Discuss as:

More scrutiny for Romney: Overseeing Marriott during years of kickback charges

Jonathan Ernst / Getty Images

From governor's son to presidential contender, a look at the life of Republican Mitt Romney.

Mitt Romney's service on the board of Marriott International has come under scrutiny in a story published Thursday by 100Reporters, a new investigative reporting group.

Business reporter Lucy Komisar reports:

Mitt Romney, who makes his hands-on business experience a talking point in his campaign for the Republican presidential nomination, was a member of the board of directors and audit committee of a global company when it paid millions of dollars to settle charges of extracting kickbacks that cheated clients.

As a board member, Romney held oversight responsibilities at a time when Marriott was repeatedly accused of obtaining secret rebates that enriched Marriott, at the expense of hotel owners who had contracted with Marriott to run the hotels on their behalf. A series of owners also accused Marriott of falsifying financial statements to owners to conceal the arrangements—charges that Marriott had denied.

Should a director bear responsibility for actions by a company's management?

Here's how Komisar deals with that question, along with background on ties between Romney and the Marriott family:

To be sure, Romney’s was only one voice of ten on the board. What he may have said privately at board meetings or to Marriott executives about the secret rebates and the risk to shareholders and the company is not known. What is known is that during his tenure the company continued a practice that had come under severe reprimand by the courts, and there is no record that Romney ever denounced or criticized the practice.

In addition, the company failed to disclose the mounting disputes to the Securities and Exchange Commission despite the risk they represented to the company’s stock price, and did so only after they culminated in public lawsuits.

With law and business degrees from Harvard University, Romney was well-schooled in understanding the legal and business risks to the company from theses charges. Romney was one of the designated “independent,” members of the Marriott board, which meant that neither he nor his family were to have financial ties to the company. Indeed, no Romney had been an employee of Marriott or the company’s auditor.

On personal and political levels, however, bonds between the Romney and Marriott families run deep. The company founder J. Willard Marriott was close to Romney's father George. Both families are important in the Mormon Church. Romney was named Willard (the W. in his name), in Marriott's honor.

In 1994 the Marriott family gave hundreds of thousands of dollars to Romney's campaign for the U.S. Senate. In 2008, CEO J. Willard "Bill" Marriott, the founder's son, was national finance co-chair of Romney’s campaign for the Republican presidential nomination. Bill Marriott has so far donated $500,000 to Romney’s current campaign through the pro-Romney "super PAC," Restore Our Future, while his brother, Richard Marriott, has given the same.

The Romney campaign did not respond to questions about his service at Marriott.

The reporter, Lucy Komisar, is an experienced investigative journalist focusing on corporate corruption.

Read her full story at 100r.org.