Bush Is No Good Trade

According to U.S. Securities and Exchange Commission records, on four separate occasions Gov. George W. Bush disregarded federal statutes by failing to file insider stock trade reports on a timely basis, back-dating one trade by some four months. Moreover, one key trade just a few weeks before Iraq invaded Kuwait -- but reported some eight months late after the Gulf War was over -- netted Bush close to $1 million in profit as he sold stock in Harken Energy, an oil company doing business in the Middle East wherein some of his father's largest contributors also maintained substantial positions.

The SEC under President Bush carried out an incomplete investigation of the younger Bush's pre-Gulf War trade in 1991 after key presidential advisor George Jr. claimed that he filed a report, but that the SEC had most likely lost it. (No one has really asked whether the governor bothered to use registered mail to verify receipt of the documents.)

According to an Oct. 28, 1991, Time Magazine report, SEC spokesman John Heine said, "as far as I know, nobody ever found the 'lost' filing." And, strangely, Bush refused comment to Time regarding either the incident or his involvement with Harken.

The governor also did not reveal the blatant conflicts of interest involved, since the chairman of the SEC was Richard Breedon, former lawyer with Houston firm Baker and Botts and deputy counsel to Bush's father when he was vice president. Breedon received his SEC appointment after the elder Bush became president.

The SEC investigation of George W. was led by general counsel James R. Doty who, according to a UPI report, mysteriously neglected to interview any of the Harken directors. Moreover, Doty had previously served as George W. Bush's personal lawyer in the deal involving his Texas Rangers purchase. So, in the end, the younger Bush was cleared of insider trade wrongdoing by his personal attorney and by his father's vice-presidential counsel, a virtual impossibility for the average U.S. citizen.

That the mainstream media has refused to question Bush regarding what voters might consider a mockery of the criminal investigative process is a story in and of itself -- especially considering it concerns how a possible future president might enforce U.S. laws if he had also broken those statutes.

Consider that Americans who currently hold stocks or mutual funds would never -- by virtually no stretch of the imagination -- be able to obtain access to corporate insider information that could turn a million dollars profit. But reporters following Bush have not broached the subject during the campaign.

Most reports involving Bush's insider oil stock trades refer only to his highly controversial June 22, 1990, million dollar trade made six weeks before Gulf War hostilities broke out in Kuwait -- a trade which was reported eight months later. However, SEC documents between 1986 and 1993 show that Bush acquired 212,152 shares of Harken stock on Nov. 1, 1986, at the time he merged his Spectrum 7 company with Harken. But the future governor did not report the transaction until April 7, 1987 -- more than five months later.

When Bush filed late on April 7,1987, SEC filings show he had purchased another 80,000 shares on March 10, 1987. But strangely, two weeks later, an April 22 filing noted that the 80,000-share purchase was backdated to Dec. 10, 1986. When questioned by the media, Bush's attorney said it was the same 80,000 shares but he could not explain the discrepancy regarding the purchase dates or why Bush even reported the trade two times.

Another SEC filing, this from June 6, 1989, showed that Bush purchased another 25,000 shares of Harken but again waited more than four months to report the transaction.

The Houston Post, recognizing Bush's late SEC filings, noted that he "took eight months to notify the government of his sale of stock in a company on whose board he served" and "also missed the filing deadline for reporting other insider trades involving Harken Energy."

Documents obtained by the Post showed "additional instances in which Bush ... ran afoul of the SEC rule requiring notification." And George W. described himself as a "small, insignificant" Harken stockholder; but news reports examining SEC documents identified Bush as the third largest non-institutional investor.

In October 1991, Time Magazine questioned why the tiny country of Bahrain would stake so much of its financial future on Harken Energy, which it labeled an "obscure, money-losing company with no refineries and no experience in offshore oil exploration." But the magazine also noted that oil-insiders speculated that Bahrain's rulers saw the arrangement as a way to gain influence with the Bush administration.

Mysteriously, primary reporters have also ignored what could point to a nexus regarding foreign policy and personal financial interests. Interestingly, the Village Voice in January 1991 reported that in 1990 the Bush administration signed an agreement with Bahrain that chose the small country as the permanent principal allied base in the Middle East, although it was some 200 miles away from the hostilities in Iraq and Kuwait.

The military-base deal came after Harken announced its Jan. 30, 1990, joint oil-drilling venture with Bahrain. So President Bush's key contributors and his son George W. were carrying on personal financial business with Bahrain at the same time decisions were being made regarding the possibility of a war in the Gulf.

And neither the president nor his adviser, George Jr., let the press know that Bahrain had been permitted to infuse $7.7 million in foreign cash to hire U.S. public relations firm Hill & Knowlton to lobby Congress and the American people; a stunning variety of opinion-forming devices and techniques were employed to inflame U.S. patriotic passions of war while personal financial interests were on the line.

On May 21, 1990, less than ten weeks before Saddam Hussein's troops invaded Kuwait to initiate the Middle East hostilities -- but just four weeks before Bush unloaded the bulk of his Harken stock -- a renegotiated corporate loan agreement featured an unusually high interest rate of 12 percent, less credit for acquisitions, a $750,000 debt fee and even requirements by some of Harken's major stockholders to guarantee $22.5 million in debt, according to Associated Press.

Did Bush know of impending losses when he sold his stock on June 22, 1990, since Federal securities law prohibits corporate insiders from trading "on the basis of" material information that is not publicly known? Bush denied the charge in spite of his positions on the Harken Energy board of directors, audit committee and stock restructuring panel. He added that he had no idea Harken was going to get an audit report full of red ink until weeks after he had made his stock sale.

But U.S. News & World Report said, "there is substantial evidence to suggest that Bush knew Harken was in dire straits. ... Harken's SEC filings make it clear that the company's directors knew radical steps were necessary." The magazine added that "one informed source says Harken's creditors had threatened to foreclose on the company if substantial debt payments were not made." Shortly thereafter, Bush cashed out of Harken.

The April 4, 1991,Wall Street Journal added that "Mr. Bush didn't return their phone calls seeking comment, and the Bush White House said 'it doesn't comment on the activities of the president's children.'"

According to the Washington Post, Harken's audit committee, of which Bush was a member, met with Mikel Faulkner and

auditors from Arthur Andersen & Co.

, Harken's accountants, on June 11, 1990 -- just 11 days before Bush sold his stock on June 22. When asked for a copy of the June 11 minutes or permission to inspect them, the company declined to make the records available.

Bush's insider transaction yielding a profit of $848,560 -- some 250 percent profit on the stock's original value -- came a week prior to the end of a quarter in which the company lost $23 million. The quarterly report was released just a few days after Iraq invaded Kuwait and the Harken stock plummeted. However, as reported in a 1992 Mother Jones report, Bush attended a meeting regarding a revised stock offering in May 1990 working with Smith Barney's financial consultants concerning corporate restructuring.

In an Oct. 11, 1994, UPI report, Bush also claimed that he was not aware of Harken's poor financial condition when he sold the stock, but UPI said that the Dallas Morning News reported on the same day that a corporate official who served with Bush on the audit committee at Harken felt otherwise; Stuart Watson told the Dallas paper that he and Bush were constantly made aware of the company's finances. "You bet we were," said Watson. "We were both trying to keep that company on the straight and narrow."

On March 16, 1992, U.S. News echoed Watson's statement, reporting that "according to documents on file with the Securities and Exchange Commission, his position on the Harken (restructuring) committee gave Bush detailed knowledge of the company's deteriorating financial condition."

Chuck McDonald, spokesman for Texas Gov. Ann Richards' campaign, said that SEC chief counsel in the Bush investigation -- James Doty, George W.'s former attorney -- never talked to George W., Watson or other Harken officials in its 1991 probe. He said, "Was this a real investigation, or was it a whitewash of an insider stock sale by the son of the sitting president?" UPI, which reported McDonald's statement, went on to note that "while Bush claims the SEC investigation absolved him of illegal insider trading, he has refused to release the investigation files."

Harken founder, Phil Kendrick, noted that the company's "annual reports and press releases get me totally befuddled. There's been so much promotion, manipulation and inside deal making." And even Harken chief executive Mikel Faulkner, an accountant, offered advice for those trying to decipher the financial statements: "Good luck. They're a mess."

Press accounts note that Bush requested a letter from the SEC, issued in October 1993, The letter, signed by SEC Associate Director Bruce A. Hiler, said that "the investigation has been terminated as to the conduct of Mr. Bush and that, at this time, no enforcement is contemplated with respect to him." But the letter also stated that "it must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result."

On Oct. 18, 1993, the Bush administration SEC said it would not bring a case against George W. Bush.

Gov. Bush speaks about his outstanding business record on the campaign stump; however, in 1989, U.S. News & World Report said, "Harken Energy lost over $12 million against revenues of $1 billion." Harken President Mikel Faulkner said that in addition to Bush's position as a director at $2,000 per meeting, stock options worth $131,250, 5 percent loans and 40 percent discounts on stock purchases, he was also a consultant to Harken for "investor relations and equity placement" at a salary of $80,000 per year from 1986 until 1989, when his salary jumped to $120,000.

The board was equally generous to Bush in 1990 as "the company lost another $40 million and shareholder equity plunged to $3 million -- down from more than $70 million in 1988." Faulkner declined to say what services George W. has performed as a consultant.

In March 1992, U.S. News said that "Despite repeated requests for interviews, George W. declined to discuss Harken or the reason for his stock sale, saying through an assistant that he 'does not want to read about himself.'" But some might ask whether American voters have a right to know whether a possible president would strictly enforce federal statutes or appoint lenient attorneys with suspect ethical standards leading to fixed politically sensitive investigations.

Moreover, should Bush -- a director of the corporation -- be accountable when huge losses are reported over a period of time, especially as a presidential candidate purporting to have an outstanding entrepreneurial business record at every presidential campaign stop? The answers have real implications regarding presidential character, morality and personal ethics.

Author and commentator Kevin Phillips offered a perceptive look at the Texas governor in the February 2000 issue of Harpers magazine when he said, "We can fairly ask whether George W. Bush is anything more than another scion who has made a decent governor during a period of prosperity and easy growth, and whether the United States can afford nominees who are to presidential politics what legacies are to college fraternities."

The S.E.C. Says: "Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading."

Insider Trading and George W. Bush
A U S T I N, July 1-- The Securities and Exchange Commission defines insider trading as "Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments". Bush sold $848,560 worth of Harken Energy stock on June 22, 1990, just one week before the company posted spectacular losses and the stock plunged sharply. When the losses were reported to the public on August 20, 1990, the stock plummeted.

According to documents from a two year investigation by the SEC, Bush served on the board of directors of Harken Energy Corporation and his position on a special Harken committee gave him detailed knowledge of the company's deteriorating financial condition. The SEC received word of Bush's trade ten months late.

The SEC states, "Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the Commission has treated the detection and prosecution of insider trading violations as one of its enforcement priorities".

Bush supporters point out that the stock's value went back up, eventually, and if Bush had held the stock, it would have made him more money. But, knowing when to sell is the golden goose of stock trading and using inside information is insider trading. The SEC investigated but decided not to punish Bush. After all, his dad was President and all five SEC Commissioners are appointed by the President. Furthermore, the SEC's general counsel had actually represented George W. in the Texas Rangers negotiation. Any doubts?

The Color of Money

The president’s eldest son and his ties to a troubled Texas firm

US News and World Report
By Stephen J. Hedges
March 16, 1992

George W. Bush shares more than a name with his father. The president’s eldest son has followed closely in his father’s footsteps, trading Yale for Texas, working his way up from the dust and dry oil wells of West Texas to carve out his own piece of the Lone Start dream. Today he runs the Texas Rangers baseball team, sits on the boards of several companies and is rising start in the state’s Republican Party. As George Bush the president glides to victory in the Texas primary this week, George Bush the son will be a center stage with his father. Some say he the president’s most influential advisors. It was George W. Bush, after all, who was called upon to tell John Sununu that powerful Republicans wanted him to resign as the White House chief of staff. Sununu was gone soon afterward.

In one important respect, however, George W. Bush has less in common with his father than with his younger brother Neil, who sat on the board of Denver’s now infamous Silverado Savings & Loan. When the thrift failed in 1988, with $1 billion in losses, Neil Bush said he didn’t understand Silverado’s complex deals. George W. Bush has also benefited from some questionable but less well-known business associations. A U.S. News examination of one of his principal investments, in the Dallas-based Harken Energy Corp., found that:

Bush sold $828,560 worth of Harken stock just one week before the company stock posted unusually poor quarterly earnings and Harken stock plunged sharply. Shares lost more than 60% of their value over 6 months. When Bush sold his shares, he was a member of a company committee studying the effect of Harken’s restructuring, a move to appease anxious creditors. According to documents on file with the Securities and Exchange Commission, his position on the Harken committee gave Bush detailed knowledge of the company’s deteriorating financial condition. The SEC received word of Bush’s trade eight month’s late. Bush has said he filed the notice but that is was lost.

Despite Harken’s small size and poor performance in recent years, it continues to provide Bush and its other directors and executives with unusually generous pay and perquisites. In 1989, for instance, Harken suffered losses of more than $12 million against revenues of $1 billion. That same year Bush received $120,000 as a company consultant ans stock options worth $131,250; other Harken executives also drew six-figure salaries and five figure bonuses. The next year, Harken’s board was equally generous, even though the company lost $40 million and shareholder equity plunged to $3 million - down from more than $70 million in 1988.

Harken has been characterized by a pattern of financial deal making so burdened with debt and tangled stock swaps that its largest creditors threatened to shut the company down and oil-industry analysts have all but given up on tracking it. "It’s a lot of jiggery-pokery," says analyst Barry Sahgal. "I want to be an analyst, not a speculator."

Despite repeated requests for interviews, Bush declined to discuss Harken or the reason for his stock sale, saying through an assistant that he "does not wish to read about himself." Harken executives say the company’s practices are proper.

Harken Energy today is a very different company from the gutsy start-up outfits that President Bush and his father once ran. In 1983, Harken was purchased by a group of investors led by Alan Quasha, an aggressive young lawyer from New York. Quasha and his colleagues transformed Harken overnight, playing the oil game like high-stakes poker. They spent money, they made money - and most recently, they have lost money. The company’s annual reports now speak little of oil and gas production but volumes about share offerings and renegotiated debt.

George W. Bush arrived in the Texas oil fields in the mid-1970s. Within a few years, he had founded his own exploration company. His partner, Mike Conaway, says they "made some money and lost some money." But by 1983, the oil market was in trouble, and so was Bush Exploration. Relief came from two Cincinati investors who had their own small oil frim, Spectrum 7. William DeWitt was the son of the former owners of the Cincinnati Reds baseball team. Mercer Reynolds was his business partner. A DeWitt family relative and old oil hand, Paul Rea, ran Spectrum 7. Rea met Bush when he first arrived in Texas. The two became friends.

Enter Quahsa. The son of an affluent American lawyer in the Phillipines, Alan Quasha brought Harken some impressive financial backers. They included money manager George Soros, who would come to hold a 30.4 percent stake; Harvard Management Co., who would control another 30.4 percent share, and Abduliah Taha Bakhsh, a Saudi investor with 21.4 percent. Harken bought Spectrum out in 1986, trading stock for Spectrum assets. Bush received $600,000 in Harken shares, but his stake would actually be worth much more.

Harken is a small oil company, but it pays big league benefits. Estimates based on company documents show that Quasha and Harken President Mikel Faulkner each received compensation worth more than $400,000 a year between 1986 and 1990, including stock options. In addition, Faulkner has borrowed $1.1 million from Harken, using stock as collateral. Quasha has borrowed $631,270 from the company, and Harken has paid his law firm $1.3 million in fees since 1988. At least three other Harken executives had six-figure compensation when Harken posted its $40 million loss. Faulkner says the compensation is based on "incentives and performance." He does not consider Harken’s pay excessive.

In addition to his $600,000 stake in Harken, George W. Bush has profited handsomely. As a consultant to the company for "investor relations and equity placement," Bush was paid $80,000 a year until 1989, when his salary jumped to $120,000. With the company suffering, Bush received only $50,000 last year and $42,000 this year. He also receives $2,000 for each board committee meeting and in 1989 was granted, with other directors, options for 25,000 shares of Harken stock. Faulkner declines to say what services Bush has performed as a consultant.

Sweet Deals

As is the case with many executive compensation packages, the key to Harken’s is the stock options. But very few companies offer terms as sweet. For starters, Harken offers select executives, including Bush, eight year loans at 5% interest. The loans may be used by the company brass to exercise options to purchase Harken shares. Bush has borrowed $180,375. At Harken, loans are sometimes forgiven. The board forgave $72,000 in non-interest-bearing loans to employees in 1989, and $269,000 in 1990.

The deal gets sweater still. Harken allows select executives and directors like Bush, who exercise their options, to purchase stock at a 40 percent discount; most U.S. companies allow executives to purchase their companies stock at current market value. Harken says it is because the stock is not registered and therefore cannot be traded. But in March 1990, Harken registered 1.8 million option shares. "Unusual," says Paula Todd of Towers Perrin, a compensation consulting firm, when asked about Harken compensation. "This definitely is not a cookie-cutter plan." Graef Crystal, a vocal critic of excessive executive pay, has harsher words: "This is a tremendous package for a little tiny company. Their stock has been growing at 4.9% per year when the market is growing at 15 percent. That is rotten performance."

Given Harken’s troubles, it might appear that owning its stock isn’t much of a bargain. However, Harken’s liberal option program makes it profitable. On June 22, 1990, for instance, Bush sold $848,560 worth of stock, which was trading at $4 a share. Even with a $180,375 loan to pay back, Bush realized $668,185 on the sale. He still owns 105,012 Harken shares.

Harken has launched several deals involving its largest shareholders. The most complex was a major reorganization through the sale of two subsidiaries, E-Z Serve, a chain of gas stations, and Tejas Power, a natural-gas supplier.

First, companies tied to Alan Quasha and Harvard Management lent Harken $46 million. Harken used $15 million of that money to retire E-Z Serve debt. It spent $28 million more on capital improvements at E-Z Serve and Tejas stock. Harken kept the remaining $3 million. The company then gave its shareholders rights to buy E-Z Serve and Tejas stock. An agreement stipulated that any stock not purchased by the shareholders could be bought at a discount of at least 3 percent by two companies affiliated with Quasha and Harvard. But Quasha and Harvard controlled 55.6 percent of Harken stock. By not exercising the rights to buy it immediately, they effectively gave themselves the built-in discount. Harvard Management declines to discuss the deal.

There is substantial evidence to suggest that Bush knew Harken was in dire straits in the weeks before he sold the $848,560 of Harken stock. For one, Harken’s board has appointed Bush and another director, E. Stuart Watson, as a "fairness committee" to determine whether the restructuring would adversely affect ordinary shareholders. The committee, which first met in May 1990, worked closely with financial advisors form Smith Barney, Harris Upham & Co., which had concluded by that time that only drastic action could save Harken. Even before then, however, Harken’s SEC filings make it clear that the company’s directors knew radical steps were necessary. One informed source says Harken’s creditors had threatened to foreclose on the company if substantial debt payments were not made. Harken’s treasurer, Dale Brooks strenuously denies any suggestion that creditors were poised to seize the company.

Today, Harken is letting it all ride on one all-or-nothing bet. Two years ago, it won the rights to look for oil and gas off the coast of Bahrain, a coup that shocked the industry. The first of the wells came up dry last month, giving analysts new reason to wonder if Harken itself isn’t a dry hole.

For George W. Bush, however, Harken remains a good deal. He is still a director and consultant and has Harken shares worth about $400,000. A Bahrain gusher will mean all the more profit. If luck isn’t with him, he has still done well with Harken.

It may be, though, that Harken has benefited most from Bush’s board service. That’s the view of some Texas oil people and analysts, including founder Phil Kendrick, the oil man who founded Harken and sold out to Quasha a decade ago. "It’s obvious why they kept George Bush." Kendrick says, "Just the fact that he’s there gives them credibility. He’s worth $120,000 a year to them just for that."

U.S. News and World Report

The SEC is powerless to do anything other than a slap on the wrist.(my apologies if this is beginning to sound redundant)

SEC investigations are handed over to the U.S. Attorney's office for prosecution or to be quashed to protect the politically well connected.

As you remember Clinton replaced all the U.S. Attorneys with his own.

The field of securities fraud has been wide open and expanding since early 90's there is little or no downside to securities fraud in the U.S. for the politically connected.

Simple equation,the greater the political protection, the greater the securities fraud scheme, this was more than obvious with Enron where prior to filing bankruptcy they made $100K donations to both the Democrats & Republicans.

This has been my personal experience with the SEC, individuals I have personally investigated for securities fraud since early 1990's ever year have continued to escalate & refine their securities fraud scheme.

1992 thru 1994 estimated $1.35 million student loan securities fraud scheme (may have been a $2.1 million scheme)

1993 same group illegally seize control of corporation, "cook corporate documents" and fraudulently alter stock certificates to convert ownership coporation to their ownership & absolute control.

SEC 1994 arrests,convicts,and incarcerates one of the above individuals (who had no political protection)for a year and half on a mear $80,ooo.oo securities fraud scheme, unrelated to the above mentioned schemes.

1996 the same syndicate issues a fraudulent stock certificate on a corporation that doesn't exist estimated value $3.65 million (obviously zero value)

1997 this syndicate would receive approx. $9 million from a $325 million IPO for assets obtained thru questionable means, and bundled into this $325 million IPO.

1999 Federal, state & local law enforcement were advised as to what was going on in this $325 million IPO. A law enforcement agencies refused to investigate (because of political corruption) and chose to ridicule the messenger, publically and in internal documents at the variuous law enforcement agencies.

2001 officers of corporation making $325 million IPO are charged in class action law suit with alleged fraud, breach of fiduciary responsibility,a scheme very similar to Enron.

Never expect the "Rule of Law" to be enforced in the U.S. by either the Republicans or Democrats if it involves public and/or political corruption.

*** In 1998 as part of a federal racketeering case in Florida another corporate entity emerged called Donald Stone Investments Inc.

My original company I had founded to commecialize a patent I had invented had been named Donald Stone Industries Inc.

What I suspect is that this entity, Donald Stone Investments Inc. was a sham entity that was going to be used to raise money thru a securities offering, by trading on my name.

Patrick, please see Donald's post #93. He's been there, done that, regarding SEC investigations, especially the politically well connected. The rule of law is DEAD. I measure the rule of law when it is pointed at the well connected elite involving corruption, not the average guy who can't buy the protection and the well-heeled lawyers and bureaucrats within the justice/investigative agencies. Father like son. Help is on the way my rear. The fall is on the way.

The United States of Enron
"Harvey Pitt, the Bush administration's chief at the S.E.C., was actually an Arthur Andersen lawyer. After this week's revelation that top Andersen executives knew of funny business at Enron as early as February 2001, you have to wonder whether Mr. Pitt should be a witness in an S.E.C. investigation rather than its overlord. Was he representing Andersen at the time it first detected Enron's misbehavior? Was he in the loop? The stonewalling may have already begun, since neither the S.E.C. nor Andersen, when queried late this week, could say just when Mr. Pitt was in the accounting firm's employ.

Whom can the country turn to for an honest investigation? Democrats and Republicans alike are so beholden to accounting-industry money that they scuttled an attempt by Arthur Levitt, the former S.E.C. head, to regulate conflicts of interest in companies like Andersen two years ago."

Hi, I'm Harvey L. Pitt, George Bush's S.E.C. chairman, and I'm a recovering Andersen lawyer.

Reflecting the legal sensitivity of the case, Securities and Exchange Commission Chairman Harvey Pitt has decided not to go before the House of Representatives Financial Services Committee to talk about Enron. Instead, Pitt will send SEC Chief Accountant Robert Herdman to the panel's hearing, which will mark the first public airing of the Enron affair. The SEC has mounted a massive investigation of Enron. Lawyers said Pitt likely declined to attend the hearing to shield the investigation's integrity.

Calling Off The Dogs

Recent signals from the SEC raise the question: is "Harvey Pitt" taking a softer line on financial fraud?

By Alix Nyberg
December 01, 2001

As accounting frauds go, the problems at Seaboard Corp.'s Chestnut Hill Farms division amounted to garden-variety book-cooking.

Division controller Gisela de Leon- Meredith had been caught overstating deferred-farming-cost assets and understating farming expenses, inflating revenues by a total of $7 million between 1995 and the first quarter of 2000. When confronted by the internal audit staff, Meredith fessed up, and parent Seaboard, a Shawnee Mission, Kansas-based agribusiness, announced that it would restate its earnings last August. Even investors, who held Seaboard's stock price steady, were apparently nonchalant about the fraud.

The case became extraordinary, however, when the Securities and Exchange Commission thrust it into the spotlight this past October--not as a warning to other companies, but as an example of good behavior on the part of Seaboard, which willingly handed over all of the evidence it had gathered from its internal investigation.

"When businesses seek out, self-report, and rectify illegal conduct, and otherwise cooperate with commission staff, large expenditures of government and shareholder resources can be avoided," read the SEC's official statement, or so-called 21(a) report, signed by recently installed chairman Harvey Pitt and commissioners Laura Unger and Isaac Hunt. In Seaboard's case, that meant a cease-and-desist order for its Chestnut Hill Farms division was the end of the matter. No charges or penalties were levied against the company or its senior management; Meredith walked away without even a fine. Extrapolating from the case, the report set forth "some of the criteria [the SEC] will consider in determining whether, and how much, to credit self-policing, self- reporting, remediation and cooperation" in reducing the severity of enforcement actions.

Meredith walked away without even a fine. Extrapolating from the case, the report set forth "some of the criteria [the SEC] will consider in determining whether, and how much, to credit self-policing, self- reporting, remediation, and cooperation" in reducing the severity of enforcement actions.

What's this? Is Harvey Pitt calling off the guard dogs that his predecessor, Arthur Levitt, so carefully bred? Just last December, the associate director of the SEC's enforcement division, Paul Berger, was warning financial executives to "fasten their seat belts" as the agency ramped up its new Financial Fraud Task Force, a 14-member team charged with special accounting investigations. And while Berger outlined the very same tenets for cooperation that appear in the 21(a) report on Seaboard, the tone was more threatening than promising. Subpoenas for documents and testimony would be sent out faster than ever, with response dates that "are reasonable but less generous than you would like," he noted.

By contrast, the October report signals a friendlier direction for the agency. Moreover, it was issued one day after Pitt's genial speech to the American Institute of Certified Public Accountants, in which he invited companies to help "raise and resolve difficult issues with us, without fear that we will play 'gotcha' with you when you do." You can't blame financial executives for breathing a sigh of relief.

"We're encouraged by this," says CFO Rick Dutkiewicz, who took the reins at wireless-equipment maker Vari-L Co. after the SEC levied accounting fraud charges against the company's former CFO and controller. "I'm delighted," says one securities attorney who requested anonymity. "Before, it was tempting to adopt the bunker mentality when the SEC started investigating, because everyone was coming after you with the suspicion that you were a wrongdoer, and they were damn well going to prove it. Now they're saying, if you cooperate, you're going to be served in the process."

The factors of cooperation listed in the Seaboard case are hardly new, say attorneys, but gain new power in being cataloged and blessed by Pitt. "This statement gives companies substantially more ammunition in dealing with the division of enforcement than they may have otherwise had," says Jerry Isenberg, an SEC enforcement division official until November 2000 and now a partner at law firm LeClair Ryan, in Washington, D.C. He and others read it to mean that cooperation will more likely stem SEC action up front, rather than simply help mitigate charges.
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Masters Head Wary of Media Stephens relieved to survive limelight PAT SULLIVAN The San Francisco Chronicle SPORTS; Pg. D3; PAT SULLIVAN ON GOLF APRIL 25, 1992, SATURDAY, FINAL EDITION

T WO WEEKS ago, in the Masters, a nervous man sat in front of about 100 members of the media. His name was Jackson Stephens, new chairman of Augusta National and the tournament.

After Stephens' news conference, all about golf, he openly expressed relief at surviving his minutes in front of the media. At the time, his uneasiness seemed unwarranted. But now it's clear that he had reason to be wary of questioning.

...the Wall Street Journal has reported that Stephens' Arkansas-based investment bank played a critical role in fund raising for Harken Energy, a small Texas company whose board of directors includes George W. Bush...

According to the PBS show ''Frontline,'' which aired Tuesday night, Stephens has been linked to past deals involving the Bank of Credit and Commerce International, a rogue bank on whose behalf a guilty plea was entered in January on a federal racketeering charge.

And the Wall Street Journal has reported that Stephens' Arkansas-based investment bank played a critical role in fund raising for Harken Energy, a small Texas company whose board of directors includes George W. Bush, the president's son, and which won a potential billion-dollar contract to drill for oil in Bahrain....

It's Ok To Lie Like Crazy - Just Ask The Judge
"Washington scandal buffs will recall that former Deputy Secretary of Defense W. Paul Thayer was sentenced to four years in prison for obstruction of justice committed by lying to investigators for the Securities and Exchange Commission during an insider-trading probe."

WHITE HOUSE E-MAIL
"November 22-25, 1986 - John Poindexter and Oliver North electronically shred more than 5000 e-mail notes in the memory banks of their computer systems, as the Iran-contra scandal breaks.

Remarks on Signing the Executive Order Establishing the President's Commission on Federal Ethics Law Reform
January 25, 1989

Well, I want to -- especially at the opening of these brief remarks -- thank Judge Wilkey and Judge Bell, former Attorney General, for joining me today and for agreeing to take on this critical task.

Our National Government depends for its success on the excellence and the integrity of those who serve the public. And in choosing officials from my administration, I have sought out individuals of unquestioned competence and the highest integrity. But along with these high standards of selection, we need an unambiguous code -- a code of conduct -- to ensure that those who serve the public trust avoid any actual or apparent conflict between their personal and public interests.

As we've seen in the recent debates about ethics legislation, current Federal ethics rules do not adequately serve to eliminate abuse of public office for private gain. And the current framework is fragmented; it's confusing; and most important, does not incorporate sufficient safeguards to protect the public interest in honest and fair government. It's the difficulty of these issues that leads me to create the President's Commission on Federal Ethics Law Reform.

Judge Wilkey, thank you, sir, for taking on the arduous responsibilities of Chairman. And Judge Bell, thank you for agreeing to be the Vice Chairman. You both come to this task with extensive experience in public service and a deep interest and understanding of these interests in, and understanding of, ethics matters. And I'm asking you and other members of the Commission to take a fresh look at the ethical standards that apply to all three branches of the Federal Government and to give me your recommendations by March 9th, if you can. I know this does not give you a lot of time, but I'm eager to move forward with reform, and I'm confident that you can get this job done.

Before I issue this Executive order, let me leave you with four key principles to guide you as you take up your efforts. One, ethical standards for public servants must be exacting enough to ensure that the officials act with the utmost integrity and live up to the public's confidence in them. Two, standards must be fair. They must be objective and consistent with common sense. Three, the standards must be equitable all across the three branches of the Federal Government. And the fourth one -- we cannot afford to have unreasonably restrictive requirements that discourage able citizens from entering public service.

The task of reforming and revitalizing Federal ethical standards is really of the highest importance to me and to the American people. And I'll await your recommendations with great interest.

And now I'll sign this Executive order.

President George H.W. Bush

Note: The President spoke at 2:36 p.m. in the Roosevelt Room at the White House. The Executive order is listed in Appendix E at the end of this volume.
Source - Bush Library

Bush Pardons 6 In Iran-Contra Affair, Averting A Weinberger Trial; Prosecutor Assails 'Cover-Up

February 3, 1989

Remarks on the Savings and Loan Crisis
February 3, 1989

The President. While we have the quick exposure here, let me just thank you all, Mr. Speaker, Leader Mitchell, Dole, Bob Michel, for coming down here. This is a listening session. We've got a big problem in this savings and loan. There are no easy answers and no worrying about the blame -- plenty to go around. I want to see the problem solved. We've had a lot of consultation up on the Hill, and good consultation. And Treasury will come, I think, to meet me tomorrow to present their views, but they're not being presented here with this stacked deck. We need ideas, and if we're overlooking something, we want to know what it is.

But I think we all agree that it's time to get on with the problem. And so, what I wanted to do this morning is simply ask your advice and listen. And whatever we come up with will not be popular. And I expect then whatever you come up with will not be popular, but we've got to get on and get the problem solved. And I appreciate your coming down here early to discuss this today, and then I'll be meeting, as I say, some more today. And then tomorrow I think we have more final recommendations. I'll go out with it publicly probably early next week -- I think that's the plan -- and see where we go from there.

But, Speaker, if you can talk, you're entitled a rebuttal. [Laughter]

Speaker Wright. I'm not sure, Mr. President, that any rebuttal is necessary. We're here to listen, and we're here to join with you in trying to find some creative solution to a very serious problem.

Majority Leader Mitchell. I think the Speaker has expressed it for all of us, Mr. President. We want to work with you. This is a serious problem for the country; it's not just for us. We've got to do the best we can to come up with the fairest, most efficient way to solve it.

The President. Before we break up here to start on our consultations, let me say -- and I think I speak for everybody here -- that the safety of those deposits is guaranteed, will continue to be guaranteed, and that there should be no feeling around the country that some solution will do anything to diminish the credit of the United States being behind the deposits in the FSLIC [Federal Savings and Loan Insurance Corporation], FDIC [Federal Deposit Insurance Corporation], whatever it is. And I thought I'd just take this occasion to make that statement. Thank you all very much, and now let's all go to work.

Note: The President spoke at 8:04 a.m. in the Cabinet Room at the White House, prior to a meeting with congressional leaders. In his opening remarks, the President referred to Jim Wright, Speaker of the House of Representatives; George J. Mitchell and Robert Dole, majority and minority leaders of the Senate, respectively; and Robert H. Michel, ranking minority member of the House of Representatives.

President George H.W. Bush
Source: Bush Library

STATE FINES BUSH'S BROTHER IN STOCK CASE

JONATHAN BUSH

Author: By Frank Phillips, GLOBE STAFF
Date: 07/26/1991 Page: 1
Section: METRO

Massachusetts securities regulators have fined the stockbrokerage firm owned by President Bush's brother Jonathan $30,000 and barred it from trading with the general public for one year because the company and Bush violated state registration laws.

As part of a consent order worked out with Secretary of State Michael J. Connolly's securities division, the New York firm of J. Bush & Co., whose only principal is Jonathan J. Bush, also agreed that it would offer to reimburse its clients in Massachusetts for stocks it had sold them since January 1988. . . .

Connolly's securities chief, Neal Sullivan, said yesterday that Bush's problems began in February when Bush informed his agency that he had never registered as a broker-dealer in Massachusetts. But Sullivan said Bush compounded his legal problem by taking a ''cavalier" attitude toward the violation of the Uniform Securities Act when he continued to carry out transactions even as state regulators were negotiating a consent decree with him.

"That created great concern for us. We were dismayed," Sullivan said. ''Anyone who has been notified that he is violating state law and continues to do so certainly exemplifies a cavalier attitude toward the registration laws. Sullivan also said that Bush, an experienced stockbroker, could not explain his failure to register in the state as a technical or minor issue. “Any time you have 880 transactions over several years, I wouldn’t characterize that as minor,” he said.1
[End of partial transcript]
For complete Wall Street Journal article click: http://interactive.wsj.com/edition/past/summaries/menu.html - select publications library, advanced search, specify date range 07/26/1991 to 07/26/1991, check the "all publications" check box, and enter search keywords: Jonathan and Bush and fine. Select the article title above and enter payment to obtain the full article.

EX-US TREASURER SENTENCED TO PRISON IN TAX EVASION CASE

Associated Press
September 14, 1994
Harry F. Rosenthal

WASHINGTON -- The former US treasurer, whose signature appears on most of the nation's currency, was sentenced yesterday to four months in prison for evading taxes and obstructing justice. Catalina Vasquez Villalpando had pleaded guilty earlier in the year to three felony charges, which also included conspiring to hide outside income while she served in the Bush administration.

Her signature is on all US paper money printed between December 1989 and April 1994.
[partial transcript]
Boston Globe on-line has full article.

Risky Business - Anne Williamson
"The story of how the citizens of what had been the freest nation on earth, founded in liberty and justice for all, were to become under their own leaders' direction the world's unwitting bottomless purse can be summarized in two words: Risk avoidance.

The Federal Reserve System was implemented in order to fob off the restraints of honest banking by socializing the risks of reckless banking amongst the entire American population while allowing the profits to be retained by and then shared out amongst the political and economic elite. Similarly, the IMF was founded to fob off the risks inherent in speculative foreign investments and global financial markets on the hard-working populations of prosperous countries, whose practitioners pocket the gains, sharing only with their political patrons."

CRIME OF THE CENTURY: THE 1990 BUDGET DEAL AFTER TWO YEARS
By far the biggest charade of all was the budgetary treatment of the savings-and-loan bailout. The key to that accounting gimmick was the timing of the government's purchase and sale of insolvent thrift institutions."

CRISIS? WHAT CRISIS? GEORGE BUSH'S NEVER-ENDING DOMESTIC BUDGET BUILD-UP - The Father

BUSH SPENDING BILL LARGEST EVER - The Son

Taxpayers May Be At Risk For Housing Bailout That Would Dwarf 1980's Savings and Loan Bailout

Long-Term Capital Management (LTCM) - Fed Bailout Requires Full Investigation - $1.25 TRILLION

THE FED'S HEDGE-FUND BAILOUT MADE THINGS WORSE

The BCCI Affair

Bailout Sequel: Rubin Tries for a Second Oscar

President George Bush in 1989 authorized spending $166 billion over 10 years to close or merge insolvent savings and loans that failed because of bad real estate investments, mismanagement and fraud. In all, the savings and loan bailout is expected to cost $300 billion over 30 years. The Wall Street Journal stated the losses could cost the American taxpayers over 1 trillion dollars.

SIGNS POINT TO MOB INVOLVEMENT IN SAVINGS-AND-LOAN MESS

Neil Bush
Neil Bush - Silverado Savings and Loan
"A failed Colorado savings and loan whose board of directors included a son of President Bush was part of an intricate web of federally insured financial institutions that had business links to organized crime figures and CIA operatives, The Houston Post has learned.

Four of the largest borrowers at Silverado Savings and Loan, a Denver thrift that collapsed in December 1988 at an estimated cost to the federal government of $1 billion, had connections to convicted Louisiana mob associate Herman K. Beebe Sr., or to Robert L. Corson, a Houston developer and alleged CIA operative.

Three of the four also had independent business relationships with Neil Bush, who was a member of the Silverado board from 1985 until he resigned in August 1988, a week after his father won the Republican presidential nomination.

The U.S. Office of Thrift Supervision in January issued orders barring five former Silverado officials from any future association with federally insured financial institutions.

Neil Bush was questioned by the OTS and was asked to sign a consent order by which he would agree to avoid conflicts of interest in any future relationships he might have with federally insured financial institutions.

Bush declined to sign the order, saying he had done nothing wrong.

Several sources close to Silverado and the federal investigation into its demise say Bush, because of his family connections, was used by his more sophisticated business associates to protect them from prosecution.

Other sources, however, said Bush fully understood what he was doing when he became involved in business deals with Silverado borrowers.

Reached at his Denver office Friday, Bush declined to answer questions. "I've talked about all that I want to talk about right now," he said."

Hear No Evil, See No Evil, Speak No Evil
"There have been some modest attempts to track this money, most notably imposition of the requirement for US banks to report on cash withdrawals and deposits in excess of $10,000. In the second half of the 1980s alone, numerous banks and financial institutions in the United States were charged with illegal financial operations - for example, drug-money-laundering - and still more remain under investigation. One bank was charged with 17,000 violations of the federal cash transactions law. (47) Yet few real indictments or serious fines have been assessed; nor has much publicity been focused on drug-money-laundering or on investments of laundered money. Yet what is happening has to be obvious. No $500 billion per year business can exist without the active and knowledgeable assistance of many banks and financial institutions.'

Ramon Milian Rodriguez [see page 28], a Certified Public Accountant [CPA] who handled money-laundering and investments for the Medellin Cartel, was arrested in May 1983, while attempting to leave the United States with $5.3 million in cash. In February 1988 he described his activities to Senators John Kerry (D-MA) and Alfonse D'Amato (R-NY). He explained how, with the assistance of Panama's National Defence Forces, he routed enormous amounts of cash through all the banks in Panama and how he was courted by the US banks to handle the Cartel's investments. 'In every instance', he testified, 'the banks knew who they were dealing with .... They were dealing with Milian Rodriguez, who represented money from South America, and their corresponding banks in Panama knew where the money came from because we required certain things from them .... We were breaking the laws in a very big manner and you always have to have plausible deniability.

'And the New York banks are no fools. (49) The banks implicated by Rodriguez read like a 'who's who' in US finance: Citibank, Citicorp, Bank of America and First National Bank of Boston. (50) Banks identified in 1983 in an ABC News 'Close up' on drugs and money-laundering, included Citibank, Marine Midland, Chase Manhattan, Irving Trust, the foreign currency exchange house of Deak-Perera [since defunct following a drug-related murder and scandal] and 'most of the 250 banks and branches in Miami. (51)

'Focusing on Florida, James Ring Adams has written that corruption in the banking industry is now endemic. 'The narcotics traffic flourishes not only because of demand, but because of tacit acceptance by elements of the political structure... money-laundering has become an entrenched feature of the state's economy'. (52) Adams describes how banks have been organised specifically for money-laundering. Evidently the Florida banking authorities could not care less.,
[end of partial transcript]

Media Censor CIA Ties With Medellin Drug Cartel

U.S. SENATOR JOHN KERRY’S COMMITTEE REPORT ON COCAINE TRAFFICKING BY THE NICARAGUAN CONTRAS

from here:
"A startling indication of Bush's role in these developments was the testimony given to a U.S. Senate hearing in 1987, where Medellín Cartel money-launderer Ramón Milián Rodríguez revealed that he had given $10 million in cocaine profits to Félix Rodríguez, a long-term CIA agent who ran the drugs-for-guns exchange for George Bush. Milián told investigative journalist Martha Honey that Rodríguez had offered that, "in exchange for money for the Contra cause, he would use his influence in high places to get the [cocaine] cartel U.S. `good will.'. . . Frankly, one of the selling points was that he could talk directly to Bush. . . . The issue of good will wasn't something that was going to go through 27 bureaucratic hands. It was something that was directly between him and Bush."

Milián met with Rodríguez on Jan. 18, 1985. Four days later, Rodríguez met with Vice President Bush in the Executive Office Building.

The promised "good will" was not long in coming. Indicative is the role played by a former senior official of the Reagan-Bush Department of Justice, Michael Abbell. In November 1984, Medellín Cartel boss Jorge Ochoa and Cali Cartel boss Gilberto Rodríguez Orejuela were sitting in a Madrid jail on drug charges, facing extradition--and probable life sentences--in the United States. Abbell, who had been the acting director and deputy director of the International Affairs section of the DOJ's Criminal Division from 1979 through 1984, abruptly quit that post, and traveled to Spain to testify against the extradition of Ochoa and Rodríguez to the United States, claiming that his old employer, the U.S. Department of Justice, had filed faulty papers against his new clients, the drug lords. Thanks to Abbell, Ochoa and Rodríguez were sent to Colombia, where they were eventually set free."
[end of partial transcript]

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