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Posted on 07/15/2002 7:07:00 PM PDT by RCW2001
By PETE YOST, Associated Press Writer
WASHINGTON (AP) - Two and a half months before George W. Bush sold his stock in a struggling Texas energy company where he was a director, he signed a letter promising to hold onto the shares for at least six months, internal company documents show.
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The "lockup" letter Bush signed on April 3, 1990, for his shares in Harken Energy Corp. is now being compared with the account his lawyers gave federal securities regulators who examined the stock sale as a possible insider trade.
Bush's lawyers have maintained for more than a decade that he had a pre-existing plan to sell his stock in Harken and other companies to pay a tax bill and a loan debt he owed for his stake in the Texas Rangers professional baseball team.
And they have said the sale wasn't motivated by Harken's deteriorating financial situation.
The letter Bush signed promising to hold onto the stock was released by the Securities and Exchange Commission ( news - web sites) under the Freedom of Information Act. At the time he signed it, Harken was considering a public stock offering to raise money to solve a cash flow problem.
"Dear George," said the April 2, 1990, letter from Harken secretary Larry Cummings. "As you are aware, Harken is contemplating a public common stock offering.
"In connection with such offering, the underwriters have requested that Harken obtain consents for all directors, officers and other affiliates to agree to not sell ... for a period of 180 days from the date our proposed public offering goes effective."
Bush signed and returned the letter the next day.
Bush's sale of his Harken stock for $848,560 has come in for renewed public scrutiny in recent weeks as he tries to restore investor confidence in the financial markets and calls for a crackdown on corporate wrongdoing.
White House spokesman Dan Bartlett said Monday the lockout letter was "made irrelevant and obsolete" by the time Bush sold his stock in summer 1990 because the public stock offering it affected never went through.
But a securities expert said the document calls into question his lawyers' account to the SEC.
"Bush's signing of the April 2, 1990, lockup agreement undercuts his lawyers' explanation for the early sale of his Harken stock," said Houston attorney Thomas R. Ajamie, an expert in securities law whose firm is advising companies that did business with the failed energy giant Enron.
"If his accountant told him that he needed to sell stock to pay a debt obligation for his interest in the Texas Rangers, it does not make sense that he would subsequently sign an agreement promising not to sell his shares of Harken stock for six months," Ajamie said. Harken scrapped the public stock offering a few weeks after Bush signed the letter because the company was plunged into a financial crisis when one of its bank lenders withdrew its support.
Bartlett said Bush and his accountant had discussions in late 1989 and early 1990 about the plan.
Bush's accountant, Robert McCleskey, said in an interview that Harken's deteriorating financial position was "not in my opinion" a factor in Bush's sale of the stock, adding that Bush "never said anything about it to me."
Bush had pledged 130,000 shares of Harken stock on the bank loan for the Texas Rangers, and when the bank note was renewed in early 1990, the shares were freed up, enabling Bush to sell them, McCleskey said.
"On the Rangers note, we were paying $45,000 to $50,000 a year in interest," said McCleskey.
Asked about the lockup document, McCleskey said a number of Bush's stock holdings from different companies were "on the table" and the sales would take place "when we get it done."
When the SEC examined the transaction more than a decade ago, Bush's lawyers offered a similar explanation as the one McCleskey gave Monday of why the future president unloaded stock at a time when Harken was experiencing financial difficulties.
"According to his attorneys, these sales, and the Harken sale, were made to meet an obligation of approximately $600,000 in connection with the Texas Rangers and to pay a couple hundred thousand dollar tax bill," an SEC memo from the probe states.
"According to his attorneys, Bush made these sales at the urging of his financial adviser/accountant who was bugging him to get liquid," the memo states.
The SEC did not interview Bush, so the only account of his sale came from what his attorneys told regulators.
One expert said even though Bush signed the lockup letter, it didn't represent a serious obstacle to selling.
It is fairly common for company insiders to sign such letters and then obtain permission to sell the stock anyway before the lockout period is up, said Carr Bettis, an associate research professor of finance at Arizona State University.
Bush sold his stock for $4 a share on June 22, two weeks after being approached by a California broker who said an institutional client wanted to buy a large block of Harken stock. The buyer has never been identified.
The stock's value declined to $3 two months later and to a little over a dollar a share by yearend. The following year, the stock rose to over $8 a share as Harken explored for oil in a potentially lucrative Middle East venture that never found any oil.
But if you think 'stonewalling' will make it go away for George...well, standby. It ain't going to happen with THIS man.
60 Minutes, 20/20, Dateline exposes coming to a television set near you!!!
This is the point that should be shouted from the mountain top, given that Clinton attempted even to claim attorney-client privilege on "private matters" discussed with his "White House" counsel.
Toll? In an off year election? Like this will have any effect on the House or Senate races? If I didn't know better, that statement seems like wishful thinking.
Sheesh.
5.56mm
If so, the bleeding heart liberals ought to understand that he was a victim and not repsonsible for his actions.
The only way GW can save his reputation from being dragged through the Democrat gutter is to act decisively. It's a war, has been since the election was almost stolen by the Dems, and the only thing that will make them stop lying is POWER. You have to hurt them in a way that matters to them. You have to kick some out of office, arrest the criminal types who abuse their office, trust, or interns, and show no charity or weakness.
I admire Bush's strength of character, and his penchant for acting as a moral leader. I admire that he's put his country ahead of his party. However, both he and his party will be rode out of town on a rail before this is over, unless he uses the political power he has.
Dumping the facts on Harken will do little good, other than provide ammunition for the next self-righteous tirade by the Dems. But, what facts does the SEC have on the Dems'? What crimes have been covered up by DEMOCRAT leaning business men. Hey, if we're going to make an example of the current VP and Pres, we sure as heck ought to make certain the scrutiny is not limited to GOP business men.
Exactly right, just like the Clintons with Whitewater and Rose law firm billing records. All instances have been investigated and we all know that nothing unlawful was found and everyone's hands are clean. Move along ;-)
You're just making this up as you go along, between bong hits, aren't you?
And I want to remind you all that I sold the stock at 4, and 14 months later -- the holding period for capital gains, I think, was 12 months in those days -- the person who bought my stock could have sold it for 8. Could have doubled his or her money.
I wish someone would try some insider trading like that with me as the victim .... :-)
I not even judging the 'merit' of the charges and accusations since it happened some 12 years ago and I could careless.
If you think letting it dribble out, bit by bit with a series of new 'nightly revelation', is a positive for the President, I think your mistaken.
Not sure what I'd do if I were in his shoes.
How many more documents do you want released? It appears they have been released to the Center for Public Integrity...... where do you think this crap is dribbling in from?
One overlooked aspect of the controversy is that the SEC has already released some of its Harken documents — with Bush's consent. In 1998, the public-interest group Center for Public Integrity made a Freedom of Information Act Request for the papers as part of an examination of the business history and finances of each major presidential candidate. Bill Allison, the center's managing editor, says the SEC originally turned down a request for Bush/Harken documents. Then the center appealed the decision, and later, Allison says, "We got a letter from the SEC from their Freedom of Information Office telling us that the subject of the investigation [Bush] had waived any privilege claim over the documents and they could send them to us." (Bush had also waived attorney-client privilege to give the material to the SEC) The center used the information for its book The Buying of the President 2000 and for later articles about Bush's business dealings. Now, with the issue again in the news, the center has posted the documents on its website.
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