It may well be easier to preach corporate responsibility than to practice it. At least for George W. Bush. Earlier this month, Bush released a “plan to improve corporate responsibility.” When he unveiled his proposal, during a speech at the Washington Hilton Hotel, he did not refer to Enron. But, clearly, this was part of his ongoing Enron-inoculation campaign. (Remember when he griped that his mother-in-law had lost $8000 in Enron stock?) The ten planks of his plan are each related to the Enron scandal. For instance, Bush noted that every investor in a publicly owned company “should have quarterly access to the information needed to judge a firm’s financial performance, condition and risks” and that “corporate leaders should be required to tell the public promptly whenever they buy or sell company stock for personal gain.” When he proposed the latter point, his hotel audience applauded.

Too bad Bush only has his words, and not his own experience, to offer as inspiration while crusading for corporate responsibility. When he was in the private sector, he and his corporate colleagues violated several of the principles he now champions, including both mentioned above.

In June of 1990, when Bush was a director of Harken Energy, a Texas-based firm that had bailed out his own failing oil company, Bush sold 212,140 shares of Harken for $848,560. This sale came at a time when Harken insiders–perhaps including Bush–had cause to believe the company’s future was not so sunny. Weeks after Bush unloaded this stock, Harken announced it had lost $23 million in the second quarter. (See the previous “Capital Games” dispatch on Bush’s stock dump). Bush has said this transaction was not prompted by inside information he possessed. But he filed notice of this sell-off with the Securities and Exchange Commission 34 weeks late.

This act of corporate tardiness (tawdriness?) has been widely reported. The Wall Street Journal, for instance, revisited it recently. Less known is an SEC report from 1991 that stated Bush had four times been late in filing notice of stock trades with the SEC. That total included the 1990 sale of Harken stock, and it covered Bush’s acquisition of 212,152 shares of Harken in 1986 (17 weeks late), a 1986 exercise of Harken stock options worth $96,000 (15 weeks late), and a 1989 exercise of Harken stock options valued at $84,375 (15 weeks late). This SEC memo, prepared by the agency’s enforcement division, was obtained by the Center on Public Integrity in 2000, as part of a joint project with Talk magazine.

Were these late filings merely the result of sloppiness or something more suspicious? In his 1994 race for Texas governor, Bush’s late notice on the June 1990 stock dump became an issue. Bush said he had filed the required form and maintained the SEC lost it. An SEC spokesman denied that. And the credibility of Bush’s the-dog-ate-my-homework excuse from 1994 is undermined by the fact–not publicly known then–that he was a serial late-filer.

Missing SEC deadlines is not the only part of Bush’s private-sector experience out of sync with his proposal for enhancing corporate governance. As the Center for Public Integrity also noted during the 2000 campaign, in 1989, when Bush was a Harken director and a consultant to the company, the firm engaged in a shady, Enron-ish transaction, apparently to conceal its losses. As Knut Royce, a senior fellow at the Center described it,

“Harken masked its 1989 losses when in midyear it sold 80 percent of a subsidiary, Aloha Petroleum, to a partnership of Harken insiders called International Marketing & Resources for $12 million, $11 million of which was through a note held by Harken.”

In its 1989 annual report, Harken claimed an $8 million profit on the Aloha deal. This permitted the company to state losses of $3.3 million for the year. But in the fall of 1990, the SEC started giving Harken a hard time about the Aloha sale, questioning how the company could claim a capital gain on the transaction while it had financed the deal through a loan. The following February, Harken filed an amended annual report that wiped away the gain from the Aloha sale and declared 1989 losses of $12.5 million. But by then, Bush had already unloaded most of his Harken shares. And he used the money from that stock sale to pay off a bank loan he had taken in 1989 to buy an interest in the Texas Rangers baseball team–an interest he sold for nearly $16 million several years later.

According to the Center for Public Integrity, there is no evidence Bush was aware of Harken’s slippery accounting related to the Aloha transaction. But it’s safe to assume that Bush benefited from these Enron-like practices. Had Harken not reported the Aloha deal in a manner that shielded roughly three-quarters of its 1989 losses, Bush’s Harken stock would likely have been worth much less in June 1990 when he dumped most of it to raise much-needed funds to cover his Rangers investment. There is no public record of Bush having challenged or chastised Harken for its actions on this front. Not until the Enron scandal did the timely filing of corporate executives appear to be a concern for Bush.

The day Bush released his corporate accountability plan–which left out Treasury Secretary Paul O’Neill’s proposal to make it easier to sue errant CEOs–he declared, “The interests of the average investor are sometimes overlooked, especially the need for thorough and timely information about firm performance. And some corporations have used artful and intricate financial arrangements to hide the true risks of the investment.” Bush gave no indication he possesses firsthand experience in this regard. But the President knows well of what he speaks. How lucky for him that there was no President raising a fuss about corporate responsibility when he was in the private sector.