SEC Records Show Bush Had Some Idea Of Harken's Troubles
THE BOSTON GLOBE
By John Aloysius Farrell
July 13, 2002 - Saturday
WASHINGTON -- Harken Energy Corp. was in bad financial shape, facing restructuring, when George W. Bush sold some $850,000 worth of shares in the company in June 1990. Evidence in government files indicates he had at least partial knowledge of the company's troubles before he sold the stock.
Records from a Securities and Exchange Commission investigation indicate that Bush, who served on Harken's board of directors and was a member of a special committee to deal with the financial troubles, had been warned about the company's crisis by its president, Mikel Faulkner, and other officers before selling his stock.
On April 20, 1990, Faulkner wrote to the members of Harken's board that the company was facing a liquidity crisis and that crucial plans to sell new shares of stock were diminished, because of a slumping oil market. The firm was also facing pressure from its lenders, especially the Bank of Boston, which "greatly intensifies our current liquidity problem," Faulkner wrote.
On May 18, 1990, according to the SEC files, Harken's senior vice president, Bruce Huff, wrote to the special committee -- made up of Bush, Faulkner, and director E. Stuart Watson -- to alert it of the "negative repercussions" that could occur if they did not approve waivers and extensions of corporate loans.
The Bank of Boston refused to renegotiate its loans, and the stock sale had to be put off. In a 1991 letter to the SEC, Huff said that by June 1990, "The company was in the midst of the severe cash crisis."
Bush sold 212,140 shares of Harken stock on June 22, 1990, two months before Harken reported a $23.2 million quarterly loss that was tied, in part, to the restructuring efforts. The SEC investigated him over possible insider trading when the SEC learned of the sale the following spring, eight months after it was required to be reported. The SEC ended its investigation without charging Bush with violating securities laws.
In its last public disclosure preceding Bush's sale, Harken had announced only a $2 million operating loss for the first quarter. Bush says he did not know that Harken was about to post the whopping second-quarter loss that August, even though he was on Harken's three-member special audit committee, as well as its board of directors.
When closing the inquiry in 1991, SEC investigators concluded that Bush was not privy to the full extent of the financial problems facing Harken. They also believed, records show, that proving a case that Bush acted with intent to defraud would be difficult because he had openly consulted the firm's officers and lawyers before selling his stock.
Bush used the proceeds of the Harken sale to pay off a loan he took to buy his interest in the Texas Rangers baseball team. The SEC general counsel at the time Bush was investigated was James Doty, the same lawyer who represented Bush in the Rangers deal.
The Associated Press reported yesterday that a 1991 SEC memo showed the agency considered interviewing Bush when it investigated him but never did. The SEC won't say why it didn't talk with Bush.
You must be kissin' up, somehow! ;-)