FORTUNE — February 1999. That’s when Mitt Romney officially left private equity firm Bain Capital, in order to head up the Olympic Games in Salt Lake City.
It’s an important line of demarcation. Anything Bain Capital did before February 1999 is on Romney, for better or worse. But he stops getting credit, or blame, after that date.
Today, however, left-leaning journalist David Corn tries to blur that line, in a new piece for Mother Jones. And, by doing so, Corn allows himself to saddle Romney with Bain Capital’s August 1999 investment in Stericycle, a medical waste management company whose services included the disposal of aborted fetuses. From a political perspective, you can see where this is going (particularly since Romney was still pro-choice at the time).
On first read, Corn’s argument seems compelling. But, upon reflection, it’s little more than conjecture that uses old regulatory filings as authoritative-sounding smokescreens.
[Bain Capital] said Romney left the firm in February 1999 to run the troubled 2002 Winter Olympics in Salt Lake City and likely had nothing to with the deal. But documents filed by Bain and Stericycle with the Securities and Exchange Commission—and obtained by Mother Jones—list Romney as an active participant in the investment… In November 1999, Bain Capital and Madison Dearborn Partners, a Chicago-based private equity firm, filed with the SEC a Schedule 13D, which lists owners of publicly traded companies, noting that they had jointly purchased $75 million worth of shares in Stericycle, a fast-growing player in the medical-waste industry…
The SEC filing lists assorted Bain-related entities that were part of the deal, including Bain Capital (BCI), Bain Capital Partners VI (BCP VI), Sankaty High Yield Asset Investors (a Bermuda-based Bain affiliate), and Brookside Capital Investors (a Bain offshoot). And it notes that Romney was the “sole shareholder, Chairman, Chief Executive Officer and President of BCI, BCP VI Inc., Brookside Inc. and Sankaty Ltd.”
To be clear, I’m not questioning the documents’ veracity. Or their existence (since I also looked them up on my own). Instead, I’m questioning Corn’s conclusion.
Remember, Romney did not leave Bain Capital as part of a long-term, planned succession process. Instead, his departure was fairly sudden — borne of a desire to help salvage an Olympic Games that was $1.4 billion in the hole and tarred by a massive bribery scandal. The very first reports of Romney being considered for the Salt Lake City job were on Feb. 2, 1999. Just nine days later, he officially took over.
Not surprisingly, Bain Capital hadn’t worked out all the details of Romney’s departure. It eventually would discard the CEO position in favor of a horizontal management committee made of of numerous partners, and provide Romney with a golden parachute that included limited partnership interests in all Bain-related funds raised through 2009 (including the option for Romney to invest additional monies). But none of that was in place when Romney took the Salt Lake City job.
Moreover, unwinding a private equity firm’s ownership structure is extremely complicated. The “firm” itself is largely a legal construct of convenience, since it doesn’t pay salaries, make investments or do much of anything else. Instead, what matters are the individual funds.
In the case of Bain Capital’s funds, it’s reasonable to assume that Romney was considered a “key man,” meaning that each fund’s limited partners could have voted to end the fund’s investment period — or take over fund management themselves — if a super-majority felt it prudent. But that didn’t happen, and Bain saw no reason to expend massive administrative effort to amend existing funds. Instead, it asked Romney to sign documents when necessary, and made the managerial/ownership changes on new funds going forward.
Corn acknowledges some of this, but seems to view it as a sham:
The document Romney signed related to the Stericycle deal did identify him as a participant in that particular deal and the person in charge of several Bain entities. (Did Bain and Romney file a document with the SEC that was not accurate?)
Moreover, in 1999, Bain and Romney both described his departure from Bain not as a resignation and far from absolute. On February 12, 1999, the Boston Herald reported, “Romney said he will stay on as a part-timer with Bain, providing input on investment and key personnel decisions.” And a Bain press release issued on July 19, 1999, noted that Romney was “currently on a part-time leave of absence”—and quoted Romney speaking for Bain Capital.
First, we’ve already dealt with why Romney was listed on the documents. The part about lying to the SEC is absurd, since the SEC doesn’t require an owner to be the operational decision-maker (Romney delegated such responsibilities, as is his right).
As for the second part, is it terribly surprising that neither Bain nor Romney was certain that his divorce from Bain was permanent? He had already left once before — in 1994, to run for U.S. Senate against Ted Kennedy — so the initial impulse was to term Salt Lake as yet another leave of absence. And Romney assumed that he’d still be involved in decision-making, albeit from a distance.
Unlike in what happened in 1994, however, Romney was successful in 1999 — and would later parlay his Olympic “victory” into elective office. He also was consumed by the Olympics job, and numerous sources — including many with Bain at the time — have told me that Romney did not make any investment-related decisions for Bain after February 1999. The firm didn’t ask, and Romney didn’t offer. He had other things to do, and those he left behind considered themselves more than capable of handling the baton.
I know that’s the Romney party line, but I’ve still seen no evidence yet to contradict it. Not even from David Corn. Unless that changes, February 1999 remains important. And Stericycle remains out of bounds.
Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com