
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.
The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.
In the process, Bain continued to buy and restructure companies, potentially leaving Mr. Romney exposed to further criticism that he has grown wealthier over the last decade partly as a result of layoffs. Moreover, much of his income from the arrangement has probably qualified for a lower tax rate than ordinary income under a tax provision favorable to hedge fund and private equity managers, which has become a point of contention in the battle over economic inequality.
Though Mr. Romney left Bain in early 1999, he received a share of the corporate buyout and investment profits enjoyed by partners from all Bain deals through February 2009: four global buyout funds and 18 other funds, more than twice as many over all as Mr. Romney had a share of the year he left. He was also given the right to invest his own money alongside his former partners. Because some of the funds and deals covered by Mr. Romney’s agreement will not fully wind down for several years, Mr. Romney is still entitled to a share of some of Bain’s profits.
The key line here is the one that I highlighted. Romney has made tens of millions more from Bain in the past decade as a result of this arrangement, but the arrangement also makes fair game questions about Bain's activities since he left it, whether at factories in the Midwest or in suppressed Tibet. That is, unless overly solicitous and genteel journalism minders decide that we really ought to just look the other way.
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