Bush risks hypocrisy charge over Harken accounts
" Mr Bush was a director at Harken from 1986 to 1993 and at the
time in question was a $100,000 a year consultant. Minutes
show that he personally approved the deal. "
David Teather in New York
Thursday October 10, 2002
The Guardian
President George Bush was yesterday laid open to further
allegations of hypocrisy in his condemnation of the aggressive
business practices of the 1990s when more details of his own
dealings were published.
Harken Energy, the oil and gas company behind the US
president's wealth, used an off balance sheet entity to move
poorly performing assets and debts off its books, according to a
report which draws comparisons with Enron.
The off balance sheet entity, a partnership with the investment
arm of Harvard University, was formed in 1990 at a critical time
for the company's finances.
HarvardWatch, an alumni and student group which monitors the
university's investments, likened the venture to those used at the
disgraced energy firm Enron to disguise debts before it
collapsed.
Mr Bush was a director at Harken from 1986 to 1993 and at the
time in question was a $100,000 a year consultant. Minutes
show that he personally approved the deal.
"The partnership bears strong resemblance to the
widely-condemned Enron partnerships, controlled by insiders
and disguising the dismal prospects of the company," the
watchdog said.
The venture enabled Harken to shift $20m (£13.1m) in debt and
liabilities off the balance sheet. Harvard's venture capital division,
Aeneas, contributed $64.5m of drilling assets to the partnership.
In return Harken received a much-needed injection of cash -
$100,000 a month in management fees, and drilling and services
fees of more than $3m in the first year.
The deals were disclosed at the time to the US regulator, the
securities and exchange commission and complied with
accounting rules. It is the kind of aggressive financial
engineering that the president has strongly criticised.
Over the summer political rivals made capital of a 1991 insider
dealing investigation into the future president by the SEC. Mr
Bush sold 212,140 shares for $849,000 two months before the
company reported a $23.2m quarterly loss but the SEC closed
the case without taking action.
The White House dismissed any hint of wrongdoing. A
spokesman said: "Independent reports note that [the
partnership] complied with accounting rules, so there is no
comparison with Enron."
There were also reports yesterday that New York prosecutors
are considering criminal charges against auditors at
PricewaterhouseCoopers who failed to report the alleged looting
of Tyco by its former chief executive officer, Dennis Kozlowski.
guardian.co.uk |
