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Posted on 07/07/2002 2:33:24 PM PDT by WarrenC
Despite intense efforts, Democrats in recent weeks have had little success in their effort to inflict political damage on George W. Bush by tying him to corrupt corporate CEOs. Now they're trying another approach, accusing Bush of being a corrupt corporate CEO.
On Tuesday, New York Times columnist Paul Krugman discussed Bush's 1989 sale of stock in Harken Energy, a company which had bought Bush's oil and gas company and placed Bush on the Harken board of directors. In 1989, Harken was struggling financially. "Only a few weeks before bad news that could not be concealed caused Harken's shares to tumble," Krugman wrote, "Mr. Bush sold off two-thirds of his stake, for $848,000. Just for the record, that's about four times bigger than the sale that has Martha Stewart in hot water. Oddly, though the law requires prompt disclosure of insider sales, he neglected to inform the Securities and Exchange Commission 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."
Thursday morning, the Washington Post followed up on Krugman's column with a story headlined "Memo Cited Bush's Late SEC Filings; White House Dismisses Suggestions of Wrongdoing in Bush's Time in Oil Business." Reporter Mike Allen wrote that "Bush's brushes with the SEC have new resonance now that he is preparing to respond to the wave of accounting scandals by proposing tough restrictions on corporate officials during an address on Wall Street next week." The SEC memo that had been cited by Krugman, Allen wrote, was not a new revelation but had in fact been part of a large amount of information published by the Center for Public Integrity, which posted the SEC memo on its web site in October, 2000 (much of the Center's research was done in collaboration with the now-defunct Talk magazine, which published a story on Bush's finances). The SEC memo, in Allen's words, "attracted little attention."
While it is perhaps news to Krugman and Allen, in fact the Harken story has attracted quite a lot of attention over the years. Political opponents of the first President Bush tried to use it to tarnish the White House. George W. Bush's political adversaries in Texas tried to make it an issue in his campaigns for governor. They tried again when he ran for president.
And now, they are trying yet again. "Democrats sense in the corporate scandals an issue that might finally dent Mr. Bush's approval ratings," the New York Times reported Wednesday. "They are making a case that Mr. Bush and Mr. Cheney, during their time in the corporate world, would not have been able to live up to the policies they are advocating now." Indeed, talking points released Tuesday by the Democratic National Committee said, "If it's corporate penalties the president prefers, perhaps he should take a look in the mirror."
But the problem for the president's opponents is that the charges, at least as far as Harken Energy is concerned, have simply never amounted to much. In 1999, I examined Bush's business career in some detail for an article in The American Spectator magazine. Bush's sale of Harken stock was part of that story, and I spoke to a former Harken director and a former Bush partner, as well as to William McLucas, who headed enforcement at the SEC at the time of the sale (McLucas is still in the news today, having been retained by WorldCom to investigate its accounting scandal). All the evidence available at the time — and all that is available now — suggested that Bush did not, as Krugman implies, engage in insider trading or other wrongdoing. This is what I wrote about the transaction in the June 1999 issue of The American Spectator:
[Bush's] largest single asset was the chunk of Harken stock he had received in the merger. Through the first half of 1990, the stock price was quite consistent, moving between $4 and $5 a share. In June 1990, Bush sold two-thirds of his stake — 212,000 shares — at $4 for a total price of $848,000. At the time of the sale, Harken was moving into a period of financial difficulties. In the months following Bush's sale, the company announced a quarterly loss and the stock price went into a long, slow decline; by the end of 1990, it was $1.25 a share. Since Bush was not only a member of the board of directors but was also on a committee assigned to study Harken's financial situation, his decision to sell a few weeks before the slide began led to accusations that he used insider knowledge to get out when the getting was good.
Bush denies any wrongdoing and has often said he was unaware of the difficulties within Harken. "He thought he was selling into good news," spokeswoman Karen Hughes told TAS, adding that if Bush had waited to sell the stock he could have earned considerably more than he got. That would, however, have required his waiting at least a year; it was not until June 1991 that Harken got back up to $4 a share. By September 1991 it briefly hit $8 a share.
In 1991 the Securities and Exchange Commission investigated the sale and took no action against Bush or anyone else. "I don't remember a lot about it, other than there wasn't a lot about it," says William McLucas, who was the SEC enforcement chief at the time. "The facts just didn't support any judgment that this was something that would result in a serious enforcement proceeding." Nevertheless, Democrats brought the issue up in 1992, as President [George H.W.] Bush was running for re-election; it became part of several news stories recounting alleged business improprieties by Bush family members. Texas governor Ann Richards revived the story during the 1994 gubernatorial campaign and also suggested, without evidence, that President Bush had rigged the SEC investigation, which commission officials denied.
As far as Bush's reporting the sale late to the SEC, it is not precisely clear what happened. Hughes told me in April 1999 that Bush believed he reported the sale earlier than SEC records indicated; she suggested the forms might have been lost, either inside Harken or the SEC. But whatever the reason, the fact that the report was filed late is not particularly damning in the absence of any underlying wrongdoing that a late filing might have been intended to conceal. And the SEC did not find anything that suggested such wrongdoing.
Since the president began his political career, there have been a number of meticulous examinations of the Harken sale, first in Texas newspapers, then in the Washington Post, the New York Times, and other national publications. None have come up with evidence that Bush did anything wrong in the Harken matter. Now, there will undoubtedly be more investigations of the same material. Democrats can hope, but it's unlikely they'll find what they're looking for.
The Holiday *Best* of Bill Clinton & his Friends!
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If the story dies a quiet death, as this one's going to, then the Times and the WashPost will draw little fire for running it - burying it in a holiday weekend when no one's paying attention. In fact, it appears that only CNN has picked up the sordid DNC banner on this one - and on a holiday weekend, it's hard to imagine an outlet with lower viewership. Other outlets have simply rolled their "old-news" eyes and file-13'd the story.
This does, however, accomplish a couple of things. The WashPost and the NYTimes can tell the DNC, "Hey, we ran 'em, but no one saluted." The fact that both papers ran the stories when they did indicates that they knew ahead of time that no one was going to get too wound up about them.
The other thing publication of these stories across a holiday does for the Times and Post is send a message to the DNC and its various and sundry arms, tentacles, etc., that if they expect the Times and Post to carry their water this time around, it had better be a better story than this one. If the papers thought this story would really go anywhere, then they would have held it until after the holiday. Running it ON a holiday gives it the half-hearted imprimateur of a pitchman not really believing his own spiel.
Of course, the DNC must have been heartened by CNN's treatment. Aaron Brown's return from vacation (in which he alluded to the fact that many more viewers seemed to like his replacement, Mole host Anderson Cooper, than Brown himself) featured Brown laying it on thick as chopped liver at a Bar Mitzvah. Brown had Bush thoroughly tarred, discredited, and driven from office by the end of his first evening back. I hope Anderson Cooper wasn't watching.
This story and the way the two dailies played it is a perfect example of how they send signals to the DNC without saying it in so many words. There may be a couple of ripples left to play out, but as THIS article says, this is really really OLD meat, and no one bit on it before.
Michael
And, of course, no wrongdoing was found. But that's the whole point. No wrongdoing needs to be found...as long as some is implied, the regurgitation of non-stories like this will continue to sprout up in rags like the Post and the Times. It's the only thing they can find that they believe will have traction against this president. Nothing else seems to work. This won't either.
On Face The Nation today I heard Gloria Borger make the statement that small investors were unwilling to invest in the stock market because of the "constant corporate scandals". Oh really?! Well, I'm a small investor and I had no problem whatsoever doing my part to help the market go up 324 points last Friday especially in light of the pounding it had taken prior to that. But the more interesting point is that Ms. Borger's statement only went to prove why liberals are usually piss-poor when it comes to investing. They simply don't understand the concept of "Buy low, sell high"!
Specfically, Bush did appear to have insider information. One can argue whether it was negative or positive. But it appears that the stock dropped due to the Iraq invasion of Kuwait on August 2, 1990, rather than the subsequent 10Q issuance that may have happened on Monday, August 13, 1990 as a guess, which didn't seem to impact the price much. Harken had a deal with Bahrain which made it sensitive to Gulf happenings. The Gulf War does muddy the waters here.
This is quite an interesting detective story, actually. I am sure we will hear more about it - much more.
cc: to the Bushbot lady. :)
The memo said Bush sold 212,140 shares of Harken stock on June 22, 1990, for $848,560, before Harken's announcement on Aug. 20, 1990, that it had lost $23.2 million in the quarter ending June 30. The SEC said the announcement caused Harken's stock to drop by more than 20 percent, and called Bush's stock sale a "matter under inquiry."
At the time, Bush was a member of Harken's audit committee. The stock sale was reported by Bush on March 4, 1991, about 34 weeks late, the memo said. Dan Bartlett, Bush's communications director, said that was the result of a miscommunication between Bush's lawyer and the Harken counsel's office.
"These types of late filings are not out of the ordinary," Bartlett said. "It would be like doing a 60 [mph] in a 55."
The White House provided the first four pages of an SEC memo from 1992 which said, "Based upon our investigation, it appears that Bush did not engage in illegal insider trading because it does not appear that he possessed material nonpublic information." Bartlett said the information about the losses at issue was available only to Harken's executive committee, of which Bush was not a member.
Now from the Flocco article you linked.....
I don't know where Flocco is getting his info, but the following differs greatly.....
Wall Street JournalThat's hardly a [$848,560 -- some 250 percent profit on the stock's original value "] .... So I have my doubts of Flocco as he's been anti Bush if I remember correctly. I'll trust the Wall Street Journal to come closer to the facts here that Flocco. JMO.In fact, the loan was paid off through the sale of stock Mr. Bush had been awarded in his only successful venture in the oil business, as a director of Texas-based Harken Energy Corp. Barely afloat in the tough oil market in the early 1980s, Mr. Bush joined Harken as a director in 1986. He was given 212,000 shares of Harken stock, worth about $500,000, or $2.50 a share, at the end of the year--although he had no daily management responsibilities. He later acquired an additional 133,000 shares through special offerings to company directors, and he was paid between $42,000 and $120,000 a year for the next five years as a consultant. .....
In 1989, Harken's stock was trading at between $4 and $5 a share. That's when Mr. Bush put up his shares as collateral for the Rangers loan. In January 1990, with shares trading around $4.50, Harken announced that it had signed a potentially lucrative oil-exploration deal with the government of Bahrain. On June 20, 1990, Mr. Bush sold the bulk of his Harken stock for $848,000, at $4 a share, and paid off the Rangers loan. Eight days later, Harken finished the second quarter with losses of $23 million, and the stock went into a nosedive, losing nearly 75% of its value, finishing the year at a little over $1 a share.
Having said that, I don't like cheats, period. But you'll have to do better than Krugmans klaptrap to convince me of that.
What's Krugman got to do with this? I didn't reference him. If I want polemics I go to Krugman. But this isn't about polemics. It is about the evidentiary trail.
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Bush has been remarkably restrained in his treatment of the Clintons.