Bushwhacked_ Life in George W. Bush's America Large Print - Molly Ivins [6]
You don’t need an accountant to interpret the Harken documents. The company was in desperate trouble. At a May 1990 meeting attended by Bush, board members discussed a stock offering they hoped would bring in enough money to keep the company solvent. Bush was named to the board’s “Fairness Committee,” which was to measure the effects of bankruptcy on small stockholders. Ever the populist, GeeDubya said at this meeting “that inherent in these principles must be the interests and preservation of value for the small shareholder of the company.” A month later Bush left the small shareholders holding the bag; he dumped $848,560 of the stock without disclosing the sale to the SEC. The purpose of the SEC’s disclosure rule is precisely to inform all shareholders that something may be wrong—by letting them know when someone with inside information sells a large block of stock.
The Harken memos show just how much Bush knew about the company’s dicey finances. By late May 1990, internal company memos warned that there was no other source of immediate financing, that a cash crunch was only days away, and that loans were slipping “out of compliance.” Banks were demanding guarantees of sufficient equity to cover the notes. As chairman of the audit committee actually working with the accounting consultants called in by the board, Bush knew exactly how grim their conclusions were. He was warned, along with other directors, in a May 25 memo that it would be illegal to dump his stock. He sold in June to a private purchaser who has never been identified.
The company was kept afloat by investments from a small liberal-arts college in Cambridge, Massachusetts. This news was revealed only after a group of dogged and enterprising Harvard students at the nonprofit HarvardWatch dug into records there and turned their findings over to The Wall Street Journal in 2002.
Harvard’s Harken bailout helped salvage Bush’s last shaky oil company, at one time setting up a Harvard-Harken venture that moved $20 million in liabilities off Harken’s books. It also cost the university’s endowment more money than the young Bush ever earned in West Texas. Hooking up with Harken contributed to a record $200 million write-down for Harvard Management in 1991. Why did Harvard do it? Let us count the ways. Harvard Management exec Michael Eisenson sat on Harken’s board with Dubya Bush. George Herbert Walker Bush was vice president of the United States—and a Skull and Bones Yalie. His son held a Harvard Business School M.B.A.—and was a Skull and Bones Yalie. After Poppy became president and tiny Harken somehow secured a huge drilling contract in Bahrain, Harvard kept pouring millions into the little Texas oil company in ’89, ’90, and ’91.*
In July 2002 the White House offered three explanations for Bush’s failure to report his own Harken stock sale. The first was that the filing of the disclosure form was “the corporation’s responsibility.” A letter from Harken’s general counsel dated October 5, 1989, gently reminds Bush that he had failed to file the same Form 4 when he exercised his director’s option to buy 25,000 shares of Harken stock exactly one year before he unloaded it in June 1990. The “Dear George” letter from Harken’s general counsel, Larry Cummings, made it clear to Bush that company lawyers or accountants couldn’t file the forms because they required his signature.
Turns out Bush regularly failed to report insider dealings to the SEC. On two occasions before his June 1990 stock dump,
Bush had sold as a board member and failed to file the disclosure forms.
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