Romney team disputes story on Bain tenure
05:05 - Source: CNN

Story highlights

Obama campaign says Romney lying about involvement with Bain after he left

Romney campaign chief says Obama should apologize for "out of control" campaign

Four sources -- three of them Democrats -- support Romney side of dispute

Obama campaign wants to tie story to other attacks on Romney's character

Washington CNN  — 

So just why is 1999 suddenly such a flashpoint in Campaign 2012?

Team Obama says 1999 is the birth year of “The Big Bain Lie” and goes on to suggest that Mitt Romney might have committed a felony.

That provoked a rare statement from Romney campaign manager Matt Rhoades, who called on President Barack Obama to apologize for “the out of control behavior of his staff, which demeans the office that he holds.”

Pointed rhetoric aside, just what is the 1999 debate about and why is it potentially significant in the Obama versus Romney race?

Fortune: Documents – Romney didn’t manage Bain funds

At issue is whether Romney, the former governor of Massachusetts, is telling the truth when he says he had no role in investment and operations decisions at Bain Capital once he left in February 1999 to take over the Salt Lake City Olympic Games.

Talking Points Memo this week questioned Romney’s claim by citing Securities and Exchange Commission filings listing Romney as Bain’s top officer after 1999. The Boston Globe on Thursday carried a similar account – and that was seized upon by Team Obama.

“Either Mitt Romney, through his own words and his own signature, was misrepresenting his position at Bain to the SEC, which is a felony, or he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments,” Stephanie Cutter, deputy Obama campaign manager, said on a campaign conference call.

Remember that last part of Cutter’s statement – about responsibility for “his” investments.

But first, is there anything other than the SEC filings to suggest a hands-on Romney role at Bain post-February 1999?

No is the word from four sources who communicated with CNN on Thursday – all of whom have firsthand knowledge of Bain’s operations at the time in question. Three of the four are Democrats, and two of the four are active Obama supporters in Campaign 2012.

All four told me Romney is telling the truth.

Only one, Bain Managing Director Steve Pagliuca, would talk on the record. The others spoke only on condition of anonymity, citing either Bain’s low-key culture or the desire not to anger friends in the Obama campaign.

Pagliuca, a Democrat who unsuccessfully ran for Senate in 2010, told CNN: “Mitt Romney left Bain Capital in February 1999 to run the Olympics and has had absolutely no involvement with the management or investment activities of the firm or with any of its portfolio companies since the day of his departure.”

In explaining the SEC documents filed in 2000 and 2001, Pagliuca said, “Due to the sudden nature of Mr. Romney’s departure, he remained the sole stockholder for a time while formal ownership was being documented and transferred to the group of partners who took over management of the firm in 1999. Accordingly, Mr. Romney was reported in various capacities on SEC filings during this period.”

Another Bain Democrat who did not want to be identified by name said Romney had no role after taking the Olympics post

“Nothing. Nothing. Nothing. He was just gone. And it happened very suddenly. … After that, he was not on calls or writing memos. He was gone.”

To be clear, all four of the sources voiced professional loyalty and personal respect for Romney. And all four have a vested interest in defending the work of Bain. But they were consistent in describing Romney’s departure as abrupt and in saying they could not recall him around the office in the months that followed.

Two highly reputable arbiters of political debate – The Washington Post’s fact-checking arm and FactCheck.org – also on Thursday stood by their earlier findings that Romney stepped away from any active role at Bain when he accepted the Olympics post. And Fortune reported that it obtained private Bain documents that support the Romney account.

But the Obama campaign and its liberal allies continue to hang their claim on the SEC filings.

Why so important for them to try to stretch the calendar of Romney’s Bain tenure?

For starters, just suggesting Romney isn’t telling the truth fits the arc of recent Obama character attacks on the Republican hopeful, including questions about why he won’t release more of his tax records.

More significant, though, is that Cutter statement about responsibility for “his” investments.

Liberal blogs were quick to list Bain-tied companies that lost jobs in late 1999 and beyond – and just as quick to suggest it is now fair game to blame Romney.

And inside both Bain and the Romney campaign, there is a strong belief that either the Obama campaign or a Democratic ally wants to use another Bain investment against Romney late in the campaign but cannot do so with any credibility under the February 1999 departure scenario.

The investment in question: Stericycle, a medical waste company that, among other things, disposed of aborted fetuses.

How could the Stericycle investment be used against Romney?

Bain’s involvement in a company that disposed of aborted fetuses could make a powerful final week direct mail piece or attack ad on Christian radio. And in a close election, turnout of the religious right is one of the keys to a Romney victory in November.

Bain negotiated the Stericyle investment deal in November 1999, nine months after Romney said he left.

Bain’s investors pour money into numbered investment pools. Several sources said that Fund VII was the main investment vehicle at that time.

“You don’t see his name anywhere – in the meetings list, the investor documents, the manager paperwork – it would have to be there if he was involved in any way,” one current Bain officer said of Romney and Fund VII. “He was long gone then.”