Bush and Harken | The Nation


Bush and Harken

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Last week, while Bush spoke to Wall Street about corporate malfeasance, he was beset by questions about the timing of his sale of stock twelve years ago while he served as a director of Harken Energy. Bush sold the Harken stock about two months before the company reported huge losses and shortly before Iraq invaded Kuwait, leaving many asking whether the President had benefited from inside information. In addition, Bush was tardy in filing the appropriate sale-related forms with the SEC. Bush has said he filed the proper documents with the SEC on time--even though it arrived thirty-four weeks late--and suggested the agency must have lost the file. Last week, White House press secretary Ari Fleischer said there had been a "mix-up" by the Bush lawyers who handled the paperwork.

About the Author

Jason Leopold
Jason Leopold is an investigative reporter covering Guantanamo, counterterrorism, national security, human rights, open...

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Aamer, the last British resident still imprisoned at Guantánamo, has faced ongoing retaliation for speaking out against his detention. Now The Nation has evidence that he may be sent to Saudi Arabia.


Brookline, Mass.

His justifiable zeal to defend Palestinian rights leads Alexander
Cockburn to call me an apologist for "policies put into practice by
racists, ethnic cleansers and, in Sharon's case, an unquestioned war
criminal who should be in the dock for his conduct" ["Beat the Devil,"
June 3]. Since I share Cockburn's criticism of reflexive support for
every Israeli policy and I agree with much of what he says about false
claims of anti-Semitism, I wish he'd accompanied his identification of
my possible inconsistencies with accurate reporting of what I actually
wrote. Ascribing to me words I'd never say and views I reject is either
sloppy or dishonest.

My essay in Salon suggested the pro-Palestinian left should
address, where it exists, anti-Semitism, superficial argumentation and
difficulties of communication. I end with this: "The justice-based left
must seek analyses and solutions built on general principles, and reject
those that make new forms of oppression inevitable."

I also say this: I march to protest Israeli policy; Israel has committed
past massacres and West Bank atrocities; ending Palestinian oppression
is central; the occupation must end; expulsion of Palestinians would
amount to ethnic cleansing; the pro-Israel explanation of how
Palestinians became refugees in 1948 is unsupported; armed resistance
(though not against uninvolved civilians) is legitimate; a Palestinian
call for militant nonviolent resistance is welcome. And I say clearly
that opposing Israeli policy is not anti-Semitic.

Cockburn's absolutism is matched by his opposites. A letter to my local
newspaper, for which I write a column, claimed that my views would lead
to "the destruction of Israel and create a danger to Jews throughout the
world." That writer, too, sees only what he wants to see.

I continue to advocate justice-focused discussion. Please see
people.uis.edu/dfox1/politics/israel.html for more.



Petrolia, Calif.

There was nothing sloppy or dishonest about what I wrote. The third
paragraph of Fox's letter is fine, and if my column pushed him to make
it clear, it served its purpose. I wish he'd written it in his
Salon piece.




Jason Leopold's "White Should Go--Now" [May 27] is built upon lies and
unethical reporting. Not only did Leopold unethically list me as an
on-the-record source, he attributed comments to me that were never
discussed and are absolutely not true.

In reference to energy contracts signed with major California customers
in 1998, the article incorrectly states, "Jestings said he told [Thomas]
White that EES [Enron Energy Services] would actually lose money this
way, but White said Enron would make up the difference by selling
electricity on the spot market...which Enron had bet would skyrocket in
2000." The article continues the lies by stating that "Jestings said he
continued to complain to White that the profits declared by the retail
unit were not real." These statements were never made to Leopold and are
absolutely false. I had significant responsibility for these 1998
contracts and believed that they would be profitable, and therefore I
would never have made such statements. Furthermore, if Enron believed
the spot market would skyrocket in 2000, it would never have signed
long-term, fixed-rate contracts with these California customers in 1998!

Leopold then states that "Jestings said he resigned from EES in 2000
because he did not agree with the way EES reported profits." Again, this
is not true. I resigned in early 1999 for personal reasons and not
because of the way EES reported profits. In fact, EES was not making
profits when I left.

It is clear that Leopold is trying to build a picture of cover-up and
manipulation by White using statements falsely attributed to me. This is
irresponsible reporting at its worst. In my short tenure at EES, I
developed great respect for White. He is an honest and ethical man and
deserves fair reporting.



Los Angeles

During my hourlong conversations with Lee Jestings on not one but
three different occasions leading up to the publication of this story, I
reminded Jestings that I would be using his comments in print. Simply
put, Jestings was well aware that he was on the record. He cannot
retract his statements after the fact and then accuse me of being
unethical and a liar. I sought out Jestings, and when I found him he
chose to respond to my numerous questions about EES and Thomas White. I
did, however, mistakenly report that Jestings left EES in 2000.

Jestings says that EES did not show a profit when he left. However, EES
under White's leadership reported that the unit was profitable in 1999
after Jestings left the company. But Enron was forced in April to
restate those profits because they were illusory. Moreover, Jestings
said during the interview that he had taken issue with EES's use of
"mark to market" accounting, in which the unit was able to immediately
book gains based on contracts signed with large businesses. Jestings
never said during the interview that he believed these contracts would
eventually become profitable. But that's beside the point. Jestings said
EES's use of aggressive accounting tactics during White's tenure left
shareholders believing the company was performing better than it
actually was.

Jestings says White was honest and ethical while he was vice chairman at
EES. My report indicates otherwise.



West Orange, NJ

There was a critical error in "Relearning to Love the Bomb" by Raffi
Khatchadourian [April 1]. Khatchadourian says that so-called mini-nukes
of about five-kiloton yield have smaller explosive effects than the US
conventional "daisy cutter" bombs. This is clearly wrong. A five-kiloton
explosion is equal to 5,000 tons of TNT, while the daisy cutter weighs
only 7.5 tons. Even allowing for the development of modern explosives
more powerful than TNT, the difference between the weapons, and their
relative destructive potential, is of several orders of magnitude. The
following excerpt from the Federation of American Scientists' Military
Analysis Network (www.fas.org/man/dod-101/sys/dumb/blu-82.htm) directly addresses that point.

"The BLU-82B/C-130 weapon system, nicknamed Commando Vault in Vietnam
and Daisy Cutter in Afghanistan, is a high altitude delivery of
15,000-pound conventional bomb, delivered from an MC-130 since it is far
too heavy for the bomb racks on any bomber or attack aircraft.
Originally designed to create an instant clearing in the jungle, it has
been used in Afghanistan as an anti-personnel weapon and as an
intimidation weapon because of its very large lethal radius (variously
reported as 300-900 feet) combined with flash and sound visible at long
distances. It is the largest conventional bomb in existence but is less
than one thousandth the power of the Hiroshima nuclear bomb."

No useful analysis of nuclear policy can be made by equating large
conventional bombs with even the smallest nuclear bombs in any way. An
analysis of policy and decision-making regarding the
conventional/nuclear threshold demands a clear understanding of how very
powerful and devastating nuclear weapons are. The author seems to be
blurring the lines of allowable nuclear-weapons use far more than the
Administration he criticizes.



New York City

Let me begin by pointing out that I said "five kilotons or less." Some
proponents of new nukes have pushed for weapons of lower tonnage. Others
argue that five kilotons is roughly optimal.

C. Paul Robinson, director of Sandia National Laboratories, demonstrates
the debate: "I'm not talking about sub-kiloton weapons...
as some have advocated, but devices in the low-kiloton range, in order
to contemplate the destruction of hard or hidden targets, while being
mindful of the need to minimize collateral damage." In April, Benjamin
Friedman, an analyst at the Center for Defense Information, wrote: "What
is revolutionary about current proposals is the idea of reducing the
yield of tactical nuclear weapons to levels approaching those of
conventional explosives, to around one-tenth of a kiloton, which would
theoretically bridge the gap between a conventional and a nuclear

The United States has developed "sub-kiloton" atomic weapons before. One
such weapon, the Davy Crockett, contained warheads weighing only
fifty-one pounds, with explosive yields near 0.01 kilotons (roughly 10
tons of TNT). We made 2,100 of those between 1956 and 1963.

When my article was written, it was unclear what size the Bush
Administration's defense team envisioned for its nuclear bunker buster.
To a degree it still isn't, although some now suggest it could be above
five kilotons. However, this doesn't change what's being contemplated: a
weapon that appears to avoid the kind of casualties that put current
nukes outside the boundary of political acceptability.

I regret if I seemed to suggest that a five-kiloton nuclear warhead
could be smaller in explosive power than the world's largest
conventional weapon. That is inaccurate. I attempted to illustrate that
on the continuum of weaponry, a gap that appeared inconceivably wide not
so long ago is now being pushed closer. As the recent Nuclear Posture
Review demonstrates, narrowing that distance is as much a matter of
ideas as a matter of tons.

Raffi Khatchadourian


Brooklyn, NY

Katha Pollitt is right on about great white hope Dennis Kucinich
["Subject to Debate," May 27 and June 10]. The boys who disparage
abortion rights as a foolish, single-issue orthodoxy don't have a clue.
Here's a hint for you guys. "Abortion" is about equitable reproductive
health services for women, obviously including the ability to end a
pregnancy, but it's also about how we think of women, and how we treat
them. Are women valued as the sum of their reproductive parts, or as
human beings?

We know where the fundamentalists stand: Protestant, Catholic, Hindu,
Islamic and Jewish fundamentalisms, as well as secular dictatorships,
are united on the need to control women's bodies. And now, thanks to
Pollitt, we know where Kucinich stands. He moves or he loses.


New York City

As co-directors of an organization of the economic left, we second
Katha Pollitt's admonition that Dennis Kucinich cannot claim the mantle
of an economic progressive while being virulently anti-choice.
Reproductive freedom is not just a matter of personal morality, it is a
fundamental element of economic justice. No woman can determine her own
economic destiny without the freedom to choose whether to bear a child.
Progressives looking for champions cannot be so desperate as to overlook
such a fundamental right. There are numerous other members of
Congress--of course, we'd like a lot more--who understand that
reproductive rights are part of the fight for economic justice.

Citizen Action of New York


Media, Pa.

My weekly ritual of reading the Nation cover to cover on Monday
was stymied last week when my postman left my mailbox door open on a
soaker of a day. I got home eager for the week's insights only to find a
soggy Nation limp in the box. Eek! I ran upstairs and spastically looked
for options. My girlfriend with astonishment: "What the heck are you
doing?" when she saw me using the hair dryer to dry my coveted pages one
by one. Did you ever know how important your work is!


While SEC reporting requirements may seem like a minor issue, it's crucial information for the average investor because it allows them to determine whether insiders have received undisclosed information about the company's financial condition. The Securities and Exchange Act of 1934 requires company insiders to disclose publicly, in a report called a Form 4, all stock purchases and sales by the tenth day of the month following the transaction.

This week, as President Bush's own business acumen is being called into question, additional SEC documents show that Bush violated federal securities laws on three other occasions during his tenure at Harken by missing the deadline for filing documents about his stock transactions with the SEC.

Bush purchased stock in Harken three times between 1986 and 1989, and was several months late in reporting those transactions to the SEC, according to documents from the agency. One transaction, in which Bush purchased 25,000 shares of Harken stock on June 16, 1989, took place three days before Harken started selling its shares on the New York Stock Exchange, where the stock traded as high as $50. The stock had previously been sold in the over-the-counter market. Bush did not report the transaction to the SEC until September 7, 1989, more than four weeks after the deadline, according to SEC documents, and he reaped a windfall in profits by purchasing the additional shares before they were sold on the NYSE.

On November 1, 1986, Bush acquired 212,152 shares of Harken as a result of the merger of his failing oil company--Spectrum 7--with Harken, but did not report the transaction with the SEC until April 7, 1987, more than twelve weeks after the deadline. On December 10, 1986, Bush purchased another 80,000 shares in Harken and again missed the deadline for reporting the transaction by eight weeks, according to SEC documents. Dan Bartlett, the White House communications director, was unable to answer why President Bush missed the deadline in reporting his stock transactions with the SEC on three other occasions, but said that the SEC obviously did not see the violation as an important matter either. "The SEC didn't do anything about it," Bartlett said. "It does not appear to be an important issue."

John Heine, a spokesman for the SEC, said the agency has never prosecuted anyone for missing the deadline to file insider-transaction forms with the agency. In fact, Heine said, insiders routinely miss the deadline. "It's something we're starting to crack down on," Heine said. Bush was investigated by the SEC for insider trading, but the probe ended in 1993 without any charges being filed against the President. Democrats, including former Texas Governor Ann Richards, have charged that the investigation was a whitewash because of Bush's political relationships.

Bruce Hiler, the associate director of the SEC's enforcement division, who wrote a letter to Bush's attorney saying the investigation was being terminated, now represents former Enron president Jeff Skilling in matters before the government. Richard Breeden, the SEC chairman at the time, was deputy counsel to Bush's father when he was Vice President and was appointed SEC chairman when H.W. Bush became President. James Doty, the SEC's general counsel at the time, helped W. Bush negotiate the contract to buy the Texas Rangers. Bush used the proceeds of his sale of Harken stock in 1990 to pay off a loan he took out for a minority stake in the baseball team. Doty has said that he recused himself from the SEC's two-year probe into Bush's sale of Harken stock.

For President Bush, this is the fourth time in a decade he has been forced to answer questions about his business experience. And he still refuses to be forthcoming. Members of Congress are calling for Harvey Pitt, chairman of the SEC, to release all files related to Bush's Harken Energy days, but Pitt said on Meet the Press that he considers Bush's Harken transactions a dead issue and therefore he will not publicly release the files.

This kind of secrecy by the Bush Administration should come as no surprise to the American public. Vice President Dick Cheney has refused to reveal the names of people his energy task force met with prior to drafting a national energy policy. Cheney has come under fire for praising Arthur Andersen, the auditing firm convicted of obstruction of justice for shredding Enron documents, in a promotional video years ago; Cheney's former company, Halliburton, where the Vice President was chairman, is under investigation by the SEC for accounting improprieties during Cheney's tenure. And there's still the thorny issue of Bush's archives from his days as governor of Texas, which are currently tucked away in his father's presidential library and difficult to access.

The Texas Legislature authorized its former governors to place their official records into a repository other than the state archives. The Texas State Library and Archives, however, houses the official papers of every Texas governor before Bush.

Bush secured a one-page agreement last December 19 to place records of his term in his father's presidential library. Soon after, Bush placed more than 1,800 boxes of documents into the George Bush Library at Texas A&M University. Within weeks of the records arriving at the Bush Library, the New York Times, the Houston Chronicle, the Dallas Morning News, the Associated Press and Public Citizen had all submitted open-records requests for information from the Bush papers. Most of the requests involved correspondence between Bush and Harken and Enron officials, and records concerning energy deregulation. The records have yet to be released.

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