Insider Deals Catch Up with Bush

This past Fourth of July, I was glad to see that George and Martha were in the media spotlight together. No, not the Washingtons, the first First Couple, but George W. Bush and Martha Stewart, a symbolic First Couple of insider capitalism. Thanks to WorldCom (which overstated pretax profits by a whopping $3.8 billion last year), Tyco International (which was run by executives who allegedly misused company money and covered up improper payments to themselves), Xerox (which over-duplicated its earnings), Martha Stewart (the domesticity-domme who stands accused of insider trading), and other alleged corporate malfeasants, Bush’s own less-than-stellar corporate past has been revived.

Al Gore may be thinking, "hey, it’s a little late for this." But Bush’s record as a private businessman -- a subject few journalists bothered to explore during the 2000 campaign -- is now deemed relevant, as Corporate America (Bush’s home district) turns ugly. One of Bush’s fishiest moves as a businessman who failed upward in the oil industry occurred in 1990, when Bush was on the board of directors and the audit committee of Dallas-based Harken Energy. Harken had bailed out Bush four years earlier by buying his own down-and-almost-out oil venture. In that deal Bush received a hefty dose of Harken shares. In June 1990, Bush dumped over 212,000 shares and bagged $848,000. He did so at a time when Harken was slipping but had hidden losses by selling a subsidiary, more or less, to itself in a deal the Securities and Exchange Commission later ruled a phony transaction. Moreover, Bush failed to disclose his stock sale right away, as the SEC required, and, instead, notified the SEC eight months after the federal deadline.

Bush skated. An SEC investigation concluded without penalties or charges, but the SEC did unearth other instances of late filings by Bush. Those skeptical about these things might want to note that the SEC general counsel at the time, James Doty, had earlier represented Bush during his purchase of the Texas Rangers baseball team—a deal that Bush partly financed with the proceeds of his Harken stock dump. And during that SEC inquiry Bush was represented by Robert Jordan, who had been a partner of Doty at the Baker Botts law firm. Jordan is now Bush’s ambassador to Saudi Arabia. Whether Bush broke any laws, the Harken deal stunk. (And there’s more to it than the cursory description I’ve provided.)

If Bush had not engaged in insider trading, he certainly benefited as an insider. At the least, his financial ass was saved by Harken because of his DNA and his father’s job (vice-president). Yet the Harken mess has never much haunted Bush in public. Until now. On July 2, New York Times columnist Paul Krugman recalled Bush’s Harken ride and observed that Bush’s Harken trade had netted him about four times the cash Martha Stewart saved via her suspicious transaction. Krugman went on to opine that Bush’s "administration is uniquely well qualified to chase after corporate evildoers" because Bush has "firsthand experience of the subject."

Molly Ivins and others have been writing about Bush’s Harken dealings for years. (I’ve been on the case for months.) But when a Times columnist throws such a punch, things happen. In response to Krugman’s wallop, reporters asked Bush about Harken when he was traveling in Milwaukee. "It’s been fully vetted," the President snapped. "Any other questions?" (It’s amazing how quickly this down-home boy from Texas can start talking like a defense lawyer.)

Next, Bush’s chief mouthpiece Ari Fleischer got into the act, claiming that the delay in Bush’s filing with the SEC was due to a "mix-up" by Harken lawyers. The problem is, when Bush was running for governor in 1994, he explained the late filing by blaming the SEC for having lost the forms (the corporate executive’s version of "the dog ate my homework"). So which was it? Lost forms or lousy lawyers? Or, to be less delicate, when was Bush not telling the truth?