ASSOCIATED PRESS
July 12, 2002
Source
WASHINGTON- When George W. Bush's sale of oil stock attracted the attention of regulators a decade ago, the Securities and Exchange considered interviewing him about possible insider trading but never did.
The SEC won't say why it didn't talk with Bush, whose father was president at the time.
An SEC memo from 1991 shows that investigators raised the possibility of interviewing Bush about his sale of 212,140 shares in Harken Energy Corp. The investigators told Harken's lawyer that "we would promptly inform him whether we need to speak with Bush," the memo said.
The Harken attorney "volunteered that Bush would consent to a phone interview and/or voluntary testimony," the memo added.
There is no explanation as to why an interview wasn't pursued in thousands of pages of material released by the SEC over the years in the Bush inquiry.
The SEC has declined to release some of the files from its investigation.
The White House has rebuffed repeated requests in recent days that it authorize the release of all the SEC's records on its inquiry, which was closed with no action against Bush.
In its limited number of interviews and extensive gathering of documents from Harken, the SEC uncovered little evidence of insider trading. Harken initially was uncooperative in the inquiry but subsequently provided extensive help to the SEC, waiving attorney-client privilege. The SEC interviewed Harken's in-house counsel who advised Bush concerning the stock sale.
The controversy surrounding Bush and his days as a Texas oilman continued Friday as Rep. Henry Waxman, D-Calif., urged the president to turn over any profits from his sale of Harken stock to a charity for displaced workers.
The stock sale allowed the future president to pay off a bank loan for his stake in the Texas Rangers baseball team.
The identity of the buyer of the stock has never been disclosed.
The SEC never asked. President Bush says he doesn't know and the White House declines to ask the broker who handled the transaction. Reporters have fared no better in getting to the bottom of the mystery.
Bush had gotten the stock in the merger of his struggling oil company with Harken in 1986.
By the time of the sale, Harken's finances also were in the red. Daily trading activity in the stock was as little as 1,300 shares on the New York Stock Exchange. If Bush had tried to sell a large amount of Harken stock into the open market, it undoubtedly would have driven the price far below the $4 a share market price that he was paid.
Bush's sale on June 22, 1990, was handled by California stock broker Ralph D. Smith, who says he got a call on June 9 that year from an institutional client who wanted to buy a large block of Harken.
Smith said he then made a couple of "cold calls" to people who owned Harken stock, including Bush.
SEC investigators interviewed Smith in the insider trading inquiry, but, according to Smith, they never asked the broker who bought Bush's stock. Smith, now retired, says he has a professional responsibility to protect the confidentiality of the buyer.
White House spokesman Dan Bartlett says that "it isn't our place" to urge that the buyer step forward.
Smith's difficult-to-read handwritten notes turned over to the SEC supply a clue about the buyer.
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 word that appears to be "Lee" is a reference to a person or an entity.
"There is nothing rotten in the accounting profession."
Harvey Pitt, Chairman of the Securities and Exchange Commission - January, 2002 - SOURCE.