Mitt Romney's offshore financial holdings are coming under new scrutiny following the publication of internal audits and private letters related to his $250m fortune.
On Wednesday New York-based website Gawker published 950 pages of documents that paint a complex picture of the Republican presidential candidate's finances.
His wealth is held in a convoluted series of holding companies in tax havens including the Cayman Islands and Luxembourg, as well as the US. Romney's investments include stakes in funds invested in high-risk derivatives like the credit default swaps that contributed to the credit crisis, and an investment vehicle that loaned money to the parent firm of the National Enquirer, a racy US tabloid.
Romney has been consistently attacked by Democrats for refusing to release more details of his finances, and his offshore accounts have become the subject of attack ads now running across the US. Romney has so far released two years of partial tax returns and furiously denounced Democratic claims that in some years, he paid no tax at all.
The documents published by Gawker, some of which have surfaced before, make clear that tax avoidance is a primary aim of some of his investments. Romney and his wife, Ann, are both investors in a Cayman Island-based fund called Bain Capital Fund VIII. There is no suggestion of any illegality.
The fund has assets of $3.7bn and according to the documents 'intends to conduct it operations so that it will not be engaged in a United States trade or business and, therefore, will not be subject to United States federal income or withholding tax on its income from United States sources'.
A recent investigation by Vanity Fair magazine concluded that Romney had $30m invested in the Cayman Islands alone. Bain Capital, Romney's former employer, controls at least 138 funds in the Caymans.
The Romneys are also investors in Absolute Capital Return Partners, a Delaware-based partnership that uses a technique called equity swapping to avoid tax. Equity swaps allow investors to exchange gains and losses on investments without taking ownership of the asset. The Internal Revenue Service has expressed concerns that swaps may have allowed investors to avoid paying billions of dollars on dividends.
Mitt Romney's individual retirement account (IRA) held between $1m and $5m in Absolute Return in 2011 and earned between $100,000 and $1m. In 2006, the Ann Romney Trust held between $100,000 and $250,000, and reported earnings of zero, according to the documents.
So far Romney has not commented on the documents. But when he issued his tax returns, Romney's campaign team issued a statement defending his record as a 'successful businessman' who complied with the tax code and 'has not only added value to our economy through his investment and business activity, but he has paid millions in taxes every year to the US government'.
In an interview to be published Sunday, Romney says one of the reasons he has restricted access to his financial records is that he does not want to disclose how much money he and his wife have donated to the Mormon church.
'Our church doesn't publish how much people have given', Romney told Parade magazine. 'This is done entirely privately. One of the downsides of releasing one's financial information is that this is now all public, but we had never intended our contributions to be known. It's a very personal thing between ourselves and our commitment to our God and to our church'.
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