To steal a line from that great
Imaginary-American Huck Finn:
George W. Bush giving a stern speech on business ethics is enough to make a cow laugh.
What's next, Bill Clinton on chastity?
Mike Tyson on sportsmanship?
Tim Hutchinson on family values?
If President Junior ever made
a honest dollar entirely on his own merit,
it'd be fascinating to know when it happened.
Maybe there was a childhood
lemonade stand in Kennebunkport; or possibly a
long-ago afternoon caddying for the King of Saudi Arabia. If the former, you can bet
the Florida citrus industry donated the lemons and servants squeezed them.
History records that several Saudi sheikhs joined an uncle, his grandmother and a
number of Bush family retainers in putting up the operating capital for Junior's first venture
into the oil business, according to Joe Conason's piece in the Feb. 2000 Harper's.
That was in 1979, back in Bush's drinking days,
and, coincidentally, around the same time
the Whitewater Development Corporation of legend and song went into business over
in Arkansas. Arbusto Energy, Conason wrote, produced "little oil and no profits but
expensive tax shelters." Then in 1982, Junior changed the company's name to
Bush Exploration Oil Co., possibly to emphasize that its CEO's Daddy had
become Vice President of the United States.
Even so, it was
hard times in the oil business and the new company was headed toward
bankruptcy when it was bought up by an outfit called Spectrum 7. That too was going down
the tubes when yet another financial angel called Harken Energy Corporation appeared in 1986.
That's seven years, four companies, three bailouts for those of you keeping score at home.
Remember when Arkansas was deemed "incestuous" because the Clintons borrowed from bankers they knew?
In exchange for his share, Bush got 200,000 shares of Harken stock, a seat on its Board of Directors,
and a $120,000 a year "consultancy." Thus fortified, he moved to Washington in 1987 to become
a "senior advisor" in his father's presidential campaign, quit drinking and got religion.
Alas, Harken too
soon faltered. With the help of clever accountants at Arthur Andersen,
the company dreamed up an ingenious plan to conceal its losses. As New York Times columnist
(and Princeton economist) Paul Krugman has explained, Harken used basically the same scam later
perfected by Enron. It created a partnership of insiders which then purchased a subsidiary called
Aloha Petroleum for far more than it was worth. Although Harken itself financed the sale--the better
to avoid outside scrutiny--it booked a phantom $7.9 million profit, thus hiding 3/4 of the corporation's
actual losses for 1989.
But for Krugman,
incidentally, it's doubtful the suddenly aroused Washington press
have found the story. Harken's scheme was simply a shell game for hiding debt. Think of a married couple
pretending to divorce, with the husband "lending" his wife the money to buy their home for twice its value,
then using the make-believe profits as collateral on a loan. The pigeons were stockmarket investors fooled
into into thinking Harken was in far better financial shape than it actually was.
As a member of
the board's audit committee, Bush had no plausible alibi except ignorance
these machinations became known. Fellow committeee member E.Stuart Watson, however, told the
Dallas Morning News in 1994 that the Harken board was kept well informed of management's plans.
"If Mr. Bush didn't know about the Aloha maneuver," Krugman writes "he was a very negligent director."
eventually forced Harken to issue a "restatement of income" just like WorldCom,
Xerox and the rest. Anyhow, while company lawyers were haggling with regulators, Junior made his move,
dumping his stock shortly before the new earnings report sent its value plunging. Bush failed to notify the SEC
as the law requires for eight months. First he claimed SEC bureaucrats had lost the documents; last week the
White House suggested it was Harken lawyers who dropped the ball.
And who supervised
the subsequent SEC probe of Junior's Harken trades? Why the sameTexas lawyer
who'd put together the deal that made him a minority owner of the Texas Rangers baseball team. Starting to
sense a pattern here? Bush appointed his own attorney, Robert W. Jordan, Ambassador to Saudi Arabia.
"I still haven't
figured it [the Harken transactions] out completely," Bush said Monday.
Neglected your homework again, Mr. President?
"There was an honest difference of opinion as
to how to account for a complicated transaction," he allowed.
"In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures."
The Washington Post reports that Junior "glared at reporters when he heard titters after that answer."
Bush's prized "moral clarity" is in short supply in corporate boardrooms, it seems, especially in Texas.