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UQ Wire: Harken Energy - George W's Perfect Storm

Unanswered Questions: Thinking For Ourselves
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"Read My Lips: Oil Was Well with Harken"
( George W's 'Perfect Storm' )

… by Tom Flocco and

George W. Bush Talks Responsibility

In an effort to control damage brought on by the collapse of yet another major U.S. corporation, President George W. Bush served up a tough-talk speech Tuesday, with a cryptic warning that “more scandals are hiding in corporate America.” He promised jail for greedy CEO’s profiting from golden parachute stock options, bogus accounting, off-shore chicanery, and insider trading knowledge that has left America’s stockholders, retirees, and pension funds with financial losses in the billions. Prior to the speech, Democrats asserted “delayed and watered-down legislation” and lack of hard specifics, in an effort to politicize the financial fraud.

However, Congress has thus far refused to hold the President’s feet to the fire regarding questionable financial stock trades involving Harken Energy Corporation in 1990, just prior to the Gulf War. Moreover, the White House Press Corps -- trying mightily to cause the President to fully explain Harken at a Monday press conference called by Bush -- still posed the kind of soft, un-aggressive questions with little follow-up that only abetted the spin and concealment at the heart of his corruption. This crowd is not Woodward and Bernstein yet.

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Falsifying Records?

Those with presidential media access still fail to press Bush about violations linked to late reporting of other additional insider trades executed well before his substantial $848,000 stock sale prior to commencement of Iraqi hostilities precipitating the Gulf War -- according to wide reports that never met with consequence during George W’s personal SEC investigation, linked to other failures in filing timely insider reports. [A complete description of the trades and SEC investigation is found here: ] And reporters permit him to say that moral and high-minded corporate executives “do not cut ethical corners.”

No one has bothered to ask whether -- as advisor to his presidential father -- Bush was testing the strictness of SEC reporting enforcement prior to his big score right before the Gulf War commenced. And House Ranking Member Gephardt never questioned why, according to reports at the time, the SEC allowed George W. to backdate an 80,000 share insider purchase some four months earlier than it was really filed.

Yet Gephardt strongly disagreed with the President prior to his Tuesday speech on Wall Street when Bush said “sometimes accounting practices are not always black and white.” This, while Bush attacked Arthur Andersen auditors for “falsifying records.” It is not known whether Andersen lawyers will raise an "accounting practices are not always black and white" defense in court.

Knowledgeable observers need to go back to White House Press Secretary Ari Fleischer’s July 5 press briefing about which Harken damage control was the primary topic. The questions centered around Bush’s late filing of required SEC insider trading forms by corporate directors and officers -- important because the President’s new 10-point plan requires corporate leaders to tell the public promptly when they buy or sell stock for personal gain. Isn't that the law now?

While most have concentrated on the 34-week late-filed SEC form 4 to the neglect of even more important Harken issues, some of which are alluded to herein, the U.S. SEC Act of 1934 requires that insider officers/directors “file three copies [form 4], at least one of which is manually signed, with the SEC.” Bush’s June 22, 1990 insider sale made prior to the Gulf War netted him $848,000.

The Commission notes that “acknowledgment of receipt by the SEC may be obtained by enclosing a self-addressed stamped postcard identifying the Form filed.” Moreover, Section 4 under Form 4 of the Act reveals that “if the Form 4 is filed for an individual, it shall be signed by that person or specifically on behalf of the individual by a person authorized to sign for the individual.’’

But more importantly, “If signed another person, the authority of such person to sign the Form 4 shall be confirmed to the SEC in writing in an attachment to the Form....unless such confirmation is on file with the Commission.

This requirement established the name of the person to take responsibility for Bush‘s signature, so that he would be unable to use “it was lost,” and “the dog ate my homework”- style excuses when illegalities were discovered.

And reporters have failed to ask the President which person signed for the $848,000 trade -- if George W. Bush did not. And again, no questions yet about the other earlier late filings.

And no one has asked Bush whether he thought nearly a million-dollar stock sale profit was worth personally handling in an efficient and legal manner anyway -- given his lofty presidential advisor position and that such failures would embarrass his father, the President.

They have also not asked to see copies of his SEC receipt of the “lost" form 4. Fleischer, however, keeps carefully shifting the blame onto Harken “corporation.” And reporters have let him have his way, since they seem unprepared to seriously challenge him with even a modicum of SEC rules and regulations.

John Hawk, from Thomson Financial -- a major company contracting with the SEC to maintain stock trade filings, told AmericanFreePress that “a Form 144 signifies an intent to or proposed sale of restricted stock which is to be followed by an immediate filing of a Form 4.” The SEC calls Form 144 a "Notice of Proposed Sale of Securities."

While AmericanFreePress is not acquainted with all the ramifications surrounding the 144 Report forms, it is known that the Rule was “designed to prohibit the creation of public markets in securities of issuers concerning which adequate current information is not available to the public,” according to the SEC Rule 144 regulations. Moreover, it deals with a “holding period prior to resale,” adding that the Act “requires that there be adequate current information concerning the issuer.” [Harken] And in SEC Reg. 230.144, (c) (1), Filing of Reports, the SEC requires that Harken “has filed all the reports required to be filed thereunder during the 12 months preceding such sale."

Given all this, questions ought to be leaping into any inquiring mind about Bush's earlier late and back-dated insider filings.

While the President is currently handing out copies of a signed Form 144 to the Press -- hopefully with a legitimate SEC dated imprint seal, reports reveal a number of past late filings prior to the large June 22 sale.

Most importantly, an April 7, 1987 SEC filing listing his purchase of 80,000 shares on March 10, 1987, and, strangely, an April 22, 1987 filing noted that the 80,000 share purchase had been back-dated to December 10, 1986. Bush’s attorney said it was the same 80,000 shares, but he was unable to explain why Bush had reported the trade two times, or whether the future president’s signature was on both filings.

Virtually all recent stories about Harken totally ignore earlier reports in the Houston Post around the time of the 1991-92 SEC investigation, that "Bush missed the filing deadline for reporting other insider trades involving Harken Energy, according to SEC reports." Further, the Post said that "Documents obtained by the Post show 'additional instances in which Bush....ran afoul of the SEC rule requiring notification.' "

George W. Bush has been lecturing corporations about “shading the truth,” and “breaching the public’s trust by abusing power,” and most importantly, that corporations have been destroyed.

Meanwhile he calls for “use of the full weight of the law to expose and root out corruption.”

It is very difficult, however, to prove cases when, as he asserts, “documents are altered or destroyed.” That's why he proposes to change the law to give the SEC greater powers of securing documents (which is rather odd since they already have such powers).

If "accountability" is to be the standard, it stands to reason that it is now up to Congress to subpoena the files of the SEC's Harken investigation.

Isn't this the President's own standard? Not to mention Congress's of late. Congressional committees positively jumped at the opportunity to question Martha Stewart about her phone calls to her boyfriend in relation to trades which look a great deal whiter than any of the Harken misfilings. Martha received a tip-off, allegedly. George W. was on the board of directors.

And yet so highly conflicted was the SEC investigation, even if Congress does get the papers, they may yield little additional information.

Personal Lawyers Lead SEC Investigation

Richard Breeden – Poppy’s SEC Commissioner

No Member of Congress or reporter is asking the president to explain a) the machinations surrounding evidence that Harvard University Endowment rescued the Presidential son’s personal finances as a political favor, by purchasing George W’s 212,140 share stake in Harken and b) indications of at least one Harvard quid pro quo, via sale of the Dallas Anatole Hotel nine years later when Bush first became Governor of Texas -- then in a position to exploit other people’s money to repay Harvard‘s bailout of his early personal finances.

And the working media following Bush around still allow him to say that “the SEC carried out a full investigation of his insider trading profits but found nothing,” deciding not to prosecute him.

Consequently, the President has consistently been given a pass on this issue since no one questions the blatant conflicts of interest involved: Poppy Bush’s SEC chairman was Richard Breeden, former Baker and Botts Houston attorney, but also Bush the Elder’s deputy counsel as vice president. Breeden was appointed SEC Chairman when Bush 41 became President.

James R. Doty led the SEC Harken investigation of George W., and conveniently neglected to interview any Harken directors. Doty was previously George Junior’s personal attorney when he swapped his Harken profits for a stake in the Texas Rangers Baseball franchise.

Would average citizens get that kind of a deal? Not surprisingly, the Bush Administration and George W. refused to release the complete investigation files.

And once again, an inadequately-prepared White House Press Corps continues to abet the Bush spin, failing to question why President George H.W. Bush, contrary to legal and personal ethics, allowed his son’s personal attorney to lead the Harken investigation against George Junior -- and more incredibly, why he permitted his former personal White House lawyer and newly-appointed SEC Chairman Richard Breeden to then supervise Doty in the investigation.

James R. Doty – Junior’s Lawyer & Investigator

Also curiously, no one has asked Mr. Bush to elaborate on what the Village Voice reported was a potential nexus regarding foreign policy and personal financial interests. For President Bush the Elder signed an agreement with Harken’s oil-drilling partner, the Bahrain government, which chose the country for a permanent allied military base in the Middle East, although it was some 200 miles away from the hostilities in Iraq and Kuwait.

Congress and reporters with access to the President have also failed to call for the President to explain whether Bahrain’s February, 1991 acquisition of additional national security via a new taxpayer-funded U.S. military base had anything to do with the January 30, 1991 joint drilling agreement between Bahrain and Harken -- on whose Board of Directors George W. sat, while also serving on the company’s audit committee and stock restructuring panel as its third largest non-institutional stockholder.

Moreover, no one has requested the President to explain these obvious conflicts of interest while carrying on personal financial business with Bahrain, since his biography disclosed that he was a presidential advisor to George H.W. Bush during the time that the Bahrain military base and Harken oil-drilling deals were being consummated. This, notwithstanding his likely knowledge of deteriorating conditions, Iraqi diplomatic alarms, and an impending military crisis in the Gulf -- which likely played a part in his gainful unloading of stock.

Dumping Harken All At Once

Newly uncovered evidence now reveals, via examination of the pattern of daily trades for Harken during 1990, that George W. Bush sold more than 2,000% times the average 1990 daily share volume on June 22, yet the share price never budged -- indicating that the insider stock sale was pre-arranged or pre-negotiated. [] ( Thanks to John Moody for this document )

It is easy to imagine what would happen if the President tried dumping 2,000% more than say, AT&T’s daily share volume in today’s stock market -- and the price never fluctuated -- and if he then waited 34 more weeks to report it to the SEC! Even the "kinder and gentler" stock enforcement chief Harvey Pitt might raise an eyebrow!

And the media around Bush will have to press him to discuss the "institutional investor" who purchased his shares so quickly with no effect upon the market, for the President likely has no desire to open up the multi-faceted Harvard Endowment's financial can-of worms. For Harvard is ever so entangled with Enron sleaze, off-shore entities, and "all the President's men" -- those silk-suited, Enron allumni-appointees in his Administration.

Meanwhile, as Congress is busy conducting hearings about collapsing corporations and daily stock fraud, it is allowing President Bush’s past insider trading and ethical violations to set the example, reinforcing current financial coruption in the stock market -- and the resulting public distrust as Americans watch their mutual fund values hit rock bottom.

Further, no Member of Congress has attempted to require the President to come to the Capitol and fully explain whether or not Harken was merely serving as a private money laundry, creating artificial earnings and bogus loans, repackaged and sold for personal gain to pension funds or institutional investors like Harvard. They admit that "the books are a mess."

Harken to Harvard

One of the questions to which the SEC was strangely unable to obtain an answer was who bought George W. Bush’s stock at the zenith of its value immediately preceding the Gulf War. One person did look into it.

According to “The Buying of the President 2000,” a book by the highly respected Charles Lewis, Director of the Center for Public Integrity, Harken officials were lining up a major new financial backer: Harvard Management -- the overseer of the school’s multi-billion dollar endowment.

“A month after Bush came on board, Harvard management agreed to invest at least $20 million in Harken. It would come to own some ten million shares of Harken stock, making it one of the company’s largest investors. The Bush name may have helped seal the deal,” said Lewis.

He added that “Harvard’s Harken investments in oil and gas would eventually generate nearly $200 million in losses for the endowment.” Knowledgeable observers have not been questioning whether Harken was nothing more than a money laundering operation -- given the substantial corporate loses suffered over time by a company into which Harvard Management kept pouring its endowment contributions and inheritence trust receipts.

“The University’s commitment to Harken was surprising in view of the bad shape the company was in. ‘I took some time and looked at it and went, God, I don’t want to be anywhere near this,’ a prospective investor in Harken from the late 1980’s told the Center. ‘This thing looks like a train wreck,’ " Lewis’ book revealed.

This flies in the face of Bush's assertions about his corporate acumen, when advising Americans that he possessed a Harvard MBA degree, and was an experienced and astute businessman -- while out on the 2000 campaign trail.

“By Harken executives’ own accounts, the company’s financial statements were ‘a mess’ and ‘a fast numbers game.’ ”

Lewis added, curiously, that “under questioning by SEC investigators, Ralph Smith, a Los Angeles broker with Sutro & Company, who handled the Bush sale, said that he solicited the shares at the behest of an institutional investor, which he didn’t name.”

But corporate-controlled media like the New York Times, seem to provide cover for the President, reporting today that "The broker, Ralph D. Smith of Sutro & Company in LA, said he was offering to take off Mr. Bush's hands the now unencumbered 212,000 shares of Harken Energy.

But Lewis revealed that “available evidence suggests the investor was Harvard. At the bottom of a spreadsheet Ralph Smith used to record calls to his client, George W. Bush, was the name of Michael Eisenson -- a partner in Harvard Management, but also a Harken Energy board director -- along with the telephone number of Harvard Management.”

Will the mainstream business advertising media interview Ralph Smith -- given Charles Lewis' evidence? Smith must have friends in very high places. And what about grilling Harvard Endowment and Harvard Management officials there at that time?

Was Ralph D. Smith merely a Bush "middle-man" surrogate -- employed only to hide Bush family relationships with Harvard Management and their Harken/Enron/New York Federal Reserve links?

Quid pro Quo

Did presidential advisor George W. Bush’s access to insider foreign policy information and Harvard’s political willingness to absorb his Harken shares make for a perfect combination -- given the swirling Bahrain military base and joint oil-drilling maneuverings surrounding him? And interestingly, there is at least one example of payback with OPM -- other people's money.

The Buying of the President 2000, notes that “nine years (1995) after [Harvard’s] Harken investment helped save Bush from financial ruin, the Texas Teacher Retirement System (TTRS) sold the Anatole Hotel in Dallas to a partnership that included the Crow family, which owns a controlling interest in [both] Trammell Crow Company, a top real estate management company -- and Harvard Management.”

Lewis added, “Without even taking bids (which may also be contrary to Texas law), TTRS -- during the first year of Texas Governor George W. Bush’s first term -- reportedly sold the hotel for $27 million less than [the Teachers Fund] had spent to make improvements on the structure.”

So again, soft and compliant media oversight in both Texas and Washington, DC has failed for years to ascertain whether then Governor George W., now President Bush, was repaying his old personal financial debts -- with teacher pension contributions.

So one of the Harken-Harvard circles was completed. Now perhaps, the President may want to take back his "more scandals are hiding in corporate America" statement from last Tuesday.

For like the former Governor and past-President from Arkansas, William Jefferson Clinton, President Bush will find that the spotlights eventually begin to shine far brighter on the White House in Washignton, DC than on the Governor's mansion in Austin, Texas.

The Future of Insider Trading

It should also be noted that individuals with prior knowledge of the attacks on September 11 also transferred billions of dollars -- via identical insider trading profits -- away from unwary Americans in yet another variation of the “pump and dump” theme -- this time with a few thousand innocent souls turned instantly to dust. But many Americans haven't found out yet.

Multiple suspicious billion-dollar Treasury notes purchased right before the attacks, highly suspicious stock market put option bets that United and American Airlines securities would plummet after the hijackings, and the SEC's secret 38-company, 9/11 corporate "control list" of suspicious pre-attack insider trading -- mistakenly leaked by Canadian stock market officials, all contribute to the current distrust of Congress and its failure to share the above information with Americans who pay their salary, fund their pensions, and honor them with high office.

Retirees, citizen stockholders, and 9/11 victim families are helpless other than to trust that their President and his men, notwithstanding their leader's conflicted insider trading past, will: a) garner complete and accurate answers regarding who had prior knowledge of the September attacks, b) ascertain who was involved in the criminal pre-9/11 insider stock trading -- fostering the profits of death that Congress still refuses to discuss publicly, and severely discipline corporate types who stole billions from the stock market.

But will any culprits, if caught (which seems unlikely) then cry "sometimes accounting practices are not always black and white" in court?

And will the President’s past stock and ethical violations make it difficult for him to deal with the specifics of laws ordering heavy jail time for those corporate executives who steal teacher pension contributions, bankrupt corporations, hide the money "off-shore," and then destroy the lives of retirees -- when President Bush lies in a political bed with them?

And what if other unknown Harken shoes are out there waiting to drop on him if he comes down too hard on CEO's who may know about his past?

Former Bush 41 Assistant Secretary of HUD Catherine Austin Fitts may have said it best, as she wonders whether “the Administration's failure to investigate, indict, and prosecute malfeasance at Enron has anything to do with the fact that Harvard was heavily involved in Harken’s ‘fast numbers game’ as well as Enron's.”

Those that say “Harken stock went up eventually, even more than when Bush made his pre-Gulf War killing,” are only denying that laws are not made to be broken; and that access to material insider trading knowledge allowed Harken corporate director George W. Bush to profit handsomely at the time of sale, thus enabling him to move on with cash in his hand to another waiting financial opportunity : The Texas Rangers and their new stadium. But that’s another scandal altogether.

Perhaps most importantly of all, however, no one has sought to determine whether Harken machinations were only a precursor to the current spate of corporate bankruptcy’s and the ongoing collapse of the American securities markets, as the Dow falls further each day.

For example, on its face the Harken insider asset sale of Aloha Petroleum (meaning "hello goodbye" in Hawaiian), which occurred when George W. was on the board, was identical to the "off-balance-sheet" transactions that led to the rise and fall of Enron. Was Andrew Fastow's Enron wizardry nothing more than simply a sophisticated version of the Harken squeeze?

Harken had created both value and fake profits via the Aloha purchase in which the company was able to hide three-quarters of its losses in 1989, just prior to W's big score. But America's very best reporters at the White House seem almost asleep at the wheel -- either failing to press hard enough for answers from Bush, or subcumbing to Ari Fleischer's skills in the art of spin.

The critical White House Press Corps problem now, however, will be preventing the President and his alter ego, Karl Rove, from diverting their attention away from Harken's explosive, still unfolding story, by allowing George W. Bush to "wag the dog" in Iraq -- with American blood. It's not too different from bombing aspirin factories. Just more outrageous.

Will Bush's "Harken problem" force a new batch of 40,000 Gulf War II veterans to have to return home from another war in Iraq, only to die inconspicuously later on from Saddam Hussein's chemical and biological weapons-induced "Gulf War illness" -- just like the last time?

This go-around, however, the National Gauard and Reserve units will be much more deployed -- with countless heads of households eventually leaving orphans and disconsolate wives over the coming years. More unnecessary tragedy.

Yes, it's past time for the monopoly media to start holding Mr. Bush's feet to the Harken fire. Will they do it? Time will tell. Hopefully before the body bags are shipped back from Iraq. And all this, while President Bush castigates corporate America last Tuesday, saying “to defraud American investors is a serious offence.” Yeah right!

© Tom Flocco, 2002

- Tom Flocco is an independent investigative journalist, having previously written for,,,,,, and Contact:

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