Why Sensata Matters
- Mitt Romney has been criticizing the Obama Administration with the claim that "twenty-three million Americans are out of work, underemployed, or have stopped looking for work."
- He has also been promising to crack down on China, with the claim that "On Day 1, I will label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers."
- And at the same time that Mitt Romney has been making these claims, the company he co-founded, Bain Capital, has been shutting down Sensata Technologies, a manufacturing plant in Freeport, Illinois, and shipping some 170 manufacturing jobs overseas to… you guessed it: China.
I came across an article written by a conservative blogger who tries to debunk, refute and spin some of the claims about the Sensata story, but only ends up making a mess of things. After the jump, let's try to get the facts straight.
Mitt Romney and Bain Capital
- Mitt Romney co-founded Bain Capital, and derives a substantial amount of income from it even now: $2 million in income in June, 2012 alone, according to reporting from Vanity Fair.
- When did Romney leave Bain? The answer isn't very clear cut: he claimed to have left Bain in 1999, but he continued to earn a salary as a Bain executive through 2002, and he claimed active participation in Bain in his 2010 tax forms.
Mitt Romney and Sensata
- Bain Capitol Investors, LLC, owns just over 51% of Sensata's outstanding shares: our friend the conservative blogger has this exactly right.
- However, our conservative friend is being somewhat loose with the facts in the claim that "Romney actually transferred what stocks he did own in Sensata to charities." Based on his 2011 tax returns, this is what really happened:
"According to his recently released 2011 tax returns, Romney transferred $701,703 worth of Sensata stock to the Tyler Charitable Foundation, a 501(c)3 tax-exempt nonprofit controlled by Romney.
"Moving the stock to his nonprofit brings Romney twin benefits. First, he gets to deduct the full value of the stock. At a 35 percent tax rate, that's nearly a $250,000 benefit. At 15 percent, it's just over $100,000.
"Second, Romney is able to avoid paying capital gains taxes on the stock price increase. Romney's returns list no cost for the stock, and indicate he obtained them as part of a partnership interest in Bain. Avoiding capital gains taxes on the full increase would save an additional $100,000. In 2010, Romney gifted $170,000 worth of Sensata stock to his charity, saving $25,000 in capital gains taxes that year." (source)
That's at least $225,000, over two years, into Mitt Romney's pocket, for transferring his Sensata stock to a charitable foundation he controls.
Does Romney own any additional shares, or did he transfer them all to his foundation in 2010 and 2011? If he does own any, then it would be fair to say that, contrary to our friend's assertion, Mitt Romney might still directly own at least a piece of Sensata today. If not, he certainly owns an indirect piece through his Bain holdings.
UPDATE: According to this report from the New York Times, Romney
"owns about $8 million worth of Bain funds that hold 51 percent of Sensata's shares. If Sensata saves money by closing the Freeport plant, that could add money to Mr. Romney's trust accounts, now or after the election."
Mitt Romney's Blind Trust
- Next, our friend makes note that the Romneys have their assets in a blind trust. The problem? It may not be all that blind:
- What other work has Bradford Malt done for Mitt Romney?
"'We remind you that Gov. Romney does not choose anything; these are BLIND TRUSTS,' a (Romney) campaign official wrote in an email.
"But government ethics experts and election lawyers told ABC News that Romney's trust might not be quite as blind as he has long maintained. That's because Romney placed his quarter-billion dollar family fortune in the hands of his personal lawyer and longtime associate Bradford Malt.
"Federal officeholders are required to either fully disclose all their financial holdings and any possible conflicts of interest, or place their holdings in a blind trust. Robert Kelner, a Republican election lawyer in Washington, D.C. with no ties to a current presidential campaign, explained the federal rules governing those blind trusts. 'The Office of Government Ethics requires that a financial institution be appointed as the trustee and that the financial institution not be controlled by or have done business with the candidate,' said Kelner. 'It would preclude you from hiring your favorite lawyer as the trustee.' (source)
"In addition to serving as the trustee for Romney's charitable foundation, Malt's law firm has represented Romney's interests in legal disputes, and Malt served as the primary outside counsel to Romney's company, Bain Capital."
A blind trust? More like a "look the other way" trust. Also, take note that the Sensata stock has only shifted slightly down the table, from Romney's direct control to his lawyer's direct control.
"Key People" at Bain
- Next on the debunking list: the relationship between Bain, Sensata and Romney. Our friend has taken great pains to document links between Bain executives and Democrats, going so far as to repeat rumors that should have been put to rest the last day of the Democratic National Convention, six weeks ago, but our friend neglected to mention some pretty important people.
- Who are the key Bain people involved with Sensata? Let's start with the Chairman of the Board of Directors, Paul Edgerley, and four of his fellow board members: Ed Conard, Michael Jacobson, Michael Ward and Stephen Zide: what does OpenSecrets say about these men and their political contributions?
- In 2012, Paul Edgerley contributed $30,800 to the Republican National Committee, $2,500 to Mitt Romney and $2,500 to Tim Pawlenty.
- In 2011, Mr. Edgerley contributed $5,000 to Scott Brown and another $2,500 to Mitt Romney.
- In 2012, Ed Conard contributed $2,500 to Scott Brown.
- In 2011, Mr. Conard contributed $1 million to the Restore Our Future PAC, which supports Mitt Romney, as well as $2,500 to Romney directly.
- In 2012, Michael Jacobson contributed $30,800 to the RNC, $5,000 to the National Republican Senate Committee, and $4,175 each to state GOP committees in Idaho, Massachusetts, Oklahoma, and Vermont
- In 2011, Mr. Jacobson contributed $5,000 to the NRSC and another $5,000 to Scott Brown.
- In 2012, Stephen Zide contributed $30,800 to the RNC, $2,500 to Romney and $250,000 to the Restore Our Future PAC.
- In 2011, Mr. Zide contributed another $2,500 to Romney, a second $250,000 to Restore Our Future and $5,000 to another Romney-supporting Super PAC, the Free and Strong America PAC.
Add it up, and that's a little over $1.6 million dollars contributed to the GOP, Mitt Romney and his Super PACs by four men who are on the Sensata board of directors. To claim that Romney has "zero influence on what these people choose to do with their business or employees" is a disingenuous claim at best.
Why Sensata Matters
Our friend, the conservative blogger, concludes with this claim: "Using these poor people (Sensata's soon-to-be former employees) as political pawns and lying to them shows the lack of character and morals of Democrats." Unfortunately, it's the owners of Sensata and Bain who are using these poor people. It's Mitt Romney who's treating them as political pawns when he makes his hypocritical claims, and it's our good friend who's lying to them, and to us. What, then, does that say about their character and morals?