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In testimony, Romney was skeptical of Staples

By Denise Lavoie and Stephen Braun

AP Legal Affairs Writer

POSTED:
LAST UPDATED: 06:23 p.m. HST, Oct 25, 2012


CANTON, Mass. » In newly unsealed testimony related to Staples founder Tom Stemberg's divorce, Republican presidential candidate Mitt Romney says he was initially skeptical of the idea for Staples, the office supply chain he lauds as a business success story that he helped create.

Romney also acknowledged in testimony in Massachusetts probate court in 1991 that he and other Staples directors created a special class of company stock for Stemberg's then-wife as a "favor" to Stemberg.

A Massachusetts judge unsealed Romney's testimony Thursday at the request of The Boston Globe. Celebrity lawyer Gloria Allred, representing Stemberg's ex-wife, unsuccessfully argued that the judge should also lift a confidentiality agreement that prevents her and her client from talking about the case.

The three days of testimony had been kept sealed for almost two decades after Maureen Sullivan Stemberg sought unsuccessfully to alter the divorce agreement that provided her with 500,000 shares of Staples stock.

Romney said during the 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."

During the presidential campaign, 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. Stemberg was one of the speakers who praised Romney last August at the Republican National Convention in Tampa, Fla.

Asked in 1991 what he thought when he was approached about the idea of investing in an office supply chain, Romney was skeptical.

"I told him I didn't think it was a very good idea, but I'd look at it," Romney testified. Once he got the plan, however, "I was impressed with the quality of the thinking and the thoroughness of the plan and arranged for a meeting with Tom Stemberg and his managers."

In hundreds of pages of 1991 testimony, Romney said his conservative estimate of Staples' financial worth at the time was justified. Lawyers for Stemberg's wife questioned whether the stock should have had a higher value before she sold her shares in 1987.

Under a plan approved by 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. She 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 Romney said he backed the deal to give 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 Romney insisted the board's decision was made "in the best interests of the company's shareholders."

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.

In seeking release of the testimony, lawyers for The Boston Globe argued that the public has the right to know the contents because Stemberg has been a prominent spokesman for Romney's qualifications for the presidency and has cited Romney's role in Staples' success. The office supply company was founded with backing from Romney's firm, Bain Capital.

The Globe also had sought a modification of a confidentiality order prohibiting either side from discussing any aspect of their divorce proceeding, including Romney's testimony, but dropped that request after lawyers for Tom Stemberg said they did not object to Romney's testimony being released.

During a hearing in Norfolk Probate and Family Court, Allred became incensed that the Globe was no longer seeking to lift the gag order. She said Stemberg's ex-wife wants to give the public her opinion of Romney but can't unless the order is lifted.

"I think voters have a right to know everything about Gov. Romney," Allred said. Without the "context" Sullivan Stemberg can provide, Allred said the transcripts will be "essentially meaningless to the public."

Robert Jones, an attorney for Romney, rejected the notion that Romney undervalued Staples stock to help Stemberg.

"These tabloid charges being shopped by Gloria Allred, one of President Obama's most prominent supporters, are absolutely false," he said. "Every time a court has reviewed the allegations of her client over the last 24 years, they have been rejected. There is no new information here."

Maureen Sullivan Stemberg sued her husband in 1990, arguing that he had failed to reveal the true value of Staples stock in their property settlement agreement.

Allred said after the hearing that she planned to file a request as early as next week to lift the gag order preventing her and her client from speaking about the case.

Outside court, Allred referred to Tom Stemberg's "glowing" speech about Romney at the Republican National Convention and mockingly referred to him as "almost a BFF" of Romney's. In response to a reporter's question, Allred acknowledged being a supporter of Obama but said she is "not a surrogate for the Democratic Party."

George Regan Jr., a spokesman for Tom Stemberg, said in a statement that he was pleased that the gag order remained intact. He said the case is a private family matter that "has nothing to do with Gov. Romney."

__

Braun reported from Washington. Associated Press writer Steve Peoples contributed to this report.







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palani wrote:
Desperation, much?
on October 25,2012 | 06:46AM
jekat2003 wrote:
To quote President Obama...“If you have no record to run on, then paint the other guy as someone to run from”.
on October 25,2012 | 08:50AM
MakaniKai wrote:
Misleading title; or is it just me? OBTW whenever I see Gloria Allred it has "victim " written all over it. Aloha
on October 25,2012 | 07:03AM
Highinthesierras wrote:
Right on the important issues Barry, you are showing everyone why you deserve another term, or why not.
on October 25,2012 | 07:06AM
XML808 wrote:
So the Boston Globe is suing for release of the testimony and you're faulting Obama? Get a grip. You're drinking too much of Trump's kool aid.
on October 25,2012 | 07:16AM
Ronin006 wrote:
From Fox Nation, October 24, 2012: DNC delegate and partisan Democrat lawyer Gloria Allred attended the “30 Days to Victory” Obama fundraiser at the Nokia Theatre in Los Angeles on October 7th…featuring George Clooney and musical acts Katy Perry, Stevie Wonder, Jennifer Hudson, Bon Jovi and Earth, Wind & Fire. After the fundraiser, Allred admitted to O’Reilly Factor correspondent Jesse Watters that she “just had a few words with the President” backstage, “he had some very kind words for me,” and “knows of my work…” but would not elaborate more on the details of her conversation. Now, two weeks later Allred is spearheading an “October surprise” targeting Mitt Romney just days before the election. What did Obama know and when did he know it?
on October 25,2012 | 10:06AM
copperwire9 wrote:
Oh yeah, and anytime you quote Fox, we all just rush to believe. Yeah.
on October 25,2012 | 11:16AM
mrluke wrote:
Gotta admit it WAS a misleading title. For those (many) who don't actually read the story, it sends a false impression.
on October 25,2012 | 08:03AM
Waterman2 wrote:
Now that is a Halloween picture for you. Just needs Nancy Pelosi .
on October 25,2012 | 08:11AM
MakaniKai wrote:
LOL...and don't forget call me Senator not Ma'am Barbie Boxer!
on October 25,2012 | 09:10AM
Macadamiamac wrote:
More evidence 'that man speak with forked tongue?'
on October 25,2012 | 08:31AM
Kuokoa wrote:
What the hell does this have to do with running for President?
on October 25,2012 | 08:41AM
mrluke wrote:
Nothing! Just the AP's way showing which way they lean.
on October 25,2012 | 09:40AM
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