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Romney on investments: 'Nothing hidden there'

July 10, 2012: 12:54 PM ET

Mitt Romney brushed aside a bubbling controversy over his offshore financial holdings on Tuesday, saying that his assets are held in a blind trust and that he doesn't "even know where they are."

"There is nothing hidden there," Romney said during a radio interview, noting that all taxes have been paid.

The Associated Press reported last week that Romney, who is worth an estimated $84 – $264 million, did not disclose in many state and federal financial reports that his portfolio included an offshore company based in Bermuda.

The company, Sankaty High Yield Asset Investors Ltd., was transferred to a blind trust held by Ann Romney in 2003, one day before Romney was sworn in as governor of Massachusetts, the AP reported.

But the asset has not appeared on many of the financial disclosure forms Romney has filed since. Sankaty, however, was listed on the couple's 2010 federal tax forms. The AP found twenty investments besides Sankaty in the tax return that had not been listed on disclosure documents. At least seven were foreign investments.

Under federal ethics rules, it would not have been necessary to report Sankaty as an asset if the company was worth less than $1,000. The Romney campaign did not immediately respond on Tuesday to questions about the company.

But the episode only serves to reinforce the perception that Romney is shielding his finances from public view, a tactic that runs counter to years of precedent established by Democrats and Republicans alike.

Here is why the issue keeps coming up:

Lack of data

The Romney campaign has released only one year of the candidate's tax returns, for the year 2010. It has provided an estimate for 2011, the most recent filing. But those returns are not yet final.

Romney's father, by way of a quick comparison, released 12 years of tax returns when he pursued the presidency.

By only releasing one year of tax returns, Romney is making it impossible to see how his assets evolved over time. One year is only a snapshot.

Compounding the lack of disclosure, Romney's campaign has been incredibly tightfisted with information on the candidate's finances, rarely offering straightforward responses to questions from reporters.

A not-so-blind trust

When asked about his finances, Romney often claims a certain level of ignorance about his holdings, saying that since 2003, his assets have been held in a "blind trust."

Public officials often place their assets in a trust in order to avoid conflicts of interest. And indeed, Romney created his blind trust before becoming the governor of Massachusetts.

But now, for a few different reasons, the trust is hardly blind.

For example, the trustee who manages the portfolio, Bradford Malt, is a friend of the candidate. A close personal relationship with the trustee, according to federal ethics rules, is most definitely out-of-bounds.

And the contents of the blind trust have been released via federal disclosure forms, which have been the subject of extensive media reports.

Romney has already pledged to dissolve his current blind trust if elected president. He will create a new one that complies with Office of Government Ethics rules, his campaign has said.

Complexity

The Romney family finances are incredibly complex. The couple's financial disclosure forms contain page after page of assets, and the tax returns are even more opaque.

Even common investment vehicles have the potential to be complex.

Romney's IRA, for example, is worth between $20 and $100 million. Reporters were stumped as to how that could be possible, as IRAs are typically limited to rather small contributions.

Months passed before the Wall Street Journal offered a convincing explanation. Turns out, Bain Capital, the private equity firm Romney ran, allows employees to co-invest in takeover deals via tax-deferred retirement accounts, a strategy capable of bringing 583-fold returns on investment.

Given the potential political payoff, the Obama camp is unlikely to ease its badgering of Romney to release more tax returns.

Releasing more returns could open old wounds -- especially if nasty little items like Cayman Island funds are peppered throughout. But for a candidate running in large part on his business acumen, releasing more returns might also lift the cloud of suspicion the Obama campaign is so desperately trying to attach to the issue.

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About This Author
Charles Riley
Charles Riley
Reporter, CNNMoney

Charles Riley lives and works in Hong Kong, where he covers markets, economics and other high-impact stories across Asia. He previously worked for CNNMoney in New York and CNN in Washington. He tweets @CRrileyCNN

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