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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.
You know, I fight with your kind occasionally too. Usually only after a big Mexican meal.
However, a good wipe, a quick flush, a couple of lit matches, an open window, and your kind is quickly forgotten.
Sometimes, some of your kind require a little extra effort, such as a dampened tissue, and extra flush, and a spray or two of Lysol, but like the others, they are quickly forgotten.
You got it.
This is a classic case of what Horowitz talks about - to the Demoncrats, it's a war, and anything goes, and our failure to engage them on their own ground always ends in our defeat.
The Demoncrats don't care a whit about Bush's finances. All they care about is using any means available to derail Bush.
They used the same tactics to get rid of Gingrich, and as Horowitz points out, instead of rallying behing Gingrich and then employing the Demoncrats' tactics against them, suing and exposing *their* goblins and minions, tit for tat, until they ran off with their scaly arrowheaded tails between their goatish legs, the Republicans once again retreated to the "High Moral Ground" - and America lost a valuable public servant.
Although, that's just my interpretation of the last paragraph
Only in this case we don't have missing records, and we don't have mens rea. What we have is some difference between what regulations say and what everyone actually does. Just remember what you said, comes time to file your 2002 income tax. As Will Rodgers put it," . . . and after you're finished you don't know if you are a cheat or a sucker."In the case of Cattlegate you had, not only the appearance of impropriety, but the fact. You had a shady broker who had been under suspension for pushing the envelope way too hard, and who Hillary had to deal with at a distance. You had a 98:1 runup in Hillary's $1000 investment, due to bets both long and short, in a highly volitile market. You had margin calls not properly sent, and you had a prior statement by a government official that Hillary wanted $100,000. And you had, after the fact, the claim by Hillary that she orchestrated the long and short sales herself--on the basis of information in the Wall Street Journal, which in fact did not publish the sort of data germane to that market at that time.Compare that with Bush doing what his company's lawyer went on record that he could do, selling a stock that subsequently went down but later went up. Selling to a willing, even eager, buyer who could have, and for all we know may have, made a profit.
Humbug!
But don't worry, Cartoon Boy, just keep listening to this guy:
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