By Steve Weinstein
By Devon Maloney
By Tessa Stuart
By Alison Flowers
By Albert Samaha
By Jesse Jarnow
By Eric Tsetsi
By Raillan Brooks
President George Bush says he's outraged at the scams that have sent big-name companies crashing, and he's not going to take it anymore. Feeding the polls, Bush tells the nation he wants new laws to bring criminal charges against dirty-dealing CEOs who fake company books and destroy not only the public's trust but its savings as well.
In common parlance, what these execs are doing is called fraud, and common knowledge says Bush already has the power to do something about it. Yet again, the president is ducking a tough issue in favor of a PR operation. The problem for Bush is how to seem to be attacking corporate scoundrels while keeping their campaign contributions coming. This is, after all, an election year, and the GOP badly wants to recapture control of the Senate and widen its margin in the House.
If Bush really wanted to address the situation, all he'd have to do is to pick up the phone, call Attorney General John Ashcroft, and ask him to launch an investigation of any one of these CEOs for fraud, conspiracy, theft, obstruction of justice, or perjury. The president could also turn to the Securities and Exchange Commission, which can refer a civil case for criminal prosecution. Bush doesn't need additional legislation to do this. All he has to do is call. He refused to do that in the Enron case, even though his administration knew about the scandal months before the company went public with its bankruptcy. And he hasn't done it with any of the subsequent double-dealings.
Perhaps Bush's inaction stems from his own history of stumbling in the corporate back alleys. Last week, the media revived a case from the early '90s, where it looks like Bush was involved in insider trading with the stock of an oil company of which he was an official. He dumped the shares shortly before the firm tanked, then failed to report his activity to the Securities and Exchange Commission for months. The ensuing investigation, handled by an agency whose director was a Bush appointee and whose general counsel was Bush the younger's own former attorney, was dropped.
Though Bush has shown he can play the game, too, he's not quite ready for the majors. The big difference between him and a guy like Kenneth Lay is that Lay at least was successful. Before he left the world of commerce for a life in politics, Bush lost money time and again. "It was dreadful," one investor told The Wall Street Journal. "I think we got [back] maybe 20 cents on the dollar," said another.
The hapless Shrub took shelter under his family tree. Nowhere is this blue-blood network more evident than in the feeble activities of the president before he became governor of Texas. Consider this chronology, put together largely from research done by the Center for Public Integrity in Washington for its book The Buying of the President 2000.
1979-83: Fifty Bush family investors and friends, led by uncle Jonathan, a New York Republican Party official and an investment manager, fork over $4.7 million to set up young Bush in a company called Arbusto. It's a flop, and in 1982 gets a new name: Bush Exploration.
1984: Spectrum 7 Corporation, an Ohio oil exploration outfit owned by Dubya's Yalie pal William DeWitt Jr., buys out Bush Exploration, setting up young Bush as CEO at $75,000 a year and giving him 1.1 million shares of the firm's stock. Another flop. The company's fortunes soon sink, with $400,000 in losses and a debt of $3 million.
1986: In the nick of time, Bush and partners merge the failing Spectrum with Harken Oil, a Dallas exploration company, with a $2 million stock purchase. Bush puts up about $500,000 and gets a $120,000 annual consulting fee along with $131,250 in stock options. Harken is a small outfit, looking for oil opportunities within the U.S. Then out of the blue comes Harvard Management Corporation, an investment adviser for Harvard University's endowment portfolio. It pumps millions into the venture.
1990: Although Harken has no international expertise, it gets the attention of the Bahrain National Oil Company, which unexpectedly appears on the scene and bypasses big oil's Amoco and Chevron to sign a production agreement with the little Texas concern. The contract grants Harken exclusive rights to what seems to be a promising offshore area squeezed between two productive tracts owned by Saudi Arabia and Qatar. The Wall Street Journalspeculates Bahrain was trying to cozy up to Daddy Bush, who was plotting an assault on Iraq after Saddam Hussein seized Kuwait.
Bass Enterprises Production Company finances the Bahrain drilling with $25 million, and Harvard Management raises its investment. A couple of members of the Fort Worth Bass family have places on Team 100, an elite business group contributing to the Republican National Committee.
In June, Harken drills two dry holes in Bahrain. The future looks bleak. Dubya dumps two-thirds of his Harken holdings (212,140 shares), for $848,560. He uses some of this money to buy into the Texas Rangers baseball club. This is a lot of stock to dump on the market all at once, and brokers say it was purchased by an unnamed institutional investor.