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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.

Bush advisers cashed in on Saudi gravy train

Our Friends the Saudis - Two Saudi princes had been paying, on behalf of the kingdom, what amounts to protection money to Osama bin Laden since 1995

Princely payments: Saudi royalty, it is claimed, make out like bandits on U.S. deals

U.S. ties to Saudi elite may be hurting war on terrorism

Former CIA director: Saudis partially to blame for 9/11

Saudis financed terror ship

SAUDIS TELL U.S. FORCES TO GET OUT

A FAVOR FROM THE SAUDIS

U.S. Withdrawal From Saudi Arabia Is Not on the Cards: U.S. Official.

Saudi denounces US agenda behind bombing campaign

Saudi Money Aiding Terrorist bin Laden

USA Today
By Jack Kelley
October 28, 1999

WASHINGTON - More than a year after the U.S. Embassy bombings in East Africa, prominent businessmen in Saudi Arabia continue to transfer tens of millions of dollars to bank accounts linked to indicted terrorist Osama bin Laden, senior U.S. intelligence officials told USA TODAY.

The money transfers, which began more than five years ago, have been used to finance several terrorist acts by bin Laden, including the attempted assassination in 1995 of Egyptian President Hosni Mubarak in Ethiopia, the officials said.

Secretary of State Madeleine Albright is expected to raise the issue with Prince Sultan, the Saudi defense minister, during his visit to Washington next week. Saudi Arabia, the main U.S. ally in the Persian Gulf, has pledged to fight terrorism.

According to a Saudi government audit acquired by U.S. intelligence, five of Saudi Arabia's top businessmen ordered the National Commercial Bank (NCB), the kingdom's largest, to transfer personal funds, along with $3 million diverted from a Saudi pension fund, to New York and London banks.

The money was deposited into the accounts of Islamic charities, including Islamic Relief and Blessed Relief, that serve as fronts for bin Laden.

The businessmen, who are worth more than $5 billion, are paying bin Laden "protection money" to stave off attacks on their businesses in Saudi Arabia, intelligence officials said. Bin Laden, whose family runs the largest Saudi construction firm, has called for the overthrow of the Saudi government.

The money transfers were discovered in April after the royal family ordered an audit of NCB and its founder and former chairman, Khalid bin Mahfouz, U.S. officials say. Mahfouz is now under "house arrest" at a military hospital in the Saudi city of Taif, intelligence officials said.

His successor, Mohammad Hussein Al-Amoudi, also heads the Capitol Trust Bank in New York and London, which U.S. and British officials are investigating for allegedly transferring money to bin Laden. Amoudi's Washington lawyer, Vernon Jordan, could not be reached for comment.

Mahfouz's son, Abdul Rahman Mahfouz, is on the board of Blessed Relief in Sudan. Suspects in the Mubarak attack are linked to the charity.

Bin Laden faces U.S. criminal charges for allegedly masterminding the 1998 bombings of U.S. embassies in Kenya and Tanzania that killed 224 people. Bin Laden, who is in Afghanistan, denies the charges.

Saudi Ambassador Prince Bandar bin Sultan declined to comment on the reports.

The White House Connection: Saudi `Agents' Close Bush Friends

Boston Herald.com
By Maggie Mulvihill, Jonathan Wells and Jack Meyers
Source Article
Tuesday, December 11, 2001

A powerful Washington, D.C., law firm with unusually close ties to the White House has earned hefty fees representing controversial Saudi billionaires as well as a Texas-based Islamic charity fingered last week as a terrorist front.

The influential law firm of Akin, Gump, Strauss, Hauer & Feld has represented three wealthy Saudi businessmen - Khalid bin Mahfouz, Mohammed Hussein Al-Amoudi and Salah Idris - who have been scrutinized by U.S. authorities for possible involvement in financing Osama bin Laden and his terrorist network.

In addition, Akin, Gump currently represents the largest Islamic charity in the United States, Holy Land Foundation for Relief and Development in Richmond, Texas.

Holy Land's assets were frozen by the Treasury Department last week as government investigators probe its ties to Hamas, the militant Palestinian group blamed for suicide attacks against Israelis.

Partners at Akin, Gump include one of President Bush's closest Texas friends, James C. Langdon, and George R. Salem, a Bush fund-raiser who chaired his 2000 campaign's outreach to Arab-Americans.

Another longtime partner is Barnett A. ``Sandy'' Kress, the former Dallas School Board president who Bush appointed in January to work for the White House as an ``unpaid consultant'' on education reform.

In September, a federal grand jury issued subpoenas for Holy Land records around the same time terrorist investigators froze the assets of a North Texas Internet firm hired by Holy Land.

Holy Land shared office space with that firm, InfoCom Corp., which was raided by police on Sept. 5, just days before the World Trade Center and Pentagon attacks.

Holy Land has denied any link to Hamas.

According to Akin, Gump, the firm represents Holy Land in a federal lawsuit filed against the charity and another suspected Hamas entity by the parents of a man allegedly murdered by Hamas operatives in the Middle East.

In a statement issued Friday, Akin, Gump said it decided last week to decline a request to represent Holy Land in its defense of terrorism-related charges made by the U.S. Treasury Department.

Akin, Gump, which maintains an affiliate office in the Saudi capital of Riyadh, is also a registered foreign agent for the kingdom. It was paid $77,328 in lobbying fees by the Saudis during the first six months of 2000, public records show.

In addition to the royal family, the firm's Saudi clients have included bin Mahfouz, who hired Akin, Gump when he was indicted in the BCCI banking scandal in the early 1990s. In 1999, the Saudi's placed bin Mahfouz under house arrest after reportedly discovering that the bank he controlled, National Commercial Bank in Saudi Aabia, funneled millions to charities believed to be serving as bin Laden fronts.

A bin Mahfouz business partner, Al-Amoudi, was also represented by Akin, Gump. When it was reported in 1999 that U.S. authorities were also investigating Al-Amoudi's Capitol Trust Bank, Akin, Gump released a statement on behalf of their client denying any connections to terrorism. One year earlier, the firm had co-sponsored an investment conference in Ethiopia with Al-Amoudi.

Akin, Gump partner and Bush fund-raiser Salem led the legal team that defended Idris, a banking protege of bin Mahfouz and the owner of El-Shifa, the Sudanese pharmaceutical plant destroyed by U.S. cruise missiles in August 1998.

The plant was targeted days after terrorists - allegedly on the orders of bin Laden - bombed two U.S. embassies in Africa. The U.S. Treasury Department also froze $24 million of Idris' assets, but Akin, Gump filed a lawsuit and the government later chose to release the money rather than go to court. Idris, who insists he has no connection whatsoever to bin Laden or terrorism, is now pursuing a second lawsuit with different attorneys seeking $50 million in damages from the United States.

Charles Lewis, executive director of the Center for Public Integrity, a Washington, D.C.-based non-partisan political watchdog group, said Akin, Gump's willingness to represent Saudi power-brokers probed for links to terrorism presents a unique ethical concern since partners at the firm are so close to the president.

The concern is more acute now, Lewis said, because Bush has faced stiff resistance from the kingdom in his repeated requests to freeze suspected terrorist bank accounts.

``The conduct of the Saudis is just unacceptable by international standards, especially if they are supposed to be one of our closest allies,'' Lewis said.

Speaking of Akin, Gump partner Kress' office in the White House, Lewis added: ``That's not appropriate and frankly it's potentially troublesome because there is a real possibility of a conflict of interest. Basically you have a partner for Akin, Gump . . . inside the hen house.''

But another longtime Washington political observer, Vincent Cannistraro, the former chief of counter-intelligence at the Central Intelligence Agency, said the political influence a firm like Akin, Gump has is precisely why clients like the Saudis hire them.

``These are cozy political relationships . . . If you have a problem in Washington, there are only a few firms to go to and Akin, Gump is one of them,'' Cannistraro said.

Cannistraro pointed out that Idris hired Akin, Gump during the Clinton presidency, when Clinton confidante Vernon Jordan was a partner at the firm. ``He hired them because Vernon Jordan had influence . . . that's a normal political exercise where you are buying influence,'' he said.

Akin, Gump is not the only politically wired Washington business cashing in on the Saudi connection.

Burson-Marsteller, a major D.C. public relations firm, registered with the U.S. government as a foreign agent for the Saudi embassy within weeks of the Sept. 11 terror attacks.

One of Burson-Marsteller's first public relations efforts for the Saudis was to run a large advertisement in the New York Times reading: ``We Stand with You, America.''

The Washington chairman for Burson-Marsteller, which also maintains an office in Saudi Arabia, is Craig Veith, who ran communications for the Republican Party in the 1996 elections.

Other GOP heavyweights who have held top positions at the PR giant include Sheila Tate, the campaign press secretary for the elder George Bush; Leslie Goodman, deputy director of communications for the 1992 Bush-Quayle campaign; Craig L. Fuller, chairman of the 1992 Republican National Convention and elder Bush's vice presidential chief-of-staff.

Bush's Terrorist Buddy

Bush's terrorist buddy
Bush's terrorist buddy, Part 2

Senator Says Bin Laden Had Accounts in Bank Shut Down in Worldwide Fraud Scandal - BCCI

ASSOCIATED PRESS
September 26, 2001

WASHINGTON --Investigators have learned that Osama bin Laden was among those with accounts in a bank shut down in 1991 in one of the world’s biggest banking scandals, Sen. John Kerry said Wednesday. The Bank of Credit and Commerce International was closed after bank regulators around the globe linked it to fraud, theft, secret weapons deals, terrorist financing and drug-money laundering. Investigators didn’t know it at the time, but it turns out bin Laden had accounts at BCCI, said Kerry, a Massachusetts Democrat who led an investigation into the Third World bank. The BCCI-bin Laden tie was first reported by MSNBC.com's Christopher Byron Tuesday.

WE HAVE LEARNED SINCE from law enforcement and intelligence that when we shut it down, we dealt him a very serious economic blow because of the size of those accounts and his dependency on that flow,” Kerry said.

Saudi Arabian multimillionaire bin Laden and his al-Qaida network are the prime suspects in the Sept. 11 hijackings of four U.S. commercial jetliners and attacks on the World Trade Center and Pentagon.

U.S. officials are trying to trace the money behind bin Laden’s network, leading to a renewed push by Kerry and other lawmakers for tougher money laundering laws.

Kerry commented on BCCI’s link to bin Laden at a Senate Banking Committee hearing on money laundering legislation.

Arab terrorist Abu Nidal and Colombian cocaine cartels also were among the bank's 1.3 million customers. Depositors lost millions of dollars when authorities seized BCCI's assets. Arab terrorist Abu Nidal and Colombian cocaine cartels also were among the bank’s 1.3 million customers. Depositors lost millions of dollars when authorities seized BCCI’s assets.

Uncle Bill, a number of the articles you have posted make mention of business connections between GW Bush and Khalid Mahfouz, a Saudi with stong ties to Bin Laden and AlQaeda and Hamas terrorists and links to the bombing of the USS COle.

Also Bush has had strong legal ties to the Holy Land Foundation and InfoCom, companies raising money for Hamas, AlQaeda and hosting and paying for websites for Saudi terror businessmen,Iraq and for terrorists groups. The FBI has known about this since 1993 and only acted in November 2001 after first making a raid on InfoCom in Dallas five days before 9/11.

I have noticed that BlueDog has within the past two months confused the relationship of InfoCom and Holy LAnd Foundation and tried caliming it was Holy Land that was raided when in fact it was InfoCom taht was raided. BlueDog himself reoported the InfoCOm raid on FreeRepublic on 9/7/2001. I corrrected his reversal of who was rasided in replies on FR especiallly to Wallaby.

Be advised that BLueDog claimed last year in his earliest posts that he was trying to land and maintain a position in the Bush adminisntration It makes you wonder if some of this is the reason Bush ordered the FBI to back off investigating Saudi business connections in the US to Bin Laden a month before 9/11.

Here is an excerpt of an earlier article that you posted which identifies the earliest connections (although indirect at the time) between Bush and Mahfouz. Mahfouz has is connections with CLinton and BCCI it appears too. Clinton's Bert Lance James Ring Adams The American Spectator November, 1992 Stephens and Bush In the late 1970s, George Jr. tried to emulate his father's business success in the Oil Patch by setting up a series of drilling partnerships. Called Arbusto '78, Arbusto '79, and so forth, they attracted capital from, among others, a Houston aircraft broker and financial manager named James Bath, who according to a former associate had acted as liaison between Saudi businessmen and the Central Intelligence Agency in 1976, the year in which George Bush, the elder, served as director of central intelligence.

Bath's associate also disclosed in the course of a bitter legal fight that Bath managed millions of dollars of Houston investments for Sheik Khalid bin Mahfouz, the most important commercial banker in Saudi Arabia and for a time one of the largest shareholders in BCCI.

Manhattan District Attorney Robert Morgenthau indicted Sheik bin Mahfouz this July for a "scheme to defraud" in connection with his investments in BCCI. George W. Bush has given conflicting statements about Bath's investment in Arbusto, finally admitting to the Wall Street Journal that he was aware that Bath represented Saudi investors.

As you may recall, I wrote an article last year for FR about AlAmoudi, Kahlid Mahfouz connections to the bombing of the USS Cole and to Al Gore and Clinton.

Note these same individual's names appear in the article Uncle Bill posted in reply #37 which describes their connection to GW Bush and his friends:

The White House Connection: Saudi `Agents' Close Bush Friends

Boston Herald.com

By Maggie Mulvihill, Jonathan Wells and Jack Meyers

Source Article

Tuesday, December 11, 2001

A powerful Washington, D.C., law firm with unusually close ties to the White House has earned hefty fees representing controversial Saudi billionaires as well as a Texas-based Islamic charity fingered last week as a terrorist front.

The influential law firm of Akin, Gump, Strauss, Hauer & Feld has represented three wealthy Saudi businessmen - Khalid bin Mahfouz, Mohammed Hussein Al-Amoudi and Salah Idris - who have been scrutinized by U.S. authorities for possible involvement in financing Osama bin Laden and his terrorist network

"These are cozy political relationships"

And they're Circles within Circles. Just the names brought out in your above reference mat'l would make an interesting snapshot of the focal points and overlap of these top players.

As usual, the motivations are Oil/Energy, Drugs and the Laundering of Money derived. It's also clear that they've set themselves above all laws as necessary by key placement thru the political system of appointments to effect their cover.

Terrorists, Dollars And A Tangled Web - The tentacles of terrorist-linked offshore money in America

Excerpt follows:

SECRET MONEY

In the mid-1970s, an obscure Saudi money man named Ghaith Pharaon began investing large sums in U.S. banks, first in Detroit and Houston, and then, in 1977, in the National Bank of Georgia, which he acquired from Jimmy Carter’s one-time director of the Office of Management and Budget, Bert Lance.

Only later was it learned that Pharaon was actually a front man for a Pakistani financier named Agha Hasan Abedi, who presided over an outfit bearing the name Bank For Credit & Commerce International. This institution, ostensibly based in Pakistan but with its main offices in London and New York, was in turn bankrolled by moneymen from Saudi Arabia. Among the fat cats were top members of the Saudi royal family and even the Croesus-rich head of Saudi Arabia’s intelligence service, Kamal Adham, a brother-in-law of King Faisal.

The bank — whose false bookkeeping and impending collapse first came to public attention as a result of an expose I published in New York Magazine in June of 1991 — turned out to be a colossal criminal enterprise that touched nearly every country on Earth. The bank was engaged in widespread, pandemic bribery of officials in Europe, Africa, Asia and the Americas. It laundered money on a global scale, intimidated witnesses and law enforcement authorities, engaged in extortion and blackmail. It supplied the financing for illegal arms trafficking and global terrorism. It financed and facilitated income tax evasion, smuggling and prostitution.

Its main means of operation? Secrecy — the secrecy that came from acting through BCCI-controlled shell companies in every offshore banking center in the world, the exact same modus operandi employed by thousands upon thousands of crooked offshore banks to this very day.

BUSH UNKNOWINGLY TIED IN

Through its fronts and various other disguises, BCCI penetrated the top-most echelons of American business, co-opting and exploiting many of the most visible and influential public figures in America. They ranged from former Secretary of Defense Clark Clifford, to Robert Magness, the founder and chairman of the nation’s largest cable television company, TCI Inc. For his part, Magness wound up serving as the titular head of a shadowy commodities trading company, Capcom Inc., which laundered billions of dollars of offshore money through the commodities markets of Chicago.

For a period in the 1980s, the bank’s tentacles even touched George W. Bush. This occurred when Bush — who at that point had not yet entered politics, but whose father was vice president in the Reagan administration — sold a small and struggling oil company he had started to a Texas wildcatting outfitter named Harken Energy, which was not much bigger than Bush’s outfit. Doing so set in motion a chain of events that wound up entangling Bush, briefly but awkwardly, in the affairs of not just BCCI but of the bin Laden family itself.

BIN LADEN CONNECTION

One of Bush’s original partners in his oil company - which initially bore the name Arbusto Corp. — had been a fellow named James Bath. Bath in turn had contacts in the Middle East and was actually named in a 1976 trust document as the Houston business representative for none other than Salem M. bin Laden, a half-brother of the infamous Osama bin Laden, who is accused of masterminding the terrorist attacks of Sept. 11.

Several published reports from the early 1990s quote an associate of Bath’s named William White — himself an Annapolis graduate and Naval fighter pilot — as claiming that Bath was actually involved in a secret conspiracy to funnel Saudi money into the United States and that he has worked as a CIA liaison to Saudi Arabia since 1976 — the year when Bush’s father, George H. W. Bush, became head of the CIA. White is quoted as saying that Bath ran an aviation business and obtained several aircraft from the CIA. Bath was quoted as denying any involvement with the CIA. In 1988, Salem bin Laden was killed in Texas in a private-plane crash. There has been much conjecture — but no established facts — as to the reasons for, or circumstances of, the crash.

In any event, Houston-based Bath ran a Cayman Islands-based aviation business bearing the name Skyway Aircraft Leasing Ltd., which was actually owned, according to a court document, by a wealthy Saudi banker named Khalid bin Mahfouz. In 1977, Mahfouz — who was reported by The Wall Street Journal in 1999 to be undergoing treatment for drug abuse — joined up with the previously mentioned Saudi front man for BCCI, Ghaith Pharaon, and became an investor in a small Houston bank, Main Bank of Houston, in which Bath himself held a stake.

When Harken needed capital to expand, Bush — by then a member of Harken’s board — helped the company obtain a $25 million infusion from the Union Bank of Switzerland, via an Arkansas investment banker named Jackson Stephens. Few people at the time had yet even heard of BCCI, but Bush would doubtless have been astonished to learn that he was being surrounded by people with ties of one sort or another to the biggest and most crime-infested bank in the history of world capitalism.

For starters, Jackson Stephens, head of the Little Rock investment firm that bears his name, would eventually be named as the promoter of a deal in which BCCI attempted, through various front men, to take over the largest bank in Washington D.C. Bush would also have been astonished to learn that the Persian Gulf patron of his oil patch pal, James Bath — Mr. Khalid bin Mahfouz — was himself an early and large investor in BCCI. Finally, he would doubtless have been surprised to learn that the bank that actually cut the $25 million check for Harken — an outfit bearing the name Banque de Commerce et de Placements — was in fact only half owned by Union Bank of Switzerland. The other half was owned by BCCI.

Those facts would certainly have eliminated much of Bush’s presumed surprise when he subsequently learned that no sooner was the Harken financing completed than Union Bank of Switzerland sold its interest in Harken to a Saudi real estate developer named Abdullah Bakhsh, whom The Wall Street Journal has described as a “sometime business associate of BCCI figures Ghaith Pharaon and Khalid bin Mahfouz.”

As for Mahfouz, who was fined $212 million by the United States for his involvement in BCCI and barred from any further activities in the American banking system, he has now resurfaced - in connection with Osama bin Laden.

A March 2000 press report by the Paris-based Intelligence Newsletter said bin Mahfouz was being held under house arrest in Taif, Saudi Arabia, at the behest of U.S. authorities. The reason: Mahfouz was believed to have provided financial aid to a charitable front organization raising money for Osama bin Laden — the Afghan-based terrorist who had already been linked to the 1993 World Trade Center bombing, the 1992 attack on U.S. Servicemen in Somalia, a 1995 bombing in Riyadh, Saudi Arabia, and the 1998 bombings of U.S. embassies in Africa. A top counter-intelligence source in Washington says Mahfouz is still under house arrest.

These are the types of people Washington now needs to root out of the nation’s — and the world’s — financial systems if it is to cut off the flow of money to the terrorists who have attacked America. But the tentacles not only now reach into just about every major money center bank in the country, they have even brushed up against the early business affairs of the very man who is now rallying America to the fight. In the end, getting the dirty money out of America may prove every bit as hard as pulling bin Laden from the mountains of Afghanistan.
[End of Partial Transcript]

Bush Name Helps Fuel Oil Dealings

Excerpt:

Bush's name, however, was to help rescue him, just as it had attracted investors and helped revive his flagging fortunes throughout his years in the dusty plains city of Midland. A big Dallas-based firm, Harken Oil and Gas, was looking to buy up troubled oil companies. After finding Spectrum, Harken's executives saw a bonus in their target's CEO, despite his spotty track record.

By the end of September 1986, the deal was done. Harken assumed $3.1 million in debts and swapped $2.2 million of its stock for a company that was hemorrhaging money, though it had oil and gas reserves projected to produce $4 million in future net revenue. Harken, a firm that liked to attach itself to stars, had also acquired Bush, whom it used not as an operating manager but as a high-profile board member.

..In fact, Bush lost money for most of his well-connected investors. At the same time, the management fees and other expenses he collected from them kept him in business and enabled him to buy oil reserves for his company's own account, including the reserves that eventually attracted Harken's attention.

Three times during his years in Midland, Bush was saved from financial trouble or stagnation by the appearance of new partners or financial angels who gave him a fresh start. One was a Princeton classmate and friend of James A. Baker III, who was to serve as his father's secretary of state; another was a fellow Yale man who shared Bush's love for baseball.

The third was Harken, which was to save Bush from humiliating failure but also create a target for later criticism. Reporters would scrutinize the deal as early as 1990. Led by then-Texas Gov. Ann Richards, Bush's opponent in the 1994 gubernatorial election, his political critics have asked whether Harken used Bush's name to obtain oil business. Even now, questions linger about a 1990 sale of Harken stock by Bush that was the subject of a probe by the Securities and Exchange Commission.

...The only hope seemed to be finding another angel. Bush, Rea and Conaway started looking for small or medium-sized companies they might approach. Rea remembers they contacted at least one, in Pennsylvania, and were turned down.

Harken ended the search for them. The company had been taken over in 1983 by a group headed by a New York lawyer and management expert, Alan G. Quasha, who seems to have had a penchant for stars on his board. Hungarian-born billionaire George Soros was one; he was listed as the company's biggest stockholder (46.8 percent) in 1986. Representatives of Harvard University's endowment fund and a wealthy Saudi real estate magnate were given seats on the board in 1987.

Bush's name was one of Spectrum's obvious assets, but, according to Jeffrey Laikind, who was on Harken's board at the time, not the most valuable one.

...The merger became final in September 1986, with Harken handing over one share of its publicly traded stock in return for roughly five shares of Spectrum.

...But four years later, his sale of his Harken stock prompted an SEC probe into whether he had engaged in insider trading. The probe centered on Bush's sale of all of his 212,140 shares of Harken stock for $4 a share on June 22, 1990, just before the conclusion of a second quarter that produced huge losses. The transaction was to net Bush $835,307, according to the "notice of proposed sale," signed and dated June 22, that Bush was required to send to the SEC as a member of Harken's board.

...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 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.

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.
[End of Partial Transcript]

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.