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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (4589)	10/10/2002 4:59:35 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 5185

Mephisto, This is great, we're taking back the media: portland.indymedia.org:8081/front.php3?article_id=25479&group=webcast

To: Mephisto who wrote (4589)	10/11/2002 1:10:29 PM
From: Mephisto	Read Replies (2) \| Respond to of 5185

Bush Linked to Harken Off-the-Books Deal President Did Not Profit; White House Says Venture Can't Be Compared to Enron washingtonpost.com Bush Linked to Harken Off-the-Books Deal President Did Not Profit; White House Says Venture Can't Be Compared to Enron By Dana Milbank Washington Post Staff Writer Thursday, October 10, 2002; Page A06 When President Bush served as a director of an energy company 12 years ago, he approved the creation of an off-balance-sheet partnership that reduced the company's debts and improved earnings in a transaction similar to those that led to the collapse of Enron Corp. As a director of Harken Energy Corp. in 1990, Bush, who had sold his own oil business to Harken and was retained as a consultant, made the motion at a board meeting to negotiate the transfer of struggling Harken assets into a partnership with Harvard University's investment arm, Harvard Management Co. Inc., documents indicate. Unlike Enron, which used partnerships to conceal debts and loss-making operations, Harken's partnership followed accounting rules and was disclosed to investors and regulators. Bush did not profit personally from the transaction because he had sold most of his shares earlier. "There is simply no comparison" to Enron, said White House spokesman Scott McClellan. "It was disclosed to investors and it conformed to accounting rules." But news of the partnership, first reported yesterday in the Wall Street Journal and the Boston Globe after documents were gathered by a group called HarvardWatch that monitors Harvard investments, provides an unwelcome link between Bush and the accounting scandals that have spooked investor confidence this year. After creation of the partnership, depressed Harken shares enjoyed a brief renaissance as the company's financial situation appeared to improve, in part because of the removal of $20 million in debt. According to board minutes of Aug. 29, 1990, obtained by HarvardWatch, Bush made the motion, which was approved, to "proceed in negotiations . . . toward formulating a letter of intent" creating "a new entity." The entity, which became the Harken Anadarko Partnership, included oil and gas properties to be managed by Harken. Harvard Management, which invests the university's endowment, was a major investor in Harken, at one point owning 30 percent of its shares. Its investments began at about the time that Bush, the son of the then vice president, became a director of the company in 1986. According to the Journal, Harvard's support of Harken influenced A. Robert Abboud, then head of First City Bancorp, to take over another bank's loans to Harken in 1990 and rescue Harken from default. Abboud had been a prominent supporter of Saddam Hussein's government in Iraq before the Persian Gulf War. Abboud also had ties to President George H.W. Bush, the current president's father. McClellan, the White House spokesman, said the ties between Harvard Management and Harken had nothing to do with the Bush connections because talks about a possible Harvard investment in Harken began before Bush became a director. McClellan said the off-balance-sheet partnership was proposed by Harvard, and the university investors "set the terms of the partnership." Harvard said in a statement yesterday that its investments in Harken were not inappropriate" and had nothing to do with Bush connections. "The role of the Harvard Management Company is not to curry political favor but to invest well on Harvard's behalf," the statement said. A phone call to Harken officials seeking comment was not returned. The partnership significantly improved Harken's fortunes. Its shares, which had fallen to $1.25 in late 1990 from an earlier high of $6, climbed to $8 in 1991. The stock improvement came as Harken's debt and interest expenses fell because of the partnership. Harvard benefited from the higher stock price by selling 1.6 million shares between September 1991 and October 1992, HarvardWatch said. By December 1992, Harvard Management had bought all of Harken's interest in the partnership. Harvard sold the venture in 1993 to Cabot Oil and Gas Corp. for stock valued at $34.6 million, HarvardWatch said. The partnership "bears striking resemblance to the partnerships Bush has condemned at Enron," HarvardWatch argued. "It was controlled by and transparent only to Harken insiders, and likely was used to artificially brighten the company's business prospects." © 2002 The Washington Post Company washingtonpost.com

To: Mephisto who wrote (4589)	10/11/2002 1:31:09 PM
From: Mephisto	Respond to of 5185

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

To: Mephisto who wrote (4589)	10/13/2002 1:18:05 PM
From: Mephisto	Read Replies (1) \| Respond to of 5185

Moles at Work The New York Times October 11, 2002 By PAUL KRUGMAN So here's my theory: Michael Oxley, Harvey Pitt and George W. Bush are all Communist moles who have worked their way into the center of the capitalist system in order to destroy it. How else can you make sense of their actions? It's true that in July they grudgingly agreed to a corporate reform bill, which briefly calmed the growing investor panic. That was because it's essential for them to control Congress - they need maximum leeway to wreck the U.S. economy . But then they found a better answer. Saber-rattling over Iraq does double duty. It distracts the media: on Wednesday the Dow fell 215 points, hitting a nearly five-year low, while consumer confidence fell to levels not seen since 1996, yet neither story was treated as front-page news. And war talk itself helps depress stocks and consumer confidence, and further undermines the economy. The master stroke came last week. Even as evidence mounted that the wheels are coming off our so-called recovery, the conspirators carefully destroyed the credibility of July's corporate reforms. The Financial Times reports that it wasn't just Congressional Republicans and the accounting industry that blocked the appointment of John Biggs to head a crucial new accounting oversight board; the White House was "concerned at labor union backing for Mr. Biggs." Now that the best candidate has been humiliated and betrayed, nobody of stature will take the post. That means corporate reform is dead in the water. And if the conspirators hold the House and regain the Senate, they can proceed with their wrecking program - driving the budget even deeper into long-term deficit, scaring small investors and blocking any actions that might pull the economy out of its deepening funk. O.K., I'm not quite sure about this theory. There is another theory that might explain what these guys are doing. They may simply be constitutionally incapable (actually, given the presence of John Ashcroft, make that unconstitutionally incapable) of doing what has to be done. What we've learned over the past year is the extent to which the modern business game is rigged in favor of insiders. Self-dealing has become pervasive: incredibly generous executive compensation, sweet-deal loans and preferential access to I.P.O.'s were standard practice in many companies that have not yet become targets of S.E.C. investigation. And deceptive accounting, which lured the public into buying stock even as insiders were bailing out, must have been very widespread indeed. In the last three years of the bubble reported corporate profits soared, but the overall measure of profits calculated by the U.S. Commerce Department, which is unaffected by the maneuvers companies use to cook their books, hardly grew at all. In short, the fix was in. If we're to have a real recovery, it's urgent that ordinary investors be reassured that those days are over. Yet it may be hard for our current leaders to understand that urgency: all their lives, the fix has been in on their behalf. Wednesday's Wall Street Journal reported another piece of the Harken Energy story, one that provides even more evidence of how family connections smoothed Mr. Bush's business career. The key defense against charges that his sale of his Harken stock amounted to insider trading has always been the fact that while that stock's price plunged soon after he sold his shares, it then recovered, albeit temporarily. Now we know why it recovered. It wasn't just the mysterious invitation to drill for oil off Bahrain. Harken also pulled a trick that would be emulated on a larger scale by Enron: In effect it borrowed money to pay its bills, while using loopholes in accounting rules to conceal the resulting debt. What made the trick possible was Harken's guardian angel, a powerful institution controlled by an oil man, Robert Stone, who was a strong political supporter of Mr. Bush's father. This institution acquired a large stake in Harken as soon as Mr. Bush became a board member, and subsequently showed itself willing to do whatever it took to keep the hapless company afloat. This included taking much of the company's debt off its books in return for assets of doubtful value, and giving Harken a share in their partnership almost twice as large as its contribution to the partnership's capital. The name of the guardian angel? The Harvard University endowment. Don't be surprised; professors don't run the university's money. nytimes.com Copyright The New York Times Company