Reply #14: Company's Work in Iraq Profited Bush's Uncle

[chlamor]

Company's work in Iraq profited Bush's uncle
William H.T. 'Bucky' Bush earned $450,000 on stock options with defense contractor ESSI.

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'I don't make any calls to the 202 area code.'
William H.T. "Bucky" Bush, referring to the long-distance dialing code for Washington, D.C.

By Walter F. Roche Jr.
Times Staff Writer

WASHINGTON, February 23, 2005 -- The Iraq war helped bring record earnings to St. Louis-based defense contractor Engineered Support Systems Inc., and new financial data show that the firm's war-related profits have trickled down to a familiar family name — Bush.

William H.T. "Bucky" Bush, uncle of the president and youngest brother of former President George H.W. Bush, cashed in ESSI stock options last month with a net value of nearly half a million dollars.

"Uncle Bucky," as he is known to the president, is on the board of the company, which supplies armor and other materials to U.S. troops. The company's stock prices have soared to record heights since before the invasion, benefiting in part from contracts to rapidly refit fleets of military vehicles with extra armor.

William Bush exercised options on 8,438 shares of company stock Jan. 18, according to reports filed with the U.S. Securities and Exchange Commission. He acknowledged in an interview that the transaction was worth about $450,000.

Other company contracts have raised questions.

Last week, Defense Department officials disclosed that ESSI contracts issued in 2002 with a cumulative value of $158 million had been referred to the Pentagon inspector general's office for investigation. The contracts were supervised by a former Defense official who was sentenced to prison for improperly aiding another contractor, Boeing Co.

Pentagon Acting Undersecretary Michael Wynne said he had referred the contracts "that appear to have anomalies in them." Wynne and his aides would not elaborate on those anomalies. Other contracts referred for review included pacts with Accenture (formerly called Andersen Consulting), Boeing and Lockheed Martin.

Company officials acknowledge the war is an economic boon to the firm.

In its quarterly earnings report a year ago, then-Vice Chairman and Chief Executive Gerald L. Daniels said: "The increasing likelihood for a prolonged military involvement in Southwest Asia by U.S. forces well into 2006 has created a fertile environment for the type of support … products and services that we offer."

Other ESSI products that have seen use in the current conflicts include radar and detection services, field medical stations and field electric generator units.

The company's record growth has come from increased orders coupled with an aggressive buyout strategy. William Bush's company, Bush-O'Donnell, was paid $125,000 to serve as a consultant in ESSI's buyout of a military contractor three years ago.
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Bush exercised the expiring options shortly after a series of announcements that the company had won additional orders totaling about $77 million to supply kits to re-armor and refurbish military equipment being used by U.S. forces in Iraq. The company has 35 employees stationed in Iraq to install the protective gear.

The company estimates the refurbishing work in Iraq ultimately could bring revenues of $200 million or more.

News of the armoring and refurbishment contracts boosted ESSI's stock to a record $60.39 per share earlier this year. The stock closed Tuesday at $54.34.

In the conference call with analysts Tuesday, ESSI's Potthoff expressed optimism that the Bush administration's proposed $82-billion supplemental defense budget submitted last week could mean substantial additional opportunities for the company in Iraq and elsewhere.

"Personally, I could not be more happy about our company's prospects," Potthoff told stock analysts.

http://www.newsday.com/news/nationworld/nation/ny-usbuck0224,0,5780095.story?coll=ny-leadnationalnews-headlines