And so it came to pass…
• While his father was Vice-President to Ronald Reagan, George W. Bush owned an unsuccessful oil and gas exploration company called, apparently with a straight face, Bush Exploration. Although the company is not very successful in its search for oil, government tax breaks for the oil industry make it attractive to investors.
• In 1982, Bush sells 10% of his company to James Baker, later Secretary of State to Bush-the-elected, for $1 million. A contemporary report values the company’s actual worth at under $400,000.
• In 1984, Bush Exploration merged with Spectrum 7 Energy Corp., a modestly successful Midland, Texas oil company and Bush becomes President of the combined business.
• In 1986, Bush and partners sell the now failing Spectrum 7 to Harken Energy Corp for $2 million, despite the fact that Spectrum 7 had posted losses of $400,000 six months before the purchase and carried a debt of $3 million. (In The Buying of the President 2000, Harken?s founder says of the deal “His name was George Bush, that was worth the money they paid him.”) Bush nets more than 200,000 shares of Harken stock and is made a director and consultant to the company. Harken‘s CEO introduces George W. to fellow Texas oilman and entrepreneur David Halbert. Bush becomes an initial investor in Halbert’s fledgling home health-care firm, Allied Home Pharmacy.
• In 1989, Harken sells a subsidiary, Aloha Petroleum, to IMR for $12 million; $11 million of that is in the form of a promissory note by IMR. Harken records the transaction as a $12 million cash sale and declares a profit in its annual earnings.
• A few months later, in early 1990, IMR sells Aloha to Advance Petroleum Marketing for no profit. APM, headed by David Halbert, promises to pay the remaining $11 million back to Harken over three years.
• In June of 1990, Bush sells his Harken stock at $4 a share, mainly to pay off a $600,000 loan that he had acquired to buy a 2% interest in The Texas Rangers baseball team. The loan came from a Midland bank where Bush was once a director. He discloses the sale to the SEC 34 weeks late.
• In August of 1990, Iraq invades Kuwait, causing huge gasoline price increases that drive several small distributors out of business. Harken renegotiates its contract with APM, forgiving $6 million in loans and interest it had made to Aloha and allowing APM to purchase Harken‘s remaining $3 million shares of Aloha stock for $1. In return, APM agrees to pay off the $10 million loan in one year instead of three and to pick up the cost of fixing Aloha‘s leaking underground storage tanks. This write-off helps reduce Harken‘s bottom line.
• Harken files a second-quarter earning statement which reveals that, even before the sudden global decrease in oil distribution, the company had been hemorrhaging money for some time. Harken‘s outside accounting firm investigates the loss and, deciding that no company officer willfully filed fraudulent reports, advises Harken that they will not refer the matter to the SEC’s enforcement division. That outside accounting firm is Arthur Anderson LLP.
• Harken stock plunges to $2.37 a share amid reports of over $23 million in previously unreported losses. The SEC begins an investigation and discovers that IMR was actually an off-the-book partnership of Harken insiders and the purchase was made through a seller-financed loan. In short, Harken sold a portion of its company to itself and claimed an overall cash profit just in time for its 1989 end-of-year report. The SEC directs Harken to revise its 1989 balance sheet and add an additional $9 million to its net loss.
• The SEC investigates George W. Bush to determine if, as a member of Harken‘s Board of Directors, he could have been aware of these off-the-book partnerships and knew of the impending write-offs and loss statements before he sold his stock. In October of 1993, Bush is cleared of any wrongdoing.
• In 1998, while preparing to run for Governor, George W. is forced to sell his interest in The Texas Rangers. During that time, between sales-tax revenue, state tax exemptions and other financial incentives, Texas taxpayers had relinquished more than $200 million in public subsidies to the privately-owned Rangers. Bush’s profit on a $600,000 investment is $15 million.
• Similarly, through a blind trust, Bush must sell his interest in David Halbert’s home pharmacy company, now called AdvancedPCS. Thanks to government subsidization of private home healthcare companies, AdvancedPCS is on its way to becoming a multi-billion dollar business. Although Bush’s initial investment is not known, he declares a capital gain of up to $1 million on the sale of the stock. David Halbert is a leading contributor to Bush’s gubernatorial campaign.
• In February of 1999, after Congressional Republicans spend tens of millions of tax payer dollars investigating a decade-old Arkansas land deal in which the Clinton’s lost money, President Bill Clinton is cleared of all charges in his Senate impeachment hearings and goes on to complete his successful presidency overseeing the most economically prosperous period this country has seen in over a century.
• In 2000, George W. Bush becomes the Republican candidate for President on a platform of cutting taxes and advocating free market capitalism absent government interference. Bush loses the election and is sworn in as President in January of 2001.
• In June of 2002, portions of the 1992 SEC investigation of Harken are leaked to the press. Previously, Bush had blamed the eight-month delay between his actual sale of Harken stock and the disclosure of the transaction on SEC regulators, claiming that they had lost the disclosure statement. Faced with leaked information disproving that claim, the White House recants and shifts blame for the delay to Harken company lawyers. Bush, who holds a master’s degree from the Harvard Business School, admits “I still haven’t figured it out completely.”
• Congressional Democrats call for the release of the full 1992 SEC investigation of Bush and Harken. Bush refuses to release the full report, declaring “You’ve seen the relevant documents.”
• In July of 2002, after a series of commercial scandals reveal a corporate culture that routinely disguises losses as profits and enables top-level executives to cash out on high-flying investments before their value plummets, leaving employees and common stock-holders with virtually worthless stocks, George W. Bush — often referred to as the first “CEO President” of the return-for-your-investment White House — appears before a select crowd in a Wall Street hotel ballroom and vows that his administration would “end the days of cooking the books, shading the truth and breaking our laws,” and asks for “a new ethic of personal responsibility in the business community.”
Irony is now officially dead.
(Details for this timeline were gathered from many media sources, including current and contemporary reports from The New York Times and The Washington Post. However, most of this data was gleaned from The Public i, the website of The Center for Public Integrity, particularly the article Bush’s Insider Connections Preceded Huge Profit On Stock Deal by Knut Royce. Seriously, they did the real work, I just stitched it together. I blame any factual errors on the company lawyers.)
All Contents (except the stuff I stole) Copyright © 2002 S.M. McCord.
Redistribution in full allowed, provided you cite http://www.semitrue.com.