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With a personal net worth estimated to be as high $250 million, Mitt Romney is one of the richest men ever to run for the White House. But he has been remarkably reticent when it comes to his financial records, disclosing the bare minimum required by federal campaign law.In an eye-opening new investigation for Vanity Fair, reporter Nicholas Shaxson attempts to blow the lid off this secrecy, diving deep into the limited paper trail to explore some of the shadier ways that the Romney family has made, invested, and perhaps hid, his millions.
Here are some of the highlights:
- In 1997, Romney set up a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., that has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” The entity was transferred to his wife’s blind trust on Jan. 1, 2003, the day before Romney was inaugurated as governor of Massachusetts. The director and president of the entity is the Romneys personal lawyer R. Bradford Malt, who also oversees the blind trust. Romney did not list it on financial disclosures until his 2010 tax return, but Shaxson writes that, “even after examining the return, we have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates.”
- Romney has personal interests in at least 12 Bain funds in the Cayman Islands, worth as much as $30 million. Shaxson reports that “the Romney campaign insists he saves no tax by using them, but there is no way to check this.”
- A $3 million Swiss bank account appeared on Romney’s 2010 returns, but disappears on the 2011 returns, after the Romneys trustee closed it. USC tax law professor Ed Kleinbard told Shaxson that the Swiss account “has political but not tax-policy resonance” because it was essentially a bet against the U.S. dollar.
- The Romneys’ I.R.A.’s have been receiving profit interest from Cayman Island–based Bain Capital funds that were set up long after Romney left the firm in 1999. Shaxson writes that although firms are technically only supposed to do this if the compensation is for past services, tax law experts say that Romney “can get away with it because of excessive ‘administrative indulgences’ that have allowed a ‘perversion of the law in favour of a small class of overcompensated investment managers.'”
- Romney’s I.R.A. appears to have invested in “blocker corporations” located in tax havens like the Cayman Islands, which are designed to make it easier to avoid U.S. business taxes.
- Shaxson also suggests that, under Romney, Bain Capital may have helped wealthy foreign investors take advantage of special U.S. tax exemptions. He writes that investors in Romney’s first Bain Capital Fund, in 1984, included “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,” “Eduardo Poma, a member of one of the ’14 families’ oligarchy that has controlled most of El Salvador’s wealth for decades,” “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.”
Despite these juicy details, however, Shaxson’s findings are inconclusive, underscoring the gaping holes in the public’s knowledge of Romney’s financial past — holes that the candidate has so far been unwilling to close. As Shaxson notes, Romney’s campaign has stuck to the defence that the candidate never broke any laws, so any perceived unfairness is the fault of the system.
Still, that argument is unlikely to change the perception that Cayman Island bank accounts are associated with drug trafficking criminals, or that betting against the U.S. dollar with a Swiss bank account looks bad for someone who is trying to get elected president.
“What Romney does not get,” Washington lawyer and offshore expert Jack Blum told VF, “is that this stuff is weird.”
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