"There are many pockets in a politician's coat, and sometimes the more subtle pockets are the ones people prefer," said Larry Makinson, executive director at the Center for Responsive Politics, a nonpartisan research group in Washington. "What you've really got to be careful about is that someday, if he becomes president, these people don't cash in their chips and reap a windfall at the expense of the American public."
Mr. Makinson cited first lady Hillary Rodham Clinton's windfall in cattle futures before her husband's election as president."
The Economist
print edition
Jul 20th 2002| WASHINGTON, DC
Source
The whiff of cronyism surrounds the president's past business deals
THE Dow Jones Industrial Average is not the only thing looking like a punctured balloon. The air may be hissing out of George Bush's poll ratings, too.
Zogby International, a polling firm, says that only 62% of those it asked now think his performance “positive”, the lowest figure since September 11th. To be fair, another poll, for the Washington Post, shows his approval rating almost unchanged at 72%. But the omens are not good. Thomas Riehle, the president of another polling outfit, Ipsos-Reid, points out that the number of Americans saying things are on the wrong track outnumber, for the first time this year, those who think things are going the right way. Fewer than half say they would re-elect Mr Bush if a presidential election were held today.
The revelations about the president's involvement in unsavoury business practices a decade ago have aggravated this vulnerability. The most commonly mentioned name is Harken Energy, a Texan firm where Mr Bush was a director.
In 1990, Mr Bush failed to obey the letter of the law in not reporting on time the sale of Harken shares. His excuse is that the lawyers ate his paperwork. In 1989 Harken partly obscured its real financial position by selling a subsidiary at a healthy profit to a group of Harken executives who borrowed some of the money for the purchase from the company. The Securities and Exchange Commission required Harken to restate its earnings. Mr Bush also bought some Harken shares using “sweetheart” loans from the company itself, a practice he now says should be stopped. Lastly, it turns out that ten weeks before the 1990 sale of those shares he signed a “lock-up letter”, promising not to sell for six months after a proposed public offering. His spokesman says the promise did not stand when the public offering failed to go through.
None of this seems to be a WorldCom-class example of bilking the shareholders. There are two more worrying things for the White House. The first is an SEC investigation into what went on in the 1990s at Halliburton, an oil-services company, when Vice-President Dick Cheney was its boss. The firm used an accounting change to count as earnings a portion of income on some projects in dispute. Mr Bush has already been pushed into insisting that Mr Cheney will be exonerated. Whatever happens, Mr Cheney must regret his comments about his firm's accountants (wait for it), Andersen: “One of the things I like that they do for us is that...I get good advice...over and above the normal by-the-books audit arrangement.” Whoops.
The second problem for the White House is that Mr Bush seems to have benefited from what Americans excoriated during the Asian financial crisis as “crony capitalism”. Mr Bush's fortune came not from Harken but from his share in the sale of the Texas Rangers, a baseball team in which he invested using Harken shares as collateral. Three questions arise.
First, Mr Bush's stake in the team was 1.8%, which should have given him $4.5m from its sale. In fact he got $14.9m, because his partners gave up some of their share. As Paul Krugman, a columnist on the New York Times, points out, Mr Bush was then governor of Texas. Was this unethical?
Second, the price of the Texas Rangers soared partly because it got a new stadium built largely at taxpayers' expense. This was approved by local voters, but lawsuits allege that some of the land purchases involved were illegal. Is that true?
Third, the Rangers' buyer was Tom Hicks. As part of his “privatisation” of the management of the University of Texas's huge endowment, Mr Bush changed the rules so that the fund merely needed to report its overall performance, not the details of each deal. Mr Hicks was the head of the investment firm that managed UT's money. Was there any link between this and the purchase of the Rangers?
Without more evidence, one has to assume the answer to all these questions is no. Moreover, many other politicians, Democrats as well as Republicans, have equally questionable episodes in their pasts, and worse things have doubtless gone on in Texas. Still, Mr Bush is a special case. He came into office promising to “change the tone” of Washington. His business travails are undermining his promise, and may yet cause Americans to see him as “just another politician”.
Vote: Just another politician