Reprinted from www.libertylobby.org, home of The SPOTLIGHT archive
George Bush Jr's White Collar Corruption
By Tom Flocco
On four separate occasions, Texas Gov. George W. Bush has disregarded federal laws by failing to file insider stock trade reports on a timely basis, even back-dating one trade by four months, with no repercussions.
One key trade, on June 22, 1990, made a few weeks before Iraq invaded Kuwait, but reported eight months after the Gulf War had started, netted Bush close to $1 million in profit when he sold stock in the oil company, Harken Energy.
Under President George Bush, the Securities and Exchange Commission (SEC) carried out an investigation of the younger Bush's pre-Gulf War sale of Harken stock but failed to file formal charges.
According to an Oct. 28, 1991, Time magazine report, Bush refused to comment on the incident and his involvement with Harken. The self-proclaimed "key presidential advisor," George W., claimed that he filed a report, but that the SEC had lost it.
Also, the Texas governor refused to comment on the blatant conflicts of interest involved in the investigation, namely:
• The chairman of the SEC was Ri chard Breedon, a former lawyer with Hous ton firm Baker and Botts. Breedon was deputy counsel to George Bush when he was vice president and received his SEC appointment after Bush became president.
• The SEC investigation was led by general counsel James R. Doty, who had previously served as George W.'s personal lawyer in the deal involving his Texas Rangers purchase.
The investigation was essentially a formality. Doty reportedly neither looked too deeply into the allegations nor interviewed any of Harken's directors.
To show proof of his innocence, Bush requested a letter from the SEC regarding the investigation. The letter, issued in October 1993 and signed by SEC Asso ciate Director Bruce A. Hiler, stated: "The investigation has been terminated as to the conduct of Mr. Bush and that, at this time, no enforcement is contemplated with respect to him."
But the letter also said that "it must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result."
George W. tried to downplay his role in Harken Energy by describing himself as a "small, insignificant" stockholder. But SEC documents identified Bush as the third largest non-institutional investor.
SEC documents between 1986 and 1993 show that Bush acquired 212,152 shares of Harken stock on Nov. 1, 1986, at the time he merged his Spectrum 7 company with Harken. The future governor did not report the transaction until April 7, 1987 -- more than five months later.
When Bush filed late on April 7, 1987, SEC filings show he had purchased another 80,000 shares on March 10, 1987.
An SEC filing from June 6, 1989, showed that Bush purchased another 25,000 shares of Harken, but again waited more than four months to report the transaction.
BUSH IN BAHRAIN
The Bush administration signed an agreement with Bahrain in 1990, establishing the small country as the permanent principal allied base in the Middle East, although it is more than 200 miles away from Iraq and Kuwait.
The military-base deal came after Harken announced its Jan. 30, 1990, joint oil-drilling venture with Bahrain.
In October 1991, a few publications questioned why the tiny country of Bahrain would stake so much of its financial future on Harken Energy, which was identified as an "obscure, money-losing company with no refineries and no experience in offshore oil exploration."
But oil-insiders speculated that Bah rain's rulers saw the arrangement as a way to gain influence with the Bush administration.
Apparently, President Bush's son George W. was carrying on personal financial business with Bahrain at the same time decisions were being made regarding the possibility of a war in the Gulf.
Gov. Bush speaks about his outstanding business record on the campaign stump. However, in 1989, Harken Energy lost over $12 million against revenues of $1 billion.
On May 21, 1990, less than 10 weeks before Saddam Hussein's troops invaded Kuwait, a renegotiated corporate loan agreement for Harken Energy featured an unusually high interest rate of 12 percent, a smaller loan for acquisitions, a $750,000 debt fee and requirements by some of Harken's major stockholders to guarantee $22.5 million in debt.
In spite of his positions on the Harken Energy board of directors, audit committee and stock restructuring panel, Bush denied knowledge of these impending losses when he sold his stock on June 22, 1990. He claimed he had no idea Harken was getting an audit report full of red ink until weeks after he had made his stock sale.
Federal securities law prohibits corporate insiders from trading "on the basis of" material information that is not publicly known.
Harken President Mikel Faulkner said that in addition to Bush's position as a director at $2,000 per meeting, stock options worth $131,250, 5 percent loans and 40 percent discounts on stock purchases, he was also a consultant to Harken for "investor relations and equity placement" at a salary of $80,000 per year from 1986 until 1989. After that, his salary jumped to $120,000.
The board was equally generous to Bush in 1990 as "the company lost another $40 million and shareholder equity plunged to $3 million -- down from more than $70 million in 1988." Faulkner declined to say what services George W. has performed as a consultant. Bush's insider transaction yielded a profit of $848,560 -- a 250 percent profit on the stock's original value. This came a week prior to the end of a quarter in which the company reported losing $23 million.