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."

Feds investigate entrepreneur allegedly tied to Saudis JERRY URBAN; Staff The Houston Chronicle; A; Pg. 21 June 4, 1992, Thursday, 2 STAR Edition

Federal authorities are investigating the activities of a Houston businessman -- a past investor in companies controlled by a son of President Bush -- who has been accused of illegally representing Saudi interests in the United States.

According to White, Bath told him that he had assisted the CIA in a liaison role with Saudi Arabia since 1976.

The Financial Crimes Enforcement Network -- known as FinCEN -- and the FBI are reviewing accusations that entrepreneur James R. Bath guided money to Houston from Saudi investors who wanted to influence U.S. policy under the Reagan and Bush administrations, sources close to the investigations say.

FinCEN, a division of the U.S. Department of Treasury, investigates money laundering. Special agents and analysts from various law enforcement agencies, including the Internal Revenue Service and the U.S. Customs Service, are assigned to work with the FinCEN staff.

The federal review stems in part from court documents obtained through litigation by Bill White, a former real estate business associate of Bath.

White contends the documents indicate that the Saudis were using Bath and their huge financial resources to influence U.S. policy.

Such representation by Bath would require that he be registered as a foreign agent with the U.S. Department of Justice.

In general, people required by law to be registered are those who represent a foreign entity seeking to influence governmental action or policy.

An Annapolis graduate and former Navy fighter pilot, White, 46, claims that Bath and the judicial system, under the veil of national security, have blackballed him professionally and financially because he has refused to keep quiet about what he regards as a conspiracy to secretly funnel Saudi dollars to the United States.

White became entangled in a series of lawsuits and countersuits with Bath, who for some six years has prevailed in the courts. White says the legal action has financially devasted him and Venturcorp Inc., the real estate development company in which he and Bath were partners.

In sworn depositions, Bath said he represented four prominent Saudis as a trustee and that he would use his name on their investments. In return, he said, he would receive a 5 percent interest in their deals.

Tax documents and personal financial records show that Bath personally had a 5 percent interest in Arbusto '79 Ltd., and Arbusto '80 Ltd., limited partnerships controlled by George W. Bush, President Bush's eldest son. Arbusto means bush in Spanish.

Bath invested $ 50,000 in the limited partnerships, according to the documents. There is no available evidence to show whether the money came from Saudi interests.

George W. Bush's company, Bush Exploration Co., general partner in the limited partnerships, went through several mergers, eventually evolving into Harken Energy Corp., a suburban Dallas-based company.

Bush, known informally as George Jr., is a shareholder and director of Harken, which has been granted lucrative offshore drilling rights off the coast of Bahrain in the Persian Gulf. One of the top shareholders of Harken, a public company, is Saudi businessman Abdullah Taha Bakhsh.

Bush said that to his knowledge, Bath's investment was from personal funds, and no Saudi money was invested in Arbusto.

Bath, 55, a former U.S. Air Force pilot, declined to comment for the record. Spokesmen for FinCEN and the FBI also declined to comment.

According to a 1976 trust agreement, drawn shortly after Bush was appointed director of the Central Intelligence Agency, Saudi Sheik Salem M. Binladen appointed Bath as his business representative in Houston. Binladen, along with his brothers, owns Binladen Brothers Construction, one of the largest construction companies in the Middle East.

According to White, Bath told him that he had assisted the CIA in a liaison role with Saudi Arabia since 1976. Bath has previously denied having worked for the CIA.

In a sworn deposition, Bath said he was the sole director of Skyway Aircraft Leasing Ltd., a company that a court document shows is owned by Khaled bin Mahfouz. Bin Mahfouz had been a major shareholder in the Bank of Credit and Commerce International, a banking empire that has been accused of money laundering and of using Mideast oil money to seek ties to political leaders in several countries. Mahfouz and his family own the National Commercial Bank of Saudi Arabia.

In 1990, Bath bought the Express Auto Park garage at Hobby Airport for $ 8.4 million, which included a $ 1.4 million loan provided by Mahfouz, according to transaction documents. Bath received a 5 percent interest in the companies that own and operate Houston Gulf Airport after purchasing it on behalf of Binladen in 1977. After Binladen died in 1988, his interests in the airport were taken over by Mahfouz, according to court documents.

Photo: Bill White, a real estate developer, balances a stack of depositions which he plans to turn over to federal authorities. The documents suggest a Houston businessman has been illegally representing the Saudis in the United States; Larry Reese/Chronicle

Jackson Stephens: The Father of WTI
Some of the Skeletons in Jack's Closet
Jack Stephens has a unique flair for wheeling and dealin". After all, you don't get to be one of the wealthiest people in the nation without being good at it. Of course it also pays to be in the right place at the right time. In 1946 he graduated from the U.S. Naval Academy with Jimmy Carter. Adams & Frantz go so far as to claim that Carter and Stephens were roommates at the Naval Academy (A Full Service Bank, 1992). 30 years later, President Carter's friend Bert Lance, the man Carter had picked to run the Office of Management and Budget, was in trouble. Lance's dealings with the National Bank of Georgia (NOB) were being questioned on Capitol Hill because of allegations that he had received favorable loan treatment from the bank as an insider. In August 1977, Stephens arrived on the scene and introduced Indonesian business tycoon Mochtar Riady to Bert Lance. At the time, Riady was set to buy Lance's 200,000 plus shares of National Bank of Georgia stock (Associated Press, August 20, 1977).

That evidently didn't happen though. Instead, Stephens and Riady bought a bank in Hong Kong. Later Stephens would invite Riady to invest in a Little Rock, Arkansas bank called Worthen as well. In the meantime, Stephens found a new buyer for Lance's NGB stock. In December, 1977, Stephens introduced Lance to Agha Hasan Abedi (the founder of the Bank of Credit and Commerce International -BCCI). According to the U.S. Securities and Exchange Commission, they discussed the possibility that Abedi purchase the stock of Financial General Bankshares (later called First American Bankshares) held by Lance, Stephens and others and concocted a plan to take over Lance's stock of the National Bank of Georgia U.S. SEC v Lance et. al.). The SEC found out about the plan and sought a restraining order to prevent a foreign bank from taking over a U.S. bank. Years later it would be revealed that Abedi and accomplise Gaith Pharoan went right ahead anyway succeeding with the takeover in 1982 (Corporate Crime Reporter, July 22, 1991). Abedi used frontman Gaith Pharoan to act as his intermediary, taking over Lance's stake in the National Bank of Georgia for BCCI. In 1990, BCCI was convicted of money laundering for the Columbian Cocaine Cartels in Miami. In 1991, BCCI collapsed and millions of investors in 73 countries lost their life savings. (A Full Service Bank, Adams & Frantz, 1992). According to the Wall Street Journal, "BCCI represents the biggest bank robbery in history... (January 18, 1994)." And that BCCI was a "$10 billion or so" heist. (Wall Street Journal, October 28, 1994.)

On February 7, 1992, New York Post reporter, Mike McAlary reported that Jackson Stephens "brokered the 1970s deals in which BCCI officials secretly acquired control of two American banks... The banks -First American Bankshares and the National Bank of Georgia were used as a financial clearinghouse by a collection of [the] world's most dastardly crooks, drug dealers, dictators and spies....and yet Stephens' ties to principals in the scandal continue to this day....Lance and Stephens are reported to have made a fortune as a result of their involvement with BCCI."

Robert M. Morgenthau, District Attorney, County af New York, stated on July 29, 1991 that "BCCI was operated as a corrupt, criminal organization, throughaut its entire nineteen-year history. It systematically falsified its records. It knowingly allowed itself to be sued to launder illegal income of drug sellers and other criminals and it paid bribes and kickbacks to other public officials (Evil Money, Encounters Along the Money Trail, Rachel Ehrenfeld, 1992)."

In October, 1992, the Senate Foreign Relations released an 800-page report on the BCCI collapse. They argued that BCCI activities represented an "international financial crime on a massive and global scale," and that the bank "systematically bribed world leaders and political figures throughout the world."

In his own defense, Stephens wrote in the Wall Street Journal that "neither I nor anyone at Stephens played any role in bringing BCCI to America nor did we play any role in persuading them to buy shares in Financial General. BCCI representatives were introduced to me as representing a third party client. We opened a brokerage account on behalf of these individuals. We were paid normal brokerage fees for our services. Our contact was brief and ordinary course (Wall Street Journal, November 18, 1992)."

In response to the concerns over Jackson Stephens' involvement in BCCI, the Ohio Attorney General noted in his 1993 report on WTI's ownership: "Stephens' name has been linked to securities violations that allegedly occurred when the Bank of Commerce and Credit International (BCCI), a foreign bank dominated by Pakistani financier Agha Hasan Abedi, acquired stock and control over the Washington-based First American Bank. This is an error by the Ohio Attorney General. The bank, as noted, was actually called Financial General Bankshares.] Because Stephens no longer owns a part interest in WTI, his alleged involvement in the BCCI affair is not relevant to the reliability of the current owner" (page 37, footnote 4). But the Attorney General's investigation didn't look into the financing of Von Roll's incinera¢or by the Union Bank of Switzerland (UBS), which was connected to BCCI through joint ownership of Luxembourg based Banque de Credit et de Placement (Reuters, July 8, 1991; Financial Times, July 9, 1991).

Writing about Von Roll's current owner, the United Bank of Switzerland, and its relationship with BCCI, James Ring Adams notes, "You can spin threads from that web for as long as you like (American Spectator, October, 1992)." Spin threads, indeed! Documents filed in Florida by the Government of Panama indicate that General Manuel Noriega used BCCI during the 1980's to funnel money to UBS that he had apparently stolen from the Panamanian military (The Independent, U.K., August 14, 1991). By 1987, Noriega had become a thorn in the side of the U.S. administration and anyone (except Jessie Jackson) who could help get rid of Noriega was apparently just fine.

Once again, there was Jack Stephens. Gabriel Lev' is a Panamanian entrepreneur, and formerly Panama's ambassador to Washington, had Jackson Stephens as his banker. Joel McCleary was an American political consultant who had been the youngest treasurer of the Democratic National Party. McCleary was a protege of Hamilton Jordon, and a deputy assistant for political affairs to Jimmy Carter. McCleary went to Panama in 1983, when Jordan's friend Gabriel Lewis sought help in running the ruling party's presidential campaign. In the mid-1980s both Lewis and McCleary fell out of favor with Noriega, and both wanted Noriega ousted. When Lewis, in Panama, felt that his life was under threat by Noriega he called his "banker, Jackson T. Stephens, in Little Rock, Arkansas, who was desperate to get his friend and client to safety...Stephens phoned his former classmate at the Naval Academy, chairman of the Joint Chiefs of Staff, Admiral William Crowe. Stephens asked Crowe to help get Lewis out of the jam. Crowe phoned the Southern Command, and within minutes General Woerner sent over a black-paneled truck with some plainclothes bodyguards to protect Lewis and help him escape Panama...(Divorcing the Dictator: America's bungled affair with Noriega, Frederick Kempe, 1990)."

"In September 1987 Lewis wanted to bring McCleary back into Panamanian affairs, this time with a brief to destroy his former employer.... Lewis had decided he could get rid of Noriega only with the military's help. McCleary had the contacts and knowledge he needed to pull it off. Again, Lewis's American banker, Jack Stephens, for whom McCleary had done work in the past, helped bring the two together..." They worked out of Washington DC. "By spring of 1988, American foreign policy makers all agreed Noriega had to go..." George Bush (and Elliot Abrams) wanted Noriega ousted. Noriega was strong and he was buying intelligence from CIA agents while he was on Bush's CIA payroll. In August 1988 Noriega said, "I've got Bush by the balls." According to Kempe, "the threat [was] that Noriega might reveal much of what he knew: he had many of the administration's secrets (Overthrowing the Dictator by Frederick Kempe)." He was finally ousted from power in 1989 when the U.S. invaded Panama. He was convicted of narcotics trafficking in 1992 and is serving a 40 year sentence in prison near Miami.

Friends in High Places: Stephens and George Bush
As described above, Jackson Stephens was close to Jimmy Carter and several people in his cabinet and coterie of political cronies. But Jack Stephens is also well known for playing both sides of the fence. In 1991, Jackson Stephens contributed $100,000 to the Republican Party for Bush's presidential campaign, and Stephens Inc. "kicked in another $100,000." Stephens wife was the Arkansas co-chairman of the Bush for President campaign. (Wall Street Journal, December 6, 1991.) He and his wife were hosts to the Inaugural party for President Bush in 1989. (New York Times, Ma, 8, 1992.) In addition, Stephens brokered the deal that allowed the Union Bank of Switzerland (as mentioned above, a BCCI-connected bank, that also financed and ultimately owns the WTI incinerator project) to rescue a Harken Energy project that George Bush Jr. (son of President Bush) was involved with in 1987. When Harken needed help, Stephens was there. A meeting in Little Rock was set up "between Harken officials and Jackson Stephens that produced an unusual rescue plan. Mr. Jack obtained a $25 million cash infusion for Harken from Union Bank of Switzerland, which rarely invested in small American companies (The American Spectator, October, 1992)."

Friends in High Places:Stephens and Bill Clinton
Jackson Stephens was a major donor to Bill Clinton's campaigns for Governor and raised at least $100,000 for Bill Clinton's first Presidential campaign (Seattle Times, November 6, 1993) while extending $2 million to the campaign through Stephens and Riady's Worthen bank (The American Spectator, October, 1992). He has been the major financier of Bill Clnton's political career. According to Peter Truell and Larry gurwin, "No group raised more money for the Clinton Presidential campaign" than the Stephens Group. "A study released in July found that employees of Stephens Inc. gave more money to Clinton than employees of all but two other firms in the entire country (False Profits. The Inside Story of BCCI, the World's Most Corrupt Financial Empire, by Peter Truell and Larry Gurwin, 1992)." Rachel Ehrenfeld argues that "Bill Clinton had full knowledge of Stephen's involvement with BCCI when he accepted hundreds of thousands of dollars from the Stephens family for his campaign (Evil Money)."

This is where things get complex. Jackson Stephens, as noted above has been partners with an Indonesian Tycoon, Mochtar Riady*. His son, James Riady was a co-president of Worthen Bank (Federal News Service, July 17' 1997). In 1994, Stephens' family interests owned approximately 55% of Worthen bank's outstanding stocks (Worthen proxy, March 29, 1994). Worthern provided the Clinton campaign with a $2 million dollar financing deal that basically saved the Democratic National Party from a cash shortage in the early 1992 Presidential campaign (The Spectator, October 1992). The Riadys own a company called The Lippo Group*.

According to William Safire, Lippo's ties to Jack Stephens enabled them to receive sensitive trade secrets from out of the Clinton Administration through Lippo employee, John Huang*, who also worked in the U.S. Department of Commerce as a Clinton employee. The kicker was that Huang would go across the street from his Commerce office to use a Stephens Inc. business office as a "drop" to receive and send documents and make off the record phone calls. "At informative Thompson committee hearings last week, we learned that Huang, Lippo's man at Clinton Commerce, received a call on the average of twice a week from a secretary at the Stephens drop who was instructed not to leave her boss's name. Huang would then cross the street to pick up and send express packages and use the Stephens phone. We know that Huang spoke to former Lippo associates at least 237 times in his 14 months at his sensitive trade post. 'That number troubles me' said Senator Joseph Lieberman.

"Who Is David Edwards?"

The Wall Street Journal
03/01/95
by Micah Morrison

This series of articles, quotes, excerpts and letters was contributed by Missy Kelly, a regular poster to Prodigy's Whitewater Bulletin Board and a follower of Banking scandals.

As the lens of "Whitewater" pans from tight focus to the full panorama of Bill Clinton's Arkansas, no more intriguing Friend of Bill appears than Edwin David Edwards.

Not that there is any suggestion that Mr. Edwards played a role in the Whitewater land development or Madison Savings & Loan, or any evidence of anything illicit where the Little Rock investment adviser has been involved. But Mr. Edwards keeps popping up, both as one of the president's oldest friends and as a symbol of the Saudi Arabian links that loom surprisingly large on Razorback terrain.

Mr. Edwards has been a Friend of Bill since at least 1969, when he briefly shared an apartment in England with Mr. Clinton and Strobe Talbott, the current deputy secretary of state. He vacationed with the Clintons on the Riviera, according to "Off the Books, " by Robert Hutchison (William Morrow, 1986). Mr. Edwards was instrumental in the Saudi contribution for a Middle East studies center at the University of Arkansas announced just after the presidential election. He was on hand for the president's emotional departure from Little Rock for Washington (see the rendering of an Associated Press photo). On a visit to Little Rock the weekend before the suicide of Deputy White House Counsel Vincent Foster, the president spent a four hour dinner alone with Mr. Edwards.

A Mysterious Investor

Mr. Edwards and his brother Mark now run their own Little Rock investment placement firm, Edwards Brothers. While Mr. Edwards refused repeated requests for interviews for this article, his principal client appears to be a mysterious Jidda investor, Abdullah Taha Bakhsh, who at one time owned nearly 10% of Little Rock's Worthen Bank. Before leaving to form their own firm in 1990, both brothers worked for Stephens Inc., the powerhouse Arkansas investment firm that handled the brokerage when Middle Eastern front men for the Bank of Credit & Commerce International made an early attempt to buy First American Bank in Washington, D.C. While at Stephens, Mr. Edwards also played an important role in securing an offshore drilling contract in Bahrain for Harken Energy Corp., on whose board sat George W. Bush, presidential son and current governor of Texas.

If only as a matter of curiosity, David Edwards is a Friend of Bill worth a few moments of attention. The tales of the university donations and the Harken deal are particularly interesting.

Much of Mr. Edwards's tenure at Stephens was devoted to the investment firm's European and Middle East operations, though his precise role is murky.

In 1989, officials of the University of Arkansas at Fayetteville approached Jackson Stephens, the billionaire head of Stephens Inc. and a university board member, for help in raising funds for international studies. Mr. Stephens referred them to his employee, Mr. Edwards, say university officials. Mr. Edwards quickly turned to his Saudi contacts, including Mr. Bakhsh. Two executives associated with the investment firm say Mr. Edwards brought the low-profile Saudi to Stephens in 1987.

Reports in this newspaper and the BCCI book "False Profits," by Peter Truell and Larry Gurwin, say Mr. Bakhsh was a co-investor in Saudi Arabia with alleged BCCI front man Ghaith Pharaon. Khalid bin Mahfouz, another BCCI figure and head of the largest bank in Saudi Arabia, was Mr. Bakhsh's banker. University of Arkansas officials say Mr. Edwards sought to involve Mr. Bakhsh in a project to create a Middle East studies center at the school. In a letter to a university official, Mr. Edwards said he would bring the reclusive Saudi to Fayetteville to talk "about designing a simple mosque somewhere on campus."

In a written statement, Mr. Bakhsh's attorney, Paul Meyer of Rogers & Wells, noted that the Saudi financier "was not involved in any way in any of the matters or transactions that constituted the BCCI scandal." Mr. Meyer added that Mr. Bakhsh "was not a participant" in Mr. Edwards's funding effort for the University of Arkansas.

When the Edwards brothers departed for their own firm, they took the university project with them. But friction was increasing between David Edwards and the university. The globe-trotting investment adviser claimed several hundred thousand dollars in Saudi travel expenses, says a university official. Others at the school found Mr. Edwards's abrasive manner and pro-Arab bias inappropriate for an academic setting. In a letter to university officials written less than a month before the Iraqi invasion of Kuwait, Mr. Edwards commented on rising tensions in the region and complained that "we are giving our money to the Israelis to do what we tell them not to do. "

Gov. Clinton, university officials say, was an enthusiastic supporter of the project, and Mr. Edwards worked closely with him--on at least one occasion conducting business from the Governor's Mansion, according to a document obtained by the Journal. But Gov. Clinton may have had some Saudi resources of his own. Mr. Clinton was a Georgetown University class-mate of Turki bin Feisal, the current head of Saudi intelligence.

Sources in Arkansas say Mr. Clinton's famous networking skills also put him in contact with Prince Bandar bin Sultan, the Saudi Ambassador to the U.S. University officials participated in a Clinton-Bandar meeting in the spring of 1991, when they and Mr. Mr. Edwards joined the governor in delivering a request for a major gift to the ambassador. According to a 1991 gubernatorial disclosure statement, Mr. Clinton and Prince Banal also were together on June 13, when they traveled from Aspen to Little Rock on a jet leased by the Saudis.

Despite such contacts, no progress in raising money was made until Gov. Clinton received the Democratic presidential nomination. One month later, Mr. Edwards handled an anonymous lead gift to the university of $3.5 million for a Middle East studies program. Individuals familiar with the gift say it came from the Riyadh Chamber of Commerce. According to the Cyprus-based Arab Press Service, the gift was approved by Saudi Arabia's King Fahd at the recommendation of Prince Turki.

Under Mr. Edwards's direction, and despite some objections from University of Arkansas officials, the unusual gift was transferred to a university account in the form of Treasury bonds. The resulting confusion was the last straw for university officials. They insisted that Mr. Edwards withdraw from the project. Curiously, documents obtained by the Journal indicate that extra bonds were delivered to the university, with a face value of $3.5 million promised and $3.9 million delivered. A financial administrator at the university says that "excess bonds were put in the account by a mistake in the electronic transfer" and were "returned. "

One month after President Clinton's inauguration, Arkansas Gov. Jim Guy Tucker announced that Prince Bandar had delivered a $20 million gift to the University of Arkansas.

A few years earlier, Mr. Edwards provided important help to a company linked by family ties to then Vice President George Bush. In 1987, Mr. Edwards and Mr. Bakhsh rode to the rescue of Harken Energy, a struggling Texas oil company that included George W. Bush on its board. Harken's web of Middle East connections was detailed in a 1991 Wall Street Journal report. Stephens officials, including Mr. Edwards, came up with an unusual arrangement to help cash-poor Harken: Union Bank of Switzerland would give the oil company a $25 million cash infusion in exchange for stock. UBS, the Journal noted, was not known as an investor in small U.S. companies and was a joint-venture partner with BCCI in a Geneva-based bank.

When UBS began to hit regulatory snags, it decided to unload its Harken stock Stephens brought in a new buyer: Mr. Bakhsh. The Saudi tycoon ended up with a l%o stake in Harken, and his American representative, Chicago businessman Talat Othman, wound up with a seat on Harken's board. By August 1990, Mr. Othman was attending White House meetings with President Bush to discuss Middle East policy. Mr. Meyer, who serves as attorney for Mr. Othman as well as Mr. Bakhsh, says the Chicago businessman was invited to the meetings only because of his "longstanding involvement in Arab-American affairs. "

In April 1989, the government of Bahrain was looking for an oil company to explore its offshore holdings. According to a 1990 article in Forbes, the Bahrainis turned to Houston oil consultant Michael Ameen, a former head of governmental relations for Aramco. Mr. Ameen, the Journal noted in it's 1991 report is another "BCCI notation in the Harken story." As a top Aramco official, Mr. Ameen "had close-up dealings for years with the Saudi royal family and it's advisors," including Kamal Adliam, a BCCI principal and former head of Saudi intelligence. Mr. Ameen also reportedly is close to Mr. Bakhsh.

Mr. Ameen and Harken officials did not respond to interview requests. But according to Forbes the Bahrainis called Mr. Ameen, looking for a small company that would give them full attention. Mr. Ameen said he didn't know of any. By coincidence, Mr. Ameen's friend David Edwards called 10 minutes later on an unrelated matter. Mr. Ameen mentioned his problem. Mr. Edwards mentioned Harken.

Mr. Ameen negotiated the Bahrain deal, earning a $100,000 consulting fee. George W. Bush says he opposed it. "I thought it was a bad idea, " Gov. Bush said recently, because of Harken's lack of expertise in overseas and offshore drilling. Gov. Bush added that he "had no idea that BCCI figured into" Harken's financial dealings.

In June 1990, Mr. Bush sold some 60% of his Harken stake for about $850,000, earning a handsome profit. In November 1993, he resigned from Harken's board. Four months later, his successor was named: Michael Ameen. Harken has yet to discover any oil off Bahrain.

Mr. Bakhsh appears to have been pleased with Stephens's investment strategies. From February 1989 through October 1990, he purchased more than one million shares in the Stephen's controlled Worthen Bank paying more than $10 million for 9.6% of the stock, according to Securities and Exchange Commission disclosure statements. Mr. Bakhsh's attorney says he no longer is a Worthen shareholder.

Mr. Bakhsh has a wide range of U.S. investments, concentrated mainly in apparel, energy, real estate and financial services. In November, the Chicago Tribune reported that Mr. Bakhsh's First Commercial Financial Group, a commodities brokerage firm, was forced to shed its customer accounts after regulators raised concerns about capital shortfalls and customer complaints. Mr. Bakhsh owns First Commercial through Dearborn Financial Inc., an investment company run by Mr. Othman. Their attorney, Mr. Meyer, says that First Commercial was completing "the final phase of its long-term strategic restructuring plan" by transferring its customer accounts to other firms. Mr. Meyer says that Mr. Edwards was not involved in Dearborn and First Commercial.

Mr. Edwards, though, has long been familiar with complicated financial transactions. In "Off the Books," financial journalist Robert Hutchison details Mr. Edwards's central role in a Byzantine tale of international banking and currency trading, In 1975, Mr. Edwards, then a Citibank junior executive in Paris, accused a senior currency trader of taking kickbacks and raised questions about the offshore parking of foreign-currency transactions. In order to avoid European taxes, Mr. Edwards charged, Citibank was booking fake transactions through its Bahamas branch, concealing them through a series of coded telex messages and other methods.

A Long Investigation

The "Edwards Affair, " as it became known, lasted until 1983, entangling the SEC, Congress, and regulatory officials of six European countries. It concluded with the senior Paris trader cleared of the kickback charges and Citibank paying minor fines and back taxes in several countries. Following a long investigation, in 1982 the SEC declined to take steps against Citibank.

By that time, Mr. Edwards was long gone. In one of his first acts as head of Citibank's International Banking Group, Thomas Theobold fired Mr. Edwards in 1978, saying that Mr. Edwards was unable "to provide any substantive, factual corroboration of the allegations. " Mr. Edwards responded by going to the SEC and filing an ultimately unsuccessful $14 million wrongful dismissal suit.

Citibank officials are bitter about their eight-year wrestling match with Mr. Edwards and worry that he may now be serving as an unofficial adviser to the president. "We fired him for being a lousy trader and he got back at us, " says a former top Citibank official. "The next thing we hear, he's down in Arkansas. Wherever there's a smell rising from the river, Edwards seems to turn up.

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Sheesh with all your "pretty" HTML skills one would think that you could use the search engine.