The much-hyped release of Mitt Romney’s testimony in the divorce of the former Staples CEO this afternoon has failed to deliver the October Surprise knock-out blow to Romney’s campaign, as promised by celebrity attorney Gloria Allred.
Mitt Romney said during the 1991 hearings that in Staples’ early days, its initial stores performed “far behind our expectations”. He said friends told him that Staples was “a hard place to shop” and employees were “surly”.
However, during his presidential campaign, Mitt Romney has described Staples as a “great American success story” and has taken credit for its growth to a mega-firm employing nearly 90,000 workers.
Tom Stemberg was one of the speakers who praised Mitt Romney last August at the Republican National Convention in Tampa, Florida.
The transcripts of his evidence run to more than 300 pages of complicated financial questioning and will surely be scrutinized in the next few days. Yet there is apparently nothing to damn the Republican rival, or instantly back up the claims of Gloria Allred or the ex-wife of Staples founder, Tom Stemberg, that Mitt Romney gave misleading evidence to ensure she could not win a better settlement.
Under a plan approved by Mitt Romney and other board members in 1988, Maureen Sullivan Stemberg was given 500,000 shares of Staples common stock, then awarded a special “D” class of stock in exchange for those shares. Maureen Sullivan Stemberg sold about half of the shares only to learn that those sold holdings would have been valued higher in a 1989 public offering of Staples stock.
In testimony Mitt Romney said he backed the deal to give Tom Stemberg’s wife a special class of stock “as a favor to Tom. It was something that was done in my opinion, it was initiated as a favor. Tom needed to have a settlement with his wife so that was the genesis of it”.
But Mitt Romney insisted the board’s decision was made “in the best interests of the company’s shareholders”.
Mitt Romney acknowledged at the time that there were no other cases in which a separate class of securities was created for the benefit of one individual. He also said that as an investor through Bain, he had never seen that kind of a device used before.
At first, his venture capital firm Bain, an early investor in Staples, was so underwhelmed by the firm’s performance that it did not plough as much money into the firm as it could have.
Mitt Romney said the initial investment in Staples was $1.5 million and valued the shares at $1.50 to $2 right up until early 1988. The court noted Maureen Sullivan Stemberg negotiated a sale of her shares at $2.25 to $2.48.
“In my opinion that’s a good price to sell the securities at,” Mitt Romney said, according to the transcript.
And, at the end of his three days of testimony, Mitt Romney was asked about his own chance to buy Staples stock before the float – and whether he bought the entire amount he was allowed to.
Crucially Mitt Romney said he did not as he believed there was a chance the company could fail.
A source told the Washington Examiner: “This disproves the Allred allegation completely. He put his money where his mouth was.”
The documents do, however, reveal the close relationship of Tom Stemberg and Mitt Romney, who testifies that he had lunch with the Staples CEO on the day of the hearing.
Mitt Romney added that he doubted the future success of the office supply stores and only created one class of shares as a “favor” to Tom Stemberg because he “needed a settlement with his wife”.
The testimony was unsealed in a Canton, Massachusetts court on Thursday after attorneys – including for Tom Stemberg and Mitt Romney – did not object to their release.