Romney tax returns detail funds not identified in ethics forms

Some investments listed in Mitt and Ann Romney’s 2010 tax returns – including a now-closed Swiss bank account and other funds located overseas – were not explicitly disclosed in the personal financial statement the GOP presidential hopeful filed in August as part of his White House bid.

The Romney campaign described the discrepancies as “trivial” but acknowledged Thursday afternoon that they are undergoing an internal review of how the investments were reported and will make “some minor technical amendments” to Romney’s financial disclosure that will not alter the overall picture of his finances.

A review by the Los Angeles Times/Tribune Washington Bureau found that at least 23 funds and partnerships listed in the couple’s 2010 tax returns did not show up or were not listed in the same fashion on Romney’s most recent financial disclosure, including 11 based in low-tax foreign countries such as Bermuda, the Cayman Islands and Luxembourg.

The campaign has stressed that Romney has paid all required U.S. taxes on his foreign funds.

Many of the funds are affiliated with Bain Capital, the Boston-based private equity firm Romney ran for 15 years. Several others are apparently unrelated offshore entities with mysterious names such as Babson 2006-1, which is based in the Cayman Islands, and Barracuda Investments, which has an address in Dublin, Ireland, but appears to be solely owned by Golden Gate Capital, a private equity firm based in San Francisco.


Among the assets omitted is a Swiss bank account in Ann Romney’s blind trust that campaign officials said held $3 million of the couple’s money until it was closed in 2010. The account was listed on a financial disclosure Romney filed in 2007, but it was mistakenly named as an asset held by the couple, not as part of Ann Romney’s trust. The campaign said it is filing an amendment to the most recent report to reflect $1,700 worth of interest earned in the Swiss bank account in 2010, as well as another amendment to move the account to the appropriate category in the 2007 report.

The Romney campaign dismissed the omission of information as inadvertent and inconsequential, noting he has released more than 600 pages of information about his finances.

But the discrepancies between Romney’s tax returns and his personal financial statement speak to a broader challenge facing the longtime private equity chieftain: convincing voters that he can relate to their economic distress despite the incredibly complex architecture of his immense fortune.

The former Massachusetts governor -- who made his money running a private equity firm that specialized in leveraged buyouts -- has displayed a tin ear when answering questions about his personal wealth.

He described his net worth as “between $150 [million] and about $200 and some odd million” Wednesday when pressed by Univision anchor Jorge Ramos about how much money he has. Earlier in the month, Romney characterized the $374,000 he made in speaker’s fees in 2010 and 2011 as “not very much.”

The fact that a small fraction of Romney’s extensive holdings may not be reported correctly could reinforce an image of the Republican candidate as elite and out of touch.

All presidential candidates must disclose their personal financial holdings to the Office of Governmental Ethics, a step mandated by the 1978 Ethics in Government Act, passed to discourage real or perceived corruption. Romney’s filing is supposed to detail his assets and income from Jan. 1, 2010, through Aug. 12, 2011, when he filed the report.

The campaign has spent the last week furiously doing its own due diligence to try to figure out the reasons for the discrepancies and plans to consult with officials from the OGE and Federal Election Commission.

Many of the inconsistencies appear to stem from the different reporting requirements of the Internal Revenue Service and the OGE. Some of the undisclosed foreign funds, for example, are part of larger investment portfolios that were reported on the financial disclosure form, but required individual reports in the Romney tax returns because they were overseas companies, a Romney associate said.

In other cases, the assets did not meet the minimum threshold of value required to be reported on financial disclosure forms. And some funds did not provide the required paperwork at the time the report was filed.

But other assets, the associate acknowledged, may have fallen through the cracks.

“The inescapable fact is that by releasing over 600 pages of information regarding his finances, Mitt Romney is clearly coming down on the side of disclosure,” said Romney spokeswoman Andrea Saul in a prepared statement. “Any document with this level of complexity and detail is bound to have a few trivial inadvertent issues. We are in the process of putting together some minor technical amendments, which will not alter the overall picture of Gov. and Mrs. Romney’s finances as disclosed in August.”

The reports of discrepancies puzzled ethics experts in Washington.

“I wonder what theory they could possibly have for declaring an asset to the United States Internal Revenue Service and not putting it on federal financial disclosure forms,” said Stanley Brand, a Washington ethics lawyer who has represented federal candidates from both political parties. “Failure to do so would lead a candidate to face the obvious question: ‘Why didn’t you disclose it?’”

Brand has not studied the Romney filings. But he said he would advise his clients -- particularly those with presidential ambitions -- to disclose on federal ethics forms anything that is reported to the IRS. “It’s important to do that as a political matter,” he said. “Otherwise you only create questions like the ones you are asking today.”

Romney released his most recent tax returns Tuesday after pressure from rival Newt Gingrich and other critics, making available more than 500 pages of filings that provide the most detailed picture yet of his complex finances. Romney and his wife collected an annual income of around $20 million in each of the last two years, largely from a vast array of investments. Most of their money is held in three separate blind trusts that were set up when Romney became governor of Massachusetts in 2003.

Most of the funds that don’t show up on the financial disclosure form are entities listed on the 2010 tax return for Ann Romney’s blind trust. While Romney’s financial disclosure does detail three pages of investments held by Ann Romney’s trust, 21 entities that the couple reported as part of their tax filing are missing or not reported in the same fashion.

One other fund, the Bermuda-based Sankaty High Yield Asset Investors Ltd., is listed in the couple’s joint 2010 tax return, but cannot be found on Romney’s financial statement.