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.
And now folks, for the laugh of the day:
SEC Lawyer Who Probed Bush Denies He Was Pressured
Reuters
BY ADAM ENTOUS
July 16, 2002
WASHINGTON - The Securities and Exchange Commission lawyer who investigated President Bush for insider trading more than a decade ago said on Tuesday that no pressure was put on him to drop the investigation even though Bush's father was president at the time.
Bruce Hiler -- who currently represents Jeffrey Skilling, bankrupt Enron Corp.'s former chief executive -- was associate director of the SEC's enforcement division when it investigated Bush's sale in 1990 of Harken Energy Corp. stock before the company reported large losses. At the time, Bush was an outside director of the Texas-based oil company.
In the run-up to the November congressional elections, Democrats have seized on the Harken transaction in assailing Bush's record as a businessman, and have questioned whether the SEC cut short the insider-trading investigation because Bush was the president's son.
Hiler, who left the SEC to join the law firm of O'Melveny & Myers in 1994, rejected suggestions the probe was in any way influenced by then President George Bush, telling Reuters: "There was no political pressure. There was no case, period."
"Of course we were aware we were dealing with the president's son. But it wasn't intimidating at all. I reported directly to the director of enforcement, who was a public official and a public servant. We cut our teeth in dealing with high profile individuals and organizations," he added.
But Hiler said he has not been contacted by Bush aides, who so far have been unsuccessful in deflecting attention from the president's business dealings at Harken.
Documents released last week showed that Bush had also received low-interest loans from Harken in 1986 and 1988, benefiting from boardroom deals he now wants banned as part of a crackdown on corporate misconduct.
Democrats said both transactions cast doubt on Bush's credibility in addressing a wave of accounting scandals at Enron, WorldCom Inc. and other major U.S. corporations that have sent the stock market tumbling to five-year lows.
WHITE HOUSE DIGS IN
The White House said Bush did nothing wrong and that the SEC settled the matter when Hiler sent an Oct. 1993 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."
Still, the White House has rejected requests by news organizations and Democrats in Congress for the release of the SEC's complete files on Bush's financial dealings at Harken.
"The SEC has already looked into this in its entirety," White House spokesman Ari Fleischer told reporters on Tuesday. "You know the conclusions, you know the reasons, and you have everything you need."
At issue is Bush's sale of 212,140 shares of Harken common stock at $4 per share, or $848,560, on June 22, 1990. Two months later, the company announced bigger-than-expected losses for the quarter ending June 30, and its stock price plunged.
The SEC was alerted to the transaction in March 1991 when Bush disclosed the completed sale to the SEC 34 weeks late. It opened an investigation on April 5 of that same year.
Bush has asserted for years that he did not know the extent of Harken's losses when he sold the stock.
In a March 1992 memorandum prepared by Hiler and other investigators, the SEC backed up this assertion, saying the "evidence establishes that Bush was not aware of the majority of the items that comprised the loss Harken announced."
"Based upon our investigation, it appears that Bush did not engage in illegal insider trading because it does not appear that he possessed material nonpublic information," the memo concluded.
However, an internal Harken chronology, obtained by the nonpartisan Center for Public Integrity, said that just over two weeks before Bush sold the stock, he was sent the company's "weekly flash report" giving "information provided by subsidiaries regarding estimated historical and projected earnings."
In a telephone interview, Hiler said the SEC's enforcement division conducted a thorough investigation, and that the president and his staff never weighed in.
"I absolutely feel we did a good job looking at this," Hiler added. "There was no case that I would have felt comfortable bringing. There was no indication of wrongdoing."
Hiler's current client, Skilling, is under investigation for his role in Enron's financial meltdown, and sources close to the case have said a federal indictment may be in the works. Enron, whose collapse last year wiped out thousands of jobs and billions of dollars in equity, was one of Bush's biggest campaign contributors.
"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.
From The Wall Street Journal:
Harken Energy Had a Web Of Mideast Connections;In the Background: BCCI
Entree at the White House
Wall Street Journal
Thomas Petzinger Jr., Peter Truell And Jill Abramson
December 6, 1991
PAGE A1
. . . The mosaic of BCCI connections surrounding Harken Energy may prove nothing more than how ubiquitous the rogue bank's ties were. But the number of BCCI-connected people who had dealings with Harken -- all since George W. Bush came on board -- likewise raises the question of whether they mask an effort to cozy up to a presidential son.
Among those relationships:
Sheik Khalifah bin-Salman al-Khalifah, the prime minister of Bahrain and a brother of the country's ruling emir, is identified on an October 1990 shareholder list as one of the 45 investors who own parent company BCCI Holdings (Luxembourg) S.A. The emir played a role in approving the Harken transaction.
Sheik Abdullah Bakhsh, a major Harken shareholder represented by Mr. Othman on the company's board, has been a co-investor in Saudi Arabia with alleged BCCI front man Ghaith Pharaon, and used Khalid bin-Mahfouz, until recently a principal BCCI shareholder, as his banker. .
[End of Partial Transcript]
Other Bush Kinfolk Also Had Dealings In Projects Abroad
The Wall Street Journal
By Jill Abramson and Peter Truell
December 6, 1991
PAGE A4
Prescott Bush , 68, forged a lucrative but ill-fated alliance in 1989 with a company linked to the Japanese mob. Members of his family say he had no idea that West Tsusho Co. was part of the empire of Susumu Ishii, who headed Japan's second largest underworld syndicate before his death in September. Prescott Bush didn't return several messages left for him.
Mr. Bush set up a consulting business in 1984 after a long career with a New York insurance brokerage firm. In 1989 his Prescott Bush & Co. helped arrange two U.S. investments for West Tsusho . That firm paid $3.8 million for a stake in Quantum Access Inc., a Houston software firm headed by a nephew of Mr. Bush , Draper Kauffman; and it paid $5 million for a 38% stake in Assets Management International Financing & Settlement, a New York firm on whose advisory board Mr. Bush had served.
[End of partial Transcript]
Mystery of Share Buyer Who Bailed Out Bush
Who is "Lee"?
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."
SIMPLY A GOOD POSSIBILITY IMHO.
Well, Did He or Didn't He?
Source
James Doty, SEC general counsel during the 1991 SEC investigation into Bush's Harken stock deals, denied today that Bush had been warned in writing by the SEC not to claim he had been exonerated. It proved to be a short-lived denial.
In an interview this morning on NPR, Doty at first denied that the SEC's letter to Bush forbid him in writing to claim that by closing the investigation he had been exonerated.
The NPR announcer was prepared with a copy of the letter. He read the 1991 SEC letter to Doty, including the line he denied was in it.
Doty quickly explained that such statements are common language in all such letters. Unfortunately Doty's explanation may now cause Bush new problems.
"That statement is put in the letters to warn people that the SEC can reopen the investigation at any time if new information surfaces," Doty tried to explain. "and to let them know that that they are forbidden from using the letter to claim they had been exonerated."
If Doty's characterization is correct, it would appear that President Bush's contention that he was cleared of any wrongdoing violates SEC rules.
Another contradiction between Bush's explanation of events surfaced today. Bush has maintained that he fully cooperated with the 1991 SEC investigation. That contention has now been contradicted by a memo from the very SEC officials who conducted - or tried to conduct - that investigation.
Three months into the 1991 investigation, SEC rank and file investigators complained to their politically appointed bosses that Bush had provided little more than already public information to the SEC about his sale. The allegation was contained in a 1991 SEC memo released yesterday by the Center for Public Integrity.
The 1991 investigation was closed without taking action. James A. Doty was the SEC's general counsel at the time. Doty had served as Bush's private attorney when he acquired the Texas Rangers.
Doty now says that he took no part in the probe and that SEC investigators took no action because there was "no substantial change in Harken's stock price" after Bush's sale that would indicate he was dumping the stock on inside information.
But Harken's historical stock chart says otherwise. A month after he sold his stock on June 22, 1989, Harken reported large losses and, from the end of August 1989 through the rest of 1990, the stock lost 70 percent of its value.
"Who Is David Edwards?" - The Wall Street Journal
Mr. Edwards also played an important role in securing an offshore drilling contract in Bahrain for Harken Energy Corp., on whose board sat George W. Bush, presidential son and current governor of Texas.
If only as a matter of curiosity, David Edwards is a Friend of Bill worth a few moments of attention. The tales of the university donations and the Harken deal are particularly interesting.
...Mr. Edwards quickly turned to his Saudi contacts, including Mr. Bakhsh. Two executives associated with the investment firm say Mr. Edwards brought the low-profile Saudi to Stephens in 1987.
Reports in this newspaper and the BCCI book "False Profits," by Peter Truell and Larry Gurwin, say Mr. Bakhsh was a co-investor in Saudi Arabia with alleged BCCI front man Ghaith Pharaon. Khalid bin Mahfouz, another BCCI figure and head of the largest bank in Saudi Arabia, was Mr. Bakhsh's banker. University of Arkansas officials say Mr. Edwards sought to involve Mr. Bakhsh in a project to create a Middle East studies center at the school. In a letter to a university official, Mr. Edwards said he would bring the reclusive Saudi to Fayetteville to talk "about designing a simple mosque somewhere on campus."
...A few years earlier, Mr. Edwards provided important help to a company linked by family ties to then Vice President George Bush. In 198, Mr. Edwards and Mr. Bakhsh rode to the rescue of Harken Energy, a struggling Texas oil company that included George W. Bush on its board. Harken's web of Middle East connections was detailed in a 1991 Wall Street Journal report. Stephens officials, including Mr. Edwards, came up with an unusual arrangement to help cash-poor Harken: Union Bank of Switzerland would give the oil company a $25 million cash infusion in exchange for stock. UBS, the Journal noted, was not known as an investor in small U.S. companies and was a joint-venture partner with BCCI in a Geneva-based bank.
When UBS began to hit regulatory snags, it decided to unload its Harken stock. Stephens brought in a new buyer: Mr. Bakhsh. The Saudi tycoon ended up with a l7% stake in Harken, and his American representative, Chicago businessman Talat Othman, wound up with a seat on Harken's board. 
By August 1990, Mr. Othman was attending White House meetings with President Bush to discuss Middle East policy. Mr. Meyer, who serves as attorney for Mr. Othman as well as Mr. Bakhsh, says the Chicago businessman was invited to the meetings only because of his "longstanding involvement in Arab-American affairs. "
In April 1989, the government of Bahrain was looking for an oil company to explore its offshore holdings. According to a 1990 article in Forbes, the Bahrainis turned to Houston oil consultant Michael Ameen, a former head of governmental relations for Aramco. Mr. Ameen, the Journal noted in it's 1991 report is another "BCCI notation in the Harken story." As a top Aramco official, Mr. Ameen "had close-up dealings for years with the Saudi royal family and it's advisors," including Kamal Adliam, a BCCI principal and former head of Saudi intelligence. Mr. Ameen also reportedly is close to Mr. Bakhsh.
Mr. Ameen and Harken officials did not respond to interview requests. But according to Forbes the Bahrainis called Mr. Ameen, looking for a small company that would give them full attention. Mr. Ameen said he didn't know of any. By coincidence, Mr. Ameen's friend David Edwards called 10 minutes later on an unrelated matter. Mr. Ameen mentioned his problem. Mr. Edwards mentioned Harken.
Mr. Ameen negotiated the Bahrain deal, earning a $100,000 consulting fee. George W. Bush says he opposed it. "I thought it was a bad idea, " Gov. Bush said recently, because of Harken's lack of expertise in overseas and offshore drilling. Gov. Bush added that he "had no idea that BCCI figured into" Harken's financial dealings.
In June 1990, Mr. Bush sold some 60% of his Harken stake for about $850,000, earning a handsome profit. In November 1993, he resigned from Harken's board. Four months later, his successor was named: Michael Ameen. Harken has yet to discover any oil off Bahrain.
Mr. Bakhsh appears to have been pleased with Stephens's investment strategies. From February 1989 through October 1990, he purchased more than one million shares in the Stephen's controlled Worthen Bank paying more than $10 million for 9.6% of the stock, according to Securities and Exchange Commission disclosure statements. Mr. Bakhsh's attorney says he no longer is a Worthen shareholder.
Mr. Bakhsh has a wide range of U.S. investments, concentrated mainly in apparel, energy, real estate and financial services. In November, the Chicago Tribune reported that Mr. Bakhsh's First Commercial Financial Group, a commodities brokerage firm, was forced to shed its customer accounts after regulators raised concerns about capital shortfalls and customer complaints. Mr. Bakhsh owns First Commercial through Dearborn Financial Inc., an investment company run by Mr. Othman. Their attorney, Mr. Meyer, says that First Commercial was completing "the final phase of its long-term strategic restructuring plan" by transferring its customer accounts to other firms. Mr. Meyer says that Mr. Edwards was not involved in Dearborn and First Commercial.
[End of partial Transcript]