Papers Show Bush Played Active Role at Harken
"Two weeks before selling his shares, Bush was sent a company report giving
"information provided by subsidiaries regarding estimated historical and projected earnings."
Earlier in the year, Bush received a letter from Harken's president warning that the company
would "continue to be severely limited in
our activities due to cash constraints."
Thu Jul 25, 7:25 PM ET
By Adam Entous
WASHINGTON (Reuters) - President Bush ( news - web sites) played an active
role in Harken Energy Corp's business decisions and consulted with the head of
the company shortly before a controversial 1989 transaction which drew
scrutiny from the Securities and Exchange Commission ,
documents released on Thursday show.
The information raised fresh questions about the
extent of Bush's role as a director at Harken more
than a decade ago. Democrats have seized on the
Harken transactions and Vice President Dick Cheney
tenure at Halliburton Co. to paint
the Republican administration as compromised by
insider deals and close business connections.
Given public outrage over stock market losses
triggered by a wave of corporate scandals, the
scrutiny could undercut Bush's public standing and
hurt Republicans in the November congressional
election, polls show.
White House officials said Democratic attacks were
politically motivated and without merit. "The career
staff of the SEC reviewed all of the documents in this
matter and concluded that there was no case, that
the president had acted appropriately," White House
spokeswoman Claire Buchan said.
According to a June 15, 1989 letter from Harken President Mikel Faulkner,
obtained by the nonpartisan Center for Public Integrity, Bush frequently advised
Harken management on "organizational and strategic matters."
In the letter, Faulkner praised Bush for "the positive image you have helped
create regarding Harken Energy Corporation, the intuitive analysis you have
provided on our various acquisitions, operating decisions at the board level and
the personal suggestions and ideas you have shared with me over the past two
years on a CEO to CEO basis."
"I consider the role which you play at Harken Energy Corporation to be a very
meaningful and significant role and look forward to a continuing relationship,"
Faulkner said in his letter to Bush.
Documents show the two met just two weeks before Harken's controversial sale
in 1989 of its Aloha Petroleum subsidiary, a transaction which critics have
compared to the accounting irregularities at bankrupt energy trader Enron Corp.
.
The company's initial treatment of the Aloha sale significantly understated the
losses Harken first reported for 1989. Under a subsequent agreement with the
SEC, Harken restated its financial statements for 1989 and for the first nine
months of 1990. As a result of accounting changes, Harken's 1989 loss
widened to $12.57 million from the $3.33 million loss initially reported.
Bush has denied wrongdoing, saying the Aloha matter reflected an honest
disagreement over accounting. "All I can tell you is, that in the corporate world,
sometimes things aren't exactly black and white when it comes to accounting
procedures," he said earlier this month.
In addition to the Aloha deal, Bush is under pressure to explain his sale of
212,140 shares of Harken stock at $4 per share, or $848,560, on June 22,
1990. Two months later, the company announced bigger-than-expected losses
for the quarter ending June 30, and its stock price plunged.
Democrats point to documents showing Bush was told that Harken faced
serious cash flow problems in the weeks and months before he sold his stock
holdings.
Two weeks before selling his shares, Bush was sent a company report giving
"information provided by subsidiaries regarding estimated historical and
projected earnings." Earlier in the year, Bush received a letter from Harken's
president warning that the company would "continue to be severely limited in
our activities due to cash constraints."
An internal memo dated May 20, 1990 also warned of the possibility that
Harken would "deplete all available cash to pay payroll and other basic needs."
The SEC investigated and concluded in a March 18, 1992 memorandum: "It
appears that Bush did not engage in illegal insider trading because it does not
appear that he possessed material nonpublic information."
A week earlier, Rep. John Dingell, a Michigan Democrat who at the time
chaired the House subcommittee on oversight and investigations, asked the
SEC to provide his staff with a confidential briefing on its investigation of Bush's
stock trades, newly-released documents show.
"We are looking into the administration and enforcement of the federal
securities law by the commission with respect to the prohibitions concerning
insider trading," Dingell wrote.
Cheney has refused to comment on the SEC's investigation of how Halliburton
accounted for cost overruns. But Bush said earlier this month that he was
confident the federal probe would show his vice president did nothing wrong.
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