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 Journal speculates 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.
That August, Harken posts a loss of $23 million.
• January 1991: Daddy Bush attacks Iraq.
• February 1991: Dubya, as the official in charge at Harken, reports his big stock sale to the SEC—eight months late.
• April 1991: The SEC begins an investigation into Harken dealings. Chairman Richard Breeden, who had been appointed by the senior Bush and served him as an economic policy adviser, hails from Baker & Botts, a big Texas oil law firm where he was a partner. Inside the SEC, James Doty, general counsel and the official in charge of any litigation that might come out of the Harken investigation, is another alumnus of Baker & Botts. And as a private attorney, before joining the government, Doty represented the younger Bush in matters related to Dubya’s ownership of the Rangers.
• 1993: The SEC ends its Harken investigation following perfunctory interviews.
The good people of Baker & Botts continued looking out for Shrub. Since 1993, Breeden, Doty, and other lawyers there have given him $182,050 for his various political campaigns, making the firm one of his biggest supporters.
That’s how the network functioned in the Harken affair. Dubya also has historic mentors among his kin. During the Second World War, for example, the government investigated his grandfather, Prescott Bush, and his maternal great-grandfather, Bert Walker. Under the Trading With the Enemy Act, officials seized Bush stockholdings, charging that “huge sections of Prescott Bush’s empire had been operated on behalf of Nazi Germany and had greatly assisted the German war effort.”
When it comes to business, the contemporary Bush men have been equally good role models for Dubya. Think about it:
• Dubya brother Neil Bush made the news during the late 1980s because he was a director of Silverado Savings & Loan, which went broke and ended up costing taxpayers about $1 billion. In the Silverado case, federal investigators accused Neil of conflicts of interest, but he was never prosecuted. The Resolution Trust Company, set up to bail out bankrupt S&Ls, brought a civil suit against Bush and other Silverado officers. The case was eventually settled for $26.5 million.
• Prescott Bush Jr., a brother of Bush Senior, was reported in 1989 to have arranged investments in two U.S. firms by an alleged front company for the Japanese mob, a task for which he was allegedly paid $500,000. Prescott denied any knowledge of mob involvement.
• In 1991, Jonathan Bush, the Daddy Bush brother who spearheaded the family effort to get Dubya set up in business, was himself fined $30,000 in Massachusetts and several thousand in Connecticut for violating registration laws governing securities sales. He was barred from securities brokerage with the general public in Massachusetts for one year.
• Then there’s George W.’s other brother, Jeb, currently standing for re-election as governor of Florida, who defaulted on a $4.5 million S&L loan in 1988, plunging the thrift over the edge. Jeb and his partners paid but 10 percent back.
With his own personal landscape a minefield of weird business dealings, Bush the younger has to watch his step. For him, leaving a few stones unturned might be a wise choice. Thus does he find himself at once making a show of righteous anger and shielding his wealthy friends. “You need to know that by far the vast majority, by far, of corporate America are above-board,” he said, “and doing their job just the way you’d expect them to do.”
Additional reporting: Cassandra Lewis
This article from the Village Voice Archive was posted on July 9, 2002