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How Mitt Romney’s Father Would Have Left Bain Capital

George Romney’s record as a businessman and politician show just how different Mitt’s approach to public service really is.

Lee Fang

July 16, 2012

When one Romney considered leaving his successful business for public service, he made sure to relinquish pay, set up a new management team and officially step down as CEO. He left no gray area in terms of his corporate responsibilities overlapping other duties, as he told the press, because doing so would violate his principles. That was former Michigan Governor George Romney.

Archived news articles from the early sixties reveal a businessman and politician with a very different approach from that of his son Mitt, who now finds himself in an avoidable scandal over when he actually left his company, Bain Capital.

Mitt’s departure from Bain Capital was far less transparent. When Mitt Romney joined the Olympics organizing committee on February 11, 1999, did he take an official leave of absence with “no involvement in the management or investment activities” at Bain Capital, the private equity and investment firm he founded, or was he a “part-timer with Bain, providing input on investment and key personnel decisions,” as Boston media and a raft of documents filed with the Securities and Exchange Commission seem to suggest?

It’s a question that has the campaign suddenly floundering.

Romney’s team has gone into crisis mode, dispatching the candidate and his surrogates to combat accusations that he either misled investors over his role at Bain between 1999 and 2002, or provided a false statement on his recent ethics forms when he swore that he had no working relation to his firm during that period. So far, the blitz had led to more confusion and more pointed questions from the press.

The Obama campaign is quick to point out that Romney has taken credit for job gains by Bain companies from 1999 to 2002, yet has claimed that the outsourcing of jobs and the bankrupting of a steel mill company during those years can not be attributed to him given his supposed lack of involvement with the firm.

The spiraling controversy leaves much to ponder. Why didn’t Romney simply appoint an interim Bain CEO or officially demote himself during his leave of absence in Salt Lake City? If he cut off all involvement with Bain to run the Winter games, as Romney said on Friday in an interview with CNN, why did Romney spend the following years signing documents as the chief executive, while collecting over $100,000 in salary from his old firm?

The entire controversy might have been avoided if Romney had simply followed the path set by his father, George Romney, who took steps to clearly transition from his perch as the head of American Motors Corporation to public service. The elder Romney, who stepped down exactly thirty-seven years and a day before Mitt Romney’s announcement about heading the Salt Lake City Winter Olympics in 1999, made a conscious effort to severe ties with his auto business.

On February 10, 1962, at a press conference with Mitt in downtown Detroit, George Romney announced his intention to run for Michigan governor as a Republican. Widely respected by both parties, George, even with minimum political experience, was seen at the time as a potential challenger to President John Kennedy. The GOP cheered a new leader—Governor Nelson Rockefeller (R-NY) celebrated the news as “a real contribution to the strength and vitality of the Republican Party”; shareholders lamented the loss of a successful businessman to the world of politics.

In fact, when George initially informed the board of his intention to resign and run, he was asked to take a leave of absence instead. Richard E. Cross, the American Motors Corporation legal counsel, told the Los Angeles Times that he was “obviously reluctant” to see George go, especially since company profits were surging with record sales of the AMC Rambler. George had been referred to back then as the “prophet of the compact car” for introducing the Rambler in 1950 as an executive at a company that later merged with AMC.

The Wall Street Journal, on Monday, February 12, reported that at 9:00 am, George planned to attend a company board meeting so that he could officially request a leave of absence as chairman and president of American Motors Corporation. It was “inconsistent with my principles that I become a candidate for public office and maintain my business responsibilities,” said George, as he explained why he planned to forgo his salary and bonus.

George, however, changed his mind and decided it would be prudent to officially resign as CEO. Before the end of the day, George had set up a management transition team. Roy Abernethy, the company’s executive vice president, would be promoted as president and chief operating officer, along with Cross, who would serve as AMC’s chairman.

The board elected George as vice chairman, but granted him an indefinite leave of absence without pay. He even had time left over to attend a political meeting in Lansing that same day. In November, after he won his election, George stepped down from his largely ceremonial role.

Four decades later, Mitt Romney, on the other hand, joined the Olympics and left his business in limbo. He chose to remain technically as Bain CEO while shifting most of the responsibilities to the other Bain Capital partners. A leadership struggle ensued, and Mitt continued to rake in a salary and travel back to Massachusetts at times for company board meetings with some of his investments. And now the claim, made by Mitt to the Office of Government Ethics and dozens of news stations, that he had nothing to do with Bain during those years is threatening to derail his campaign.

George Romney’s shadow already looms large over some of the most controversial political problems faced by his son. In 1967, it was George, during his own presidential bid, who released twelve years of tax returns as a show of transparency. He said that candidates should show multiple years because just “one year could be a fluke, perhaps done for show.” The tradition started by his father is the other big issue haunting Mitt on the trail today as he refuses to release more than two years of returns.

A detailed history of George Romney’s failed quest for the presidency, published by New York magazine’s Benjamin Wallace-Wells, paints a picture of Mitt’s own bid for the White House deeply colored by efforts not to repeat his father’s mistakes.

But if Mitt had merely followed George’s strict ethical code on separating from business before entering public service, he wouldn’t find himself in the quagmire he is in today.

Lee FangTwitterLee Fang is a reporting fellow with The Investigative Fund at The Nation Institute. He covers money in politics, conservative movements and lobbying. Lee’s work has resulted in multiple calls for hearings in Congress and the Federal Election Commission. He is author of The Machine: A Field Guide to the Resurgent Right, a recently published book on how the right-wing political infrastructure was rebuilt after President Obama's 2008 election. More on the book can be found at www.themachinebook.com.


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