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The Facts About Bush and Harken
National Review Online ^ | July 10,2002 | Byron York

Posted on 07/12/2002 3:11:27 PM PDT by Lady In Blue

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July 10, 2002 8:45 a.m.
The Facts About Bush and Harken
The president’s story holds up under scrutiny.

ecently Senate Majority Leader Tom Daschle was asked whether President Bush's 1990 sale of stock in the Harken Energy Corporation undermined his credibility in dealing with today's corporate scandals. Daschle did not answer directly but said, "I think the president would do well to ask the Securities and Exchange Commission to release the file — release it all. Let everybody see just what is there. There have been some real questions, I think, about what happened."

On Monday, after the president's news conference in which he faced a long series of questions about Harken, Democratic National Committee chairman Terry McAuliffe joined Daschle's call. "Every day, more questions arise," McAuliffe said in an e-mail to reporters and activists. "President Bush should stop refusing to release his SEC files and let the American people, and not his lawyers, decide what is relevant."

The calls for SEC disclosure are the latest tactic in the Democrats' attempt to tie Bush to the issue of "corporate greed." While such statements are intended to suggest that Bush is covering up his role in the Harken matter, they ignore one important fact: There are already many SEC documents about Harken available to the public. The documents deal with the critical issues raised by Bush's stock sale, and they reveal the reasoning behind the SEC investigators' decision not to take any action against Bush or Harken. A close review of the documents supports statements made by the president and answers most, if not all, of the questions raised by his Democratic critics. Together with other publicly available information on Bush's business career, they suggest that Bush was correct when he told the press that as far as Harken is concerned, "there's no there there."

THREE QUESTIONS
In the 1980s, Bush ran an energy company called Spectrum 7. By 1986, with the oil market in a deep slump, the firm was in serious financial trouble. That year, another company, Harken Energy, which specialized in buying distressed oil properties, purchased Spectrum 7. Harken's management wanted Bush on its team — his father was then vice-president, and he had extensive connections, as well as knowledge of the oil and gas business. But Harken's officers did not offer Bush an executive role, instead giving him a seat on the board, a chunk of stock worth at least $500,000 at the time, and a consulting contract.

It was not a full-time job, and in 1987 and 1988 Bush devoted much of his energy to his father's presidential campaign. The next year, Bush got involved with a group of investors who were trying to buy the Texas Rangers baseball team. When the sale went through in March 1989, Bush borrowed $600,000 to purchase his stake in the team. At that time, his biggest single asset was his Harken stock, and he decided to sell the stock to pay off the baseball loan.

On June 22, 1990, Bush sold 212,140 shares of Harken at $4 a share, for a total sale of $848,560. Nearly two months later, on August 20, Harken announced a much larger than expected loss for the quarter that ended on June 30. In the months that followed, Harken's stock price drifted downward, hitting $1.25 per share by the end of 1990. When word of Bush's sale became public, Democrats charged that he had used inside information — he also served on the Harken board's audit committee — to sell the stock while he could still make a lot of money.

Bush denied any wrongdoing, but the allegations led to an SEC investigation. Commission experts looked into three questions: One, did Bush know in advance that Harken was going to post an abnormally large loss in August, 1990? Two, did Bush sell the stock with the intent of getting out while the getting was good? And three, did Harken's loss announcement lead to a stock downturn that hurt ordinary investors who had no inside knowledge of the company's workings?

According to several internal SEC memos written in 1991 and 1992 — they are available on the website of the public-interest group the Center for Public Integrity — investigators examined thousands of pages of documents given to them by Bush and Harken, interviewed several witnesses, and met with lawyers for Bush and the company (Bush waived attorney-client privilege to allow the SEC to interview the lawyers). On the first question, whether Bush knew in advance about the losses, the SEC investigators found that "the evidence establishes that Bush was not aware of the majority of the items that comprised the loss Harken announced on August 20." Most of that loss, according to the SEC, resulted from write-downs and expenses that occurred after Bush sold his stock — events that he did not know were coming. In addition, the investigators found that Bush played a "relatively limited role in Harken management." In that role, he usually did not receive what were called the Weekly Flash Reports on the company's financial condition; those reports were given only to the board of directors' executive committee. The result, according to an SEC investigative memo, was that Bush was not particularly up to date on the company's finances:

The staff's investigation indicates that, at most, Bush was aware that Harken was forecasted to lose approximately $4.2 million in the second quarter. [The actual loss eventually turned out to be more than five times that] Harken's financial reporting was on about a 45-day delay, so that in mid-June the numbers reflecting Harken's actual results in April would be available. Consequently, by June 22 (the date when Bush sold) no actual revenue or loss information was available for the second two months of the quarter ended June 30. Bush, however, did see the Weekly Flash Report for the week ended May 31, 1990, which reflected a projected net loss for April of $1,875,00, a loss for May of $2,029,000, and a loss for June of $327,000 (for a total of $4,231,000)....Flash reports for the first two weeks of June, which would have been in existence prior to June 22, were only circulated to the members of the Harken executive committee (of which Bush was not a member).

On the second question, whether Bush sold the stock deliberately to avoid losing money before bad news was made public, the SEC found that Bush made the sale after being contacted by a stockbroker who had an institutional client who wanted to buy a large block of Harken stock. When Bush decided to sell, he checked with Harken's in-house counsel, as well as the company's chairman, plus another director, and, finally, the company's outside counsel, to see whether there were any reasons the sale could not go through. No one raised any objections. "In light of the facts uncovered, it would be difficult to establish that, even assuming Bush possessed material nonpublic information, he acted with scienter or intent to defraud," the SEC concluded.

On the third question, whether the news of Harken's unexpectedly large loss hurt the company's investors, the SEC examined Harken's share price just before and just after news of the loss was made public. The announcement came at 9:34 A.M. on August 20, 1990. When the market opened that morning, according to the SEC, Harken's stock was selling at $3 per share. It stayed at that level until after noon, when it began a slow slide to $2.375 per share. The next day, however, it rebounded to $3 per share. If the loss announcement had been a bombshell, SEC investigators reasoned, the stock would most likely have fallen immediately and stayed down. "The conclusion of the Office of Economic Analysis is that, because the price of Harken did not immediately react to the earnings announcement and there is no news that explains Harken's return to its pre-announcement price of $3 on August 21, 1990, the earnings announcement did not provide investors with new material information," the SEC said. Furthermore, even though Harken stock moved down for the rest of 1990, it recovered its value — and more — the next year, when it hit $8 a share.

FORM 144 VS. FORM 4
In addition to the questions that have been raised about Bush's decision to sell his stock, there are also questions about when he informed federal regulators of the sale. Last week, New York Times columnist Paul Krugman wrote, "Oddly, though the law requires prompt disclosure of insider sales, [Bush] neglected to inform the SEC about this transaction until 34 weeks had passed. An internal SEC memorandum concluded that he had broken the law, but no charges were filed. This, everyone insists, had nothing to do with the fact that his father was president."

The documents tell a somewhat different story. Although Krugman did not mention it, Bush was required to file two disclosure forms with the SEC. One, which was known as a Form 4, was due the month after Bush made the sale. The other, known as a Form 144, was due at the time of the sale. Bush filed the Form 4 several months late, but he filed the Form 144 on time. In the view of some experts, the Form 144 was the more important of the two.

Bush filed the Form 144, officially known as a "Notice of Proposed Sale of Securities," on June 22, 1990, the day of the sale. In the form, he listed, among other things, how many shares he intended to sell, when he had originally acquired them, how much they were worth, and which broker would handle the transaction. "The 144 is probably the more market-informative form," says Edward Fleischman, who was an SEC commissioner between 1986 and 1992. "It gives market-watchers an indication of what is coming." In contrast, Fleischman says, "The Form 4 is totally retrospective and was originated for a very different purpose, to keep track of dates and prices." If the purpose of disclosure was to make regulators and investors aware of Bush's insider sale, then the Form 144 was the more important document.

Still, the law required that the Form 4 also be filed, and even though he had apparently done everything by the book up to that point, Bush did not file the form until March 1991, nearly 34 weeks late. Why did he wait so long to file? At various times through the years, Bush's advisers have suggested that he thought he filled out the form and believed it might have been lost, either inside Harken or the SEC. After Krugman raised the issue last week, White House spokesman Ari Fleischer attributed the late filing to "a mix-up with the attorneys." Then, at his news conference on Monday, the president admitted, "As to why the Form 4 was late, I still haven't figured it out completely."

Whatever the reason, the fact that the report was filed late, while a violation of SEC rules, does not seem particularly damning in the absence of any underlying wrongdoing that a late filing might have been intended to conceal — and especially in light of the fact that the Form 144 was filed on time. In addition, it appears that at the time Bush sent his form to the SEC, late filing was not seen as a very serious offense. "If it had come to the SEC's attention back then, somebody would have said, 'Get the bloody form filed,' and that would have been it," says Fleischman. "There was precious little attention paid to a timely or tardy filing of Form 4."

ALOHA, ALOHA
There is one last question about Bush's role in the Harken matter, a question which, like some of the allegations of insider trading itself, has come to the fore in the columns of Paul Krugman. In a July 7 article, Krugman wrote that Harken had engaged in Enron-style financial misdeeds while Bush was a company director. When Harken ran into money troubles in the late 1980s, Krugman charged, it "concealed its failure — sustaining its stock price, as it turned out, just long enough for Mr. Bush to sell most of his stake at a large profit — with an accounting trick identical to one of the main ploys used by Enron a decade later":

A group of insiders, using money borrowed from Harken itself, paid an exorbitant price for a Harken subsidiary, Aloha Petroleum. That created a $10 million phantom profit, which hid three-quarters of the company's losses in 1989. White House aides have played down the significance of this maneuver, saying $10 million isn't much, compared with recent scandals....But for Harken's stock price — and hence for Mr. Bush's personal wealth — this accounting trickery made all the difference.

Unlike the claims that Bush engaged in insider trading, which are convincingly refuted by the available evidence, there is not enough public information to know precisely what happened in the Aloha situation. But from what is known, it's possible to draw some preliminary conclusions about Harken and Aloha — and those conclusions do not support accusations that Bush engaged in wrongdoing.

Krugman writes that Bush either knew about the Aloha situation from the beginning or found about it when the SEC ordered Harken to restate its earnings. It is hard to know which is true; at his news conference Monday, the president himself said he didn't know. But the fact that the SEC ordered Harken to restate its earnings indicates that the Aloha matter had come under commission scrutiny. And the absence of any other SEC action against Harken indicates that, after that scrutiny, the commission's investigators believed that the Aloha situation did not merit any enforcement action against Harken.

According to people familiar with the workings of the SEC, questions about earnings are relatively common in the corporate world. When doubts are raised about a company's earnings, the SEC often enters into an extended exchange of letters in which it asks the company to defend its statement of earnings. At the end of that exchange, the SEC and the company often find themselves with a difference of opinion over how earnings should be counted; at that point the company, like Harken, usually agrees to do things the SEC's way. According to the those familiar with the situation, anywhere between 35 and 50 companies amend their annual reports each year after such dialogues with federal regulators.

In the Harken/Aloha case, the SEC's deliberations remain confidential, but it is known that the matter never reached the level of an SEC enforcement action against the company. If the commission's reviewers had concluded that Harken had done something clearly wrong, they would have most likely escalated the matter from a businesslike dialogue into a full-scale investigation. After that, they might have recommended some sort of civil, or even criminal, action against the company.

But that didn't happen. Instead, Harken, like many other corporations, restated its earnings as the SEC demanded. Despite some suggestions to the contrary, that was a far different situation from a case like WorldCom, in which the immense size of the earnings restatement prompted a far-reaching criminal investigation. From the circumstantial evidence that is publicly available, the charge that the Harken/Aloha matter is somehow of a piece with the worst of today's corporate scandals simply doesn't seem plausible.

MAKE MORE PUBLIC
That is what is known about George W. Bush and Harken. Although the story has attracted a lot of attention lately, it's not exactly news. As Bush's defenders have pointed out, over the years there have been a number of meticulous examinations of the issue, not only by the SEC but also by Texas newspapers and, later, the Washington Post, the New York Times, and several other national publications. Beyond that, Bush's political opponents have tried mightily to use the issue against him during campaigns in 1994, 1998, and 2000, with no success.

But the fact that the available evidence strongly suggests there is no merit to the Democratic allegations does not mean that Tom Daschle and Terry McAuliffe are wrong in their calls for more information. The documents that are available now were not formally released by the SEC, or by anyone else, but instead found their way into the public domain through back channels — perhaps through a congressional office, perhaps from some of those involved in the investigation, or perhaps from leaks inside the commission. The release of more information in a systematic way would undoubtedly help us know more about what went on inside Harken and the SEC.

But it would not, in all likelihood, change the basic story. We have seen the SEC documents in which investigators outlined their reasons for declining to take action against Bush, and it seems only reasonable to believe that if there were smoking-gun documents pointing to wrongdoing on Bush's part, the investigators would have reached a different conclusion, or at least dealt with those issues when they summarized the evidence. And even if they didn't, it seems likely that smoking-gun evidence would have emerged during the decade of politically charged scrutiny the issue has received.

Even so, it's probably safe to expect the president's opponents to keep hammering away on the Harken issue. Just because it's never worked before doesn't mean they'll stop trying.

       


 

 
http://www.nationalreview.com/york/york071002.asp
     



TOPICS: Miscellaneous
KEYWORDS: innocent
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FYI and Discussion.
1 posted on 07/12/2002 3:11:27 PM PDT by Lady In Blue
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To: Lady In Blue
I just checked to see if this article has been already posted but I didn't see it. Sorry if this is a duplicate.
2 posted on 07/12/2002 3:12:38 PM PDT by Lady In Blue
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To: Lady In Blue
Bump for TRUTH!!

GRRRRRollin'

3 posted on 07/12/2002 3:29:58 PM PDT by GRRRRR
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To: GRRRRR
Thanks,GRRRR! There's nothing like the truth!
4 posted on 07/12/2002 3:33:02 PM PDT by Lady In Blue
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To: Lady In Blue
Good post. The smearers will continue their smearing although they know the truth, and those who delight in Bush being smeared will continue to believe anything bad whether true or not. Standard MO.
5 posted on 07/12/2002 3:44:20 PM PDT by maranatha
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To: maranatha
That's the sad truth,unfortunately!
6 posted on 07/12/2002 4:21:31 PM PDT by Lady In Blue
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To: Big Steve; deport; blackie; Deb; GUIDO; Howlin
ping
7 posted on 07/12/2002 4:22:30 PM PDT by Lady In Blue
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To: Lady In Blue
Thanks for the ping. Bryon York has done more work in detailing this entire transaction that anyone else. He did a fairly good piece back during the primary campaign entitled "Georges Road to Riches" published by the NYT.... It wasn't quite as detailed at this on regarding the Harken stock.
8 posted on 07/12/2002 4:49:31 PM PDT by deport
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To: Lady In Blue
Stop the attacks by the wacko, extreme left-wing, rat-nazis terrorist's on our Freedoms !!

Freedom Is Worth Fighting For !!

Molon Labe !!

9 posted on 07/12/2002 5:06:15 PM PDT by blackie
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To: Lady In Blue
The most important part of the Harken Oil deal and Goerge W. Bush is that he sold his stock shortly after the Emir of Bahrain announced that Harken has been awarded a contract to develop an off shore oil field in that country. The oil industry was miffed that Harken got the contract since it had never drilled a single off shore well. It appeared to be little more than a thinly disguised means for the Bahrainis to give a boost to the value of Harken stock for the benefit of Bush, whose father was then the President.

The original Wall Street Journal article discussing this strongly implied that the transaction was tainted, a thinly disguised bribe although that exact word was not used. The WSJ article I am refering was written not too long after the sale, during the first Bush Presidency.

Please do not ask me for a copy of this article since I did not clip it at the time.

Since "W" became a candidate for the Presidency, this aspect of the sale has been deeply buried, including by the WSJ itself.

10 posted on 07/12/2002 7:53:46 PM PDT by NoLongerLurker
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To: deport
Thanks for the info,deport.So much has happened since the campaign that York's original article just slipped by me I guess.I didn't realize that he had done so much work.
11 posted on 07/12/2002 8:49:57 PM PDT by Lady In Blue
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To: blackie
Don't hold back,blackie, just tell us what you think! Couldn't agree with you more!LOL!
12 posted on 07/12/2002 8:51:17 PM PDT by Lady In Blue
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To: NoLongerLurker
Please do not ask me for a copy of this article since I did not clip it at the time.


I most certainly would like to see that article before I believe anything like that! The SEC investigated this case.I'll take their word before any WSJ article, thank you very much!

13 posted on 07/12/2002 8:53:52 PM PDT by Lady In Blue
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To: Lady In Blue
Harken was awarded a contract to drill some well for the Bahrainis about the time that they bought Spectrum7. President Bush was given some stock for his holdings in Spec7 and a position on the BOD at Harken. Nothing new about all that. The Harken stock was in a long slow decline at that time if anyone wants to go look at the graphs.

I think I prolly have some articles marked somewhere that will mention the Bahrain deal. But that has never been the real controversy, it's always been the "insider trading" when he sold his stock and liquidated his loan with the Midland Bank that he had gotten when he bought his share of the Texas Rangers.

14 posted on 07/12/2002 9:08:07 PM PDT by deport
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To: Lady In Blue
Don't count on any evidence to back up these outrageous claims. Most of his(or her) posts are about some supposed "corrupt bargain" between the President's father and Bahrain for the benefit of Harken Energy - claims completely with no merit.
15 posted on 07/12/2002 9:11:19 PM PDT by Lee_Atwater
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To: deport
Thanks,deport for all of the info.I'm not at all familiar with the Bahrainis and Spectrum7 angle of it.
16 posted on 07/12/2002 9:24:49 PM PDT by Lady In Blue
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To: Lee_Atwater
Thanks Lee_Atwater for your input.I also thought those claims were outrageous!
17 posted on 07/12/2002 9:26:12 PM PDT by Lady In Blue
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To: Lady In Blue
Bookmark and Bump
18 posted on 07/12/2002 10:15:35 PM PDT by PeaceBeWithYou
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To: Lady In Blue
Has this article been posted? I could not find it but it deserves publicity.
http://www.nationalreview.com/york/york071202.asp
     
July 12, 2002 8:45 a.m.
The Group Behind the Attacks on Bush
The story of American Family Voices.

mong the many questions that have been raised about George W. Bush's business dealings with Harken Energy, there's one that has so far failed to attract the attention of journalists delving into the president's past: Why is all this coming up now? Did Bush's sale of Harken stock more than a decade ago come to the fore spontaneously as a result of public outrage over scandals at Enron, WorldCom, and Arthur Andersen? Did enterprising reporters dig up long-buried secrets? Did one of the president's former business associates come forward to expose his hypocrisy?

While anything is possible, it appears the answer to all those questions is no. There has been no Harken whistleblower. There have been few, if any, elements of the Harken story that were not previously reported — and, far more important, investigated by the Securities and Exchange Commission, which took no action against Bush. And despite public anger at Kenneth Lay, Bernard Ebbers, and other symbols of corporate criminality, the Harken story did not emerge spontaneously. Rather, a look at recent events suggests that the Harken resurrection was the result of a well-planned, well-funded, and well-executed campaign to damage the president politically at a time when his approval ratings seemed almost unchallengeably high. Those involved in the effort include former officials in the Clinton White House, veterans of liberal interest groups, sympathetic journalists, and some of the nation's richest labor unions.

SLY LIKE A FOX
Last Monday, a little-known group called American Family Voices received some notice in the press when it unveiled a television ad attacking the president on the issue of corporate corruption. The ad featured footage of a fox walking through woods, with a narration that said,


Remember the saying about foxes guarding the henhouse — well guess what's happening in Washington?

President Bush says he's getting tough on corporate fraud.

But look at the record:

Bush played a key role at Harken Energy — they used Enron-style accounting to hide losses.

Bush sold out early...

Bush thinks tough talk can hide the record.

That's sly — like a fox.


"The idea for the ad started a couple of weeks ago when Bush announced that he was going to give a speech on corporate responsibility," says Michael Lux, the man who heads American Family Voices. Lux, a former aide to President Clinton and former political director for the liberal interest group People for the American Way, says, "I was outraged at the idea that Bush was going to do a big speech and pound his chest and say he is in favor of corporate responsibility when he is closer to the corporate world than any president since Ronald Reagan. I started to think about the fox and the henhouse. I was talking to Joe Lockhart [the former Clinton press secretary who now runs an advertising agency in Washington], and he came up with the ad."

Lux has been trying to highlight the Harken story for months. He hired a writer named Stephen Pizzo, who in the 1990s wrote a story about Bush and Harken for Mother Jones magazine. Pizzo went to Lux last March, just before the president gave an earlier speech on corporate accountability, and the two discussed the allegations in Pizzo's Mother Jones piece. As a result of that talk, American Family Voices put out a press release on March 7 which "questioned the White House's credibility on this issue in light of President Bush's own actions as a Texas oil company executive prior to his career in politics." The release — which was featured on one of AFV's websites, thedailyenron.com — chronicled the stock sale as well as the story of two loans Bush received from Harken for the purpose of buying company stock.

The release attracted little attention, but in the days that followed, Lux returned to the issue several times in thedailyenron.com. On June 27, he published a report which began, "Yesterday the foxes assured Americans that they are hot on the trail of those missing chickens." After recounting the Harken story yet again, the article claimed that Bush had "pulled a Martha Stewart" when he sold his stock "on inside information."

There was no reason to expect that this release would receive any more notice than the ones that preceded it, but a short time later, Lux found his words featured in the editorial pages of America's most powerful newspaper. On June 2, five days after the American Family Voices release, New York Times columnist Paul Krugman told the story of Bush's stock sale. Krugman quoted Lux's line about the foxes and the chickens — he credited it to thedailyenron.com — and also compared Bush's stock sale, unfavorably, to Martha Stewart's financial troubles. Given a prominent place in the Times, the Harken story had new life.

AMERICAN FAMILY WHAT?
A few days later, AFV released the "like a fox" ad, and the group began to receive some media attention. There were reports on CNN, Fox News, and in several major newspapers. The most-noticed was, again, in the Times, which ran a story referring to AFV as a "small, secretive group." For many people, the stories were a first glimpse of Lux's organization. But it was not the first time that AFV played a major role in political events.

Lux founded the organization in 2000 to be "a strong voice for middle and low income families on economic, health care, and consumer issues." The group got going with $800,000 donated by the American Federation of State, County, and Municipal Employees. To this day, the union remains AFV's largest single contributor, although Lux says the group also receives money from "other progressive groups and a wide variety of donors." In addition to the government employees, Lux says other labor unions that contribute to AFV include the International Brotherhood of Electrical Workers, the United Food and Commercial Workers, and the International Association of Machinists. Lux declined to name AFV's other contributors, except to say that they are "your classic progressive donors."

In the first months of its existence, AFV used its contributions from government workers to mount a furious effort to keep George W. Bush out of the White House. In September 2000, the Brennan Center for Justice at New York University School of Law, a pro-campaign finance group, cited AFV as one of the main organizations funding outside ads for Democrat Al Gore. In a study headlined, "Special Interest Groups Flood Key States With Ads For Gore; Group Spending For Bush Virtually Nonexistent," the center reported that American Family Voices spent $640,000 on pro-Gore ads between June and September 2000 (only two groups spent more for Gore: Handgun Control, with $1.3 million, and the AFL-CIO, with $1.1 million). In contrast, the group that spent the most money for Bush, the National Rifle Association, spent a relatively small $257,072.

Still, all that spending wasn't enough to win the White House for Gore, and after his defeat, American Family Voices found itself without a clear mission. Through much of 2001, Lux worked at his Washington consulting firm, Progressive Strategies, while AFV received almost no attention in the press. Then, as 2002 began, the group found a new cause.

A WORLD OF ENRON
When the energy company Enron collapsed, Lux says, he and many of his associates believed it was "a metaphor for what we saw as wrong" with much of American business. "We felt like Enron was an absolutely classic example of corporate America run amok in a deregulatory environment," Lux explains. "It was the fox guarding the henhouse. We felt the issues raised by that scandal would end up dominating the news for the rest of the year."

Lux created thedailyenron.com and another website, nomoreenrons.com, both of which began by covering the Enron matter, but later expanded to include other issues, like Vice President Dick Cheney's refusal to give the General Accounting Office information about his energy task force. The sites do the usual political stuff — they give anti-Bush activists talking points and arguments to use against the administration, and also encourage readers to sign petitions and send letters to their senators and representatives. In addition, Lux tries to spread the message by speaking frequently with reporters — "Like most groups," he says, "we give information to journalists who we've had a relationship with." When it's all added up, it is hard to say precisely what influence AFV has, but it is hard to deny that the stories and angles Lux emphasizes often find their way into the news.

For example, on Thursday both the Times and the Washington Post ran front-page stories on Bush's two loans from Harken. Both stories tied the loans to Bush's speech on Wall Street, in which he said, "I challenge compensation committees to put an end to all company loans to corporate officers." And both suggested that there was more than a little hypocrisy in Bush's position. The Times said the loans "raised the question of how [Bush's] toughened standards today would have applied to his own corporate experience," while the Post wrote that the "contrast between Bush's record as a business executive and his rhetoric in the face of corporate scandals underscores the challenge his administration faces in trying to credibly foster what he calls 'a new era of integrity in corporate America.'"

The loan story dominated news coverage all day, but, like the insider-trading allegations that had dominated coverage a few days earlier, it was not exactly new. Word of the loans was first reported by U.S. News & World Report in March 1992, as Bush's father began his presidential reelection campaign. The magazine reported that "Harken offers select executives, including [George W.] Bush, eight-year loans at five-percent interest. The loans may be used by company brass to exercise options to purchase Harken shares. Bush has borrowed $180,375."

The U.S. News story attracted a little notice in places like The Hotline. A few months later, in September 1992, Stephen Pizzo discussed the loans in his Mother Jones article. But in the decade that passed between 1992 and this week's stories in the Times and Post, it appears the loans received little, if any, attention. There was, however, one exception: The loans were prominently featured in American Family Voices's March 7 press release. Once more, Michael Lux's cause got a big boost from not one, but two, of the nation's most important papers.

THE COMING CAMPAIGN
All in all, it's been a good few months for Lux and AFV. At the same time that he was highlighting Enron and Harken, Lux also held the first public meeting of another of his creations, the Progressive Donor Network. The network aims to coordinate programs with interest groups like People for the American Way, Emily's List, and the National Abortion Rights Action League. At its first meeting, network organizers heard from Senate Majority Leader Tom Daschle, House Minority Leader Richard Gephardt, Democratic National Committee chairman Terry McAuliffe, and other party leaders. The meeting also featured appearances from operative/pundits James Carville and Paul Begala. (For the record, Lux says that, contrary to some reports, Carville, who "is a friend, and as he has said, talks to us all the time," nevertheless did not play a role in creating the "like a fox" ad.)

Now, after his success with Harken, Lux senses it's time to move American Family Voices beyond what has been an essentially Enron-based critique of the Bush administration. In the next few weeks, he says, AFV plans to launch a much broader effort. "We're going to move forward with an overall campaign to build on the Enron work and corporate responsibility in general," Lux says. "It's gone so far past Enron now that we're going to do a broader campaign." The work, Lux explains, will involve "more ads, coalition building with unions and environmental groups, and work in a lot of states."

If the past is any measure, look for the campaign to have more than a little success. American Family Voices has a talented leader, rich supporters, and some important friends in the press. That's more than enough to keep making trouble for George W. Bush.




       



 
 



19 posted on 07/13/2002 5:29:28 AM PDT by maica
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To: Lady In Blue
...Please do not ask me for a copy of this article since I did not clip it at the time...

I'm not BSing about the Bahrainis' role. It was the entire reason Bush sold his stock when he did. The announcement of the off shore drilling contract had boosted the price of Harken shares.

The whole thing was a scam from beginning to end designed to put money in the pocket of President Bush's kid. In the end, the wells never even got drilled because there wasn't enough oil there to make it worth while.

The sale of the Harken shares was done legally, so there wouldn't have been an SEC problem. It was what preceded the sale that was irregular. By the way, are you naive enough to believe that the SEC would go after the President's son even if the sale had been irregular?

20 posted on 07/13/2002 2:15:17 PM PDT by NoLongerLurker
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