07/27/2012 01:53 pm ET Updated Sep 26, 2012

Romney's Lies and Bain's Capital

As Bain Capital has said, as Gov. Romney has said and as has been confirmed by independent fact checkers multiple times, Gov. Romney left Bain Capital in February 1999 to run the Olympics and had no input on investments or management of companies after that point. -- Andrea Saul, the Romney campaign

So was Gov. Romney lying to the government when he signed filings with the Securities and Exchange committee identifying himself as the Chairman, Chief Executive Officer and sole shareholder of Bain during all of 1999, 2000 and 2001 -- intensifying the controversy over Romney's true status during those years with respect to the operations of Bain?

Or is he lying to the American people to avoid having to accept even more responsibility than is already rightly his for Bain's dubious business practices? That seems more likely.

While Gov. Romney flits around London's Olympics this week, the controversy continues at home over whether and when he supposedly "left" Bain to begin work on the Salt Lake City Winter Olympics in 2002. Romney says he did actually retire then and had no involvement in the management of Bain after that time. Thus he claims he cannot be held responsible for Bain's controversial business conduct during 1999-2001 -- the plant closings, firings and sending jobs overseas -- that so many find disturbing.

When critics pointed out the inconsistency between Romney's claimed non-involvement and the legal filings he signed as the Chairman/CEO of Bain, Romney claimed he was being accused of committing a crime by lying to the SEC. That's not true. He was being accused of telling the truth to the SEC and lying to the American people to avoid having to accept even more responsibility than is already rightly his for Bain's dubious business practices.

A corporation's bylaws (its rules of operation) establish who runs its operations by setting forth the duties of its corporate officers. Bain was incorporated in Delaware. Delaware corporate bylaws normally provide that "the Chief Executive Officer shall have general supervision and direction of the business affairs of the corporation [and] shall be responsible for corporate policy and strategy." So -- a couple questions for Romney:

  1. How do Bain's corporate bylaws describe the powers and duties of its CEO?
  2. If Romney was not the CEO of Bain during 1999-2001, who was? On what date did the Bain Board appoint that other person CEO?
  3. If during 1999-2001 someone other than Romney was Bain's CEO, why were the SEC filings not correct when filed or later corrected?

Here's an educated guess: Romney knew he was not coming back to Bain when he left for the Utah Olympics, but he was nevertheless the CEO and owned 100 percent of the company. He had a huge personal economic interest to protect. He keeps the title and the power of the CEO position so that when he finally negotiates his formal exit and his payout package, he controls the process. It was about lining his pockets, which is what has made him one of the wealthiest major party presidential candidates in the history of American politics.

At least he did not commit a felony by lying to the SEC; he was Chairman and CEO of Bain as the SEC filings he signed stated. But that means he is not telling the truth now in claiming he had no involvement in Bain's business during 1999-2001, because Bain's corporate bylaws charged him as its CEO with direction and supervision of that corporation's business, policies and strategy. The layoffs, bankruptcies, off-shorings and other reprehensible things that Bain is becoming famous for absolutely happened on his watch. When is he going to defend them?

William S. Lerach was for three decades one of the nation's leading class action attorneys specializing in corporate securities misbehavior. He lives in San Diego.