Posted on 07/03/2002 3:54:32 PM PDT by Dog Gone
WASHINGTON (AP) -- As a Texas oilman, President Bush engaged in some of the same kinds of business practices he's now promising to clean up in response to a wave of corporate scandals.
Bush was a board member of Harken Energy Corp. in 1989 when the company engaged in a transaction that later prompted an inquiry by the Securities and Exchange Commission. The SEC forced the company to amend its books to reflect millions of dollars in losses that had been masked by the sale of a subsidiary to a group of insiders. And Bush, who was on the company's audit committee, was the subject of a separate insider stock trade investigation by the SEC.
More than a decade later, the SEC is investigating insider deals and questionable bookkeeping at Enron, WorldCom and other companies, and Bush is promising to crack down on corporate wrongdoers.
Questions about Bush's past business practices prompted the White House to acknowledge Wednesday that he had failed to promptly disclose the 1989 sale of his Harken stock as required by federal law. The notice of the sale was filed with the SEC 34 weeks after it took place.
A spokesman blamed it on a clerical mistake by company lawyers. Bush has said previously that he filed the disclosure form and government regulators lost it.
Bush's stock sale was the subject of an SEC insider trading investigation. The president sold Harken stock for $848,000 two months before the company reported millions of dollars in losses. The stock price plunged from $4 when Bush sold it in June 1990 to a dollar a share by year-end.
Bush had gotten the stock when Harken bought his failing oil company in the mid-1980s. The SEC took no action in the insider trading probe of Bush.
Democrats have made Bush's dealings at Harken a political issue over the years, and it resurfaced in recent days because of Bush's promises to deal harshly with corporate wrongdoers in the wake of the latest corporate scandal, at WorldCom.
``It's time this CEO, President Bush, took responsibility for his actions as a private businessman and as president of the United States,'' Democratic National Committee chairman Terry McAuliffe said Wednesday. He said the Bush administration has ``given the green light to unscrupulous CEOs by helping to foster a business environment that says 'if it feels good, do it.'''
WorldCom, the nation's second-largest provider of long-distance phone service, has said it inflated its earnings by wrongly listing on its books $3.8 billion of expenses in 2001 and $797 million for the first quarter of 2002.
The White House dismissed comparisons between Bush's dealings at Harken and the current corporate scandals.
``To compare a $12 million sale of a subsidiary company by Harken to a deliberate attempt to hide $3.8 billion in losses is ridiculous,'' said White House Communications Director Dan Bartlett. ``The proof is in the results. Harken fully complied with the SEC and restated its losses and by 1991 the value of their stock doubled from its price a year before.'' On Wednesday, Harken stock was selling for 45 cents a share.
In the 1989 transaction, Harken financed the sale of a subsidiary to a partnership of its own executives. The company then counted the sale price as income, reducing its overall losses. Under pressure from the SEC, the company redid its books to reflect additional losses.
WorldCom is the latest in a series of corporate scandals beginning with Enron, which filed for bankruptcy after revelations that it had concealed hundreds of millions of dollars in losses in off-the-books partnerships operated by company insiders.
The accounting firm Arthur Andersen was the auditor for both WorldCom and Enron, and was found guilty of obstruction of justice regarding the Enron investigation. Andersen also was the accountant for Harken Energy when Bush sold his stock.
After the Enron bankruptcy, Bush proposed a 10-point reform plan that included a requirement that executives promptly disclose when they sell or buy their company stock.
On Wednesday, White House press secretary Ari Fleischer defended the president's sale of his Harken stock by saying Bush had notified the SEC in advance and in a timely manner that he intended to sell his shares. However, Bush failed to notify the SEC once the stock was actually sold, as required by law.
Fleischer said that when Bush blamed the SEC for losing the form, he may have been referring to the first form which he knew he had filed.
Initially, Fleischer said that the second form -- on the actual sale -- is filed by the corporation, but later he said he did not know who bears the legal responsibility
Federal law says that it is the responsibility of the individual director -- not the corporation -- to file the form.
That's more than a bit of a stretch, isn't it? Political fodder for morons. The perpetual grasping at straws by the Democrats and their media co-conspirators shows how intellectually and morally bankrupt they are.
Attempting to defeat Bush by jumping on every float in the parade is making them look reallllllly stupid/petty/desperate/dishonest.
This Harkin thing didn't help Ann Richards and it ain't gonna help you!
Uh...terry mcawfull...during whose administration did the current crop of corporate fraud and greed begin and expand and during whose administration did the current crop of corporate fraud and greed become exposed to the light of day???
Note the sentence "The SEC took no action in the insider trading probe of Bush." The fact is that an SEC investigating team looked into the matter and found nothing illegal. But that doesn't conform to AP's prejudgment of Bush, so it has to be left out or distorted.
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