Joe Conason

A daily political weblog, updated as circumstances demand.


Salon Staff
July 11, 2002 8:49PM (UTC)

Did those "boutique" liberals bail out Bush?
As the national press slowly winches open that can of worms called Harken Energy (current share price now hovering around 44 cents), other investors and directors from the George W. Bush era will come under increased scrutiny. A few of them are major players who may know the answers to questions that the White House would prefer to ignore. And they are certainly an intriguing cast of characters.

The biggest institutional investor in Harken back then was Harvard Management Company, the private investment arm of the great university and steward of its multibillion-dollar endowment. As of March 30, 1990, Harvard was the single-largest owner of Harken stock, with 29.4 per cent of the outstanding shares. Curiously, the university's investments in Harken began a few years earlier, immediately following the company's purchase of Bush's foundering Spectrum 7 oil exploration outfit.

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Charles Lewis of the Center for Public Integrity -- which has performed an outstanding service in probing this story over the years and posting relevant documents discussed Harvard's possible reasons for getting involved with this turkey in "The Buying of the President 2000." He notes that the decision was made by Michael Eisenson, a Harvard Management partner who joined Harken's board.

"A month after Bush came on board, Harvard Management agreed to invest at least $20 million in Harken ... The Bush name certainly would have made an impression on Eisenson's boss, Robert Stone Jr., one of Harvard Management's directors and a fellow with extensive ties to the Bush family via both Houston oil bidness and Greenwich social connections.

More pertinently, Lewis believes "the available evidence" shows that the mystery institutional buyer of Bush's 212,000 Harken shares in June 1990 was Harvard. The university increased its Harken holdings around that same time, according to him. And although the broker involved, Ralph Smith of Sutro & Company, has steadfastly refused to name the buyer, Lewis reports that "at the bottom of a spreadsheet Smith used to record his calls to Bush was the name of Michael Eisenson, along with the telephone number of Harvard Management." In 2000 when Lewis was working on his book, Eisenson didn't return his calls.

Aside from whatever knowledge the Harvard money men may have about Bush's role as a Harken director, there is a delightful irony here. Although Dubya graduated from Harvard Business School, his father often liked to denounce the university's "boutique" liberalism. The grumpy old man must not have known that those Cambridge elitists had bailed out his oldest son.


[Posted: 6:45 p.m. PST, July 11, 2002]

Riling the lapdogs
Mainstream journalists are starting to pose hard questions about George W. Bush's business career -- the kind of questions that gave way two years ago to more urgent issues like the color of Al Gore's suits and the "authenticity" of Bill Bradley and John McCain. Wednesday, reporters in the White House press room requested copies of the Harken Energy board minutes from 1989 and 1990. Those are the same minutes that the president urged the press to consult during his Monday press conference. But the answer from the White House communications office is that those minutes won't be made available.

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Spokesman Dan Bartlett said that the White House doesn't have the records, although Bush himself certainly once did, and as president could surely request them again. The Harken board minutes would show whether and how he participated in the deceptive purchase of a company subsidiary, Aloha Petroleum, by a firm that included the Harken chairman and other insiders.

On Monday, Bush seemed to indicate that he couldn't remember his view of the Aloha scheme. Maybe he enthusiastically endorsed it, which wouldn't look so good right now; or maybe he was the kind of "independent director" who yawned, collected his fees and stock options and rubber-stamped management, which wouldn't look so good now either. If he had opposed that Aloha deal, he would probably remember it well. And if he or his lawyers are keeping those yellowed board minutes in an old trunk anywhere, that's one Pandora's box they're not opening.

Still, there are clues to be found in the publicly available documents. Harken's proxy statement for its annual stockholders meeting on Nov. 18, 1990, mentions aspects of the Aloha Petroleum sale. In a footnote on Page 20, the statement explains that "the sale price was ... approved by independent directors of HMC," or Harken Marketing Company, then a subsidiary of Harken Energy. Weren't the "independent directors" of HMC identical with those on the board of Harken Energy, including George W. Bush? A glance at those proxy statements, available at the SEC's EDGAR site, might refresh the president's dim recollection.

Do as I say
The same proxy statement also shows that Bush got personal loans from Harken totaling more than $180,000 to purchase company stock. As the Washington Post and the New York Times headline Thursday, the president now says such loans to directors should be outlawed because they tend to discourage the borrowers from exercising critical judgment about management decisions. I guess he would know. (The Times story, by Jeff Gerth and Richard W. Stevenson, is well reported and scoops the sweetheart aspects of the loans. It also poses new, unanswered questions about which "institutional investor" purchased Bush's 212,000 shares at a time when they were clearly declining in value. The broker who arranged the deal won't say.)

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Why was Bush on Harken's board?
What hasn't been discussed much lately is why Harken management wanted George W. Bush on its board, why they paid millions for his worthless, debt-ridden Spectrum 7 oil company in 1986, why they continued to pay him a handsome $120,000 consulting fee and how his association finally paid off for them.

Months before Bush cashed out most of his stock in June 1990, he had attracted the benign attention of the Gulf sheikdom of Bahrain. The sheiks generously awarded an exclusive offshore drilling contract to Harken -- despite the fact that the small, poorly run company had neither the experience nor the capital for such a huge venture. The story in today's Times notes that the Bass oil interests of Fort Worth were completing a deal with Harken to do the real work in Bahrain around the same time that Bush sold his shares.

That "good news" about the Bass family briefly pumped Harken's stock price a month after Bush sold. But the much bigger news was the Bahrain deal itself, which had been announced six months earlier. And apparently it was during the discussions in 1989 with the Bahraini authorities -- which began after Bush Senior became president -- that Harken gave Bush, but no other outside director, another sweetheart loan of $84,000.

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There is much more to be said about the Bahrain deal, and there are many reporters in Washington who know a lot about it -- including one very high-ranking editor in the Times Washington bureau. Digging up those old stories would lead to some very contemporary angles about the Bush family's Saudi friends.
[Posted: 10 a.m. PST, July 11, 2002]

For more Conason, click here .


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