As Herman Cain’s sexual harassment scandal dominated campaign coverage, Mitt Romney was asked point blank at a CNBC debate whether he’d “hire” Cain as America’s CEO based on his own experience in the business world.
Romney declined to answer. “The people in this room and across the country can make their own assessment,” he told the moderator.
In this particular case, however, Romney’s business experience really was instructive. As an executive at Bain Capital he faced a similar situation in the private sector with a businessman whose successful career had been derailed by a sex scandal.
Martin Hanaka’s stint as CEO of Staples came to an ugly and very public end in 1997 after the married businessman was arrested for allegedly assaulting a secretary, Cheryl Gordon, in her apartment. Gordon told police the two were romantically linked, a claim Hanaka denied along with the accusation that he had assaulted her. But, according to reports, he told police that he had given her more than $10,000 and offered to find her a better job in an attempt to stop her from blackmailing him over a fictitious affair. The story made headlines across the country and, after an internal inquiry by Staples determined he had violated rules prohibiting fraternization, he lost his job. The assault charges ended up being thrown out by a judge at the request of both Hanaka and Gordon.
Enter Romney, who was on the board of the struggling athletics chain Sports Authority and looking for a new CEO to helm a turnaround effort. According to reports by the Boston Globe and Boston Herald, Romney recommended Hanaka for the job despite his recent scandal, arguing to board members that the matter had been resolved and that the worst allegations had been dismissed. They ended up unanimously confirming him as CEO.
The story briefly emerged as a campaign issue in the 2002 gubernatorial race, with Romney drawing criticism from Democratic lieutenant governor nominee Chris Gabrieli in debate for minimizing the “very serious allegations” against Hanaka, according to the Boston Herald.
Romney defended his actions in a statement to the Boston Globe. “What Martin Hanaka did was wrong,” he told the paper. “He made a mistake and he knows it. The case against him was resolved to the satisfaction of all the parties. … He deserved a second chance and by all accounts he has straightened out his life.”
Certainly from a business perspective, Romney’s faith in Hanaka was vindicated. He ended up running the Sports Authority through 2004, bringing it back to profitability and leading it through a merger with top rival Gart Sports Co. Hanaka, now CEO of golf retailer Golfsmith, Inc., is still on the board of the company. In an ironic twist, he ended up taking a prominent spot on the board of Staples’ rival Office Depot as well.
Hanaka hasn’t forgotten Romney’s help either: according to FEC filings, he donated $2,500 to his presidential campaign this year. He did not return an interview request from TPM.
