Sweetheart Insider Loans for Bush

Once upon a business digest...

President Bush has called for an end to some of the very insider transactions that he used as a director of Harken Energy in the late 1980s. Mr. Bush received two low-interest loans and then benefited from the company's relaxation of the terms of one loan. On Tuesday, he challenged directors to "put an end to all company loans to corporate officers."

Dan Bartlett, the White House communications director, discounted suggestions that Mr. Bush was being hypocritical in calling for an end to loans of a kind he once received. Mr. Bartlett said that while such loans had been properly used in the past, they had recently been abused.

Yea, right. More details on the loans.

Bush a Phony Businessman:

In 1986, Bush's company, Spectrum 7, was on the brink of insolvency. Harken bought it, paying Bush and his partners roughly $2 million in Harken stock. Bush's name and connections were the main reasons Harken was willing to offer so much to purchase the otherwise ruined Spectrum 7, pay impressive director's and consultant's fees, and generous loans to someone who had yet to launch a successful business venture.

More serious questions surrounded Bush's 1990 sale of his Harken stock. Basically, Bush used the loans to buy Harken stock. Bush later sold the stock on inside information shortly before the company announced major losses. In 1991, the Security and Exchange Commission investigated Bush for fraud, including failure to report the stock sale, but... when you're the President's son, justice doesn't seem to apply the same as it would otherwise.

Harken pulls an Enron: Facing large end-of-year losses, Harken sold a chain of gas stations for $11 million to a group of investors, including Harken's chair and a director. Harken received $1 million, and loaned the rest to the investors. In an Enronian bit of accounting, Harken posted a $7.9 million current profit. Harken's executives obtained approval for the transaction from Harken's directors, among them Bush.

I've directly quoted extensively from The Truth About George . Com [2].

Sources:

1. New York Times, Business Digest, July 11, 2002.

2. TheTruthAbout George.com