"The SEC fully looked into the matter, they looked at every aspect of it ... and the people who looked into it said they have no case,"George W. Bush - July 8, 2002 -
Source.
As I documented above the SEC was so tough that they, well, just, well, you know, didn't even interview George W. Bush. LOL! Even Ari Fleischer had to admit it. But it was a tough SEC investigation! Every stone was turned over, much like Janet Reno's talents. Hahahahaha!!!
Press Briefing by Ari Fleischer
For Immediate Release
Office of the Press Secretary
July 12, 2002
12:02 P.M. EDT
SOURCE
The James S. Brady Briefing Room
Partial Transcript:
Q Can you explain why you think it's appropriate that the President wasn't interviewed on the Harken -- by the SEC, on the Harken situation?
MR. FLEISCHER: I think just as with any type of review of facts and of allegations, when the reviewers determine that the facts and the allegations don't hold up there's no need for an interview. The President would have been willing to have been interviewed if that was the case, he has said so. But I think it underscores exactly what has been discussed many times here, that there is no "there" there. It's all been looked into, the Securities and Exchange Commission has looked into this issue extensively and exhaustively and made the determination there was no "there" there.
Q But how do you react to the fact that the Securities experts say that this kind of lack of interview is highly unusual in this kind of case? I mean, if it had been someone else, there probably would have been an interview.
MR. FLEISCHER: I think it's all been looked at and explored by the Securities and Exchange Commission. And I think if that was the case, if somebody is suggesting that the actions of the Securities and Exchange Commission at the time they looked on this were somehow wrong actions, don't you think the administration that succeeded that administration might have looked at it differently if they had different people at the helm? Obviously, they made no changes to it because it was based on good judgment and the careful, considered judgment of the career people at the Securities and Exchange Commission. That's why in Washington you can go around in circles and circles and circles at a time when an old issue arises out of politics. And, again, there's no "there" there.
Q Ari? Ari?
Q Regardless of whether it was an old issue --
...Q Regardless of whether it was an old issue, Ari, the President did come out on Monday and field dozens of questions about the topic. We haven't seen the Vice President in the same way, come out and field those kinds of questions about his own accounting practices, his own stock practices. Is the President suggesting to him, regardless of whether it's old, it's been investigated, that he, too, come out, face the press, the American people and take questions on it?
MR. FLEISCHER: Let me put it to you this way. After a week of noise about nothing, people are seeing a scandal-seeking Washington that's out of touch with a solution-seeking nation. And that's what this President is focused on: solving the problems that have been created, that have been growing up for a considerable number of years as a result of the bubble in the markets and the corporate excesses that took place as a result of that; and targeting the wrongdoers and people who engage in fraud so that the country can have confidence in the free enterprise system and those people who are responsible in corporate America. And most of corporate America agrees with that, the American people agree with that. And that's where the President's focus is and shall be.
"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.
I thought the Bush-bots were just telling everybody that Bush and the SEC turned over ALL the documents. LOL!
DEVELOPING: Harvey Pitt, the nation's chief regulator of financial markets, said Friday he 'absolutely' will not resign and that he has the full support of President Bush. Pitt also said he had no plans to release SEC documents involving Bush's controversial sale of Harken Energy Co. stock in 1990... MORE...
"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.
SEC Chairman Pitt Says He Won't ResignAtlanta Journal-Constitution
By MARILYN GEEWAX
July 12, 2002
Source
Harvey Pitt, chairman of the Securities and Exchange Commission, said Friday that he "absolutely" will not resign and that he has the full support of President Bush.
"I have a big job to do," said Pitt, the nation's chief regulator of financial markets.
Pitt spoke in an exclusive interview with Cox Newspapers, his first since a growing number of accounting scandals sparked calls for his resignation by high-profile lawmakers of both major political parties.
Pitt said he has no plans to release additional SEC documents involving Bush's sale of Harken Energy Co. stock in 1990.
Critics recently questioned whether Bush benefited from inside information before selling the stock. The president has acknowledged that lawyers at Harken belatedly filed paperwork with the SEC related to the sale.
Pitt said he didn't think the release to the public of all the documents would quiet questions about the president's business dealings at Harken.
"The reason is, first of all, I don't think the president's credibility needs to be increased," he said. "And second, this was thoroughly investigated a decade ago. It was meticulously done . . . so the issue at this juncture is political."
Just before Friday's interview at his SEC office, Pitt met with Bush at the White House to lay out strategies for a new anti-fraud task force, described by Bush as a SWAT team that will crack down on accounting fraud and other kinds of corporate wrongdoing.
The panel includes Pitt, Deputy Attorney General Larry Thompson, Attorney General John Ashcroft and FBI Director Robert Mueller.
Pitt said Bush's support for him "has been clear all along. . . . It has never wavered."
The president, Pitt said, knows he will be a tough crime fighter because Bush "is aware of what we are actually doing" at the SEC to enforce laws. "I am enormously grateful for his support."
In recent days, more critics have demanded Pitt resign, saying he is the wrong man for the job because he spent 23 years representing the accounting and securities firms he now must police.
On Thursday, Sen. John McCain (R-Ariz.) said the agency needs a new leader "whose background and record leave no question" about the SEC's independence and authority.
Senate Majority Leader Tom Daschle (D-S.D.) said Pitt's "cozy relationship" with accountants calls into question "whether or not he has the credibility to be the independent regulator he needs to be."
Attacks are 'political'
Pitt said such attacks are "political diatribes" that ignore facts, and he does not agree with those who say he has become a political liability to Bush and to Republicans running for office in November.
"If you look at the people who criticize, you'll notice that all of their criticisms are generic -- they're just sound bites," he said. "No one who sees what we have done could doubt that this is the most effective SEC in history."
Pitt said the SEC has stepped up its pace of enforcement actions and issued numerous new reporting rules and regulations.
"My obligation is to serve the public," he said. "After November, after all of the critics have moved on to the next issue, I'm still going to be here cleaning up the mess" in the accounting world.
Pitt is not daunted by the scope of that task, he said. "This is a historic period -- I want to be part of the solution."
He said he was devastated to learn of accounting irregularities at Enron, WorldCom, Xerox and other major corporations that have led to the loss of tens of thousands of jobs and hundreds of billions of dollars in retirement savings.
"You look at an Enron or a WorldCom, and to me it's devastating," he said. "I won't tolerate it. I will make certain that we do everything in our power to restore the integrity and quality of the accounting profession."
Throughout his career, first as a young SEC lawyer and then as an attorney in private practice, Pitt, 57, has been praised for his legal brilliance and diligent work habits.
But the events of his first year as SEC chairman have been daunting. By his own count, he already has faced four crisises: the economic fallout from the Sept. 11 terrorist attacks, the Enron accounting debacle, the felony conviction of accounting firm Arthur Andersen and a stock market plunge tied to the loss of investor confidence.
Pitt may have set himself up for criticism in October, just a month after taking office, when he made a speech to the American Institute of Certified Public Accountants. He promised a new era at the SEC, saying the commission "has not, of late, always been a kinder and gentler place for accountants."
That phrase has been used time and again to suggest he won't be tough enough on criminal conduct in the industry.
"People are misconstruing what I said," Pitt said Friday.
Accountants used to be reluctant to call the SEC for advice, he said. He was only suggesting that his staff would be more willing to sit down with companies and their auditors to explain the law, and be sure they are following it, he said. His words were taken "wholly out of context" because some people want "to make political capital."
Responsible or timid?
Critics have said Pitt is not aggressive enough, that he asked for a budget increase of $100 million for more staff, yet Congress since has made it clear it would give him about three times as much.
"I wasn't being too timid. I was being responsible" in asking for a modest amount in his first year in office, Pitt said. "I wanted to make a top-to-bottom study of our efficiency" to determine exactly what the budget ought to be.
"We are doing that now," he said. "It will be done by the end of the summer, at which point we may well ask for additional people. But at least our request will be scientific, not this, 'Let's see who can outbid whom and who can come up with the largest number.' "
"There is nothing rotten in the accounting profession."
Harvey Pitt, chairman of the Securities and Exchange Commission - January, 2002 - SOURCE
Hi, my name is Harvey Pitt, you'll have to excuse me, I'm a recovering Arthur Andersen attorney.
Who Bought Bush's Stock In Problem-Plagued Oil Company And Why?Associated Press
By Pete Yost
July 12, 2002
WASHINGTON (AP) -- It is a stock market whodunit that has withstood a decade of scrutiny. Who bought George W. Bush's problem-plagued oil company stock just before its value dropped?
The 1990 transaction involving shares of Harken Energy Corp. allowed the future president to pay off a bank loan for his now-famous stake in the Texas Rangers baseball team. The identity of the buyer of the stock has escaped public disclosure.
Federal regulators who examined the deal as a possible insider trade never asked. President Bush says he doesn't know and the White House declines to ask the broker who handled the transaction. Reporters have fared no better in getting to the bottom of the mystery.
Was Bush's sale of Harken stock another instance of a helping hand from family friends? Or was it a simple case of a buyer trying to make a killing in a high-risk investment?
Corporate scandals and failures that have rocked Wall Street in recent months have renewed questions about Bush's own business dealings when he was a Texas oilman. The White House was put on the defensive again Thursday, as it faced questions about the fact that Bush borrowed $180,000 from Harken to buy some of its stock. The loans are a type of transaction that Bush now wants to ban as part of a crackdown on corporate wrongdoing.
In the 1990 stock sale, Bush collected $848,560 when he sold 212,140 shares he had gotten in the merger of his struggling oil company with Harken in 1986.
By the time of the sale, Harken's finances also were in the red. Daily trading activity in the stock was as little as 1,300 shares on the New York Stock Exchange. If Bush had tried to sell such a large amount of Harken stock into the open market, it undoubtedly would have driven the price far below the $4 a share he was paid.
Bush's oil industry career is a history of being bailed out of money-losing ventures. Among the businessmen who came to his rescue before Harken were Cincinnati businessmen Mercer Reynolds III and William O. DeWitt. They eventually invested in the Rangers with Bush, raised more than $3 million for his presidential campaign and served as co-chairmen of Bush's inaugural committee. Reynolds is now U.S. ambassador to Switzerland and Liechtenstein.
Bush's sale on June 22, 1990, was handled by California stock broker Ralph D. Smith, who says he got a call on June 9 that year from an institutional client who wanted to buy a large block of Harken.
Smith said he then made a couple of "cold calls" to people who owned Harken stock, including Bush.
The broker said there wasn't any arrangement ahead of time to bail Bush out of Harken.
"If there was a rigged buyer, why would he come" to a West Coast brokerage firm? said Smith, who worked for Sutro & Co. in California until his retirement.
The broker said that "if you wanted to do a favor for Bush, you just go to him directly, say here's $800,000 and we'll get this stock transferred."
The 1990 sale triggered an insider trading probe of Bush because he was eight months late in disclosing it to the Securities and Exchange Commission. White House press secretary Ari Fleischer defended the sale by saying Bush had notified the SEC in a timely manner that he intended to sell his shares. However, Bush failed to notify the SEC once the stock actually was sold, as required by law.
On Thursday, a Washington group, the Center for Public Integrity, posted internal SEC documents on the Internet showing that Harken initially was uncooperative in the insider trading probe. The company subsequently provided extensive cooperation to the SEC.
Uncovering little evidence to support an insider trading case, the SEC chose not to interview Bush.
SEC investigators interviewed Smith in the probe, but, according to Smith, they never asked the broker who bought Bush's stock.
Over the past two years, news organizations have tried to persuade Smith to ask the buyer to waive the cloak of confidentiality that surrounds the transaction, but the retired broker has declined.
"They're not going to find out the name of the buyer; it's none of their business," Smith said, adding that he had a professional responsibility not to identify the buyer.
On Thursday, White House spokesman Dan Bartlett said that "it isn't our place" to urge that the buyer step forward.
While Smith declines to name the purchaser, his difficult-to-read handwritten notes turned over to the SEC in the insider trading probe of Bush supply a clue.
The notes for June 9 appear to state that "Geo Bush will sell 212,010 shares in about 2 weeks." The June 22 entry on the day of the sale appears to state, "s/212,140 at 4 to Lee for Bush."
Smith declines to say whether the apparent word "Lee" refers to a person or an entity.
Bush's lawyers have said his investment in the Texas Rangers -- not any inside information about Harken's deteriorating financial performance -- was the motivating factor in selling his shares.
The stock Bush sold for $4 was selling for $3 two months later and fell to around a dollar by the end of 1990. It rebounded to nearly $9 a year after Bush sold. Today it sells for 44 cents a share.
Despite financial losses in 1990 and 1991, Harken's stock price was propped up by the company's highly publicized deal to drill for oil off the coast of Bahrain. The project, which came together while Bush's father was president, never struck any oil. Little Harken beat out major oil companies, including Amoco, for what at the time was thought might be an extremely valuable concession.
Bush's lawyers told the SEC that before the sale, his financial adviser "was bugging him to get liquid" to meet a financial obligation of $600,000 in connection with the Texas Rangers and to pay a tax bill of a couple of hundred thousand dollars. Bush paid off a bank loan he'd taken out for a share of the baseball team.
Bush's $600,000 stake in the Rangers in 1998 brought him $14.9 million when the team was sold.
On the Net: Center for Public Integrity:
www.publicintegrity.org/dtaweb/home.asp
THE HARVARD BOYS DO RUSSIA
"Anne Williamson, a journalist who specializes in Soviet and Russian affairs, details these and other conflicts of interest between H.I.I.D.'s advisers and their supposed clients-the Russian people-in her forthcoming book, How America Built the New Russian Oligarchy. For example, in 1995, in Chubais-organized insider auctions of prime national properties, known as loans-for-shares, the Harvard Management Company (H.M.C.), which invests the university's endowment, and billionaire speculator George Soros were the only foreign entities allowed to participate. H.M.C. and Soros became significant shareholders in Novolipetsk, Russia's second-largest steel mill, and Sidanko Oil, whose reserves exceed those of Mobil. H.M.C. and Soros also invested in Russia's high-yielding, I.M.F.-subsidized domestic bond market.
Even more dubious, according to Williamson, was Soros's July 1997 purchase of 24 percent of Sviazinvest, the telecommunications giant, in partnership with Uneximbank's Vladimir Potanin. It was later learned that shortly before this purchase Soros had tided over Yeltsin's government with a backdoor loan of hundreds of millions of dollars while the government was awaiting proceeds of a Eurobond issue; the loan now appears to have been used by Uneximbank to purchase Norilsk Nickel in August 1997. According to Williamson, the U.S.assistance program in Russia was rife with such conflicts of interest involving H.I.I.D. advisers and their U.S.A.I.D.-funded Chubais allies, H.M.C. managers, favored Russian bankers, Soros and insider expatriates working in Russia's nascent markets."
NOTE: An Inconvenient History - The Russian Money Laundering Pyramid
The Buying Of The President
Indeed, once Bush signed on, business at Harken began to pick up.
"When Harken bought out Spectrum 7, the company was broke and desperately needed a cash infusion.. As the talks with Spectrum 7 progressed, Harken officials were lining up a major new financial backer: Harvard Management Company, Inc. The investment firm's only client is Harvard University; it manages the school's multi-billion dollar endowment.
A month after Bush came on board, Harvard Management agreed to invest at least $20MM in Harken. it would eventually come to own some ten millions shares of Harken's stock, making it one of the company's largest investors.
The Bush name may have helped seal the deal.
Michael Eisenson, a partner in Harvard Management Company, who sat on Harken's board of directors, said that he and other Harvard officials picked Harken after reviewing several proposals from energy companies. "Harken management seemed capable and honest," Eisenson said.
The Bush name certainly would have made an impression on Eisenson's boss, Robert Stone, Jr., who was one of Harvard Management's directors. Stone was the "driving force" behind Harvard's Southwest oil and gas investments, according to Scott Sperling, who worked with Eisenson at Harvard. Stone himself was a player in the Texas oil and gas industry; at the time, he was the chairman of Kirby Exploration, an oil and gas transportation company based in Houston. As a longtime resident of Greenwich, Connecticut, he also knew the Bushes. His father in law, Godfrey Rockefeller, had invested in George Bush's oil drilling ventures in the 1940's. Stone's brother, Galen L. Stone, was the US envoy to Cyprus during the first Reagan-Bush Administration. In 1980 and 1988 he contributed to the elder Bush's presidential campaign.
Harken was Harvard Management's first major investment in Texas wildcat operations, a part of the university's investment history it would rather forget. The investments in oil and gas would eventually generate nearly $200 million in loses for the endowment.
The university's commitment to Harken was suprising in view of the bad shape the company was in. "I took some time and looked at it and I went, God, I don't want to be anywhere near this," a prospective investor in Harken from the late 1980's told the Center. "This thing looks like a train wreck."
By Harken executives' own accounts, the company's financial statements were "a mess" and " a fast numbers game" But insiders insist that Harvard's money managers wouldn't have kept pumping money into Harken if they didn't thing it would become profitable.
For a time, they had reason to believe it would.
The Bahrain agreement, announced on January 30, 1990, seemed to justify Harvard's enthusiasm for Harken. (Note from Solari: See the book "False Profits" on the allegations surrounding the dropping of indictments by the Bush Administration against BCCI's Miami and Caribbean operations and Harken's first non domestic oil deal and alleged relations between the two investor groups).
One of the questions the SEC didn't answer was who bought Bush's stock.
In his statement of intent to sell, which Bush also had to file with the SEC, he said he was putting his 212,140 shares on the open market. That was nearly twenty times the daily volume of stock that traded on average during June 1990; without a buyer willing to absorb such a large block of stock, the share price would have plummeted.
Under questioning by SEC investigators, Ralph Smith, a Los Angeles broker with Sutro & Company, who handled the sale, said that he solicited the shares at the behest of an institutional investor, which he didn't name.
The available evidence suggests that the investor was Harvard. The university increased its holdings in Harken around the time. No new institutional investors appeared on the scene. At the bottom of a spreadsheet Smith used to record his calls to Bush was the name of Michael Eisenson, along with the telephone number of Harvard Management. (Eisenson did not return the Center's telephone calls).
Finally, nine years after its investment in Harken helped save Bush from financial ruin, Harvard Management Company got a deal on a piece of real estate it bought from the Texas Teachers Retirement System. In 1995 the Texas Teachers Retirement System sold the Anatole Hotel in Dallas to a partnership that included the Crow family, which owns a controlling interest in Trammell Crow Company, one of the nation's top real estate management companies, and Harvard Management. Without taking bids, the Texas Teachers Retirement reportedly sold the hotel for $27 million less than it had spent to make improvements on the structure."
Winokur to Join Harvard Corporation
Herbert S. Winokur Jr.
Born in Columbus, Ga., Winokur holds three degrees from Harvard: A.B. '65 ('64), A.M. '65, and Ph.D. '67. His doctoral degree is in applied mathematics (decision and control theory). Since 1987, Winokur has been chairman and chief executive officer of the investment firm Capricorn Holdings Inc., based in Greenwich, Conn. He is also managing general partner of three affiliated limited partnerships, Capricorn Investors, L.P., I, II, and III. The portfolio investments encompass companies with revenues of more than $2 billion and having more than 20,000 employees.
Winokur has maintained close ties to Harvard over the years. A member of the Committee on University Resources since 1989, he has also served since 1995 as a member of the board of directors of the Harvard Management Company. He serves on the advisory committee of Harvard's Mind/Brain/Behavior Initiative, as well as on the Technology and Education Planning Committee of the Faculty of Arts and Sciences. He is a member of the Committee to Visit the Weatherhead Center for International Affairs, and previously served on the FAS Planning Committee for Faculty Recruitment and Development. Co-chair of reunion fundraising efforts for the Class of 1965, he is a member of the New York Major Gifts Steering Committee.
An active board member in both the nonprofit and for-profit worlds, Winokur is an honorary director of the UCLA Medical Center, a former trustee of the Greenwich Academy, and a former co-chair of the New York Historical Society. He is on the board of Second Stage Theatre and until recently served on the board of Project 180, an organization that facilitates the restructuring of nonprofit institutions. He is a member of both the Council on Foreign Relations and the Woodrow Wilson International Center for Scholars Council, and he chaired the search for the Center's current director. His present and past corporate directorships span a wide range of industries, including information technology, energy, water management, and commercial real estate finance.
Before becoming chairman and CEO of Capricorn Holdings, Winokur served as senior executive vice president of the Penn Central Corp., and played a leading role in the corporation's major restructuring and cost reduction efforts. Previously, from 1974 to 1983, he held senior management positions at Pacific Holding Corp., Victor Palmieri and Co., and Pennsylvania Co., Penn Central's principal operating subsidiary.
From 1969 into the early 1970s, Winokur was co-founder and chairman of the Inner City Fund (later ICF Kaiser International), a management consulting firm specializing in policy planning for senior government and business officials, and which also focused on stimulating minority entrepreneurship. For the two preceding years, following the receipt of his Ph.D., he served as an officer in the U.S. Army, assigned to the Office of the Secretary of Defense.
Group Questions Harvard's Ties to Enron
Herbert "Pug" Winokur Jr. - Embattled Enron director to resign from Harvard Management Company
Winokur, a member of the committee that produced the report, has been a director since 1985. Winokur is also affiliated with the National Tank Co., an oil industry supplier, which in 2000 received $370,294 in sales from Enron, according to Enron's most recent proxy.
ENRON - June 6, 2002 - At a Board meeting today, the Board unanimously accepted the resignations, effective today, of the four remaining long-standing directors, Robert A. Belfer, Norman P. Blake, Dr. Wendy L. Gramm and Herbert S. Winokur, Jr.
"There is nothing rotten in the accounting profession."
Harvey Pitt, chairman of the Securities and Exchange Commission - January, 2002 - SOURCE