Memo emerges to haunt president
David Teather in New York
Saturday November 2, 2002
The Guardian
guardian.co.uk
George Bush quashed evidence in the insider dealing inquiry he
faced a decade ago, it was claimed yesterday, further
undermining White House efforts to restore some confidence in
Wall Street.
A memo has emerged that was sent by lawyers in 1990 that
warned executives of the energy firm Harken, for which Mr Bush
was a director, against cashing in stock if they had any negative
information about the company.
Harken was undertaking financial engineering to keep it afloat at
the time.
A week later the president cashed in $848,000 of shares. The
sale triggered an inquiry by the Securities and Exchange
Commission which ended in August 1991. No action was taken
against the president who claimed to have been unaware of the
problems facing the business.
The letter from Haynes and Boone was not given to the SEC
until a day after the inquiry ended.
The president's aggressive stance against corporate and
accounting chicanery has thrown the spotlight back on the
share sale.
Democrats argue that his own business dealings and those of
many in his government lay the administration open to charges
of hypocrisy, if not financial wrongdoing.
The president was criticised last month when it emerged that
Harken had used an off-balance sheet entity to rid its books of
poorly performing assets and debts.
Although disclosed at the time, the ploy was compared to the
practices at Enron, the disgraced energy firm.
Harken executives claimed client-attorney privilege for
withholding the Haynes and Boone letter from the inquiry.
It was obtained by Michael Aquirre, a securities lawyer in San
Diego, under the Freedom of Information Act. "This was a failure
to deal with the most important piece of evidence," he told the
Washington Post.
A White House spokesman said the timing of the letter's
submission was immaterial as the SEC had the right to reopen
the case at any time. "Whether it was a day after, or a week
after, if prosecutors received information that was material or
relevant, it's safe to say they would follow up on it."
The vice-president, Dick Cheney, has also come under scrutiny
for his time at the oil services firm Halliburton. The Dallas
company is being investigated by the SEC for an accounting
change that flattered its profits.
Less than a week before congressional elections, the latest
revelations come at an embarrassing time for the president. The
SEC chairman, an appointee of the president, is also under
pressure to quit over alleged mismanagement.
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