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.
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.