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The Truth-O-Meter Says:

A D V E R T I S E M E N T

Says Barack Obama has pension investments that include Chinese firms, and "investments through a Caymans trust."
Mitt Romney on Tuesday, October 16th, 2012 in debate comments

About this statement:

Published: Wednesday, October 17th, 2012 at 5:50 p.m. Subjects: China, Debates, Pensions, Taxes

Romney says Obama also has investments in Chinese companies and through a Cayman Islands trust
One of the many tense moments in the second presidential debate turned on a new topic in the race: President Barack Obamas pension account.

Sources: Washington Post debate transcript, RomneyObama exchange on personal investments, Oct. 16, 2012 Interview with William Atwood, executive direcctor, Illinois State Board of Investment, Oct. 17, 2012 Interview with David S. Miller, partner, Cadwalader, Wickersham & Taft, Oct. 17, 2012 Interview with Chuck Dohrenwend, U.S. spokesperson, Advent International, Oct. 17, 2012 Illinois State Board of Investment, 2010 Annual Report, Feb. 4, 2011 PolitiFact.com, Obama says Mitt Romney had millions in the Cayman Islands, a tax haven, July 17, 2012 PolitiFact.com, "Even today part of Romneys fortune is invested in China," Sept. 20, 2012 President Barack Obama, 2011 personal financial disclosure form, released May 15, 2012

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Heres how it came up: Early in the face-off, Obama scoffed at Mitt Romneys pledge to crack down on unfair trading practices by China, saying Romney is currently invested in companies "that are building surveillance equipment for China to spy on its own folks." Romney later explained that, yes, he understands that his blind trust has invested in foreign firms, including companies in China. Then he confronted Obama. Romney: "Mr. President, have you looked at your pension? Have you looked at your pension?" Obama: "You know, I dont look at my pension. Its not as big as yours so it doesnt take as long. I dont check it that often." Romney: "Let me give you some advice. Look at your pension. You also have investments in Chinese companies. You also have investments outside the United States. You also have investments through a Caymans trust." The exchange was a role reversal: An Obama campaign ad in July 2012 claimed Romney had millions in the Cayman Islands, among other "tax havens." We rated that True, noting that nothing illegal or improper about the investments through his blind trust. We also reviewed an Obama claim from an ad in September 2012 that said, "Even today part of Romneys fortune is invested in China." We rated that Mostly True, noting that Romney had money invested in funds that owned shares in two Chinese firms, but that Obamas claim suggested Romney had more to do with the investment decision than is the case. (We further noted that the New York Times reported that one of the funds had invested in a Chinese video surveillance company that supplies cameras to police for watching public spaces.) Okay, so what about Romneys debate description of Obamas pension investments? The Romney campaign told us it was referring to investments made by the Illinois State Board of Investment on behalf of the state employeesretirement system there. Obama, you may recall, was an Illinois state senator from 1997 to 2004 before winning election to the U.S. Senate. He is a participant in the General Assembly Retirement System in Illinois, said William Atwood, executive director of the Board of Investment, who confirmed that for us. The Romney campaign pointed us to that pension funds holding in an entity that is part of Advent International. Advent has described itself as "one of the worlds most global private equity firms" and has buyout offices in 16 countries. Atwood confirmed that the pension fund has invested $30 million in one of Advents limited partnerships, Advent International GPE VI-A. That partnership was organized in the Cayman Islands, Atwood said. Public filings back that up. What about Romneys broader claims, about Obamas foreign investments? The Illinois pension fund also has numerous foreign investments, including in Chinese companies, as part of its diversified portfolio, Atwood said. The Obama campaign has connected Romneys overseas investments in the Caymans to methods for avoiding U.S. taxes. But theres no evidence Obama receives any tax advantage from his overseas pension investments.

Written by: Dave Umhoefer Researched by: Dave Umhoefer Edited by: Angie Drobnic Holan

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David S. Miller, a tax attorney with Cadwalader, Wickersham & Taft LLP in New York, reviewed public filings by Advent and said it was highly unlikely Obama got any tax advantage from the pension funds investment in the Advent partnership. Atwood went further, saying: "There is no tax advantage to any (pension) plan participant" from that investment. Miller offered this analysis: "There is no evidence that the fund helped the Illinois pension fund avoid any taxes in this respect, the Illinois pension fund would have been treated identically had the fund been organized as a domestic (U.S.) partnership. However, the fact that it was organized as a Cayman partnership might have allowed some taxable investors to defer some tax on foreign (non-U.S.) portfolio companies purchased by the Fund." Atwood emphasized that neither Obama nor any other participant in the retirement system has anything to do with selecting investments for the fund. Miller concurred with that, and added that Romney legitimately can claim that he has similar distance from foreign investments made through his individual retirement accounts. Its "entirely accurate" for Romney to say that Obamas pension plan has investments in foreign companies and through a Caymans trust, Miller said. Technically, its a Cayman-based partnership, but thats a trivial difference, he added. Our rating Romney told Obama: "You also have investments in Chinese companies. You also have investments outside the United States. You also have investments through a Caymans trust." Its an accurate set of statements when you consider investments made by managers of the Illinois pension fund in which Obama has an account. As we noted in reviewing previous claims about Romneys investments in China, the investments involved are indirect and -- as far as anybody has said -- made without the knowledge of the account holder. With that clarification, we rate Romneys statement Mostly True.

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