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Did Mitt Romney Break the Law by Failing to Disclose Delphi Investments? | The Nation

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George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

Did Mitt Romney Break the Law by Failing to Disclose Delphi Investments?

We now know, thanks to Greg Palast’s recent scoop in The Nation, that Mitt Romney reaped a large financial windfall from the auto bailouts. Romney didn’t talk up this shrewd investment while touting his business experience on the campaign trail, for obvious reasons—he is a strong critic of those bailouts.

But while Romney had ample political reasons to conceal his investment, he apparently had no legal justification for doing so. Federal law requires that candidates disclose stock holdings that are affected by government action—and Romney’s million-dollar (at least) investment in a hedge fund that bought up Delphi stocks surely fits that bill.

Now, unions and good-government groups are calling on the feds to investigate Romney’s oversight.

Thursday afternoon in Toledo, Ohio—where the story has received significant play in local media—United Auto Workers president Bob King joined Palast and Service Employees International Union vice president Tom Woodruff to call upon the US Office of Government Ethics to look into Romney’s financial disclosures and their failure to list the Delphi investments. Along with several groups like CREW and Public Citizen, the union leaders also sent a letter to OGE demanding a formal investigation.

“The American people have a right to know about Governor Romney's potential conflicts of interest, such as the profits his family made from the auto rescue,” said King. “It’s time for Governor Romney to disclose or divest.”

As Palast reported, a trust in Ann Romney’s name listed “more than $1 million” invested with Elliott Management, run by hedge fund guru and GOP mega-donor Paul Singer. (That’s the minimum amount of disclosure required by law, so it could have been much more than $1 million.) Singer subsequently snapped up large amounts of stock in Delphi at pennies on the dollar, and then, along with other hedge funds, demanded that the government assume pension responsibilities and bail the company out—or they would shut it down, thus crushing General Motors as well.

The government acceded, Delphi became lucrative again and then went public, and Elliott Management and its investors—including Romney—reaped enormous rewards.

Under any rational interpretation of the Ethics in Government Act of 1978, these are holdings that a presidential candidate would need to disclose, because they can be affected by government action. The Romney campaign doesn’t argue that they are not, but rather that, since Ann Romney’s trust is “blind,” there is no disclosure requirement.

Today’s letter points out, however, that Ann Romney’s trust is blind in name only. Romney himself has said that “the blind trust is an age-old ruse, if you will. Which is to say you can always tell a blind trust what it can and cannot do.” Moreover, this is not a federally recognized blind trust of the sort Romney would be forced to create if he won the White House. If it was, he would have never been able to reap his windfall from Delphi, the letter points out.

Whether or not Romney broke the law will come down to this question of how blind this trust really is, and Romney at least has some plausible deniability there. But no doubt this is a story his campaign doesn’t want to see playing out in Ohio five days before the election.

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