Romney’s offshore finances draw new scrutiny

Updated
 
The Democratic National Committee used this image in press releases in January.
The Democratic National Committee used this image in press releases in January.

Back in January, Americans first learned something odd about Mitt Romney. The fact that he’s enormously wealthy was not new, but one of the eyebrow-raising aspects of his wealth is where he’s kept his money: the Republican nominee is the first modern candidate to stash cash in the Cayman Islands and have a Swiss bank account for no apparent reason.

Romney wasn’t exactly forthcoming with details – as his hidden tax returns help show, he’s kind of shy – and voters still don’t know much about his offshore finances.

But in a much-discussed piece for Vanity Fair, Nicholas Shaxson digs deeper into Romney’s offshore finances, which “look pretty strange for a presidential candidate.”

[T]here is a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” It could be that Sankaty is an old vehicle with little importance, but Romney appears to have treated it rather carefully. He set it up in 1997, then transferred it to his wife’s newly created blind trust on January 1, 2003, the day before he was inaugurated as Massachusetts’s governor…. Romney failed to list this entity on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund” that would not need to be on his disclosure forms. […]

That’s not the only money Romney has in tax havens. Because of his retirement deal with Bain Capital, his finances are still deeply entangled with the private-equity firm that he founded and spun off from Bain and Co. in 1984. Though he left the firm in 1999, Romney has continued to receive large payments from it – in early June he revealed more than $2 million in new Bain income. The firm today has at least 138 funds organized in the Cayman Islands, and Romney himself has personal interests in at least 12, worth as much as $30 million, hidden behind controversial confidentiality disclaimers. Again, the Romney campaign insists he saves no tax by using them, but there is no way to check this.

A veteran Washington lawyer and offshore expert told Vanity Fair, ”What Romney does not get is that this stuff is weird.”

Complicating matters are questions about how Romney acquired so much wealth in the first place.

This part of the article also stood out:

There is absolutely no evidence that Bain has done anything illegal, but private equity is one channel for this secrecy-shrouded foreign money to enter the United States, and a filing for Mitt Romney’s first $37 million Bain Capital Fund, of 1984, provides a rare window into this. One foreign investor, of $2 million, was the newspaper tycoon, tax evader, and fraudster Robert Maxwell, who fell from his yacht, and drowned, off of the Canary Islands in 1991 in strange circumstances, after looting his company’s pension fund. The Bain filing also names Eduardo Poma, a member of one of the “14 families” oligarchy that has controlled most of El Salvador’s wealth for decades; oddly, Poma is listed as sharing a Miami address with two anonymous companies that invested $1.5 million between them. The filings also show a Geneva-based trustee overseeing a trust that invested $2.5 million, a Bahamas corporation that put in $3 million, and three corporations in the tax haven of Panama, historically a favored destination for Latin-American dirty money – “one of the filthiest money-laundering sinks in the world,” as a U.S. Customs official once put it.

Bain Capital has said it did everything required by the U.S. government to check that the investors were not associated with unsavory interests. U.S. law doesn’t require Bain to enforce the tax laws of its investors’ home countries, but the presence of Swiss trustees, Bahamas trusts, and Panama corporations would raise red flags with any tax authority.

Under the circumstances, it would seem as if Romney has some legitimate questions to answer about his remarkable offshore investment strategy, but therein lies part of the problem: the candidate simply won’t talk about it. He hears the questions, evades them, waits for them to go away, and hopes voters simply don’t notice.

And who knows, maybe that’ll work. But given the questions and the fact that this multi-millionaire still paid a lower tax rate than the American middle class (and intends to keep it that way if elected), there’s simply no reason to let this issue fade away.

Mitt Romney

Romney's offshore finances draw new scrutiny

Updated