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King
Midas in Reverse
December
18, 2001
by William
Rivers Pitt
I met a traveler from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert . . . Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them, and the heart that fed.
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. that colossal wreck,
boundless and bare
The lone and level sands stretch far away.
- 'Ozymandias' by Percy Bysshe Shelley
Once upon a time, a person's ability to effectively manage
a budget, whether it be personal or business-oriented, was
an essential aspect of the character analysis performed if
said person wished to seek political office. Financial records
would be disclosed and examined by a wide array of eyes. If
said person appeared unable to handle his money, or the money
of others, that person stood little chance of getting elected.
Take the failed candidacy of Massachusetts Governor Michael
Dukakis as a working example. His 1988 Presidential run was
hamstrung almost immediately by the staggering economy of
Massachusetts, and it reflected poorly on him throughout the
campaign. A variety of other factors helped lead him to his
inevitable slaughter at the polls, but the question of his
fiscal abilities played no small role. The sluggish late-80s
economy of Massachusetts was not entirely Dukakis' fault,
any more than the foul state of Boston Harbor was. Since he
was the Governor, however, the buck stopped with him.
Somewhere between then and now, we seem to have lost the
ability to effectively analyze the fiscal responsibility level
of our candidates. The Presidency of George W. Bush is the
newest, and perhaps most fearsome, example of this phenomenon.
If the election game in 2000 had been played by 1988 rules,
Bush would have never gotten out of Texas.
The sad and sorry story of Arbusto Energy provides the first
of what has become a long litany of evidence that suggests
George W. Bush should on no account be allowed to handle other
people's money in any capacity.
Arbusto was created by Bush in 1978 in the wake of his failed
congressional campaign using start-up money collected from
well-to-do family friends. All in all, he raised some $4.7
million for his enterprise between 1979 and 1982, an astounding
figure when one realizes that Bush was a total neophyte in
the oil business. Astounding, that is, until one considers
that his father was either running for President or sitting
as Vice President at the time. His investors, clearly, were
looking to get in good with the son of a man who would have
considerable pull on their behalf in Washington, D.C.
Over the course of the next several years, Arbusto traveled
a snarled trail of near-bankruptcy before finally exploding
in a cloud of dry Texas dust. Before the deal went down, Arbusto
had its name changed to Bush Exploration in 1982, at which
point its stock value cratered. Two Bush family friends who
owned an oil business called Spectrum 7 came in and bought
him out, making him the third-largest shareholder in that
company.
By 1986, Spectrum 7 also began to sink. In the best tradition
of the deus ex machina, however, yet another angel descended
to rescue the son of the sitting Vice President. A Republican
Party fundraiser named Alan Quasha swooped in and acquired
Spectrum 7, incorporating it into his bizarre little oil business,
Harken Oil. Bush and his partners were given $2 million in
Harken stock for the deal, and named as special 'consultants.'
At this point, the story gets strange.
Harken was anything but a big player on the world stage.
Few had heard of the company before 1990, when Harken landed
an impressive deal to drill for oil in the Persian Gulf emirate
of Bahrain. Petrochemical business analysts were surprised,
to say the least, as Harken had never before played with the
big boys on the world stage. How, then did they land this
contract? The answer likely lies somewhere along the hallways
of power that led to Vice President Bush's White House office.
It's nice to have friends in high places. Apparently, it's
even nice to have family members there. Several months after
landing this deal, all hell broke loose in the Gulf. Iraq
invaded Kuwait, and the international oil community's financial
situation was roiled. This did not bode well for Harken's
new arrangement, but somehow George W. Bush managed once again
to escape unscathed. I quote:
"On June 22, 1990, George Jr. sold two-thirds of his Harken
stock for $848,560-a cool 200 percent profit. The move was
well timed. One week after Junior sold his stock, Harken announced
a $23.2 million loss in quarterly earnings and Harken stock
dropped sharply, losing 60 percent of its value over the next
six months."
In short, it seems clear that Bush knew Harken was in deep
financial trouble, so he bailed on the stock before it became
devalued, but failed to alert his investors of the impending
calamity. Somehow he escaped SEC penalties for what appears
to be nothing less than opportunistic profiteering at the
expense of those who helped him get his businesses off the
ground, a place they found themselves on several occasions.
The rest, of course, is history. Bush got into baseball,
and then into politics, never once getting called to task
for the calamitous financial history he left in his wake.
If asked today, Bush would likely respond that none of the
circumstances behind the demise of Arbusto, Spectrum 7 or
Harken were his fault. These things happen when one chooses
to go wildcatting for oil with other people's money. He should
not be held responsible for it, and indeed he has not.
Yet today, as investigators and regulators sift through the
shattered remains of the energy giant Enron Corporation, which
last week flamed out in what will be recorded as the biggest
business catastrophe in the history of human enterprise, fingerprints
matching those of the sitting President are being discovered
in all sorts of strange places.
Enron, the enfant terrible of energy companies in the 1990s,
spent the last several years hiding the fact that it was losing
billions of dollars in revenue. They managed to obscure this
by setting up a variety of hidden boxes controlled by Enron
executives, into which were piled as much bad financial news
as possible. This served to keep the losses off the books,
until a few weeks ago, when a $1.2 billion shortfall was revealed.
Enron stock plummeted, and some 4,000 Enron employees were
shown the door, their pockets stuffed with stock options no
longer worth the paper they were printed on. People who had
depended on these stocks to fund their retirement are now
investigating the requirements needed to sign up for Food
Stamps, while the executives parachuted to the streets of
Houston with millions of dollars to show for their deceit.
Merry Christmas.
This is the news you can read on the financial pages of every
major newspaper in the country, but the back pages prove far
more fascinating. Enron chairman Kenneth Lay, architect of
this disaster, has for years been the single most important
patron of George W. Bush. The two have been friends for years,
and Lay is listed prominently as one of Bush's Pioneers, a
title given to anyone who raised $100,000 or more for the
2000 Bush campaign.
Bush was given the use of Enron corporate jets during the
campaign. Karl Rove, consigliere to Bush, is a former Enron
employee. Harvey Pitt, Bush's chairman of the SEC, was hand-picked
by Ken Lay and Enron because of his business-friendly ideas
on regulation. Most importantly, Enron was the primary player
in the closed-door energy policy meetings run by Vice President
Dick Cheney. Cheney has been stonewalling the GAO and Congress
on providing details about these meetings, and was about to
be served subpoenas about the matter when the September 11th
attacks took place.
How far did Enron's tentacles reach into the Bush administration
before it vaporized will likely be a hot topic in the upcoming
Congressional investigations into the matter. At best, the
situation is uncomfortable for Bush. At worst, it is a political
scandal that dwarfs the picayune Whitewater deal. Among certain
circles, the name 'Enrongate' has already begun to circulate.
If the worst is true, Bush will have a hard time getting
out from under. This is not a situation where the illegal
destruction of evidentiary documents will do the trick. The
chain of evidence has names, and it will prove a messy affair
if Bush tries to stuff Rove or Pitt into a document shredder.
When the fact that there are thousands of former Enron employees
walking the streets feeling betrayed and frustrated is added
to the equation, the chances that someone will spill the beans
rise exponentially. Bush may try at some point to resort to
his favorite new toy, the Executive Order, in an attempt to
stuff any investigation that gets too close, but it is doubtful
that the increasingly fractious Democratic majority in the
Senate will allow such a thing to stand for long.
That, however, is the future. In the present we must attend
to the central truth: any time George W. Bush gets within
shouting distance of a company, it collapses. This is a troubling
fact when one considers that Bush is currently at the helm
of the American economy. In this, the axiom once again holds.
Since the beginning of his tenure, the economy has begun to
fall apart.
While the September 11th attacks certainly play a part in
this, the fact that economists announced recently that the
country has been in recession since last March can not be
ignored. Democrats will tell you that Bush's massive and ill-advised
tax giveaway to rich people, an act that gutted the Clinton
surplus and left little maneuvering room for the Federal budget,
is the central factor in the economic slowdown. They are quite
correct in this.
Bush sees himself more as a corporate CEO than as a President.
If his past and present management history holds any mirror
to his soul, it can be said without qualification that he
is the worst CEO in modern history, perhaps second only to
lifelong chum Ken Lay. Everything he touches turns to dust.
Perhaps, in 2004, the remarkable financial record of George
W. Bush, Arbusto, Spectrum 7, Harken and Enron will stand
as a warning when we consider the qualifications of those
who stand for the office of President. People who lose vast
amounts of other people's money while turning a tidy profit
for themselves probably shouldn't be given the keys to the
Treasury. Once upon a time, this was just common sense.
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