SCRUB ALERT: Originally published here:
A project in Bahrain that Bush opposed as oil company director helped company's stock price
PETE YOST; Associated Press Writer
WASHINGTON (AP) _ Five days after former President Bush was inaugurated in 1989, an official from Bahrain set in motion a chain of events that allowed the Texas oil company where the president's son was a director to beat out Amoco for drilling rights with huge profit potential.
George W. Bush was on the board at Harken Energy Corp. when the company won the right to drill for oil off the coast of Bahrain, a tiny Persian Gulf island.
There is no evidence the country was trying to curry favor with his father's administration when it turned away from a major U.S. oil company in favor of Harken. Board member Bush opposed the deal.
In the end, the project was a bust. But it helped keep Harken's stock price in reasonably good shape for a few years _ and in so doing, helped Bush when he came under investigation for insider trading. The Securities and Exchange Commission took no action against him.
At the time of the Bahrain project, Bush sold most of his shares as Harken tried to weather financial problems. Bush's sale drew the SEC's attention because the trade was reported eight months late to regulators.
Bush's years as a Texas businessman have come under renewed scrutiny recently as he tries to restore confidence in financial markets hurt by business scandals.
Despite Harken's continuing financial losses in 1990, minutes of a Harken board meeting attended by Bush show that the company's investment banker, Chad Weiss of the firm Smith Barney, said the Middle East drilling venture would keep the company's stock price up.
"The potential of the Bahrain prospect will be the primary driving force initially for the company's stock," according to the minutes of a May 1990 meeting. "With the prospect of Bahrain in the picture," the investment banker "did not see much downside for the price of the stock."
Worried board members had asked the Smith Barney representative whether the stock price would be hurt in carrying out the drastic step of splitting Harken into three separate companies.
Harken's stock price stayed strong, though volatile, despite an unprecedented $23 million loss two months after Bush sold 212,140 shares for $848,560.
The SEC cited the stock's rebound after a one-day drop in deciding there was no case against Bush for possibly profiting from inside information. In the absence of a drop in the stock price, the SEC concluded other investors did not view the $23 million loss as important, making any advance knowledge of the loss by Bush irrelevant. The SEC also concluded Bush had little advance knowledge.
Ten days after reporting the huge loss, Harken stock was selling for $4 a share, the same price Bush had sold it for two months earlier.
In recent weeks, Bush has responded to criticism of his sale by noting that the stock price doubled a year later. A key factor in that showing was that Harken and a company owned by the billionaire Bass brothers of Texas were working on the Bahrain project amid high expectations.
The Basses' was among 25 oil companies that Harken said lined up at its door after it won the Bahrain concession. Harken announced the good news that it was teaming up with Bass the month before Harken reported its $23 million loss.
The Bahrain project literally landed in Harken's lap.
On Jan. 25, 1989, Bahraini minister of development and industry Yousef Shirawi contacted a respected retired American oil executive, Mike Ameen, and asked him if there was a small American company interested in drilling off the coast of Bahrain. Amoco wanted to drill in the same area.
Later, Ameen, who did not know about Harken, mentioned the Bahrain project to investment banker David Edwards of Little Rock, Ark. Edwards had worked with Harken for several years and suggested the Texas firm. Ameen helped negotiate a deal.
The U.S. ambassador to Bahrain at the time, Charles W. Hostler, said Friday that "an important factor in this relationship is Mike Ameen, who knew well the key figures and spoke their language after a lifetime of activity in that part of the world in the oil business."
Shirawi has said that he had not known Harken's name and that he did not find out until later that Bush was connected with the company.
According to people familiar with the matter, Bush opposed the Bahrain venture because of Harken's total lack of experience in Middle East drilling.
In a letter on Bush behalf written during the 2000 presidential campaign, his lawyer, Robert Jordan, wrote that "at no time" did Bush "discuss Harken's interests in Bahrain or any other Harken business with any member of the Bush administration. He did not favor Harken's decision to seek a drilling concession in Bahrain."
Jordan is now U.S. ambassador to Saudi Arabia.
After Bahrain awarded the concession, Amoco executives went to the U.S. Embassy in Manama to express their "puzzlement" over how they lost out to the much smaller Harken, according to a State Department cable from 1990 released under the Freedom of Information Act.
"Amoco officials were apparently unaware of the role" that Ameen "played in securing the contract for Harken, although they had heard that there had been an unknown middleman involved," said the cable.
Bush predicts Cheney will be cleared; dodges question on his own business deals 07-18-2002
RON FOURNIER; AP White House Correspondent
WASHINGTON (AP) _ President Bush said Wednesday he is confident an inquiry into Dick Cheney's former oil company will exonerate the vice president, drawing swift criticism from Democrats who said Securities and Exchange Commission investigators may be influenced by the president's prediction.
As a string of corporate scandals loomed as a major political issue, Bush shrugged off calls to have the SEC release files from its decade-old insider-trading investigation of Harken Energy Corp. _ the president's former oil company.
"There is no case," said Bush, a former Harken board member. "It was fully investigated by career investigators."
Shifting the subject, the president said: "The key thing for the American people is to realize that the fundamentals for economic vitality and growth are there."
The White House has been dogged in recent days by questions about an old SEC investigation into Bush's $848,000 sale of Harken stock, a case that was dropped in 1991. The SEC is currently investigating the Dallas-based Halliburton Co.'s accounting practices when Cheney was its chief executive.
Asked if he was confident the SEC would find Cheney did nothing wrong, Bush replied, "Yes. I am" and called the vice president a "fine business leader."
Until the news conference, the White House had diligently refused to comment on the Halliburton inquiry to avoid being accused of trying to influence the independent agency. Cheney himself has not discussed the SEC inquiry.
"Bush has blown Cheney's cover," said Democratic National Committee spokeswoman Jennifer Palmieri.
"The whole White House strategy for protecting Cheney has been to refuse to answer any questions on Halliburton. For Bush to clear him from the podium blows that cover," she said. "And what kind of message does it send to the SEC when the president of the United States says, in effect, there is nothing to investigate?"
Bush did not respond when asked whether Cheney should go public about his business dealings.
He grudgingly addressed the Harken and Halliburton cases in a joint news conference Polish President Aleksander Kwasniewski, who was rewarded a rare state visit for his staunch support of U.S. foreign policy.
"America and Poland see the world in similar terms. We both understand the importance of defeating the forces of global terror," Bush said, flanked by his counterpart in the East Room ceremony.
Kwasniewski replied, "We want to reconfirm our readiness to continue this combat."
On other subjects, Bush:
_ Renewed his call for new leadership for the Palestinian people, but did not answer a question about whether a compromise could be reached to give Yasser Arafat a figurehead position in a new Palestinian government. Secretary of State Colin Powell has suggested he is open to the idea.
_ Sought to quell European concerns about potential U.S. military conflict with Iraq. "We don't necessarily place one aspect on the war against terror as more important than the other."
_ Said the long-term cost to run his proposed Homeland Security Department is "going to depend upon how effective we are at defeating the enemy." He acknowledged that some states will have trouble paying their share of new homeland security costs, but predicted that their situation will improve as the economy prospers.
The Harken and Halliburton investigations pose a political problem for Bush as he tries to shield himself and his party from fallout over a string of corporate scandals.
He has urged corporate America to adhere to the highest ethical standards, and has proposed stiff new penalties for wrongdoers.
Democrats hope to convince voters that Bush and Cheney were involved in the same types of business dealings they now denounce.
"They can't hide from their own business records," the Democratic Party spokeswoman said.
Bush said the SEC has released key documents under Freedom of Information laws. However, the SEC continues to withhold a wide range of internal investigative documents in the probe.
The SEC closed the Harken case in 1991 without taking any action against Bush. The SEC found that Bush had known of only $4 million of a $23 million loss the company announced two months after he sold his stock.
Congressional Democrats have said they may hold congressional hearings into accounting at Halliburton Co., when Cheney was chief executive of the oil equipment company.
A watchdog group, Judicial Watch, has filed a shareholders lawsuit alleging that Halliburton overstated revenue by $445 million from 1999 through 2001. The suit suggests that Halliburton's accounting practices resulted in an overvaluation of its shares.
The group condemned Bush's defense of Cheney, calling it "inappropriate and improper." "President Bush's comments are a signal to the court in our case and to the SEC to give the vice president a pass for any alleged wrongdoing concerning Halliburton," said Judicial Watch President Tom Fitton.
"I've got great confidence in the vice president," Bush said. "He's doing a heck of a good job. When I picked him, I knew he was a fine business leader."
On the SEC inquiry, he said, "That matter will run its course."