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July
3, 2002 12:25 p.m. |
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espite intense efforts, Democrats in recent weeks have had little success
in their effort to inflict political damage on George W. Bush by tying
him to corrupt corporate CEOs. Now they're trying another approach, accusing
Bush of being a corrupt corporate CEO.
On Tuesday, New York Times columnist Paul Krugman discussed Bush's 1989 sale of stock in Harken Energy, a company which had bought Bush's oil and gas company and placed Bush on the Harken board of directors. In 1989, Harken was struggling financially. "Only a few weeks before bad news that could not be concealed caused Harken's shares to tumble," Krugman wrote, "Mr. Bush sold off two-thirds of his stake, for $848,000. Just for the record, that's about four times bigger than the sale that has Martha Stewart in hot water. Oddly, though the law requires prompt disclosure of insider sales, he neglected to inform the Securities and Exchange Commission about this transaction until 34 weeks had passed. An internal SEC memorandum concluded that he had broken the law, but no charges were filed. This, everyone insists, had nothing to do with the fact that his father was president."
Thursday morning, the Washington Post followed up on Krugman's column with a story headlined "Memo Cited Bush's Late SEC Filings; White House Dismisses Suggestions of Wrongdoing in Bush's Time in Oil Business." Reporter Mike Allen wrote that "Bush's brushes with the SEC have new resonance now that he is preparing to respond to the wave of accounting scandals by proposing tough restrictions on corporate officials during an address on Wall Street next week." The SEC memo that had been cited by Krugman, Allen wrote, was not a new revelation but had in fact been part of a large amount of information published by the Center for Public Integrity, which posted the SEC memo on its web site in October, 2000 (much of the Center's research was done in collaboration with the now-defunct Talk magazine, which published a story on Bush's finances). The SEC memo, in Allen's words, "attracted little attention."
While it is perhaps news to Krugman and Allen, in fact the Harken story has attracted quite a lot of attention over the years. Political opponents of the first President Bush tried to use it to tarnish the White House. George W. Bush's political adversaries in Texas tried to make it an issue in his campaigns for governor. They tried again when he ran for president.
And now, they are trying yet again. "Democrats sense in the corporate scandals an issue that might finally dent Mr. Bush's approval ratings," the New York Times reported Wednesday. "They are making a case that Mr. Bush and Mr. Cheney, during their time in the corporate world, would not have been able to live up to the policies they are advocating now." Indeed, talking points released Tuesday by the Democratic National Committee said, "If it's corporate penalties the president prefers, perhaps he should take a look in the mirror."
But the problem for the president's opponents is that the charges, at least as far as Harken Energy is concerned, have simply never amounted to much. In 1999, I examined Bush's business career in some detail for an article in The American Spectator magazine. Bush's sale of Harken stock was part of that story, and I spoke to a former Harken director and a former Bush partner, as well as to William McLucas, who headed enforcement at the SEC at the time of the sale (McLucas is still in the news today, having been retained by WorldCom to investigate its accounting scandal). All the evidence available at the time — and all that is available now — suggested that Bush did not, as Krugman implies, engage in insider trading or other wrongdoing. This is what I wrote about the transaction in the June 1999 issue of The American Spectator:
[Bush's] largest single asset was the chunk of Harken stock he had received in the merger. Through the first half of 1990, the stock price was quite consistent, moving between $4 and $5 a share. In June 1990, Bush sold two-thirds of his stake — 212,000 shares — at $4 for a total price of $848,000. At the time of the sale, Harken was moving into a period of financial difficulties. In the months following Bush's sale, the company announced a quarterly loss and the stock price went into a long, slow decline; by the end of 1990, it was $1.25 a share. Since Bush was not only a member of the board of directors but was also on a committee assigned to study Harken's financial situation, his decision to sell a few weeks before the slide began led to accusations that he used insider knowledge to get out when the getting was good.
Bush denies any wrongdoing and has often said he was unaware of the difficulties within Harken. "He thought he was selling into good news," spokeswoman Karen Hughes told TAS, adding that if Bush had waited to sell the stock he could have earned considerably more than he got. That would, however, have required his waiting at least a year; it was not until June 1991 that Harken got back up to $4 a share. By September 1991 it briefly hit $8 a share.
In 1991 the Securities and Exchange Commission investigated the sale and took no action against Bush or anyone else. "I don't remember a lot about it, other than there wasn't a lot about it," says William McLucas, who was the SEC enforcement chief at the time. "The facts just didn't support any judgment that this was something that would result in a serious enforcement proceeding." Nevertheless, Democrats brought the issue up in 1992, as President [George H.W.] Bush was running for re-election; it became part of several news stories recounting alleged business improprieties by Bush family members. Texas governor Ann Richards revived the story during the 1994 gubernatorial campaign and also suggested, without evidence, that President Bush had rigged the SEC investigation, which commission officials denied.
As far as Bush's reporting the sale late to the SEC, it is not precisely clear what happened. Hughes told me in April 1999 that Bush believed he reported the sale earlier than SEC records indicated; she suggested the forms might have been lost, either inside Harken or the SEC. But whatever the reason, the fact that the report was filed late is not particularly damning in the absence of any underlying wrongdoing that a late filing might have been intended to conceal. And the SEC did not find anything that suggested such wrongdoing.
Since the president began his political career, there have been a number of meticulous examinations of the Harken sale, first in Texas newspapers, then in the Washington Post, the New York Times, and other national publications. None have come up with evidence that Bush did anything wrong in the Harken matter. Now, there will undoubtedly be more investigations of the same material. Democrats can hope, but it's unlikely they'll find what they're looking for.