Bush Name Helps Fuel Oil Dealings
Eight days after Bush's stock sale, Harken wound up its second quarter with operating losses from day-to-day activities of $6.7 million, almost three times the losses it reported for the second quarter of 1989.
The public didn't learn of this until Aug. 20, when the company, now known as Harken Energy, announced in a press release that its overall losses for the quarter, including non-recurring expenses as well as operating losses, totaled $23.2 million. Harken's stock had slipped to $3 a share earlier that month when Iraq's invasion of Kuwait stirred fears that it would endanger a potentially lucrative offshore drilling contract with Bahrain. On Aug. 20, the stock dropped to $2.37.
Did Bush know of the impending losses when he sold his stock in June? Federal securities law prohibits corporate "insiders" from trading "on the basis of" material information that is not publicly known.
Bush says he did not know, even though he had a seat on Harken's three-member audit committee as well as its eight-member board of directors. He said he had no idea Harken was going to get an audit report full of red ink until weeks after he had made the sale.
"I wouldn't have sold if I had," Bush said. "I got clearance by the lawyer [Harken general counsel Larry E. Cummings] to sell this stock. I was mindful that this transaction would be completely scrutinized. I knew the law and I sold at a time that I was cleared to sell."
Bush said he didn't seek a buyer, but was approached by a Los Angeles broker, Ralph D. Smith. Now retired, Smith said he had an institutional client who wanted a large bloc of Harken stock. Smith said he called other Harken officials before calling Bush on June 9, 1990.
"I had no takers until I got to him," Smith said. "It was just like a shot out of the blue."
Bush's lawyer, 
Robert Jordan, who also represented Harken in the SEC inquiry, said Bush and other board members were not informed until July 13, 1990, in a communication from Harken president Mikel Faulkner that "operating losses were incurred in the second quarter, which will be further quantified and explained." Even then, Jordan said, Faulkner did not provide details. Many companies project and announce expected profits and losses before the end of a quarter, but Jordan said this was not done at Harken.
Asked for a copy of the July 13 communique, or permission to inspect it, Jordan checked with company officials and said they would not allow it. He said Harken has "a policy of keeping internal documents private."
Before Bush's stock sale, Harken's audit committee – Bush, Watson(Stuart Watson) and another Harken director, Talat Othman – met on June 11 with Faulkner and auditors from 
Arthur Andersen & Co., Harken's accountants. Jordan, however, said the committee "did not discuss operating losses that might be coming up, because that would be in the realm of conjecture and speculation." The minutes of the meeting, Jordan said, "show that."
Asked for a copy of the June 11 minutes or permission to inspect them, the company, through Jordan, again declined to make the records available. Jordan said company officials felt that granting the requests would put them on "a slippery slope."
Before giving Bush clearance to sell his stock, Jordan said that company counsel Cummings "checked with Mr. Faulkner at least and maybe others" to see if there was "any material, undisclosed information out there that would prevent the sale." The answer was no, Jordan said.
Faulkner, a certified public accountant who used to work at Arthur Andersen and who has spoken frequently with reporters over the years, declined through Jordan to be interviewed. So did Cummings.
The SEC investigation was launched in April 1991 when it found that Bush apparently failed to submit notice of actual sale of the stock (as distinct from the separate "notice of proposed sale") until eight months after the deadline. Bush said he is sure he did, but the filing couldn't be found.
The inquiry became an issue in the 1994 governor's race when Richards, the incumbent Democrat, challenged its thoroughness, calling it "at best, incomplete, and at worst, a coverup."
Bush was prepared, having obtained a letter from a top SEC official, associate director for enforcement Bruce A. Hiler, a year earlier.
[NOTE: Bruce A. Hiler is the lawyer for Jeffrey Skilling of Enron]
Dated Oct. 18, 1993, three weeks before Bush announced his candidacy for governor, the carefully worded letter was addressed to Jordan and said that "the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him."
Bush took that as vindication. "The SEC fully investigated the stock deal," he said in October 1994. "I was exonerated." Supporting Bush, the head of the SEC's enforcement division, William McLucas, went beyond the letter and stated publicly that "there was no case there."
Hiler, however, was more cautious. His statement said it "must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff's investigation."
How thorough the SEC inquiry was remains unclear. Jordan said Harken provided investigators with "thousands of pages" of documents, including the June 11 minutes and Faulkner's July 13 communique. Investigators interviewed Cummings, stockbroker Smith and a member of the Arthur Andersen auditing team, but they did not talk to Faulkner or any other officers or directors of Harken.
In an interview, McLucas said the investigation was handled "the same way we would handle any inquiry as to [insider] trading or delinquency in reports," but such matters are usually not accorded high priority.
Dallas Attorney Named Ambassador To Saudi Arabia
He represented Bush in SEC case over sale of Harken Energy stock
The Dallas Morning News
By G. Robert Hillman
Article Source
July 21, 2001
WASHINGTON – President Bush has chosen as ambassador to Saudi Arabia a Dallas attorney who represented him against insider trading allegations arising from his sale of stock in Harken Energy Co. 11 years ago.
Robert Jordan, a founding partner of the Dallas law office of Baker Botts, represented Mr. Bush during a Securities and Exchange Commission inquiry into the allegations involving Mr. Bush's lucrative sale of stock in Harken, where he had been a director.
The SEC found no merit in the charges. Critics have noted that Mr. Bush's father was president during the investigation and a longtime supporter, Richard Breeden, was the commission's chairman.
Mr. Bush has said he needed to sell his 212,000 shares of Harken stock for nearly $850,000, which later plummeted in value, in order to finance his purchase of an interest in the Texas Rangers baseball club.
He invested about $600,000 in the team and earned nearly $15 million when it was sold in 1998.
If confirmed by the Senate, Mr. Jordan would represent the United States in the capital of one of its key allies in the Middle East.
"He understands the important relationship that exists between the United States and Saudi Arabia, and I am confident he will be an outstanding ambassador," Mr. Bush said in announcing his selection.
In a brief telephone interview Friday, Mr. Jordan said he was honored by the appointment, but could not discuss it in any detail until he is confirmed.
In the Senate, Allison Dobson, a spokeswoman for Sen. Paul Wellstone, D-Minn., whose foreign relations subcommittee will screen Mr. Jordan's nomination, said a staff review had just begun and any hearing was weeks off.
At the White House, deputy press secretary Scott McClellan said Mr. Bush has confidence in Mr. Jordan and foresaw no problems with his Senate confirmation.
"The president believes Mr. Jordan will do an outstanding job representing the United States," Mr. McClellan said.
Early in the new Bush administration, there have been reports of strained relations between the United States and Saudi Arabia over the continued violence between Israel and the Palestinians.
Just last week, it was reported that former President George Bush had called Saudi Crown Prince Abdullah to reassure him that his son was determined to "do the right thing" in the region.
Mr. Jordan, 55, is a director of the State Bar of Texas and a past president of the Dallas Bar Association.
He is a Navy veteran and a graduate of Duke University. He also has a master's degree in government and international relations from the University of Maryland and a law degree from the University of Oklahoma.
A corporate lawyer familiar with the courtroom, Mr. Jordan has handled a wide range of domestic and international cases. His Houston-based firm, Baker Botts, deals heavily with energy and technology issues and has a branch office in the Saudi capital of Riyadh.
James Baker, who was secretary of state in the administration of Mr. Bush's father and treasury secretary under President Ronald Reagan, also is a partner in the firm.
Although the White House has announced Mr. Jordan's selection, his nomination has not been formally submitted to the Senate. Mr. Jordan said he is still working on the voluminous personal and financial disclosures that are required for such appointments.
Decades In The Life of George W. Bush, George H.W. Bush and Saudi Arabia
The White House connection: Saudi `agents' close Bush friends
Bush advisers cashed in on Saudi gravy train
Saudi Money Aiding Terrorist Bin Laden
Princely payments: Saudi royalty, it is claimed, make out like bandits on U.S. deals
Records Show What Bush Knew Before Stock Sale
Regulators Concluded in 1992 That He Did Nothing Improper
The Dallas Morning News
By Mark Curriden
September 7, 2000
Days before selling 212,000 shares of stock in a Texas oil company in 1990, George W. Bush received a memo as a company director estimating it might lose $4 million that quarter and faced serious problems refinancing its debt, according to documents made public Wednesday.
The records released by the Securities and Exchange Commission and Mr. Bush's lawyer show Mr. Bush didn't have any information that wasn't publicly available elsewhere. And, his lawyer said, the records were available to federal regulators who investigated Mr. Bush's stock sale and did not alter their 1992 conclusion that the he did nothing improper.
The internal corporate documents, provided by the SEC after Freedom of Information requests from The Dallas Morning News and The Associated Press, offer the most extensive details yet of Mr. Bush's knowledge of Harken Energy Corp.'s financial troubles when he sold his shares for $848,560 in June 1990.
Insider trading allegations have been raised during both Mr. Bush's run for governor and his presidential race. Mr. Bush has said he did not know that Harken was going to report a $22 million loss two months after he sold his stock.
"I absolutely had no idea and would not have sold it had I known," he told The News during his 1994 campaign for governor.
The records released Wednesday show Mr. Bush, a Harken board director and member of its audit committee, received a so-called "flash sheet" in early June 1990 estimating quarterly losses for the company would reach $4 million.
Other reports available to Mr. Bush disclosed that Harken faced a "liquidity crisis" regarding the refinancing of it's $43 million debt. Another told Mr. Bush the company was "in a state of noncompliance" with its lenders.
Those same documents also say the company expected to make a profit in subsequent quarters and that two of its largest stockholders had agreed to refinance its debt.
Federal law prohibits company insiders, such as corporate directors and consultants, from buying and selling stock based on private information they received as an officer of the company.
In separate internal SEC records obtained by the AP, federal investigators concluded in March 1992 that "Bush did not engage in illegal insider trading because it does not appear that he possessed nonpublic information or that he acted with wrongful intent when he sold the Harken stock."
Bush critics have noted that Mr. Bush's father was president at the time of the investigation and that a longtime Bush supporter, Richard Breeden, was then the SEC's general counsel.
Mr. Bush has said he received no special treatment and cited a letter from SEC associate director Bruce Hiler, stating that "the investigation has been terminated as to the conduct of Mr. Bush and that, at this time, no enforcement action is contemplated with respect to him."
Mr. Bush received the 212,156 shares of Harken stock in 1986 when he helped merge Spectrum 7, an oil company of which Mr. Bush was chairman and 15 percent owner. Mr. Bush has said he needed to sell his Harken stock to pay off a loan he got to invest in the Texas Rangers baseball club.
Mr. Bush's lawyer said Wednesday that the information, while new to the presidential campaign, is "old news.''
"The SEC did their job by the book, and this is old news," attorney Robert Jordan said. He said that "the company's financial situation was well-disclosed to the public" through filings at the time with the SEC.
"By the time Bush sold his stock, the cash crisis had been largely resolved," Mr. Jordan said. "By May 21, 1990, the major shareholders had agreed to a credit agreement which put $26 million into the company immediately. ...This stock sale was completely legal and proper."
The SEC investigators never interviewed Mr. Bush about what else he might have known about the company's financial situation before selling the stock.
The investigators said that Mr. Bush did not initiate the sale of his stock, that he was approached by a broker and checked with the company's general counsel about the propriety of the sale before carrying it out.
"We've had too many cases of people abusing their responsibilities, and people just need to know that the SEC [Securities and Exchange Commission] is on it, our government is on it,"
George W. Bush - Source - Insight Magazine.
"I am deeply concerned about some of the accounting practices that take place in America,"
George W. Bush - June 26, 2002 Source.
"There are some concerns about the validity of the balance sheets of corporate America, and I can understand why,"
George W. Bush - June 26, 2002. Source.
"There is a need for renewed corporate responsibility in America. Those entrusted with shareholders' money must -- must -- strive for the highest of high standards."
George W. Bush - June 26, 2002. Source.
"We will fully investigate and hold people accountable for misleading not only shareholders, but employees as well."
George W. Bush - June 26, 2002. Source.
"Off and on over the years, a few capitalists have done more to delegitimize capitalism than America's impotent socialist critics ever did or today's moribund left could hope to. It is the Republicans' special responsibility to punish such capitalists."
George Will - January 14, 2002 - Washington Post.
One time in America, the following was an outright lie, and with a little effort they threw your butt in prison. Now they elect you president.
Bush has said he did not know that Harken was going to report a $22 million loss two months after he sold his stock.
"I absolutely had no idea and would not have sold it had I known," he told The News during his 1994 campaign for governor.
The records released Wednesday show Mr. Bush, a Harken board director and member of its audit committee, received a so-called "flash sheet" in early June 1990 estimating quarterly losses for the company would reach $4 million.
Other reports available to Mr. Bush disclosed that Harken faced a "liquidity crisis" regarding the refinancing of it's $43 million debt. Another told Mr. Bush the company was "in a state of noncompliance" with its lenders.