Bush Is No Good Trade

According to U.S. Securities and Exchange Commission records, on four separate occasions Gov. George W. Bush disregarded federal statutes by failing to file insider stock trade reports on a timely basis, back-dating one trade by some four months. Moreover, one key trade just a few weeks before Iraq invaded Kuwait -- but reported some eight months late after the Gulf War was over -- netted Bush close to $1 million in profit as he sold stock in Harken Energy, an oil company doing business in the Middle East wherein some of his father's largest contributors also maintained substantial positions.

The SEC under President Bush carried out an incomplete investigation of the younger Bush's pre-Gulf War trade in 1991 after key presidential advisor George Jr. claimed that he filed a report, but that the SEC had most likely lost it. (No one has really asked whether the governor bothered to use registered mail to verify receipt of the documents.)

According to an Oct. 28, 1991, Time Magazine report, SEC spokesman John Heine said, "as far as I know, nobody ever found the 'lost' filing." And, strangely, Bush refused comment to Time regarding either the incident or his involvement with Harken.

The governor also did not reveal the blatant conflicts of interest involved, since the chairman of the SEC was Richard Breedon, former lawyer with Houston firm Baker and Botts and deputy counsel to Bush's father when he was vice president. Breedon received his SEC appointment after the elder Bush became president.

The SEC investigation of George W. was led by general counsel James R. Doty who, according to a UPI report, mysteriously neglected to interview any of the Harken directors. Moreover, Doty had previously served as George W. Bush's personal lawyer in the deal involving his Texas Rangers purchase. So, in the end, the younger Bush was cleared of insider trade wrongdoing by his personal attorney and by his father's vice-presidential counsel, a virtual impossibility for the average U.S. citizen.

That the mainstream media has refused to question Bush regarding what voters might consider a mockery of the criminal investigative process is a story in and of itself -- especially considering it concerns how a possible future president might enforce U.S. laws if he had also broken those statutes.

Consider that Americans who currently hold stocks or mutual funds would never -- by virtually no stretch of the imagination -- be able to obtain access to corporate insider information that could turn a million dollars profit. But reporters following Bush have not broached the subject during the campaign.

Most reports involving Bush's insider oil stock trades refer only to his highly controversial June 22, 1990, million dollar trade made six weeks before Gulf War hostilities broke out in Kuwait -- a trade which was reported eight months later. However, SEC documents between 1986 and 1993 show that Bush acquired 212,152 shares of Harken stock on Nov. 1, 1986, at the time he merged his Spectrum 7 company with Harken. But the future governor did not report the transaction until April 7, 1987 -- more than five months later.

When Bush filed late on April 7,1987, SEC filings show he had purchased another 80,000 shares on March 10, 1987. But strangely, two weeks later, an April 22 filing noted that the 80,000-share purchase was backdated to Dec. 10, 1986. When questioned by the media, Bush's attorney said it was the same 80,000 shares but he could not explain the discrepancy regarding the purchase dates or why Bush even reported the trade two times.

Another SEC filing, this from June 6, 1989, showed that Bush purchased another 25,000 shares of Harken but again waited more than four months to report the transaction.

The Houston Post, recognizing Bush's late SEC filings, noted that he "took eight months to notify the government of his sale of stock in a company on whose board he served" and "also missed the filing deadline for reporting other insider trades involving Harken Energy."

Documents obtained by the Post showed "additional instances in which Bush ... ran afoul of the SEC rule requiring notification." And George W. described himself as a "small, insignificant" Harken stockholder; but news reports examining SEC documents identified Bush as the third largest non-institutional investor.

In October 1991, Time Magazine questioned why the tiny country of Bahrain would stake so much of its financial future on Harken Energy, which it labeled an "obscure, money-losing company with no refineries and no experience in offshore oil exploration." But the magazine also noted that oil-insiders speculated that Bahrain's rulers saw the arrangement as a way to gain influence with the Bush administration.

Mysteriously, primary reporters have also ignored what could point to a nexus regarding foreign policy and personal financial interests. Interestingly, the Village Voice in January 1991 reported that in 1990 the Bush administration signed an agreement with Bahrain that chose the small country as the permanent principal allied base in the Middle East, although it was some 200 miles away from the hostilities in Iraq and Kuwait.

The military-base deal came after Harken announced its Jan. 30, 1990, joint oil-drilling venture with Bahrain. So President Bush's key contributors and his son George W. were carrying on personal financial business with Bahrain at the same time decisions were being made regarding the possibility of a war in the Gulf.

And neither the president nor his adviser, George Jr., let the press know that Bahrain had been permitted to infuse $7.7 million in foreign cash to hire U.S. public relations firm Hill & Knowlton to lobby Congress and the American people; a stunning variety of opinion-forming devices and techniques were employed to inflame U.S. patriotic passions of war while personal financial interests were on the line.

On May 21, 1990, less than ten weeks before Saddam Hussein's troops invaded Kuwait to initiate the Middle East hostilities -- but just four weeks before Bush unloaded the bulk of his Harken stock -- a renegotiated corporate loan agreement featured an unusually high interest rate of 12 percent, less credit for acquisitions, a $750,000 debt fee and even requirements by some of Harken's major stockholders to guarantee $22.5 million in debt, according to Associated Press.

Did Bush know of impending losses when he sold his stock on June 22, 1990, since Federal securities law prohibits corporate insiders from trading "on the basis of" material information that is not publicly known? Bush denied the charge in spite of his positions on the Harken Energy board of directors, audit committee and stock restructuring panel. He added that he had no idea Harken was going to get an audit report full of red ink until weeks after he had made his stock sale.

But U.S. News & World Report said, "there is substantial evidence to suggest that Bush knew Harken was in dire straits. ... Harken's SEC filings make it clear that the company's directors knew radical steps were necessary." The magazine added that "one informed source says Harken's creditors had threatened to foreclose on the company if substantial debt payments were not made." Shortly thereafter, Bush cashed out of Harken.

The April 4, 1991,Wall Street Journal added that "Mr. Bush didn't return their phone calls seeking comment, and the Bush White House said 'it doesn't comment on the activities of the president's children.'"

According to the Washington Post, Harken's audit committee, of which Bush was a member, met with Mikel Faulkner and

auditors from Arthur Andersen & Co.

, Harken's accountants, on June 11, 1990 -- just 11 days before Bush sold his stock on June 22. When asked for a copy of the June 11 minutes or permission to inspect them, the company declined to make the records available.

Bush's insider transaction yielding a profit of $848,560 -- some 250 percent profit on the stock's original value -- came a week prior to the end of a quarter in which the company lost $23 million. The quarterly report was released just a few days after Iraq invaded Kuwait and the Harken stock plummeted. However, as reported in a 1992 Mother Jones report, Bush attended a meeting regarding a revised stock offering in May 1990 working with Smith Barney's financial consultants concerning corporate restructuring.

In an Oct. 11, 1994, UPI report, Bush also claimed that he was not aware of Harken's poor financial condition when he sold the stock, but UPI said that the Dallas Morning News reported on the same day that a corporate official who served with Bush on the audit committee at Harken felt otherwise; Stuart Watson told the Dallas paper that he and Bush were constantly made aware of the company's finances. "You bet we were," said Watson. "We were both trying to keep that company on the straight and narrow."

On March 16, 1992, U.S. News echoed Watson's statement, reporting that "according to documents on file with the Securities and Exchange Commission, his position on the Harken (restructuring) committee gave Bush detailed knowledge of the company's deteriorating financial condition."

Chuck McDonald, spokesman for Texas Gov. Ann Richards' campaign, said that SEC chief counsel in the Bush investigation -- James Doty, George W.'s former attorney -- never talked to George W., Watson or other Harken officials in its 1991 probe. He said, "Was this a real investigation, or was it a whitewash of an insider stock sale by the son of the sitting president?" UPI, which reported McDonald's statement, went on to note that "while Bush claims the SEC investigation absolved him of illegal insider trading, he has refused to release the investigation files."

Harken founder, Phil Kendrick, noted that the company's "annual reports and press releases get me totally befuddled. There's been so much promotion, manipulation and inside deal making." And even Harken chief executive Mikel Faulkner, an accountant, offered advice for those trying to decipher the financial statements: "Good luck. They're a mess."

Press accounts note that Bush requested a letter from the SEC, issued in October 1993, The letter, signed by SEC Associate Director Bruce A. Hiler, said that "the investigation has been terminated as to the conduct of Mr. Bush and that, at this time, no enforcement is contemplated with respect to him." But the letter also stated that "it must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result."

On Oct. 18, 1993, the Bush administration SEC said it would not bring a case against George W. Bush.

Gov. Bush speaks about his outstanding business record on the campaign stump; however, in 1989, U.S. News & World Report said, "Harken Energy lost over $12 million against revenues of $1 billion." Harken President Mikel Faulkner said that in addition to Bush's position as a director at $2,000 per meeting, stock options worth $131,250, 5 percent loans and 40 percent discounts on stock purchases, he was also a consultant to Harken for "investor relations and equity placement" at a salary of $80,000 per year from 1986 until 1989, when his salary jumped to $120,000.

The board was equally generous to Bush in 1990 as "the company lost another $40 million and shareholder equity plunged to $3 million -- down from more than $70 million in 1988." Faulkner declined to say what services George W. has performed as a consultant.

In March 1992, U.S. News said that "Despite repeated requests for interviews, George W. declined to discuss Harken or the reason for his stock sale, saying through an assistant that he 'does not want to read about himself.'" But some might ask whether American voters have a right to know whether a possible president would strictly enforce federal statutes or appoint lenient attorneys with suspect ethical standards leading to fixed politically sensitive investigations.

Moreover, should Bush -- a director of the corporation -- be accountable when huge losses are reported over a period of time, especially as a presidential candidate purporting to have an outstanding entrepreneurial business record at every presidential campaign stop? The answers have real implications regarding presidential character, morality and personal ethics.

Author and commentator Kevin Phillips offered a perceptive look at the Texas governor in the February 2000 issue of Harpers magazine when he said, "We can fairly ask whether George W. Bush is anything more than another scion who has made a decent governor during a period of prosperity and easy growth, and whether the United States can afford nominees who are to presidential politics what legacies are to college fraternities."

Just got back in. Don't mind the surface scratchers. They come and go. They know nothing, therefore they are harmless. Name calling is all they have. We'll eventually, God willing, get a real conservative in the White House. One who truly believes in the Constitution. You really must be 13 years old to understand this however. This thread has rolled over. Folks should be aware of the Bush family business traditions. This gives just a small sample snapshot of their activities in the past.

BUSH FAMILY BUSINESS PLAN

George W. Bush - President.

During The So-Called Investigation:

George H.W. Bush was President.
Richard C. Breeden - "was SEC chairman under President Bush's father, former President George H.W. Bush" - Baker Botts, L.L.P.
Richard C. Breeden - "Also Served as an 'Assistant' to President George H.W. Bush"
Ex-SEC chairman Richard Breeden named "WorldCom" monitor
Robert Jordan, a founding partner of the Dallas law office of Baker Botts, L.L.P., 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. Robert Jordan, is now ambassador Saudi Arabia. Saudi Arabia is connected to the Harken scandal.
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." - Baker Botts, L.L.P.
"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"
James R. Doty was a law partner with Robert Jordan at Baker Botts, L.L.P..

Harvey L. Pitt - Former Arthur Andersen Attorney

"There is nothing rotten in the accounting profession."
Harvey Pitt, Chairman of the Securities and Exchange Commission - January, 2002 - SOURCE

Chief Says He Opposes Release of Files on Bush

"Q Mr. President, even while you're calling for transparency in corporate America, you refuse to ask the SEC to turn over documents from its investigation into Harken Energy Corporation, your old company. ..Why not just clear the air, ask the SEC to release those documents..?

"PRESIDENT BUSH: Secondly, as to a look at Harken, the SEC, as a result of Freedom of Information requests, has released documents, and the key document said there is no case. It was fully investigated by career investigators."
Source.

Harvey Pitt, the Bush administration's chief at the S.E.C., was actually an Arthur Andersen lawyer.
Harken Energy Accountants: Arthur Andersen. George W. Bush - Seated on Harken's Board of Directors and audit committee, and large shareholder while Arthur Andersen applied their talents to the books. Bush Violated Security Laws Four Times, SEC Report Says Harken's audit committee, of which Bush was a member, met with Mikel Faulkner and auditors from Arthur Andersen and Co. Harken's accountants, on June 11, 1990, just 11 days before Bush sold his stock on June 22. When asked for a copy of the June 11 minutes or permission to inspect them, the company declined to make the records available. Also, Securities and Exchange Commission (SEC) investigators, heading an insider trading probe in 1991, said they had difficulty getting useful information from Mr George W. Bush on what he knew about the finances of Harken Energy Corp, where he was a director. This, according to an SEC memo dated July 17, 1991.
The S.E.C. Says: "Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading."
Insider Trading and George W. Bush
A U S T I N, July 1-- The Securities and Exchange Commission defines insider trading as "Corporate officers, directors, and employees who traded the corporation's securities after learning of significant, confidential corporate developments". Bush sold $848,560 worth of Harken Energy stock on June 22, 1990, just one week before the company posted spectacular losses and the stock plunged sharply. When the losses were reported to the public on August 20, 1990, the stock plummeted.
According to documents from a two year investigation by the SEC, Bush served on the board of directors of Harken Energy Corporation and his position on a special Harken committee gave him detailed knowledge of the company's deteriorating financial condition. The SEC received word of Bush's trade ten months late.
The SEC states, "Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the Commission has treated the detection and prosecution of insider trading violations as one of its enforcement priorities".
Bush supporters point out that the stock's value went back up, eventually, and if Bush had held the stock, it would have made him more money. But, knowing when to sell is the golden goose of stock trading and using inside information is insider trading. The SEC investigated but decided not to punish Bush. After all, his dad was President and all five SEC Commissioners are appointed by the President. Furthermore, the SEC's general counsel had actually represented George W. in the Texas Rangers negotiation. Any doubts?
Bush Signed Stock 'Lockup' Letter
Bush Administration Has Tight Ties to Arthur Andersen
George W. Bush and Ashcroft think Arthur Andersen is the firm to review and clean up the FBI.
Bush Issues Warning On Hiring Andersen

Neil Bush

Neil Bush - Silverado Savings and Loan - Executive on Board of Directors. Signs point to mob involvement in savings and loan mess. Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which actually cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million. Ernst & Young Pays $400 Million To Settle Thrift Regulators including Silverado Banking Savings and Loan.

Jonathan Bush

Jonathan Bush - Bush and Company - President & Chief Executive Officer. Massachusetts securities regulators have fined the stock brokerage firm owned by President Bush's brother Jonathan $30,000 and barred it from trading with the general public for one year because the company and Bush violated state registration laws.

Jeb Bush

Jeb Bush - Ideon Corporation - Board of Directors - Bush sat on Ideon's audit committee, the watchdog of financial and management integrity. Jeb Bush joined board of company mired in trouble. Ideon was sold to CUC International. Ideon's directors faced lawsuits claiming stock manipulation. Now, more than two years later, Cendant -- the successor company to CUC -- is struggling to recover after discovering years of accounting fraud attributed, in part, to CUC's purchase of Ideon. Consultants like convicted Wall Street felon Martin Siegel were used. Jeb Bush and his Republican fund-raiser friend Thomas Petway sat on Ideon's audit committee, the watchdog of financial and management integrity. Many of Bush's fellow outside directors -- who were supposed to represent shareholder interests -- had cut cozy business deals with Ideon. In some cases, they got six-figure consulting fees on top of their directors pay. By August 1996, Ideon was sold for $375-million to CUC. The sale included indemnification for directors against lawsuits. Good news, considering the lawsuits charge Ideon and its directors with stock manipulation. The cases were settled early this year for $15-million. Bush and the other directors paid nothing. On August 28, 1998, Arthur Andersen & Co. rendered its Report to the Audit Committee of the Board of Directors of Cendant Corporation reporting on its forensic audit of CUC International, Inc., in the wake of disclosures in mid-April that accounting irregularities had been discovered at CUC.

George H.W. Bush

George H.W. Bush - Zapata Petroleum - George Bush: The Unauthorized Biography
The Zapata Offshore filings with the SEC between 1955 and 1959 are cryptic, and the SEC files on Zapata Offshore between 1960 and 1966, when Bush had exclusive control of the company, were destroyed by the SEC either in 1981, when Bush had just become vice president, or somewhat later, in October, 1983, according to various SEC officials. Bush nevertheless created a network of subsidiaries which was suspiciously complex. This topic is difficult to research because of the very convenient disappearance of the Zapata Offshore filings with the Securities and Exchange Commission in Washington for the year 1960-1966 which were "inadvertently" destroyed by a federal warehouse. This is the kind of convenient tampering with official records from which Bush has benefitted again and again over his career. Auditors for Zapata Petroleum were Arthur Andersen. Counsel were listed as Baker, Botts, Andrews & Shepherd of Houston, Texas. Transfer agents were J.P. Morgan & Co., Inc., of New York City.

Bush Issues Warning On Hiring Andersen

"There is substantial evidence to suggest that Bush knew Harken was in dire straits in the weeks before he sold the $848,560 of Harken stock."
US News and World Report - by Stephen J. Hedges March 16, 1992 - The Color of Money.

Q "Mr. President, you've said that you didn't know, when you sold your Harken stock, that the company was going to restate its earnings. As a member of its audit committee, how could you not know that its earnings had not been properly accounted for?

THE PRESIDENT: Because that fact, that fact came up "after" I sold the stock."
Source

"It must in no way be construed as indicating that the party[George W. Bush] has been exonerated or that no action may ultimately result from the staff's investigation."
Bruce A. Hiler - associate director of the SEC's enforcement division.

"Responsible leaders do not take home tens of millions of dollars in compensation as their companies prepared to file for bankruptcy, devastating the holdings of their investors."
George W. Bush - speech on "corporate accountability" July 9, 2002.

THE ROAD TO PERDITION - By FRANK RICH
Partial Excerpt:
"Nor, of course, do we know the full details of the president's past history at Harken Energy or the vice president's at Halliburton. Those details matter not so much because of any criminality they might reveal — we are rapidly learning that there is no such thing as a prosecutable corporate crime anyway — but because of what they may add to our knowledge of the ethics, policies and personnel of a secretive administration to which we've entrusted both our domestic and economic security.

What we know about Harken so far is largely due to the S.E.C. documents unearthed and posted since 2000 by the enterprising and nonpartisan Center for Public Integrity, also a leader in uncovering the Clinton administration's Lincoln Bedroom scandals. "It's Forrest Gump does finance," says Charles Lewis, the center's founder, in looking at the story line of the remarkable George W. Bush business career. "Every time he seemed to be in trouble, he would end up with a box of chocolates."

The president's self-contradictory defense of his past is to say he was "fully vetted" by the S.E.C. even though he still hasn't "figured it out completely" himself. But the S.E.C. never interviewed Mr. Bush during its investigation. The agency was then run by an appointee of his father, Richard Breeden, who recused himself from the case. Last Sunday, Mr. Breeden turned up on Fox News as a George W. defender. Yet when Tony Snow asked him twice if he could give the president "a clean bill of health, yes or no," Mr. Breeden pleaded ignorance and ducked. Perhaps that's why the White House has not asked the S.E.C. to release its Harken papers, even though Harvey Pitt last weekend said he would if it did. The president has also told the press that "you need to look back on the director's minutes" to answer questions about Harken — and then refused to provide those minutes or to instruct Harken to release them either. But yesterday Mr. Lewis's organization posted a pile of them at www.publicintegrity.org, and says that more documents are yet to come.

What is the president hiding? Clearly the story here is not merely a hard-to-prove case of insider trading, tardy stock-sale forms and Mr. Bush's knowledge of the sham transaction involving Aloha Petroleum. Most likely it also involves the mystery first raised by The Wall Street Journal and Time in 1991. Back then, their investigative journalists tried to break the cronyism code by which tiny Harken, which had never drilled a well overseas, miraculously beat out the giant Amoco for a prized contract for drilling in Bahrain. They also tried to learn what various Saudi money men, some tied to the terrorist-sponsoring Bank of Credit and Commerce International, may have had to do with Harken while the then-president's son was in proximity.

These questions, like the companion questions about Halliburton's dealings with Iraq on Mr. Cheney's watch, are not ancient history but will gain in relevance in direct proportion to the expansion of the war on terrorism and the decline of the Dow. Sooner or later George W. Bush will have to answer them, because even though he cares more about loving his neighbors than the bottom line, the rest of us are just irredeemably crass."

Bush and the Billionaire Soros: How Insider Capitalism Benefited W.

Report Says That Harken Sought Influence In Buying Bush Firm

THE BOSTON GLOBE
By Michael Kranish, Globe Staff
July 19, 2002
Source

WASHINGTON - Billionaire investor George Soros was quoted yesterday as saying that Harken Energy Corp. purchased a Texas oil company run by George W. Bush in 1986 because ''we were buying political influence.'' Soros owned nearly a third of Harken at the time the deal was made.

Soros, who runs a variety of investment funds and philanthropic organizations, was offering a reason why Harken purchased Spectrum 7, a failing oil company that was then run by Bush.

In an article posted on the Web site of The Nation magazine, David Corn, the magazine's Washington editor, said he happened to run into Soros at a party recently and asked Soros why Harken bought Bush's company.

''I didn't know him,'' Corn quoted Soros as saying. ''He was supposed to bring in the Gulf connection. But it didn't come to anything. We were buying political influence. That was it. He was not much of a businessman.''

Soros, a political liberal who often has been critical of President Bush's policies, has declined repeated requests for an interview about his dealings with Harken. A Soros spokesman, Michael Vachon, yesterday would neither deny nor confirm that Soros made the comment. But Vachon said it was ''taken out of context'' because it implied that Soros was actively involved in Harken's decision to buy Spectrum 7.

''The quote is out of context, because it makes it appear as if Soros were involved in the deal,'' Vachon said. ''That is not the case. Soros did not know Bush, and he was not actively involved in the management of the company.''

Vachon, who said he had discussed the issue with Soros, did not dispute that Soros uttered the comment. ''I don't want to say the quote is inaccurate,'' Vachon said. ''This is two months ago at a cocktail party with hundreds of people in the room.''

At the same time, Vachon did provide the fullest explanation yet of Soros's involvement with Harken. Vachon said Soros owned a small company, Soros Oil, that was bought by Harken in 1985. As a result, Soros received stock that made him a major Harken shareholder. But he left management of Harken to others, Vachon said.

Then, about a year after Soros acquired his stake, Harken was looking for more acquisitions and targeted the Bush company, Spectrum 7. Numerous Harken officials have said over the years that Bush's presence at Spectrum 7 made the failing company more attractive than it would otherwise have been.

Harken officials put Bush on the board, gave him stock options worth hundreds of thousands of dollars, and paid him a consulting fee of $120,000 a year. It was around the same time, October 1986, that Harvard Management Co., the independent investment arm of Harvard University, began pouring millions of dollars into Harken, eventually owning a third of the company.

Soros sold his Harken stock back to the company in 1989, a year before Harken struck a deal with the tiny Persian Gulf nation of Bahrain to drill for oil off its coast. That deal sparked questions about whether Bahrain offered it to Harken in an effort to court favor with Bush's father, who was then president of the United States. Bush, however, has said that he tried to dissuade the company from making the Bahrain deal because of concern that Harken was not prepared to follow through. It turned out that the Bahrain wells were dry.

Soros recently has been critical of Bush's stand on corporate responsibility. Soros told the Wall Street Journal recently that the Bush administration has shown ''no particular desire to do too much about'' corporate excesses.

Bush and Harken

The Nation
By Jason Leopold
July 18, 2002

Last week, while Bush spoke to Wall Street about corporate malfeasance, he was beset by questions about the timing of his sale of stock twelve years ago while he served as a director of Harken Energy. Bush sold the Harken stock about two months before the company reported huge losses and shortly before Iraq invaded Kuwait, leaving many asking whether the President had benefited from inside information. In addition, Bush was tardy in filing the appropriate sale-related forms with the SEC. Bush has said he filed the proper documents with the SEC on time--even though it arrived thirty-four weeks late--and suggested the agency must have lost the file. Last week, White House press secretary Ari Fleischer said there had been a "mix-up" by the Bush lawyers who handled the paperwork.

While SEC reporting requirements may seem like a minor issue, it's crucial information for the average investor because it allows them to determine whether insiders have received undisclosed information about the company's financial condition. The Securities and Exchange Act of 1934 requires company insiders to disclose publicly, in a report called a Form 4, all stock purchases and sales by the tenth day of the month following the transaction.

This week, as President Bush's own business acumen is being called into question, additional SEC documents show that Bush violated federal securities laws on three other occasions during his tenure at Harken by missing the deadline for filing documents about his stock transactions with the SEC.

Bush purchased stock in Harken three times between 1986 and 1989, and was several months late in reporting those transactions to the SEC, according to documents from the agency. One transaction, in which Bush purchased 25,000 shares of Harken stock on June 16, 1989, took place three days before Harken started selling its shares on the New York Stock Exchange, where the stock traded as high as $50. The stock had previously been sold in the over-the-counter market. Bush did not report the transaction to the SEC until September 7, 1989, more than four weeks after the deadline, according to SEC documents, and he reaped a windfall in profits by purchasing the additional shares before they were sold on the NYSE.

On November 1, 1986, Bush acquired 212,152 shares of Harken as a result of the merger of his failing oil company--Spectrum 7--with Harken, but did not report the transaction with the SEC until April 7, 1987, more than twelve weeks after the deadline. On December 10, 1986, Bush purchased another 80,000 shares in Harken and again missed the deadline for reporting the transaction by eight weeks, according to SEC documents. Dan Bartlett, the White House communications director, was unable to answer why President Bush missed the deadline in reporting his stock transactions with the SEC on three other occasions, but said that the SEC obviously did not see the violation as an important matter either. "The SEC didn't do anything about it," Bartlett said. "It does not appear to be an important issue."

John Heine, a spokesman for the SEC, said the agency has never prosecuted anyone for missing the deadline to file insider-transaction forms with the agency. In fact, Heine said, insiders routinely miss the deadline. "It's something we're starting to crack down on," Heine said. Bush was investigated by the SEC for insider trading, but the probe ended in 1993 without any charges being filed against the President. Democrats, including former Texas Governor Ann Richards, have charged that the investigation was a whitewash because of Bush's political relationships.

Bruce Hiler, the associate director of the SEC's enforcement division, who wrote a letter to Bush's attorney saying the investigation was being terminated, now represents former Enron president Jeff Skilling in matters before the government. Richard Breeden, the SEC chairman at the time, was deputy counsel to Bush's father when he was Vice President and was appointed SEC chairman when H.W. Bush became President. James Doty, the SEC's general counsel at the time, helped W. Bush negotiate the contract to buy the Texas Rangers. Bush used the proceeds of his sale of Harken stock in 1990 to pay off a loan he took out for a minority stake in the baseball team. Doty has said that he recused himself from the SEC's two-year probe into Bush's sale of Harken stock.

For President Bush, this is the fourth time in a decade he has been forced to answer questions about his business experience. And he still refuses to be forthcoming. Members of Congress are calling for Harvey Pitt, chairman of the SEC, to release all files related to Bush's Harken Energy days, but Pitt said on Meet the Press that he considers Bush's Harken transactions a dead issue and therefore he will not publicly release the files.

This kind of secrecy by the Bush Administration should come as no surprise to the American public. Vice President Dick Cheney has refused to reveal the names of people his energy task force met with prior to drafting a national energy policy. Cheney has come under fire for praising Arthur Andersen, the auditing firm convicted of obstruction of justice for shredding Enron documents, in a promotional video years ago; Cheney's former company, Halliburton, where the Vice President was chairman, is under investigation by the SEC for accounting improprieties during Cheney's tenure. And there's still the thorny issue of Bush's archives from his days as governor of Texas, which are currently tucked away in his father's presidential library and difficult to access.

The Texas Legislature authorized its former governors to place their official records into a repository other than the state archives. The Texas State Library and Archives, however, houses the official papers of every Texas governor before Bush.

Bush secured a one-page agreement last December 19 to place records of his term in his father's presidential library. Soon after, Bush placed more than 1,800 boxes of documents into the George Bush Library at Texas A&M University. Within weeks of the records arriving at the Bush Library, the New York Times, the Houston Chronicle, the Dallas Morning News, the Associated Press and Public Citizen had all submitted open-records requests for information from the Bush papers. Most of the requests involved correspondence between Bush and Harken and Enron officials, and records concerning energy deregulation. The records have yet to be released.

Bush’s Document Dilemma - Bush Should Release Documents - National Review - Byron York

Harvard U. Denies Purchase Of President Bush's Harken Shares

"Who is Lee?"

"s/212,140 at 4 to Lee for Bush."

Mystery of Share Buyer Who Bailed Out Bush

Who bought Bush's stock in problem-plagued oil company and why?
"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."

"Lee" M. Bass

George Bush the Son Finds That Oil and Blood Do Mix
"Bush maintained that he had filed the missing disclosure form. But the commission investigated the transaction anyway. Bush’s lawyer, Robert W. Jordan, defended him by arguing that he had not known about the impending loss when he sold his stock and that he had thought he was selling into the anticipated good news that the Basses were underwriting the Bahrain project."

NOTES ON A NATIVE SON
The indispensable local money came from Richard Rainwater, formerly the chief financial adviser to the Bass brothers of Fort Worth. Little known to the general public, Rainwater was famous on Wall Street for growing the Bass inheritance from around $50 million in 1970 to more than $4 billion by the time he left in 1986 to manage his own investments."

How George W. Bush Scored Big With the Texas Rangers
"The commissioner, a GOP donor himself, wanted the deal approved before his term expired at the end of 1989, and so he and then-American League president Bobby Brown took it on themselves to line up Fort Worth financier Richard E. Rainwater.

Rainwater and Bush weren’t exactly strangers. Rainwater was a contributor to his father’s presidential campaigns and, later, an overnight guest in the Bush White House. Until 1986, he was the chief money manager for the Bass brothers, Fort Worth billionaires who financed drilling in Bahrain by the Harken Energy Corp., a company that in 1986 had bought out Spectrum 7, one of Bush’s oil companies."

RAINWATER - Can He Recoup? - Business Week
"Moving quickly has always been Rainwater's style. His big break in business came early. A math and physics major at the University of Texas at Austin, he headed off to Stanford University's Graduate School of Business with only $400 and a car to his name. But there he became fast friends with fellow Fort Worth native Sid R. Bass. And after a two-year stint as a Goldman, Sachs & Co. trader, Rainwater went to work for the Basses.

Cutting deals for the family, Rainwater concentrated on picking up shares in blue chips like Texaco Inc. and Disney when they were cheap. As a result, the Bass empire grew from $50 million when he joined in 1970 to more than $5 billion when he left in 1986. ''Richard's style has always been to buy when no one else wants to buy and sell when everybody wants to get into it,'' says David Bonderman, who worked for Sid Bass's brother, Robert. ''The crux of Richard is that he is one of the best value investors of all time.''

HEALTHY PROFIT. Rainwater proved that again after leaving the Basses with his $100 million nest egg."

Bahrain Project Helped Harken Stock

The Associated Press
By Pete Yost
ASSOCIATED PRESS WRITER
July 20, 2002 10:05:36 AM PT

WASHINGTON -- Five days after former President Bush was inaugurated in 1989, an official from Bahrain set in motion a chain of events that allowed the Texas oil company where the president's son was a director to beat out Amoco for drilling rights with huge profit potential.

George W. Bush was on the board at Harken Energy Corp. when the company won the right to drill for oil off the coast of Bahrain, a tiny Persian Gulf island.

There is no evidence the country was trying to curry favor with his father's administration when it turned away from a major U.S. oil company in favor of Harken. Board member Bush opposed the deal.

In the end, the project was a bust. But it helped keep Harken's stock price in reasonably good shape for a few years - and in so doing, helped Bush when he came under investigation for insider trading. The Securities and Exchange Commission took no action against him.

At the time of the Bahrain project, Bush sold most of his shares as Harken tried to weather financial problems. Bush's sale drew the SEC's attention because the trade was reported eight months late to regulators.

Bush's years as a Texas businessman have come under renewed scrutiny recently as he tries to restore confidence in financial markets hurt by business scandals.

Despite Harken's continuing financial losses in 1990, minutes of a Harken board meeting attended by Bush show that the company's investment banker, Chad Weiss of the firm Smith Barney, said the Middle East drilling venture would keep the company's stock price up.

"The potential of the Bahrain prospect will be the primary driving force initially for the company's stock," according to the minutes of a May 1990 meeting. "With the prospect of Bahrain in the picture," the investment banker "did not see much downside for the price of the stock."

Worried board members had asked the Smith Barney representative whether the stock price would be hurt in carrying out the drastic step of splitting Harken into three separate companies.

Harken's stock price stayed strong, though volatile, despite an unprecedented $23 million loss two months after Bush sold 212,140 shares for $848,560.

The SEC cited the stock's rebound after a one-day drop in deciding there was no case against Bush for possibly profiting from inside information. In the absence of a drop in the stock price, the SEC concluded other investors did not view the $23 million loss as important, making any advance knowledge of the loss by Bush irrelevant. The SEC also concluded Bush had little advance knowledge.

Ten days after reporting the huge loss, Harken stock was selling for $4 a share, the same price Bush had sold it for two months earlier.

In recent weeks, Bush has responded to criticism of his sale by noting that the stock price doubled a year later. A key factor in that showing was that Harken and a company owned by the billionaire Bass brothers of Texas were working on the Bahrain project amid high expectations.

The Basses' was among 25 oil companies that Harken said lined up at its door after it won the Bahrain concession. Harken announced the good news that it was teaming up with Bass the month before Harken reported its $23 million loss.

The Bahrain project literally landed in Harken's lap.

On Jan. 25, 1989, Bahraini minister of development and industry Yousef Shirawi contacted a respected retired American oil executive, Mike Ameen, and asked him if there was a small American company interested in drilling off the coast of Bahrain. Amoco wanted to drill in the same area.

Later, Ameen, who did not know about Harken, mentioned the Bahrain project to investment banker David Edwards of Little Rock, Ark. Edwards had worked with Harken for several years and suggested the Texas firm. Ameen helped negotiate a deal.

The U.S. ambassador to Bahrain at the time, Charles W. Hostler, said Friday that "an important factor in this relationship is Mike Ameen, who knew well the key figures and spoke their language after a lifetime of activity in that part of the world in the oil business."

Shirawi has said that he had not known Harken's name and that he did not find out until later that Bush was connected with the company.

According to people familiar with the matter, Bush opposed the Bahrain venture because of Harken's total lack of experience in Middle East drilling.

In a letter on Bush behalf written during the 2000 presidential campaign, his lawyer, Robert Jordan, wrote that "at no time" did Bush "discuss Harken's interests in Bahrain or any other Harken business with any member of the Bush administration. He did not favor Harken's decision to seek a drilling concession in Bahrain."

Jordan is now U.S. ambassador to Saudi Arabia.

After Bahrain awarded the concession, Amoco executives went to the U.S. Embassy in Manama to express their "puzzlement" over how they lost out to the much smaller Harken, according to a State Department cable from 1990 released under the Freedom of Information Act.

"Amoco officials were apparently unaware of the role" that Ameen "played in securing the contract for Harken, although they had heard that there had been an unknown middleman involved," said the cable.

Bush Built Success On Harken Sale

© St. Petersburg Times
By ROBERT TRIGAUX, Times Business Columnist
published July 21, 2002
Source

The struggling oil company served as a launching pad for the president's role in Major League Baseball which, in turn, spurred his successful political career.

Twelve years and 30 days ago, George W. Bush sold most of his stock in Harken Energy Corp. Now the echoes of that deal are undermining his campaign to rein in corporate wrongdoers, calm investors and revive plummeting stock markets.

The basics of Bush's entanglement with the Dallas oil exploration company can be told in three paragraphs:

In 1986, Bush joined the board of Harken when the struggling oil exploration company bought out another money-losing oil company that had, in turn, bought his troubled Bush Exploration Oil Co.

Bush was paid in Harken stock, consulting fees, discounted stock options and low-interest-rate loans by the company. In June 1990, a fateful month for Bush, he sold more than 200,000 Harken shares for nearly $850,000. But he neglected to file a required form with the Securities and Exchange Commission until eight months later.

When Harken soon reported an unexpectedly big loss and Iraq's Saddam Hussein invaded Kuwait, company shares plummeted from $4 to as low as $1.25 before the year was out.

That's when those questions -- the same critical ones being asked this summer -- began to arise.

Did Bush know bad news was coming when he sold? Did Bush just forget to file some of the disclosures required by the SEC when directors sell shares in their companies? Or was this some glitch caused by the inattention of Harken lawyers?

Bush filed an initial disclosure with the SEC indicating his intent to sell shares. But he has given several explanations for the 34-week delay in filing a report on the specific sale. "I still haven't figured it out completely," Bush said this month.

Why did Bush sign off on the same type of loss-hiding accounting that ruined Enron and WorldCom? Bush was a director in 1989 when Harken booked a cash gain after selling its Aloha Petroleum subsidiary to insiders who used money borrowed from Harken. That deal caught the eye of the SEC, which in 1991 forced the company to restate its earnings and show a big loss for 1989.

The sequence of events poses another dilemma. When Bush sold his Harken stock in 1990, it was the year after the company cooked the books and a year before the SEC demanded a restatement of earnings so Bush was selling when the stock was artificially inflated.

The stock sale is important for another reason. The profits from the Harken shares allowed Bush to join the investor group that bought the Texas Rangers baseball franchise. When Bush and his co-owners sold the major league team in 1998, then-Texas Gov. Bush reaped $15-million, setting the financial stage for his run for president.

"My pet belief, and I think it's grounded in some good research and reality, is that George W. Bush would not be president of the United States today if not for that starting point of this controversial Harken sale," Bill Minutaglio, author of the Bush biography, First Son: George W. Bush and the Bush Family Dynasty, said on ABC's Nightline Thursday.

Since delivering his "corporate responsibility" speech July 9 on Wall Street, Bush has faced these and tougher questions each time he talks of cracking down on corporate fraud and accounting scams.

The president's supporters scoff at efforts to turn the long-ago Harkin deal into an Enron scandal -- or another Whitewater affair. But critics ask whether Bush can provide the leadership needed to fix corrupt corporate business practices when he has had dubious deals of his own. Then there's Vice President Dick Cheney, whose past job was as CEO of Halliburton Co., which is under SEC investigation for accounting shortcuts. And there's Army Secretary Thomas White, the former Enron executive, who sold $12-million in Enron stock prior to the company's bankruptcy and allegations of phony accounting.

More than 67 percent of those surveyed in a New York Times/CBS News poll last week said the administration was more keen on protecting the interests of large companies than those of ordinary Americans. That concern was expressed by more than a third of Republicans and most Democrats.

Bush insists his Harken dealings are old news and were investigated by the SEC with no action being taken against him. "Everything I do is fully disclosed," he said. "It's been fully vetted."

The Harken dealings received some attention in Texas during Bush's campaigns for governor, but they were little-known nationally until now.

And even if there's no smoking gun of Bush wrongdoing, Harken is worth studying because it played a key role in transforming Bush from a failing Texas businessman to a multimillionaire on the political fast track.

In the late 1970s, three years after graduating from Harvard Business School, Bush decided to follow in his father's energy business footsteps. He returned home to Midland, Texas, where he incorporated his oil-drilling venture called Arbusto (that's "bush" in Spanish) Energy.

About $3-million poured into Bush's business from uncle Jonathan Bush, a Wall Street banker; grandmother Dorothy Bush; Rite-Aid drugstore chairman and influential Republican Lewis Lehrman; William Draper III, a corporate executive and family friend who would soon be appointed to head the federal Export-Import Bank; and James Bath, a Houston aircraft broker who fronted as an investor for several Saudi Arabian sheiks.

By 1982, with his father serving as the country's vice president, Bush changed the Arbusto name to Bush Exploration Oil Co. with plans to take it public. But oil prices were falling and the company soon ran into financial trouble.

Several wealthy benefactors helped with money, including Philip Uzielli, a friend of James Baker III, a family confidante serving as chief of staff in the Reagan White House. Uzielli bought 10 percent of Bush Exploration for $1-million, though the company was valued at less than $400,000. Bush insists this was no bailout. Uzielli had invested for the "romance" of energy and, perhaps, the chance to buy low, Bush told Time magazine.

Uzielli recalled in 1999 that the investment was a major money loser. "Things were terrible," he said.

By the mid 1980s, Bush Exploration was again in money trouble. Enter two Cincinnati investors -- William DeWitt Jr., son of the former owners of the Cincinnati Reds baseball team, and business partner Mercer Reynolds, who controlled a small energy business called Spectrum 7. They merged with Bush Exploration and chose Bush as chairman and CEO. Though more money was raised, losses at Spectrum 7 grew.

In 1986, struggling Spectrum 7 was acquired by the larger Harken Energy, a Dallas company known by industry figures as a "bottom feeder" and run by Republican fundraiser Alan Quasha. Harken's major investors included billionaire currency speculator George Soros, Ivy League university fund investor Harvard Management Co., and, after Bush joined the board, Saudi investor Abdullah Taha Bakhsh.

As part of the Spectrum buyout, Bush received Harken stock and was named a Harken director and paid consultant. He also gained membership in a group of Harken officials who could exercise options to buy company stock at a 40 percent discount, an unusual perk. Bush later received two low-interest loans from the company -- a corporate practice Bush now says should be stopped -- that were worth $180,375 by 1992.

It wasn't Bush's oil expertise that earned him these financial gains. Harken viewed Bush's famous name as an important asset. "It's obvious why they kept George Bush," Harken founder Phil Kendrick has been quoted as saying. "Just the fact that he's there gives them credibility."

Harken directors believed having "George's name there would be a big help to them," said Spectrum 7's former president, Paul Rea.

In 1988, Cincinnati investor DeWitt called Bush to tell him that aging oil executive Eddie Chiles, the owner of the Texas Rangers and a Bush family friend since the 1950s, was looking for a buyer. Bush and DeWitt, passionate baseball fans, assembled an investor group.

At first, the group lacked deep pockets and enough local Texas participants to please Major League Baseball commissioner Peter Ueberroth. To ensure the Rangers stayed in Texas, and to bolster a pet project of the oldest son of the new U.S. president, Ueberroth recruited Fort Worth financier Richard E. Rainwater, the former hotshot money manager for the billionaire Bass brothers, to take charge.

Rainwater agreed to invest millions, but only after his trusted associate, Edward "Rusty" Rose, was installed as general managing partner. With new money, the group bought the Rangers from Chiles for $86-million.

Though Bush scraped together only $606,000 to invest, he was made a managing partner. The Rangers investors tagged Bush, with his now-famous name, to serve as the group's face to the public.

That role suited the affable Bush perfectly. In turn, the Texas baseball team (and soon, a brand new taxpayer-subsidized stadium in Arlington, near Dallas) gave Bush a base -- after a decade of failures in the oil business -- to start building a political image in the state.

If the Rangers deal looked like a home run, Harken was a foul ball. As a member in 1989 of Harken's audit committee, Bush signed off on a deal, similar to recent shenanigans by Enron, that inflated company earnings.

Here's how it worked: Harken decided to lend money to a partnership of company insiders, which used the money to buy Aloha Petroleum, a Harken subsidiary that owned gas stations in Hawaii. By Harken's way of accounting, the twisted transaction created a multimillion-dollar instant "profit." Harken then recorded a gain of $7.9-million and finished the year with a modest $3.3-million loss. That was a good performance year for Harken.

In reality, the loss was much worse. The SEC later would demand that Harken restate its earnings.

By 1990, Harken's luck had changed for the better.

In a decision that shocked industry experts, Bahrain dropped its negotiations over offshore oil and gas rights with international energy giant Amoco. Instead, the tiny Persian Gulf nation handed a 35-year contract to the struggling and inexperienced Harken.

Bush denied he was a factor in Bahrain's unusual decision, and Harken board members said Bush voiced doubts about whether Harken had the means and expertise for such a distant oil play. Later, Harken executives acknowledged that Bahrain officials were quite aware that the son of the U.S. president was a director.

One result of the Bahrain contract was immediate. Harken stock rose from $4.50 to more than $5.50 a share. But an unprepared Harken lacked cash and had to bring in the Bass brothers as equity partners to finance the drilling. Several years later, after two exploratory wells were drilled in Bahrain and found dry, the Bass partners told Harken they were pulling out of the Bahrain joint venture.

On June 22, 1990, Bush sold $848,560 worth of Harken stock, about 21/2 times its original value, for just more than $4 a share. Even with a $180,375 loan to pay back, Bush realized $668,185 on the sale. He still owned more than 100,000 Harken shares.

This is the stock sale that would pay for most of Bush's stake in the Texas Rangers.

A fascinating mystery: Who bought Bush's shares in Harken? Ralph Smith, who was then an institutional trader for Sutro & Co. in Los Angeles, said he called Bush on the off chance he might want to sell Harken shares. Smith, retired from Sutro, told the Los Angeles Times this month that Bush said he would check to see if "he could legally sell" his shares before agreeing to do so. The institutional buyer has never been identified, and Smith won't say.

In what would become Bush's most enduring business controversy, the Harken director filed a Form 144 with the SEC announcing his intention to sell a large block of stock. But he also was supposed to file a Form 4 after the sale that documented the specific transaction.

The filing did not occur for 34 weeks, until April 1991. At first, Bush blamed the late filing on the SEC for losing his paperwork. But now he says the fault lies with Harken's lawyers.

Bush failed to file required followup reports with the SEC on four separate Harken transactions over several years. After joining Harken's board, the company gave Bush a $96,000 loan at 5 percent interest, with an eight-year holiday on principal repayments, so he could buy 80,000 shares of company stock. Bush missed SEC deadlines for giving notice of both these acquisitions by nearly four months.

Bush got a second loan of $84,375 in 1989 to acquire 25,000 shares. This time, Bush missed the SEC filing deadline by 15 weeks.

In August 1990, two months after Bush's big sale of Harken stock, the company disclosed an unprecedented quarterly loss of $23-million. The same month, Hussein invaded oil-rich Kuwait. Both events drove Harken shares down to $3, then to $1.25 near the end of the year.

Bush, a member of Harken's audit committee, denied he knew of the upcoming quarterly loss when he sold his shares. But before the June sale, Bush served on Harken's "fairness committee" to determine whether a corporate restructuring would hurt shareholders. The committee met in May (the month before the stock sale), had access to details of Harken's big financial problems and worked closely with financial adviser Smith Barney, which concluded at the time that only drastic action would save Harken.

How bad off was Harken? By the end of 1990, the company posted a $40-million annual loss. Its shareholder equity had plunged to $3-million, down from more than $70-million in 1988.

In 1991, the SEC had completed its investigation of Harken's funny accounting for the sale in 1989 of its Aloha Petroleum subsidiary. The agency ordered Harken to restate its 1989 earnings, meaning that the company's $3.3-million loss was larger: $12.6-million.

Asked this month why Bush and other members of Harken's audit committee didn't see that this Enron-like deal would not pass SEC review, the president responded: "In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures."

By April 1991, Bush's long overdue Form 4 filing of his stock sale in 1990 had arrived at the SEC. The tardy filing and suspicious timing of the sale shortly before Harken reported a heavy loss prompted the SEC to open an investigation of Bush's transaction.

That Bush sold Harken shares in 1990 at a price propped up, in part, by faulty 1989 accounting has never been addressed by the SEC.

The SEC investigation of Bush ultimately would be closed without action being taken against the president's son. But the major players in the 1991 SEC inquiry read less like investigative watchdogs and more like an invitation list to a Bush family picnic.

SEC chairman Richard Breeden, appointed by President George Bush, was a former Baker & Botts attorney and longtime Bush administration aide. The SEC's general counsel was James R. Doty (he recused himself in the Bush matter), the same lawyer who earlier represented George W. Bush in his purchase of the Texas Rangers. Doty, too, is a partner with Baker & Botts.

Defending Bush in the SEC investigation was Robert W. Jordan, another lawyer with the Baker & Botts law firm and a former partner with Doty.

In October 2001, Jordan would be confirmed as President George W. Bush's choice as U.S. ambassador to Saudi Arabia. And James Baker III, secretary of state under the first President Bush, is the current "Baker" in Baker & Botts.

Bush agreed to be interviewed by the SEC, but investigators did not take him up on it, provoking skepticism from some government officials about their thoroughness.

Bruce Hiler, SEC associate director of the enforcement division, later said he faced no political pressure in the investigation. "Of course we were aware we were dealing with the president's son," he said. "But it wasn't intimidating at all."

Hiler, who left the SEC in 1994 for private practice, now represents Jeffrey Skilling, the former CEO of bankrupt Enron Corp.

By the fall of 1993, the SEC ended its inquiry. Hiler sent a letter to Bush's attorney saying "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."

With the SEC inquiry over, Bush resigned in late 1993 from the Harken board to pursue his successful run for governor of Texas.

By 1998, Bush had served four years as Texas governor and was preparing for a second term. He also was ready to unload his stake in the Texas Rangers. After buying the team for $86-million in 1989, Bush and his co-owners sold the franchise in 1998 to media mogul Tom Hicks for $250-million.

Bush, who held a mere 1.8 percent stake in the Rangers, was paid 12 percent of the sales price in 1998. That unusual boost dramatically enhanced the deal's return to Bush, an elected official.

On a borrowed $606,000 investment that should have returned $2.5-million, Bush received $15-million. His transformation from business failure to success was complete, with help from family friends all along the way.

Said Bush, in a favorite line about his wheeling-and-dealing era in private business: "I was a pit bull on the pant leg of opportunity."

Bush's Role In Corporate Fraud

REPORT: Bush Had Insider Edge

Press Briefing by Ari Fleischer

For Immediate Release
Office of the Press Secretary
July 23, 2002 - 12:23 P.M. EDT
SOURCE

James S. Brady Briefing Room

Partial Transcript:

Q Ari, why won't the President ask the SEC to release all Harken documents?

MR. FLEISCHER: No change in anything on that, Holly. That question was asked yesterday, asked last week. No changes, as you're well aware of.

Q What is the reason why?

MR. FLEISCHER: Same reasons -- you can just check the transcripts from the last time you asked the same question.

Q I don't think I -- could you repeat it, possibly?

MR. FLEISCHER: It's in the transcripts.
[End of partial transcript]

Remarks by President Bush and President Kwasniewski of Poland in Press Conference

The East Room

For Immediate Release
Office of the Press Secretary
July 17, 2002

12:03 P.M. EDT

Partial transcript:

PRESIDENT BUSH: We'll answer some questions. We'll alternate between the American press and the Polish press, three apiece --

Q Mr. President, even while you're calling for transparency in corporate America, you refuse to ask the SEC to turn over documents from its investigation into Harken Energy Corporation, your old company. And the Vice President has answered few questions about his role at Halliburton, his old company, which is now under investigation by the SEC. Why not just clear the air, ask the SEC to release those documents and ask the Vice President to talk about Halliburton in a public forum?

PRESIDENT BUSH: Well, first, the Vice President -- I've got great confidence in the Vice President, doing a heck of a good job. When I picked him, I knew he was a fine business leader and a fine experienced man. And he's doing a great job. That matter will take -- run its course, the Halliburton investigation, and the facts will come out at some point in time.

Secondly, as to a look at Harken, the SEC, as a result of Freedom of Information requests, has released documents, and the key document said there is no case. It was fully investigated by career investigators. Some of you, I think, have talked to the head career investigator, and he's made it clear there was no case.
[End of partial transcript]

Press Briefing by Ari Fleischer

For Immediate Release
Office of the Press Secretary
July 16, 2002
Source

The James S. Brady Briefing Room

12:23 P.M. EDT

Partial Transcript:

Q Just to answer a lot of the questions that have been out there and to show, back-up your claims in the past that this is an open administration. Why not just ask the SEC to release all the documents behind the Harken investigation -- just to get it out there.

MR. FLEISCHER: Ron, you know, the SEC took a look at all the questions that were raised in the context of Harken and they have come to their conclusions. They have made their determinations and they made their judgments and they made their call. It's all been shared with you. And you have what they determined.

Q Why don't you want to have shared with us the basis that they used to come to that conclusion?

MR. FLEISCHER: Well, Ron, you know, the lesson in Washington, there's no end to that type of question. It doesn't matter that the SEC has already looked into this in its entirety, shared its finding, shared its results with you and come to the conclusion that there's no "there" there.

Q Let me follow-up --

MR. FLEISCHER: The premise that you're asking is any time we ask for anything, we want to have full access to everything in a file. And that's just the precedent that is lacking in sense or merit, and especially in a case here where you know the conclusions, you know the reasons, you have everything you need, and it's all at your disposal.

Q Can I ask one more question? The President's accountant said yesterday that a Texas bank freed up $130,000 -- 130,000 shares of Harken stock that were being pledged for the loan the President took out for the Texas Rangers. Do you happen to know what the President did to get the collateral free?

MR. FLEISCHER: No, Ron, I'm not the President's accountant.

Q On Halliburton, Ari, you said from the podium that the Vice President believes that the lawsuit against him is without merit. I realize you're not going to comment on an ongoing SEC investigation. But isn't it also true that because of these things that one of the most experienced former CEOs in this administration has become something of a political liability, in that at the time when you're cracking down on corporate responsibility, the Vice President is not heard from, he's not talking about these issues. He can't be used as a vital spokesman of the administration.

MR. FLEISCHER: I thought I saw him on TV just yesterday or the day before giving a speech about corporate governance. So I just differ with your findings and with your premise.

Q That was a fundraiser, right, and we'd all stipulate that those don't get a lot of coverage, right?

MR. FLEISCHER: I saw him on TV, so obviously he got covered.

Q Wait a second, is that your only answer?

MR. FLEISCHER: I'm sorry, what was your next question?

...Q Thank you. Is the -- was he aware of circumstances or problems within Halliburton that could ultimately affect the financial position of the company prior to his selling of stock?

MR. FLEISCHER: As you know, these are issues that if the Securities and Exchange commission deems them appropriate to look into, they will look into.

...Q It was not on the wires, but it's all right. Next question. Does the President feel -- I know the President has been backing Harvey Pitt as president of the SEC -- does the President feel, though, that some of the criticism, some of the questions the Democrats have and John McCain have, does he feel some of those arguments are valid?

MR. FLEISCHER: No. The President listens to Arthur Levitt, for example. Arthur Levitt, the former Chairman of the Securities and Exchange Commission appointed by President Clinton has commended Harvey Pitt for the superb job he is doing at the SEC; for the enhanced number of corporate wrongdoers who Harvey Pitt has now banned from serving as members of board of directors of corporate companies or in corporate positions anymore; for the amount of money that Harvey Pitt has taken back from business executives who took that money as a result of filing phoney books.

He is receiving bipartisan acclaim from some of the best experts in the business, such as Arthur Levitt. And the President knows that Harvey Pitt is doing an excellent job, a superb job. And the President looks forward to him continuing in that good job.

"RELEASE THE DOCUMENTS" - John LeBoutillier - Former Conservative Congressman

Bush's Document Dilemma: Should he release the Harken SEC documents? Byron York Says Yes

Sen. Hatch Joins Dems in Call for Harken Documents

Senators: Release Records On Bush Stock Sale

Bush Should Release Documents - National Review - Byron York

"Because of the president's involvement in the Harken Energy case, there is a large cloud hanging over his head. I am afraid if he doesn't eliminate it soon by giving 'full disclosure', the suspicions will diminish his moral authority — his presidential authority to lead the critical effort to restore confidence in the stock market." - Sen. Joseph I. Lieberman

Amid scandals, Bush White House takes a risky path, placing loyalty over public duty - Jonathan Turley

The President vs. The Presidency - Jonathan Turley

SEC Chief Pitt Says He Opposes Release of Files on Bush

Bush Clamps Down On Records Disclosure

The Road to Perdition
"The president's self-contradictory defense of his past is to say he was "fully vetted" by the S.E.C. even though he still hasn't "figured it out completely" himself. But the S.E.C. never interviewed Mr. Bush during its investigation. The agency was then run by an appointee of his father, Richard Breeden, who recused himself from the case. Last Sunday, Mr. Breeden turned up on Fox News as a George W. defender. Yet when Tony Snow asked him twice if he could give the president "a clean bill of health, yes or no," Mr. Breeden pleaded ignorance and ducked. Perhaps that's why the White House has not asked the S.E.C. to release its Harken papers, even though Harvey Pitt last weekend said he would if it did. The president has also told the press that "you need to look back on the director's minutes" to answer questions about Harken — and then refused to provide those minutes or to instruct Harken to release them either. But yesterday Mr. Lewis's organization posted a pile of them at www.publicintegrity.org, and says that more documents are yet to come."

"The importance of protecting sensitive institutional, commercial, and personal interests that can be implicated in government records — such as the need to safeguard national security, to maintain law enforcement effectiveness, to respect confidentiality, to protect internal agency deliberations, and to preserve personal privacy."
John Ashcroft - Source.

"We believe in people. We’re of the people and by the people and for the people. That’s the motto of our campaign."
George W. Bush - Source: Remarks in Eau Claire, Wisconsin Oct 18, 2000.

Bush Flap Thrusts Harken Back Into the Spotlight

The Street.Com
By Melissa Davis
Staff Reporter
July 11, 2002 - 06:59 AM EDT
Source

Even in its glory days of rising sales and standing-room-only shareholder meetings, Harken Energy (HEC:Amex - news - commentary - research - analysis) wasn't what you'd call a blue-chip investment.

More than a decade ago, the Texas-based energy company was making a big bet on a fiercely competitive business in which it had little experience. A dozen years and numerous setbacks later, with its $10 million market cap and well-established knack for losing money, Harken is the sort of penny stock that rarely interests investors.

That is, until you throw the stock sales of a certain former director -- President George W. Bush -- into the equation.

Suddenly, it doesn't matter that Harken is a tiny exploration-and-production company with a scant $5.5 million in latest-quarter revenue. Now Harken is in the headlines because years ago, Bush reaped a profit by selling thousands of shares just months before the company was hit by bad news.

If the sale itself was exceptionally well-timed, the renewed interest in its details comes at an inopportune moment for the president. In the wake of wealth-destroying corporate scandals at Enron and WorldCom, to name two, Bush is promising to crack down on corporate misconduct. But with its echoes of recent scandals, the Harken case now threatens to undermine the president's offensive against unethical behavior.

The Herald Angels

It may be tough to imagine, given the company's current state, but Harken was once so popular that Bush had to fight for a seat at the annual shareholder meeting -- a fight he actually lost, leaving him standing at the back of the room.

In 1989, a huge crowd of Harken's nearly 10,000 shareholders poured into a Dallas airport hotel to hear about the company's promising future. During the three short years since it had brought Bush aboard by buying out his struggling company, Harken had exploded from a tiny operation with only $4 million in sales to one expecting more than twice that amount in profits.

In fact, Harken was then on its way to delivering $1 billion in annual sales for the first and only time in its history. And that was even before January 1990, when Harken landed a coveted Middle Eastern drilling contract, beating out the likes of Amoco and becoming one of the hottest gambles of the time.

It was with this backdrop that in the summer of 1990, Bush sold most of his Harken stock -- then his largest asset -- to pay off a $600,000 loan he had taken to invest in the Texas Rangers baseball team. At the time of the stock sale, Bush was a director of Harken and was serving on a two-member "fairness committee" formed to study whether a major company restructuring would hurt ordinary Harken shareholders. (He also served on Harken's audit committee.)

The timing of Bush's insider sale -- which reduced his stake in Harken by two-thirds -- proved impeccable on two counts. It barely preceded Harken's report of an unprecedented $23.2 million quarterly loss that punished the stock. And it came just before Iraq invaded Kuwait, potentially jeopardizing the exclusive drilling opportunity in nearby Bahrain that made Harken such an exciting gamble for investors.

It's Curious, George
Events surrounding President Bush's Harken stock sale*

1. September 1986: Bush sells his fledgling energy company for $600,000 in Harken stock and becomes a director and paid consultant.

2. June 1989: Harken predicts it will achieve $1 billion in annual revenue -- and delivers that at year's end, along with a $12 million loss.

3. January 1990: Harken signs an exclusive 35-year production-sharing contract with Bahrain.

4. June 1990: Bush sells two-thirds of his stake in Harken for $835,807 -- but doesn't file a necessary disclosure form.

5. August 1990: Harken reports a $23.2 million loss and major restructuring plan.

6. October 1990: Bush mentions Harken stock sale in Dallas Morning News interview.

7. April 1991: The SEC receives official notice of Bush's 1990 stock sale.

8. Fall 1991: Harken reports revenues of only $5.35 million, and a $4.19 million loss, for the first nine months of 1991.

9. December 1991: Harken's stock climbs to $7, more than double its price of five months earlier, as investors gamble on Bahrain bid.

10. January 1992: Harken reports the failure of first drilling attempt in Bahrain.

11. June 1992: Bush takes a leave of absence from Harken.

12. February 1993: Harken strikes out on its second attempt in Bahrain and doesn't try again.

13. November 1993: Bush resigns his board seat at Harken.

*Prices adjusted for November 2000 1-for-10 reverse split.

Further raising eyebrows was the fact that a required filing with the Securities and Exchange Commission didn't reach regulators until more than eight months after the reporting deadline. Bush properly filed his intent to sell stock but failed to file the actual sale documents until later.

At least one newspaper reported the sale before the SEC got its document: In October 1990, the Dallas Morning News quoted Bush as saying he'd become a "small, insignificant" stockholder in Harken after selling 225,000 of his 345,426 shares in "June or July," at $4 a share. A White House spokesman said Bush sold the rest of his Harken holdings before becoming the Texas governor in 1995, but wouldn't be more specific.

(Unless otherwise noted, figures in this story reflect historical stock information. For the sake of clarity, share counts and prices haven't been recalibrated to account for a 1-for-10 reverse split the company effected in the fall of 2000 to boost its stock price.)

Changing Tunes

Further muddying the waters, Bush has given a variety of reasons for his delinquent stock sale notification. When the matter first arose in 1991 -- and again during his race for Texas governor in 1994 -- Bush blamed the SEC for misplacing his forms. He stood by that story two years ago during his campaign for president.

Then, last week, a Bush spokesman suddenly shifted the blame to Harken attorneys for committing a "clerical error" that delayed the filing. Since then, Bush has simply claimed ignorance, saying he really doesn't know what caused the supposed foul-up.

The timing of the disclosure aside, questions have long swirled about what Bush knew when he sold the stock. In the early 1990s, U.S. News & World Report concluded that Bush had had "substantial evidence" to determine that Harken was in dire straits and needed to make radical changes to recover. Bush has consistently denied any allegation that he improperly enriched himself through insider trading, or that he tried to hide transactions.

Bruce Day, a securities attorney with a background in both federal and state securities regulation, said he's not convinced Bush did anything terribly wrong. If Bush simply failed to file a Form 4 stock sale registration late -- even eight months late -- his misstep was a minor one, he said. As for the insider-trading questions, "I'm not aware that that really happened," Day said.

Whatever happened, Harken's stock took a hard hit in the months following Bush's sale. The stock finished 1990 at $1.25 -- down 76% for the year.

As it turns out, Bush could have actually profited more by selling his Harken stock at its real peak nearly 18 months later.

After dipping to its low of $1.25 in 1990, the stock took flight in mid-1991, against incredible odds. By then, Harken had spun off its most valuable assets, including a retail gasoline chain that once generated about 90% of revenue. That left nearly all of Harken's assets tied up in its wildcat drilling project off the coast of Bahrain. Harken had no experience drilling wells either overseas or in the water. In fact, some people believed the company landed the Bahrain contract only because Bush was the president's son.

But investors had just watched Triton Energy score big on its own highly speculative overseas project. And they didn't want to miss out again.

So they overlooked Harken's dismal numbers, including revenues that had trickled to a measly $5.35 million during the first nine months of 1991, and a $4.19 million loss for the same period. They gobbled up the stock, sending it to $7 a share.

And they held their breath and waited.

Dry Hole

The following year, Harken's shareholder meeting attracted only 11 people, including three from the media and four from the company itself. Bush, who'd just begun a leave of absence days earlier, was nowhere around.

The meeting started late, at 5 p.m. in a hotel near Chicago's O'Hare airport, and lasted just under 10 minutes. The company's prospects in Bahrain were barely mentioned.

Harken's first drilling expedition off the shore of Bahrain had ended in a dry hole. The company's second -- and final -- try in the area would meet the same fate the following year.

On the day the second failure was announced, in February 1993, Harken's stock plummeted 29% to $1.50 a share. It was the sixth most heavily traded stock on the American Stock Exchange.

Seven months later, Bush ended his profitable eight-year stint with the company by officially resigning from his seat on the board.

Salary and Perks

At the height of Bush's Harken career in 1989 -- when the company pushed past $1 billion in revenue -- Bush raked in $121,000 as a paid consultant and $131,250 worth of stock options. Like other directors and officers, he was allowed to exercise his options at a 40% markdown from market prices, using low-interest company loans to boot.

Despite 1989's milestone in sales, Harken lost $12 million by year's end. It lost $40 million in 1990 -- when shareholder equity plunged to $3 million, down from $70 million just two years earlier. But even then, Harken's generous executive compensation remained virtually unchanged.

As the losses mounted, Bush's consulting salary finally dropped to $50,000 in 1991 and $42,000 in 1992. Still, by 1993 -- the year Bush exited the company -- he had amassed a personal net worth of more than $4 million.

Except for a brief rebound in 1997-98, Harken's stock traded mostly in the low single digits following the company's failures in Bahrain. This year has been among Harken's worst, with its stock failing to fetch much more than $1 a postsplit share and slipping below 50 cents this week.

Due to low energy prices, Harken has curtailed much of its exploration and production activity. It still has operations in the U.S. and abroad, but it is now seeking to grow through mergers and acquisitions.

Sixteen years have passed since Harken adopted a similar strategy, snatching up companies -- including Bush's -- on the path to its brief moment as a $1 billion company. In exchange for his company, near foreclosure at the time, Bush received Harken stock valued at $600,000.

He collected $835,807 for the sale of two-thirds of that stock less than four years later. At today's prices, the stock would be worth just over $10,000.

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