martha rosler on Tue, 9 Jul 2002 14:22:57 +0200 (CEST)

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<nettime> martha vs george

Cooking With Martha: What's Good for The Goose...

July 3: Yesterday a reporter in the press pool traveling with President
Bush to Milwaukee shot him a question about his days at a publicly traded
Texas oil company, Harken Energy. Clearly blindsided, Bush responded
curtly, "Everything I did was fully vetted. Next question."
   Bush was in Milwaukee to make his position on marriage perfectly clear
-he's for it. Foursquare, unequivocally for it.
 With that hot-button issue settled, Bush was ready to bask in the glow of
public approval when that rude reporter rattled the 12-year-old Harken
Energy stock deal in front of Marriage Counselor in Chief. He asked Bush
how his
 behavior back then squared with his new-found get-tough-on-corporate-crime
      Bush was not the only person startled by the question. The Harken
Energy insider trading matter had been carefully buried during the Bush Sr.
administration and received very little press coverage.
     So, for those of you who said "Harken who?" yesterday, here's a little
Harken cheat-sheet for your next game of Not-So-Trival Pursuits:

                        In 1986, Harken Energy, run by a group of
well-heeled Reagan/Bush supporters, absorbed George W. Bush's failing
Spectrum 7 oil company. Bush gets $600,000 in Harken stock.
                        Bush was paid $80,000 a year as a "consultant,"
until 1989 when he got a raise to $120,000.
                        Bush was also allowed to borrow from Harken's
dwindling treasury - loans that, according to SEC filings, were later
                        Bush was also granted liberal executive stock
option rights allowing him to purchase additional Harken stock at 40
percent below market value.
                        In 1990, when Harken ran into financial trouble,
Bush held a seat on the company's restructuring committee. The committee
hired consultants from Smith Barney to look over Harken's books and prepare
a report for the  board.
                        Harken's outside accounting firm was - who else -
Arthur Andersen.
                        Smith Barney uncovered several "irregularities" in
Harken's accounting. In one case Harken had anticipated  Enron by a decade.
Faced with the unsettling prospect of reporting a $10 million loss for
1989,the companymmasked the loss by manufacturing a profit - selling one of
its subsidiaries to a group of Harken insiders who  paid with money
borrowed from the company itself. (Sorry, Messrs Skilling and Fastow, but
it seems George did it first.)
                        The Securities and Exchange Commission later ruled
the transaction phony and forced Harken to restate its 1989 earnings.
Harken was now also reportedly $150 million in debt.
                        After Smith Barney submitted its critical report
to Harken's board but before the general public learned of  Harken's dire
condition, Bush unloaded the bulk of his Harken stock in June 1990. He sold
212,140 shares -- pocketing $848,560.(Martha Stewart, rejoice, George did
it too - and got away with it.)
                        The money, friends of Bush said later, was used to
pay off his Texas home which under Texas law became automatically protected
from creditor claims. (Just like Enron's Ken Lay, Jeffrey Skilling and Andy
                        Even though the sale was an unambiguous insider
stock deal, neither Bush nor Harken reported the trade to the SEC as
required by law. (Shortly thereafter Harken stock fell 25%. Had Bush hung
onto his stock just 60
days longer he would have received over $200,000 less for it.)
                        The SEC investigated G. W. Bush for insider
trading during his father's term as President and decided to take  no
action. Career SEC officials, clearly miffed by their inability to charge
the son of a sitting President, made  their feelings clear in a 1993 letter
to Bush's attorney. In the letter, the SEC emphasized that the decision not
to charge Bush "must in no way be construed as indicating that (Bush) has
been exonerated."
                   We only mention all this because at American Family
Voices we too are foursquare in favor of marriage. But, we oppose corporate
executives and company insiders who pillage not only shareholder equity,
but public trust as well.
    If I were Martha Stewart's attorney I would cite the Bush/Harken case
as an example of selective prosecution on the  part of the SEC and the
Department of Justice. After all, Martha only pocketed $250,000. Bush got
away with over three times that much - proof we suppose that there's even a
glass ceiling for insider traders.
    Now we wait to see if there is also a double standard of justice.

  (You can read more about the Harken above transactions - and others - in
today's Washington Post at:
    And )
    Got Thoughts?

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