George W. Bush - July 8, 2002 - Source
"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."
The Washington Post - Bush Name Helps Fuel Oil Dealings - By George Lardner Jr. and Lois Romano - Friday, July 30, 1999; Page A1.
- Richard C. Breeden - "who was SEC chairman under President Bush's father, former President George H.W. Bush"
- Richard C. Breeden - "Serving as 'Assistant' to the President for President George H.W. Bush"
- Ex-SEC chairman Richard Breeden named "WorldCom" monitor
- James R. Doty - "From May 1990 through December 1992, Mr. Doty was the General Counsel of the United States Securities and Exchange Commission, Washington, D.C."
"As General Counsel, Mr. Doty was the chief legal officer of the Commission, responsible for advising the Commission and its staff with respect to interpretations involving questions of law, the conduct of administrative proceedings, the preparation of Commission comments to Congress on pending legislation and the drafting, in conjunction with the appropriate divisions and offices, of legislative proposals sponsored by the Commission." - James R. Doty - "who earlier represented Bush in his purchase of the Texas Rangers, made with the proceeds of his sale of Harken shares"
- Harvey L. Pitt - Former Arthur Andersen Attorney
"I absolutely had no idea and would not have sold it had I known,"
George W. Bush - The News during his 1994 campaign for governor. - Source: The Dallas Morning News - By Mark Curriden - September 7, 2000 - Article: Records Show What Bush Knew Before Stock Sale.
Excerpt:
"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."
Source: The Dallas Morning News - By Mark Curriden - September 7, 2000 - Article: Records Show What Bush Knew Before Stock Sale.
Bush Defends Stock Sale And Vows To Enhance SEC
By Elisabaeth Bumiller and Richard A. Oppel Jr.
July 9, 2002
Source
President Bush defended himself today against a barrage of questions about his own corporate stock dealings even as he vowed to take a tougher line in a speech in New York on Tuesday against corrupt corporate executives.
As pressures mounted today from Democrats in Congress, Mr. Bush repeatedly dismissed assertions that he had failed to properly disclose a 1990 stock sale, saying the criticism was nothing more than a political attack, although he acknowledged that he still did not know why the sale had not been disclosed as promptly as required by law.
"I still haven't figured it out completely," Mr. Bush said in a late afternoon White House news conference hastily announced after his return from a three-day vacation at his parents' summer home in Maine, and only 18 hours before what the White House has billed as a major presidential speech about corporate responsibility.
Asserting that a central element of his proposal is to strengthen the Securities and Exchange Commission, Mr. Bush said, "I'll call for a stronger S.E.C., more investigators and more budget."
As Mr. Bush and Senate Democrats vied to seize political advantage on the corporate responsibility issue today, former top executives of WorldCom invoked their Fifth Amendment rights against self-incrimination rather than answer questions on Capitol Hill about a $4 billion discrepancy in the company's books.
At his news conference, the president was also vague and dismissive about the accounting procedures at a company on whose board he served, the Harken Energy Corporation. Harken was subsequently required by the S.E.C. to restate its earnings.
"In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures," Mr. Bush said, referring to Harken.
Seeking to upstage Mr. Bush before his speech on Wall Street — and emboldened by momentum created by fresh scandals at WorldCom and other companies — Congressional Democrats moved to gain the upper hand by trying to broaden significantly the corporate reform legislation that is to be taken up by the Senate on Tuesday.
While the current focus of the legislation is on accounting-related changes, Democrats want to expand the measure to make it simpler to prosecute securities fraud, aid plaintiffs who want to bring private securities fraud lawsuits against corporations, and make it easier for securities regulators to levy fines and impose other penalties on executives and directors who commit wrongdoing.
Mr. Bush also said at his news conference that he wanted to strengthen enforcement powers of the S.E.C. and expressed confidence in Harvey L. Pitt, the chairman of the regulatory agency, whose resignation has been called for by Democratic Congressional leaders in recent days.
The curious timing of the news conference, in the White House press briefing room, appeared intended to distract attention from a day that would have been dominated by news coverage of the beleaguered WorldCom executives. The event also seemed an attempt to place Mr. Bush back in command at the White House after three days of television and newspaper pictures of him fishing and golfing in Maine, many of them accompanied by reports of the president's own corporate stock dealings.
White House officials also seemed intent on getting questions about Mr. Bush's stock dealings out of the way before his speech, which his advisers hope will clear the way for a more straightforward handling by the media of his remarks on Tuesday. But they probably did not anticipate that Mr. Bush's meeting with reporters would be so dominated by questions about Harken.
The scandals in recent weeks at WorldCom, Tyco International and other companies have added so much energy to the drive for corporate reform that the Senate accounting bill, which was struggling just a month ago, is now expected to pass by a wide margin.
Democrats are trying to take greater advantage of that favorable political momentum by adding significant amendments to the bill — proposed by Senator Paul S. Sarbanes, Democrat of Maryland — that may not have had enough support to pass the Senate just weeks ago. Many of these provisions have the support of the Senate majority leader, Tom Daschle of South Dakota, aides said today.
"The Sarbanes bill is a strong bill and a great starting point, but there are a number of areas where it can be strengthened," said Senator Carl Levin, a Michigan Democrat who plans to offer several amendments.
Asked today about the Sarbanes bill, Mr. Bush said, "We share the same goals, and I'm confident we can get a good piece of legislation out of the Congress."
Mr. Bush added, "My concern on the Sarbanes bill is that there's overlapping jurisdiction, which will make it harder to enforce rules and regulations, not easier."
Mr. Bush insisted that the procedures at Harken were not similar to those at the bankrupt Enron Corporation, and that there was no malfeasance, saying, "There was an honest difference of opinion as how to account for a complicated transaction."
The most sweeping amendment to the Democrats' plan is a proposal by Senator Patrick Leahy, Democrat of Vermont. That proposal creates a new felony for any "scheme or artifice" used to defraud shareholders; increases penalties for shredding or other destruction of evidence; offers new protections to corporate whistle-blowers; and prevents executives who lose securities fraud lawsuits from using bankruptcy to escape fraud-related verdicts and settlements. Mr. Leahy, the chairman of the Judiciary Committee, has the strong support of Mr. Daschle; many Republicans are also backing most provisions of the measure.
The proposal would, however, also lengthen the amount of time plaintiffs have to file securities fraud lawsuits, a provision many Republicans have objected to. Also, Senator Richard C. Shelby, Republican of Alabama, is expected to offer another plaintiff-friendly amendment that would make it easier for investors to sue accountants, lawyers, investment banks and others who "aid or abet" securities fraud.
In another important amendment, three senators want to write into the law strict responsibilities for corporate lawyers. This proposal, by Mike Enzi, Republican of Wyoming, and Democrats Jon S. Corzine of New Jersey and John Edwards of North Carolina, requires corporate lawyers for publicly traded companies who receive credible evidence of material legal violations to bring the matter to the attention of management and, if ignored, the board.
Mr. Levin plans to offer an amendment that would empower the S.E.C., without first going to court, to ban "unfit" officers and directors from publicly traded companies; fine accountants, lawyers, companies, executives and directors who violate securities laws; and obtain records for financial investigations without disclosing the subpoenas.
Even with all the new political momentum, the Democrats have to be careful, as whatever they pass still faces a showdown in conference committee with a much different legislative package approved in April by the Republican-controlled House. If the Democrats put too many new items on their bill, that could undermine its support among some members and reduce the legislation's momentum.
It is unclear whether Mr. Bush's news conference will put the questions behind him, particularly because he offered less of an explanation today than he and his advisers have in the past for why he was eight months late disclosing his 1990 sale of Harken stock on a document called a Form 4.
In his 1994 race for governor of Texas, Mr. Bush said that he thought he had filed on time but that the S.E.C. had misplaced the proper disclosure forms. Last week, Ari Fleischer, the White House press secretary, attributed the late filing to a "mix-up" with Harken's lawyers. Mr. Bush said today, "As to why the Form 4 was late, I still haven't figured it out completely."
Mr. Bush repeatedly said that his stock sale and late filing were old news, and that it had been used against him by his political opponents for years. "People love to play politics," Mr. Bush said. Then he added: "That's nothing new. That happened in 1994. I can't remember if it happened in 1998 or not. It happened in 2000. I mean, this is recycled stuff."
At issue are 212,140 shares of Harken stock that Mr. Bush sold on June 30, 1990, for $4 a share, or $848,560, eight days before Harken finished its second quarter with a loss of $23.2 million. By August, the share price had fallen to $2.37. The S.E.C. investigated on suspicions that the transaction was conducted on the basis of insider information, a potential crime, but dropped the investigation in 1993, saying that "at this time no enforcement action is contemplated."
Today Mr. Bush said that by his accounting, he had actually lost money on the sale. "I sold the stock at 4, and 14 months later — you know, the holding period for capital gains I think was 12 months in those days — the person who bought my stock could have sold it for 8, could have doubled his or her money."
Aides to Senate leaders said they hoped that widening the scope of their bill would illuminate what they believe is a sharp contrast with a weaker plan by the Bush administration.
"I'm afraid he's going to try to blur the difference and get away with something without real teeth in it," said a senior aide to the Democratic leadership. "I think he's going to stand up there, with a great deal of hoopla, and deliver what sounds like a responsible position, but do nothing to support a responsible bill."
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