The watchdog didn't bark

Why didn't the media question Bush's shady stock dealings before he became president?


Harold Evans
July 17, 2002 3:14AM (UTC)

Why the activities of oilman George W. Bush in the 1980s and 1990s should be a matter of headlines now is something of a mystery. The mystery isn't what actually happened. It is clear that in the course of making roughly $16 million, Bush flouted securities laws, rode roughshod over the rights of others and found protection among his father's friends. (Bush's memory is fuzzy on some of the details.)

But the real mystery -- and it is every bit as important in a democracy as what Bush knew and when he knew it -- is the one memorialized by the "curious incident" of the dog that roused Sherlock Holmes' interest in "Silver Blaze." The dog did nothing, Watson protested. But that was the point, said Holmes: Why didn't the dog bark on the night of the murder?

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The "curious incident" regarding the president's shady stock dealings is why the watchdog media didn't bark during the 2000 presidential election, when new unflattering evidence emerged in the month before the vote. This is not a question that even now the media is bothering to probe, which at least demonstrates a consistent talent for inertia. Indeed, if there is any effort now among the most delinquent, it is to cover up their inadequacies by misrepresenting what they did, or by suggesting the story is no big deal anyway, and never was.

Back in 1991 it became known that when Bush, a director and consultant to Harken Energy, made a June 1990 insider sale of Harken stock, he failed to complete the requisite SEC Form 4. The deadline for reporting insider trades is the 10th day of the following month; Bush was eight months late. He unloaded more than 200,000 Harken shares for $848,560, just before the company revealed a quarterly loss of $23 million and its stock cratered. The story is that an institutional investor -- an unnamed good fairy with a gift for timing -- called Bush's stockbroker just at the moment Bush needed $600,000 for a minority stake in the Texas Rangers. This was the stake he sold in 1998 for $16 million. The SEC, having looked into the affair, did not press any charges.

But that was then. During the presidential election, a more thorough investigation was carried out by a group of journalists at a time when Bush was saying he would run the White House like a business corporation. The reporters' conclusion was that candidate Bush's own business model was uncomfortably close to today's increasingly scandalous business practices. The general public, however, was not enabled to weigh this conclusion before it went to vote for president, because the press, print and electronic, signally failed to publicize the facts.

The revelations, based in part on documents secured under the Freedom of Information Act, were published in Talk magazine a month before the election. (I declare something of an interest here, in that the magazine was edited by my wife, Tina Brown.) The long report was the work of two Talk writers, Bill Minutaglio, a Bush biographer, and Nancy Beiles, who worked with Peter Eisner and Knut Royce at the Center for Public Integrity. This is what they reported:

First, Bush had made not just one but four Harken stock transactions worth more than $1 million between the time he joined the board of Harken and the beginning of the SEC probe. And each time he was at least three and a half months late filing the legal required report to the SEC. The writers quoted Alan Dye, who worked at the SEC during the Reagan administration, that this was getting into "dangerous territory."

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Two, Bush had access to more knowledge than had previously been reported that Harken was failing financially at the time he dumped most of his stock, on June 22, 1990. The SEC never challenged Bush's claim that he had no idea Harken was in trouble -- and that if he had he would never have sold. But the magazine quoted documents showing Bush had been warned that the company was in bad financial trouble at least twice during the month he cashed out. On June 7, 1990, for instance, he received a memo from Harken CEO Mikel Faulkner, in which Faulkner predicted that sometime before the end of the month the company would run out of cash. He also noted that by August Harken would be in violation of "numerous" debt agreements. The magazine commented: "Of course it is possible he never read the materials, his colleagues told the SEC they provided. After all, Bush is famous for his aversion to long and complicated reports. But if he did in fact skip meetings and blow off memos, he would have left himself open to an equally damaging charge: dereliction of his fiduciary duties as a Harken director."

The reporters also showed that Bush and his fellow Harken directors carried out accounting maneuvers that are a mirror image of the practices of their friends at the now-disgraced Enron. Unwilling to report greater losses than expected for 1989, Harken sold 80 percent of one of its own subsidiaries, Aloha Petroleum, to a partnership of Harken insiders at an inflated price, a transaction that masked the losses and pushed up the stock price -- whereupon they sold their personal stakes. Months after Bush sold his stock the SEC directed Harken to recast its balance sheet to reflect a net loss of $12.5 million for 1989, four times more than originally reported.

The Talk report disclosed new details about the tactics Bush and his Texas Rangers baseball partners used to exploit the power of the state to grab 270 acres of private land in Arlington, the bulk of which was not intended for the new stadium but for private commercial speculation. This was very much at odds with his pledge to "do everything I can to defend the power of private property and private property rights." Maree Fanning, who lost her family horse farm as a result, had the best comment on the whole shoddy business. She told Talk reporter Robert Bryce: "If I saw Bush today, I'd say 'Bite my ass.'"

The report also revealed that Arlington Mayor Richard Greene, who facilitated the land grab, was also the principal agent by which the city subsidized the baseball owners in sweetheart deals. He told the public the Rangers were "putting $30 million cash equity upfront, like a down payment on a house." But according to the magazine's investigators, the Rangers' owners never did make a down payment. The $30 million was raised by the Arlington Sports Development Authority, a quasi-governmental body set up by the city and the state legislature.

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Greene just happened to be facing two serious suits by the Resolution Trust Corporation, set up by the first President Bush, for his involvement in two savings and loans institutions that had lost $2 billion. He ended up paying $165,000 to make the nastiness go away.

All this and more, including the Bush family connections with the SEC, was fissile material in the run-up to the 2000 election. Astonishingly, it was all ignored. As indeed had been earlier reports questioning the Rangers deal by Joe Conason in the New York Observer and Harper's, and by Robert Bryce in the Texas Observer. The elite mainstream press, notably the New York Times, the Washington Post, the Wall Street Journal and others, along with all the big television and radio news shows and the major newsmagazines, failed to report the Harken revelations. Only Tom Brokaw on NBC gave them a mention. In his long profile of Bush in the New York Times, Nicholas Kristof covered the Rangers story well, but neither he nor anyone else on the Times news pages or Op-Ed ever got around to the bigger issue. All these news organizations were giving pages and pages and hours and hours to the election, but not one followed up the Harken story about which they have now been belatedly raising questions. If they did ask a question or two, they were blown off.

It' s not as if the originators of the scoop were shy in pressing for attention. The Center for Public Integrity issued a press release and put the story on its Web site; so did Talk magazine. Minutaglio and his colleagues were made available for television and radio. The Gore campaign picked up the press releases and gave them out. Nothing. Zilch. Two weeks after publication, MSNBC's Eric Alterman was so surprised by the silence he wrote a piece headlined "The scandal no one cares about." He asked: "Where is the New York Times' famed Whitewater reporter, Jeff Gerth? Where's the Washington Post special investigations unit? Where are the scandal-mongering Matt Drudge and the Fox factory philandering patrol?" He speculated that perhaps the issue was too large and serious for a celebrity press. Again, nobody took up the challenge.

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Why? Why was a press that for years flogged the dead horse of Whitewater so indifferent to a much bigger, fresher story? Why didn't it probe, even if only to discountenance the allegations?

Three reasons suggest themselves, none of them edifying. The 2000 election was notorious for the way beat reporters got themselves trapped in a narrative that was throughout impervious to real news: the narrative that Gore was a braggart and a poseur and Bush was an amiable Forrest Gump. Anything that did not fit the preconceived pattern had little chance of seeing ink or breathing air. Throughout the entire campaign, the political reporters and their editors were typically less concerned with the integrity of Bush than Gore's decision to wear earth tones.

Second, they were suckers for spin when the Republican campaign managers shrewdly cottoned on to the material needed to keep the Gore stereotype going.

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Finally, there was surely an element of political and personal prejudice against Clinton and Gore. The then-head of CNN said the network "would not dream of touching" the story; to do so would be unfair to Mr. Bush so close to the election. That the right-leaning editorial page of the Wall Street Journal would show a similar fastidious concern for its candidate was to be expected, but in this case solicitousness seems to have extended to the more robust news pages. The reporter who in 1991 discovered the original single failure to file was excited by the magazine scoop. She could never get her editors to report or follow up.

Of course, there are still unanswered questions. Perhaps there are very good explanations in unexamined documents. President Bush himself has now remembered -- about one late filing -- that perhaps the SEC did not lose his paperwork, as he claimed in 1991. Now his White House spokesman blames "a mix-up by the attorneys," and Bush himself says, "I still haven't figured it out completely." He could ask the man who represented him in the SEC probe, one Robert Jordan, who is now his ambassador to Saudi Arabia. Better still, release all his papers, as the Republicans pressed the Clintons to do, and explain in this context what he means when he says "in the corporate world, sometimes things aren't exactly black and white."

None of the news oligarchs who failed the public in 2000 has fessed up -- or organized a proper follow-up. Still nobody has asked about the other late filings, or even bothered to record them. Little imagination is needed to picture the media furor if these details had come out about Clinton and Whitewater. Yet the Washington Post, which pursued Clinton with such zealotry, even urges Congress and others in the press not to be "distracted" by Harken. The New York Times, in the person of columnist Paul Krugman, is showing a belated concern, but none of the manic energy it manifested over Whitewater, Wen Ho Lee and the like. The Wall Street Journal has grossly misrepresented its own negligence, claiming in a July 10 editorial a vigilance it never exhibited at the time. Significantly, even now, the Journal refers only to "a" late filing, singular. The Journal's defensive argument is that it is amusing to see the Democrats whooping it up about Harken and responds as follows: "Two Words: Bill Clinton. Or for that matter Al Gore."

Yes, of course, we should have known; the business scandals are all the fault of the bad example set by the Democrats. That blow job, you must believe, destroyed the moral fiber of a generation of American businessmen -- and, it seems, the sense of priorities of the best professional newspeople.

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Harold Evans

Harold Evans, author of "The American Century," is the former editor of The Sunday Times of London and The Times. This article first appeared in the London Observer.

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Al Gore George W. Bush

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