The DUer grabbed the available info and put it in a convenient package for people to read, file and spread around.
So, the subject becomes Georgie Jr's sweetheartingest sweetheart bidniss deal, another Bush money-maker, inside trading in the field and on Wall Street.
skip fox
HarkenGate, July 9, 2002 file:HarkenGate readily breaks down into five areas for investigation and discussion:
1.W. possibly built oil company and interests through favoritism or trading off his father's name (esp. Bahrain's naming of Harken as the oil company for the country's off-shore interests).
2. Harken's posted of phony financial statements, claiming incoming assets for a subsidiary it bought from itself. (A mere $8-12 million, a low-rent version of what Enron did a decade later.)
3. W.'s trading of stock based on possible knowledge of potential stock devaluation i.e., insider trading (2 possibilities):
–a. Knowledge of secret State Dept. memo claiming Hussain was ready to attack neighbors.
–b. Knowledge of Harken's dire straits as one member of a three-member "Fairness" (auditing) committee.
4. W.'s late filing of stock sales to SEC and variation in story as to reasons.
5. Possible favoritism shown to Bush's business "indiscretions" by SEC through father's influence and/or the possible reward to SEC investigator(s) by W. himself.
According, this first file breaks into these five areas with hotlinks and clipping of the stories focusing on each issue. The second file provides the base of documents from which the first file was drawn in a manner that the reader might follow the progression of the story. Both files begin with BACKGROUND, citing Joe Conason's thorough and clear overview of the narrative of W.'s fortune. To Joe's credit, he brings up nearly all of the five issues (and sub-issues) listed above. Pizzo's article is also a good background piece.
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BACKGROUND:
--Joe Conason's "Notes on a Native Son," Harper's Magazine, Feb. 2000. (A thorough, given article parameters, overview of George W. Bush's fortune. Harken is covered primarily on pp. 4-6 of item. Due to this article, Conason has been frequently quoted on Bush's corporate dealings):
http://www.findarticles.com/cf_0/m1111/1797_300/59086099/p1/article.html–Stephen Pizzo, "Bush Family Values," Mother Jones, Sept.-Oct. 1992 (another good example of early reporting on Bush's fortunes):
http://www.motherjones.com/news_wire/bushboys.htmlWill Pitt's December 18, 2001 DU article, "King Midas in Reverse," also summarizes the major issues well and is a good read:
http://www.democraticunderground.com/articles/01/12/18_midas.html************************************************
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1.THE POSSIBILITY THAT W. BUILT OIL INTERESTS BY TRADING OFF HIS FATHER'S NAME AT THE LEAST, FAVORITISM AT THE MOST:
Read Conason and Pizzi in Background.
Kevin Sack's "George Bush the Son Finds That Oil and Blood Do Mix," NY Times, May 8, 1999 (another excellent background piece concerning W.'s acquisition of a fortune, but Sack's clearly draws the personal and familial connections):
http://www.csus.edu/indiv/f/friedman/spring02/govt1/schedule/j/j1/bush.htmlTom Flocco, Wolrd Net Daily, laid it out clearly:
http://www.worldnetdaily.com/news/printer-friendly.asp?ARTICLE_ID=16298<snip>
In October 1991, Time Magazine questioned why the tiny country of Bahrain would stake so much of its financial future on Harken Energy, which it labeled an "obscure, money-losing company with no refineries and no experience in offshore oil exploration." But the magazine also noted that oil-insiders speculated that Bahrain's rulers saw the arrangement as a way to gain influence with the Bush administration.
Mysteriously, primary reporters have also ignored what could point to a nexus regarding foreign policy and personal financial interests. Interestingly, the Village Voice in January 1991 reported that in 1990 the Bush administration signed an agreement with Bahrain that chose the small country as the permanent principal allied base in the Middle East, although it was some 200 miles away from the hostilities in Iraq and Kuwait.
The military-base deal came after Harken announced its Jan. 30, 1990, joint oil-drilling venture with Bahrain. So President Bush's key contributors and his son George W. were carrying on personal financial business with Bahrain at the same time decisions were being made regarding the possibility of a war in the Gulf.
And neither the president nor his adviser, George Jr., let the press know that Bahrain had been permitted to infuse $7.7 million in foreign cash to hire U.S. public relations firm Hill & Knowlton to lobby Congress and the American people; a stunning variety of opinion-forming devices and techniques were employed to inflame U.S. patriotic passions of war while personal financial interests were on the line.
<snip>
And it's even possible that some bin Laden money went to Bush's launching pad in the oil business (Arbusto) as the wealthy Saudi family sought to maintain favor with the Republican administration as Wayne Madsen reports in In These Times:
http://www.inthesetimes.com/issue/25/25/feature3.shtml<snip>
In 1979, Bush's first business, Arbusto Energy, obtained financing from James Bath, a
Houstonian and close family friend. One of many investors, Bath gave Bush $50,000 for a
5 percent stake in Arbusto. At the time, Bath was the sole U.S. business representative
for Salem bin Laden, head of the wealthy Saudi Arabian family and a brother (one of 17)
to Osama bin Laden. It has long been suspected, but never proven, that the Arbusto
money came directly from Salem bin Laden. In a statement issued shortly after the
September 11 attacks, the White House vehemently denied the connection, insisting
that Bath invested his own money, not Salem bin Laden's, in Arbusto.
In conflicting statements, Bush at first denied ever knowing Bath, then acknowledged
his stake in Arbusto and that he was aware Bath represented Saudi interests. In fact,
Bath has extensive ties, both to the bin Laden family and major players in the
scandal-ridden Bank of Commerce and Credit International (BCCI) who have gone on to
fund Osama bin Laden. BCCI defrauded depositors of $10 billion in the '80s in what has
been called the "largest bank fraud in world financial history" by former Manhattan
District Attorney Robert Morgenthau. During the '80s, BCCI also acted as a main conduit
for laundering money intended for clandestine CIA activities, ranging from financial
support to the Afghan mujahedin to paying intermediaries in the Iran-Contra affair.
<snip>
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2. HARKEN'S POSTING OF PHONY FINANCIAL STATEMENTS CLAIMING ASSETS WITHOUT NOTING DEBITS AND BUSH'S KNOWLEDGE OF THE FRAUDLENT ACCOUNTING.
Paul Krugman's July 7 column spells it out:
http://www.nytimes.com/2002/07/07/opinion/07KRUG.html<snip>
That's exactly what happened at Harken. A group of insiders, using money borrowed
from Harken itself, paid an exorbitant price for a Harken subsidiary, Aloha Petroleum.
That created a $10 million phantom profit, which hid three-quarters of the company's
losses in 1989. White House aides have played down the significance of this maneuver,
saying $10 million isn't much, compared with recent scandals. Indeed, it's a small
fraction of the apparent profits Halliburton created through a sudden change in
accounting procedures during Dick Cheney's tenure as chief executive. But for Harken's
stock price — and hence for Mr. Bush's personal wealth — this accounting trickery made
all the difference.
Oh, and Harken's fake profits were several dozen times as large as the Whitewater land
deal — though only about one-seventh the cost of the Whitewater investigation.
Mr. Bush was on the company's audit committee, as well as on a special restructuring
committee; back in 1994, another member of both committees, E. Stuart Watson,
assured reporters that he and Mr. Bush were constantly made aware of the company's
finances. If Mr. Bush didn't know about the Aloha maneuver, he was a very negligent
director.
<snip>
An unattributed editorial in the St. Louis Post Dispach July 7, 2002, puts it succinctly:
http://home.post-dispatch.com/channel%5Cpdweb.nsf/TodaySunday/86256A0E0068FE5086256BEF002DD29E?OpenDocument&PubWrapper=Editorial
(You'll have to bind http address together to go directly.)
<snip>
...Harken sold a subsidiary to a group of its own insiders. It lent those insiders much of the money to make the purchase. Then Harken claimed a profit from the sale. It was almost as if the company were claiming profits for selling something to itself. Shades of Enron, Qwest and Dynegy, among others. The SEC cried foul. It forced the company to restate its earnings to show a much larger loss.
Did Mr. Bush approve of such accounting sleight of hand? After all, he was on Harken's audit committee. Or was he snoozing while management had fun with figures?
<snip>
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2002/07/08/MN139428.DTL<snip>
Democrats hope to draw attention to a controversial deal by Harken to sell one of its subsidiaries, Aloha Petroleum, to a group of Harken insiders. The SEC later found that deal might have disguised at least $8 million in losses by Harken and asked the company to restate its 1989 earnings. Bush was on the audit committee of Harken's board at the time.
<snip>
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3. BUSH'S SELLING OF HARKEN STOCK BASED ON POSSIBLE KNOWLEDGE OF POTENTIAL STOCK DEVALUATION, I.E, INSIDER TRADING (2 possibilities):
–a. BUSH'S KNOWLEDGE OF A SECRET STATE DEPARTMENT MEMO CLAIMING HUSSAIN WAS OUT OF CONTROL AND READY TO ATTACK KUWAIT
Pizzo lays out the case:
http://www.motherjones.com/news_wire/bushboys.html<snip>
In May 1990, the U.S. State Department sent a chilling but still classified report to Scowcroft. The report warned that Iraqi president Saddam Hussein was out of control and was threatening his neighbors:
May 16, 1990
SECRET
Attached is a paper containing a list of options for responding to recent actions and statements by the Government of Iraq. ...We ask that you pass this paper to Robert Gates for his review.
Under "options" the memo suggested: Ban Oil Purchases: The largest benefit Iraq receives from the US is through our oil purchases...
PRO -- A total ban on oil purchases would have some short-term impact.
CON -- Such action might also have an impact on US Oil prices.
Oil companies had learned, during the years of the long Iran-Iraq war, that trouble in the gulf hurts companies with oil interests because, for one thing, at the first sound of a rifle shot in the gulf region, Lloyds of London jacks up insurance rates on oil tankers and company installations. The "wartime" rates are very high and cut deeply into company profits and investor confidence. If things really get out of hand, pipelines are destroyed and waterways are mined.
The secret memo augured ill for Harken's fledgling venture.
<snip>
(Memo is May, Bush sells in June!)
–b. KNOWLEDGE OF HARKEN'S POOR FINANCIAL SITUATION AS A MEMBER OF A THREE-MEMBER "FAIRNESS" (read: AUDIT) COMMITTEE :
Read Conason and Pizzi in Background.
Molly Ivins Feb. 15, 2002 Texas Observer article:
http://www.texasobserver.org/showArticle.asp?ArticleID=562<snip>
A month before Bush sold his stock, the Harken board appointed Bush and another company director, E. Stuart Watson, to a "fairness committee" determine how restructuring would affect ordinary stockholders.
Smith, Barney, Harris, Upham & Co., the financial consultants hired by Harken, told Bush and Watson only drastic action could save the company. So Bush sold his stock before the news became public. According to U.S. News & World Report, there was "substantial evidence to suggest that Bush knew Harken was in dire straits."
<snip>
Daschle's desire to look into the SEC's 1991 investigation of Bush (mostly on late filings, but also on possible insider trading):
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2002/07/08/MN139428.DTL************************************************
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4. BUSH'S LATE FILING OF STOCK SALES TO SEC AND VARIATIONS IN THE STORY
Real problems are brewing in this area. Did you notice that the story changed again in the last 24-36 hours?? The initial story had been that the SEC had misplaced the filings. But that didn't wash (since nobody at SEC was willing to take the heat for W.'s incompetence in a high profile case.) Recently he claimed that the hold up was due to Harken's lawyers. At Bush's Monday (June 8) press conference, he said that they are not clear what happened. Why can't the previous story, that Harken's lawyers filed months late, stand up under scrutiny??
A July 4, 2002, NYTimes story by Elisabeth Bumiller succinctly provides details on W's changed story about late filing:
http://www.nytimes.com/2002/07/04/politics/04BUSH.html?ex=1026532800&en=249a29fcb97603b8&ei=5040&partner=MOREOVER
You'll have to paste address together and register to read, but a shortened version without NYTimes registration necessity at:
http://www.ohio.com/mld/beaconjournal/3599668.htm<snip>
Ari Fleischer, the White House press secretary, said Wednesday. that Bush failed to promptly disclose the sale of stock 12 years. ago because of a ``mix-up'' with his lawyers. In 1994, however,. Bush blamed not his lawyer but the Securities and Exchange Commission for misplacing the proper forms.
Fleischer could not completely explain the inconsistency, and he said he did not know when or why Bush changed his explanation about the reason the sale was disclosed late.
. . .
Bush, who was on Harken's board of directors, has said that he quickly realized that the stock's slide would raise concerns that he had sold based on inside information, a potential crime. The suspicions grew when the SEC said that it did not have a document from Bush, a Form 4, that insiders must file when they sell stock. Bush did not file the Form 4, and officially report the sale, until March 1991.
But Bush had promptly filed another required document, a Form 144, disclosing his intent to sell the stock.
In 1994, when Bush was asked why he had not filed the Form 4, he said he thought he had and that the SEC must have misplaced it. But on Wednesday, Fleischer said the problem was a ``mix-up, a clerical mistake'' by lawyers for Harken.
``The best explanation is the attorneys thought the form hadbeen filed, which is what led George W. Bush to say he thought it had been filed and the SEC had lost it,'' Fleischer said. ``That was not the case.''
<snip>
http://www.buzzflash.com/contributors/2002/07/08_Harken.html<snip>
Ari Fleischer who, if you read the. transcript of July 3, 2002's White House Press Briefing, craftily alleged. that Harken Energy's corporate attorneys were grossly incompetent. No, he didn't "say" they were grossly incompetent, but if you follow Fleischer's logic, you would have to conclude that this is what he meant. Apparently the attorneys neglected to read the deadline and filing instructions printed at the top of SEC Form-4: "This Form must be filed on or before the tenth day after the end of the month in which a change in beneficial ownership has occurred (the term "beneficial owner" is defined in Rule 16a-1(a)(2) and discussed in Instruction 4)." That is the tenth day after the end of the month . . .. Not 34 weeks.
. . .
I have never once worked with what I'd call an "upright" attorney who would dare miss a director's SEC filing deadline. In fact, if I were the assigned secretary to that lawyer, I would have been fired had I failed to note the deadline on my own working calendar.
<snip>
The third change in the story, Chicago Trib:
http://www.democraticunderground.com/cgi-bin/duforum/duboard.cgi?az=show_thread&om=25150&forum=DCForumID5
(You'll have to paste address back together to go direct and then register, but here is the salient paragraph.)
<snip>
Changing his response for a third time, Bush said he did not know why some of the
forms he was required to file with the Securities and Exchange Commission about his
1990 sale of nearly $850,000 in Harken Energy Corp. stock were 34 months late reaching
the SEC. He earlier had blamed the SEC for losing the documents, and then a "mix-up"
by Harken's attorneys.
<snip>
David Scheim, for Campaign Watch, summarizes the SEC's final disposition on Bush's sales:
http://www.campaignwatch.org/more1.htm<snip>
. . . the SEC had not exonerated Bush. On October 18, 1993, Bruce A. Hiler, the SEC's associate director for enforcement, wrote a letter to Bush's lawyer stating that "the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him."7 Bush claimed he had been cleared, and the head of the SEC's enforcement division, William McLucas, went beyond the letter and stated that "there was no case there."8
Yet Hiler's official letter had added that it "must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff's investigation ."9
<snip>
Knut Royce's report for The Public i stresses the SEC connection:
http://www.public-i.org/story_01_100400.htmand he follows it up with another:
http://www.public-i.org/story_01_100400.htmInformational: Nederland posted this in DU July 8, 2002
<snip>
Mr. Bush followed the law by informing regulators of his intention to sell stock in Harken Energy Corp., a Texas oil company, in 1990. But he conceded that because of a "mix-up, a clerical mistake" by Harken lawyers, Mr. Bush had not promptly reported the sale after it took place.
Link:
http://www.cbsnews.com/stories/2002/07/03/politics/main514190.shtmlAs I mentioned before, its the intention to sell (form 144) that is the important document. The document indicating that you actually sold your stock (form 4), is generally regarded as a formality.
<snip>
and Nederland follows up with:
<snip>
This form must be filed with the SEC as notice of the proposed sale of restricted securities or securities held by an affiliate of the issuer in reliance on Rule 144. Notice on the form is only required when the amount to be sold during any three-month period exceeds 500 shares or units or has an aggregate sales price in excess of $10,000. The sale must take place within three months of filing the form and, if the securities have not been sold, an amended notice must be filed.
Link:
http://www.sec.gov/answers/form144.htmAs you can see, the form must be filed within three months of the sale, not in the "next couple of years" . . . .
<snip>
The seriousness of late filings?? Frank Rich's "All the President's Enrons," NY Times (July 6) provides only a brief paragraph on Harken, but includes the sentence, "A Presidential spokesman assured us . . . that this infraction amounted to nothing more than driving 60 in a 55-mile-an-hour zone.")
http://www.nytimes.com/2002/07/06/opinion/06RICH.htmlDaschle's desire to look into the SEC's 1991 investigation of Bush (mostly on late filings, but also on possible insider trading):
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2002/07/08/MN139428.DTL************************************************
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5. POSSIBLE FAVORITISM BY SEC WHEN INVESTIGATING BUSH'S BUSINESS "INDISCRETIONS":
Tom Flocco for World Net Daily put it well last Feb.:
http://www.worldnetdaily.com/news/printer-friendly.asp?ARTICLE_ID=16298<snip>
The governor also did not reveal the blatant conflicts of interest involved, since the chairman of the SEC was Richard Breedon, former lawyer with Houston firm Baker and Botts and deputy counsel to Bush's father when he was vice president. Breedon received his SEC appointment after the elder Bush became president.
The SEC investigation of George W. was led by general counsel James R. Doty who, according to a UPI report mysteriously neglected to interview any of the Harken directors. Moreover, Doty had previously served as George W. Bush's personal lawyer in the deal involving his Texas Rangers purchase. So, in the end, the younger Bush was cleared of insider trade wrongdoing by his personal attorney and by his father's vice-presidential counsel, a virtual impossibility for the average U.S. citizen.
<snip>
Even W.'s lawyer profits:
http://www.opensecrets.org/bush/ambassadors/jordan.asp___________________________end file__________________________
SkipFox uses the coolest blackbird I've seen stay in my head since reading Heinlein's "The Unpleasant Profession of Jonathan Hoag."