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Posted on 07/15/2002 7:07:00 PM PDT by RCW2001
By PETE YOST, Associated Press Writer
WASHINGTON (AP) - Two and a half months before George W. Bush sold his stock in a struggling Texas energy company where he was a director, he signed a letter promising to hold onto the shares for at least six months, internal company documents show.
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The "lockup" letter Bush signed on April 3, 1990, for his shares in Harken Energy Corp. is now being compared with the account his lawyers gave federal securities regulators who examined the stock sale as a possible insider trade.
Bush's lawyers have maintained for more than a decade that he had a pre-existing plan to sell his stock in Harken and other companies to pay a tax bill and a loan debt he owed for his stake in the Texas Rangers professional baseball team.
And they have said the sale wasn't motivated by Harken's deteriorating financial situation.
The letter Bush signed promising to hold onto the stock was released by the Securities and Exchange Commission ( news - web sites) under the Freedom of Information Act. At the time he signed it, Harken was considering a public stock offering to raise money to solve a cash flow problem.
"Dear George," said the April 2, 1990, letter from Harken secretary Larry Cummings. "As you are aware, Harken is contemplating a public common stock offering.
"In connection with such offering, the underwriters have requested that Harken obtain consents for all directors, officers and other affiliates to agree to not sell ... for a period of 180 days from the date our proposed public offering goes effective."
Bush signed and returned the letter the next day.
Bush's sale of his Harken stock for $848,560 has come in for renewed public scrutiny in recent weeks as he tries to restore investor confidence in the financial markets and calls for a crackdown on corporate wrongdoing.
White House spokesman Dan Bartlett said Monday the lockout letter was "made irrelevant and obsolete" by the time Bush sold his stock in summer 1990 because the public stock offering it affected never went through.
But a securities expert said the document calls into question his lawyers' account to the SEC.
"Bush's signing of the April 2, 1990, lockup agreement undercuts his lawyers' explanation for the early sale of his Harken stock," said Houston attorney Thomas R. Ajamie, an expert in securities law whose firm is advising companies that did business with the failed energy giant Enron.
"If his accountant told him that he needed to sell stock to pay a debt obligation for his interest in the Texas Rangers, it does not make sense that he would subsequently sign an agreement promising not to sell his shares of Harken stock for six months," Ajamie said. Harken scrapped the public stock offering a few weeks after Bush signed the letter because the company was plunged into a financial crisis when one of its bank lenders withdrew its support.
Bartlett said Bush and his accountant had discussions in late 1989 and early 1990 about the plan.
Bush's accountant, Robert McCleskey, said in an interview that Harken's deteriorating financial position was "not in my opinion" a factor in Bush's sale of the stock, adding that Bush "never said anything about it to me."
Bush had pledged 130,000 shares of Harken stock on the bank loan for the Texas Rangers, and when the bank note was renewed in early 1990, the shares were freed up, enabling Bush to sell them, McCleskey said.
"On the Rangers note, we were paying $45,000 to $50,000 a year in interest," said McCleskey.
Asked about the lockup document, McCleskey said a number of Bush's stock holdings from different companies were "on the table" and the sales would take place "when we get it done."
When the SEC examined the transaction more than a decade ago, Bush's lawyers offered a similar explanation as the one McCleskey gave Monday of why the future president unloaded stock at a time when Harken was experiencing financial difficulties.
"According to his attorneys, these sales, and the Harken sale, were made to meet an obligation of approximately $600,000 in connection with the Texas Rangers and to pay a couple hundred thousand dollar tax bill," an SEC memo from the probe states.
"According to his attorneys, Bush made these sales at the urging of his financial adviser/accountant who was bugging him to get liquid," the memo states.
The SEC did not interview Bush, so the only account of his sale came from what his attorneys told regulators.
One expert said even though Bush signed the lockup letter, it didn't represent a serious obstacle to selling.
It is fairly common for company insiders to sign such letters and then obtain permission to sell the stock anyway before the lockout period is up, said Carr Bettis, an associate research professor of finance at Arizona State University.
Bush sold his stock for $4 a share on June 22, two weeks after being approached by a California broker who said an institutional client wanted to buy a large block of Harken stock. The buyer has never been identified.
The stock's value declined to $3 two months later and to a little over a dollar a share by yearend. The following year, the stock rose to over $8 a share as Harken explored for oil in a potentially lucrative Middle East venture that never found any oil.
So, what's the crime???? shheeesh.
Only Democrats can get away with stonewalling in this country. In fact, the story the media spins is not why they're stonewalling, but how good they are at it. Disgusting, but that's the way it is.
Despite what you might think, Bush is not a poodle named Fifi who has to jump through a hoop just because you or anybody else stomped their feet, demanding so.
Fight like hell and remind everyone about Lieberman's ongoing coverup.
The "facts" are out; just go to the SEC website and you can read about Harken to your heart's content.
Whitewater proved that the American public could care less about complicated business deals. Whether Bush dumps all the data or not will not make one bit of difference.
Fodder for larry.......
Most people do not care at all. To borrow a play from the democrat playbook: "This is old news and it's not easy for the average Joe to understand. And the President really, really, needs to get back to work for the American people."
Sounds as though that came right out of the "Clinton Playbook"...
The media, however, is not concerned with "underlying facts". Especially, if they are "exculpatory"...
Smith said the trade came about because he called Bush on behalf of an "institution" that wanted to buy Harken Energy stock after other Harken directors said they did not want to sell. Bush also was a member of company's board.
At first, Smith said Bush told him "he didn't know if he could sell, and to check back."
"I checked with the [Harken] lawyers to make sure he could sell. ... They said that he could," he said. The former broker said it was "implicit" in later conversations that Bush also had sought legal advice.
Smith said he called again a couple of weeks later, and "then he said he would be interested in selling. [Bush] decided on the amount," and in June 1990 sold 212,140 shares for $835,807.
Before the deal went through, Smith said, Harken's lawyers wrote "a letter to the transfer agent ... [assuring him] there was no insider information available that wasn't available to the public. That's why he was allowed to sell."
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