Huge Bush Scandall (2)
The hypocrite in Chief
President Bush is talking tough about pinstriped rip-off artists --
ignoring the skeletons in his and Cheney's own corporate closets.
Anthony York
Salon.com
Although Bush evaded most of the political fallout from the Enron
debacle despite his administration's close ties to that company, the
growing scandal of corporate irresponsibility is threatening to
engulf the business-friendly White House. And with every move Bush
makes to respond, his own corporate past, and that of Vice President
Dick Cheney, the former Halliburton CEO, may well come back to haunt
him.
Bush is planning a big address on the issue, complete with proposals
for reform, for July 9. He already put forward a 10-point proposal
for corporate reform back in March. But these very moves could help
remind Americans of the corners Bush and Cheney cut during their days
in the executive suites of corporate America.
Point No. 6 of the president's plan, for instance, says, "Corporate
leaders should be required to tell the public promptly whenever they
buy or sell company stock for personal gain."
And yet Bush had his own run-in with the SEC over his failure to
report sales of Harken Energy stock in a timely manner when he was a
member of Harken's board of directors. Bush dumped thousands of
shares of Harken stock and then filed his forms with the SEC 34 weeks
late.
*****
http://www.mediawhoresonline.com
KRUGMAN!
Bush/GOP Thwarted Clinton Efforts Against Corporate Fraud
No Moral Authority On Issue From Fraud-in-Chief
88's Answer to Biz Cheats? Lots Of Outrage!
Everyone is Outraged
Paul Krugman
New York Times
Now to the story of Harken Energy, as reported in The Wall Street
Journal on March 4. In 1989 Mr. Bush was on the board of directors
and audit committee of Harken. He acquired that position, along with
a lot of company stock, when Harken paid $2 million for Spectrum 7, a
tiny, money-losing energy company with large debts of which Mr. Bush
was C.E.O. Explaining what it was buying, Harken's founder said, "His
name was George Bush."
Unfortunately, Harken was also losing money hand over fist. But in
1989 the company managed to hide most of those losses with the
profits it reported from selling a subsidiary, Aloha Petroleum, at a
high price. Who bought Aloha? A group of Harken insiders, who got
most of the money for the purchase by borrowing from Harken itself.
Eventually the Securities and Exchange Commission ruled that this was
a phony transaction, and forced the company to restate its 1989
earnings.
But long before that ruling — though only a few weeks before bad news
that could not be concealed caused Harken's shares to tumble — Mr.
Bush sold off two-thirds of his stake, for $848,000. Just for the
record, that's about four times bigger than the sale that has Martha
Stewart in hot water. Oddly, though the law requires prompt
disclosure of insider sales, he neglected to inform the S.E.C. about
this transaction until 34 weeks had passed. An internal S.E.C.
memorandum concluded that he had broken the law, but no charges were
filed. This, everyone insists, had nothing to do with the fact that
his father was president.
***
THIN-SKINNED, CORRUPT DUBYA CRUMBLES UNDER QUESTIONING
Seethes Over Reporter's Query Re Paul Krugman Column
Well You Don't Have To Get Snappy, Governor Bush
Drip.. Drip.. Drip.....
NEW ASSIGNMENT FOR MEDIA
To America's Courageous White House Press Corps:
Please reconcile this...
Bush on Harken corruption scandal investigation: "Everything I do is
fully disclosed; it's been fully vetted"
AP on Bush's Harken corruption scandal: "The SEC eventually found
that Bush did nothing illegal or improper.
Full Story:
Jul 2, 2002
Bush Defends Himself Against Criticism of His Own Corporate
Accounting Experience
The Associated Press
MILWAUKEE (AP) - President Bush defended in a snappish tone Tuesday
his own business experience with a corporation accused of fishy
accounting.
"Everything I do is fully disclosed; it's been fully vetted," the
president said as he paused to speak with reporters during a church
appearance in Wisconsin. "Any other questions?"
Bush was responding to a journalist who asked for his reaction to New
York Times columnist Paul Krugman, who said in Tuesday's newspaper
that Bush's recent campaign against corporate malfeasance draws
on "firsthand experience of the subject."
Bush, in 1989, was on the board of directors and audit committee of
Harken Energy when the company masked $10 million in losses by
reporting a profit on the sale of a subsidiary to a group of Harken
insiders borrowing money from the company itself.
The Securities and Exchange Commission ruled the transaction phony
and forced the company to restate its 1989 earnings. The SEC also
investigated Bush for insider trading after he sold nearly $850,000
of Harken stock shortly before its mounting debt was publicly
disclosed.
The SEC eventually found that Bush did nothing illegal or improper.
Democrats, however, said those investigations bear close similarities
to current-day corporate accounting scandals involving Enron,
WorldCom and other business giants that have shaken investor
confidence.
Democratic National Committee spokeswoman Jennifer Palmieri called
the 1989 transactions by Harken and Bush "very Enron-esque" and said
they were symbolic of how Bush and Vice President Dick Cheney, whose
former employer Halliburton is also now under SEC investigation, had
helped create a business climate ripe for accounting fraud.
Republicans say Democrats are just desperate to make political hay in
an election year.
With this...
"George W. Bush violated federal securities laws at least four times
when he was a director of a Texas oil firm in the late 1980s and
early 1990s, according to an internal government report."
"The SEC did not press charges against Bush, even though the tardy
disclosures had become something of a pattern, according to the memo,
which was drafted for the files on April 9, 1991, by three
enforcement investigators."
http://www.public-i.org
Investigative Report
Bush Violated Security Laws Four Times, SEC Report Says
By Knut Royce
(Washington, Oct. 4, 2000) George W. Bush violated federal securities
laws at least four times when he was a director of a Texas oil firm
in the late 1980s and early 1990s, according to an internal
government report.
The document was prepared by the Securities and Exchange Commission
in 1991 during its well-publicized investigation into whether Bush
had benefited from insider information when he sold Harken Energy
Corp. stock before its value plummeted, and then failed to promptly
report the transaction to the SEC in violation of federal law. Bush's
stake in Harken helped make him a multimillionaire.
The internal SEC memorandum, prepared by the commission's enforcement
division and obtained by The Public i from sources, discloses what
was previously not known--that Bush also had been tardy in reporting
three other transactions involving stock in Harken, on whose board he
sat as director.
(This report was prepared in collaboration with Talk magazine, whose
article, "George W. Bush . . . And the Horse He Rode In On," appears
in the magazine's November issue.)
The Securities and Exchange Act of 1934 requires company insiders to
disclose publicly, in a report called a Form 4, all stock purchases
and sales by the 10th day of the month following the transaction.
A former SEC official who asked not to be further identified said
that he could recall at least one instance—involving the late stock
manipulator Alexander Guterma, who began a three-year prison term in
1960 for a variety of securities offenses — where a prison sentence
was imposed for failure to report a transaction. More commonly, he
said, the SEC has obtained court injunctions barring frequent
violators from repeating the offense. But he said that instances of
insiders filing late disclosures were "fairly common'' and that the
SEC, with a limited staff, seldom pursued those cases.
The filing requirements are not a trivial matter. Insider
transactions can sometimes alert outside investors that corporate
officers or directors are nervous about the company's earnings or
growth. They can also alert the SEC that an officer or director
benefited from information that only an insider could have known, a
violation of securities laws.
Bush, the SEC memo noted, had on four occasions filed late Form 4s
involving Harken stock worth more than $1 million. The tardiest—34
weeks late—was his Form 4 report disclosing that he had sold $848,560
of Harken stock on June 22, 1990, just weeks before the company filed
a quarterly report revealing that it had hemorrhaged $23 million
during that period. Bush had sold his stock for $4 a share. By the
end of the year it was trading not much above $1.
The Public i in April reported that Harken had been bleeding
profusely in 1989, before Bush sold his stock, but masked the losses
by claiming in its annual report a capital gain on the sale of a
subsidiary even though the transaction was through a seller-financed
loan. Months after Bush sold the stock, the SEC directed Harken to
recast its balance sheet to reflect a net loss of $12,566,000 for
1989.
The SEC did not press charges against Bush, even though the tardy
disclosures had become something of a pattern, according to the memo,
which was drafted for the files on April 9, 1991, by three
enforcement investigators.
"The SEC never raised any missed deadlines with us,'' Bush's attorney
in the matter, Robert Jordan, told Talk magazine, which analyzed the
transactions in cooperation with The Public i. "It was either a
trivial matter to the SEC, or everything was fine."
That indeed appears to have been the SEC's conclusion after it
learned that between 1987 and 1989, Bush was about three months late
on three other occasions in reporting the acquisition of Harken
stock, including the shares he eventually sold in June 1990, the memo
discloses.
Yet the memo also makes clear that Bush was aware of the requirement
to report insider transactions. On June 25, 1984, the document
reveals, he was timely in filing a report disclosing that he was a
director of Silver Screen Management Inc., the managing partner of a
movie production company, Silver Screen Partners; was prompt in
reporting on Aug. 31, 1989, that he owned shares in Tom Brown, Inc.,
an energy company on whose board he served, and was only three days
late in reporting on Jan. 6, 1984, that he owned stock in Lucky
Chance Mining, where he also was a director.
In its book The Buying of the President 2000, the Center for Public
Integrity reported that Bush had acquired the stock he sold in 1990
in a deal that made little economic sense. Bush had been chief
executive officer of a tiny money-losing energy company called
Spectrum 7. Harken acquired the firm in 1986 from Bush and two
partners for $2 million in stock despite the fact that Spectrum 7 had
posted losses of $400,000 six months before the purchase and carried
a debt of $3 million.
"His name was George Bush,'' Phil Kendrick, Harken's founder, said of
the purchase. "That was worth the money they paid him."
At about the same time Bush unloaded his Harken stock in 1990, he
also sold nearly $700,000 worth of shares in four other companies.
His accountant, according to a March 1992 SEC memo to the file, had
been "bugging him to get liquid." About $600,000 of the proceeds, the
memo noted, went to pay off a bank loan he had taken a year earlier
for his minority stake in the Texas Rangers baseball team. In 1998
Bush's trust sold that stake for $16 million, catapulting him to the
rank of multimillionaire.
Knut Royce is a senior fellow at the Center for Public Integrity. To
write a letter to the editor for publication, send to
letters@publicintegrity.org. Please include a daytime telephone
number.
Please report on whether Bush is lying.
Please report on whether Bush is parsing.
Please ask Bush whether he was cleared of wrongdoing. Then please
ask him to explain what the meaning of the word "cleared"... is.
Please report on whether Bush has been caught violating laws he is
now promoting.
Washington Post: Please publish an editorial on whether a
congressional investigation into the Harken scandal is in order. If
not, please explain why not.
Sincerely,
The American People
***
AP REVISES HARKEN SCANDAL STORY
Yesterday: SEC found bush did nothing illegal or improper
The Securities and Exchange Commission ruled the transaction phony
and forced the company to restate its 1989 earnings. The SEC also
investigated Bush for insider trading after he sold nearly $850,000
of Harken stock shortly before its mounting debt was publicly
disclosed.
The SEC eventually found that Bush did nothing illegal or improper.
Democrats, however, said those investigations bear close similarities
to current-day corporate accounting scandals involving Enron,
WorldCom and other business giants that have shaken investor
confidence.
Today: SEC closed investigation - but said decision 'in no way'
exonerates Bush
The Securities and Exchange Commission ruled the transaction phony
and forced the company to restate its 1989 earnings. The SEC also
investigated Bush for insider trading after he sold nearly $850,000
of Harken stock shortly before its mounting debt was publicly
disclosed.
The SEC eventually closed its investigation of Bush without taking
action against him, although The Dallas Morning News has quoted a
1993 letter from the SEC to Bush's lawyer emphasizing that its
decision "must in no way be construed as indicating that (Bush) has
been exonerated."
***
MORE LIES FROM 1994?
Fellow Harken Director E. Stuart Watson: We Knew Everything
'We Were Both Trying To Keep Company On Straight And Narrow'
Bush: Watson Is Mistaken
DALLAS MORNING NEWS
October 11, 1994, Tuesday
Richards wants Bush to reveal documents from SEC inquiry; GOP
challenger denies insider trading with Harken Energy stock
Charlotte-Anne Lucas, Austin Bureau of The Dallas Morning News
Mr. Bush and his attorney said he was not aware of the impending
losses when he sold the stock.
"I absolutely had no idea and would not have sold had I known," said
Mr. Bush.
Another Harken director at the time, E. Stuart Watson of Richardson,
who served on the company's audit and restructuring committees with
Mr. Bush, said they were constantly made aware of the company's
finances.
"You bet we were," said Mr. Watson, who says he supports Mr. Bush in
his race against Ms. Richards. "We were both trying to keep that
company on the straight and narrow."
Mr. Bush said Mr. Watson "is mistaken." ...
Mr. Watson, the former director who served on two key committees with
Mr. Bush at the time, said they were kept current on the company's
finances and knew that losses were to be announced.
Earnings reports at Harken "were never a surprise to us," said Mr.
Watson, who joined Harken's board after retiring as a senior
executive with Arco USA in 1982. As members of the audit committee,
the two were briefed by the company treasurer and the inside and
outside auditors, Mr. Watson said.
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More From Dallas Morning News:
In its letter last year to Mr. Bush's lawyer - a rare action by
the agency - the SEC said, "the investigation has been terminated as
to the conduct of Mr. Bush, and . . . at this time, no enforcement
action is contemplated with respect to him."
The letter, signed by an associate director of enforcement, goes on
to say 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 investigation.
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Reader Request To Media:
Explain Importance of Form 4 For American People
Boring And Insignificant - Or Smoking Gun?
MWO,
I'm no lawyer, but when I heard Ari assure us that Bush filed Form 3
like he was supposed to; he only neglected Form 4, I thought I was
being snowed. Classic scandal management demands that one makes the
scandal seem boring, in this case a simple paper-pushing error.
So I made a timeline, attached as a .txt file, of the info provided
by the Center for Public Integrity linked on your site. It seems that
the Form 4 was due after he sold his Harken shares and before Harken
announced their losses. As I understand it, the purpose of these
forms are to let the public know when insiders like Bush sell their
stock so that it's harder to get away with insider trading. That
makes the missing Form 4 a pretty big deal, doesn't it?
As far as I can tell, the Form 3 is way back from November or
December 1986 and simply reported that Bush had become a director of
Harken. Saying, "Well, he filed his Form 3, just not his Form 4," is
like saying, "Well, he admitted he was an employee, he just lied to
cover up the embezzlement."
Like I said, I'm not a lawyer, so I might be wrong. Please ask
someone who can be confident about the issue and let us all know the
truth.
Thank you,
Jared Feuerhelm
***
FLEISCHER: BUSH LIED ABOUT HARKEN IN 1994 CAMPAIGN
BUSH 1994: I FILED REPORT. SEC 'MUST HAVE MISPLACED' IT
ARI 2002: FORM NEVER FILED
ARI 2002: TRUTH 'EXACTLY AS I INDICATED'
Bush Corporate Record Examined
By Scott Lindlaw
Associated Press Writer
Wednesday, July 3, 2002; 12:36 PM
WASHINGTON –– The White House acknowledged Wednesday that when he was
a corporate director, President Bush failed to promptly disclose
stock sales as required by federal law. A spokesman blamed it on
a "clerical mistake" by company lawyers, though Bush has said
government regulators lost it.
White House spokesman Ari Fleischer said Bush had 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, Bush had not
promptly reported the sale after it took place.
Reacting to a wave of corporate accounting scandals in recent weeks,
Bush has proposed that top company leaders be required to promptly
disclose their sales or purchases of company stock for personal gain.
The law already says company insiders must disclose publicly, by the
10th day of the month following the transaction, a sale or purchase
of stock in their companies. The report is known as a Form 4.
Fleischer said that on June 22, 1990, Bush filed a form 144 – the
notice of intention to sell Harken stock. "The president has called
for prompt disclosure of a sale; the president in his own personal
action disclosed promptly the intent to sell," Fleischer said.
But, he said: "In the case of the second form, the additional form,
the Form 4s, there was indeed a mix-up, a clerical mistake, involving
the lawyers at Harken, and in that case the Form 4 was not filed."
That explanation was at odds with one Bush himself offered during his
1994 campaign for governor of Texas. Bush said at the time that he
had filed the required report, and that the SEC must have misplaced
it.
Questioned on which version was accurate, Fleischer said: "It's
exactly as I indicated."
One Form 4 filing came more than eight months late and disclosed Bush
had sold $848,560 of Harken stock, according to SEC documents. That
sale was on the same date that Fleischer said Bush had given notice
that he intended to sell.
Dan Bartlett, the White House communications director, said the eight-
month delay resulted from a miscommunication between Bush's lawyer
and Harken's lawyers.
"These types of late filings are not out of the ordinary," Bartlett
told The Washington Post in Wednesday's editions. "It would be like
doing a 60 in a 55" speed-limit zone, he said.
Bush filed Form 4s late on four occasions, according to an internal
Securities and Exchange Commission finding that was reported by a
nonpartisan watchdog group, the Center for Public Integrity. Those
sales involved stock worth more than $1 million.
On the largest sale, Bush sold his stock for $4 a share, just before
the company filed a quarterly report revealing it had lost $23
million during the period. By the end of the year, the memo says, it
was trading at around $1.
The SEC investigated whether Bush had benefited from insider
information when he sold Harken stock before its value plunged, then
failed to report the transactions.
Though the memo indicates SEC investigators observed a pattern of
late filings by Bush, the agency said in 1993 it would not bring a
case against him.
Bush's father was president at the time the SEC memo was drafted in
1991.
Asked by a reporter Tuesday about the matter, the president said
curtly: "Everything I do is fully disclosed; it's been fully vetted.
Any other questions?"
Fleischer said Bush plans next week to deliver a speech before 1,000
business leaders in New York about corporate responsibility.
Democrats have seized on the corporate accounting scandals and
suggested that Bush – with his strong support from the business
community, and his own business background – is soft on corporate
wrongdoing. The address will express the "faith he has in our free-
enterprise system," Fleischer said. "Our free-enterprise system
creates wonderful opportunities and wealth for the American people
from all walks of life."
But, Fleischer said: "If there are any bad players in our free-
enterprise system, they will be held accountable by this
administration and by the government."
© 2002 The Associated Press
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