Editor’s note: Below is David Corn’s article, posted on March 4, 2002, that first broke news of the Bush-Enron oil deal. An update follows.
Did George W. Bush once have a financial relationship with Enron? In 1986, according to a publicly available record, the two drilled for oil together–at a time when Bush was a not-too-successful oil man in Texas and his oil venture was in dire need of help. Bush’s business association with Enron, it seems, has not previously been reported.
In 1986, Spectrum 7, a privately owned oil company chaired by Bush faced serious trouble. Two years earlier, Bush had merged his failing Bush Exploration Company (previously known as Arbusto–the Spanish word for shrub) with the profitable Spectrum 7, and he was named chief executive and director of the company. Bush was paid $75,000 a year and handed 1.1 million shares, according to “First Son,” Bill Minutaglio’s biography of Bush. Under this deal, Bush ended up owning about 15 percent of Spectrum 7. By the end of 1985, Spectrum’s fortunes had reversed. With oil prices falling, the company was losing money and on the verge of collapse. To save the firm, Bush began negotiations to sell Spectrum 7 to Harken Energy, a large Dallas-based energy firm owned mostly by billionaire George Soros, Saudi businessman Abdullah Taha Baksh and the Harvard Management Corporation.
The deal took months to work out. In September of 1986, Spectrum 7 and Harken announced they had reached an agreement. Spectrum 7 shareholders, under the plan, would receive Harken stock. Bush publicly said that Spectrum 7 would continue to operate in Midland, Texas, as a wholly-owned subsidiary of Harken and that he would become an active member of Harken’s board of directors. As Minutaglio noted, the deal would give Bush about $600,000 in Harken shares and $50,000 to $120,000 a year in consultant’s fees. It also would provide $2.25 million in Harken stock for a company with a net value close to $1.8 million.
As the details of the Spectrum-Harken acquisition–which Bush badly needed–were being finalized, Enron Oil and Gas Company, a subsidiary of Enron Corporation, announced on October 16, 1986, that it had completed a well producing both oil and natural gas in Martin County, Texas. An Enron Oil and Gas press release reported the well was producing 24,000 cubic feet of natural gas and 411 barrels of oil per day in the Belspec Fusselman Field, 15 miles northeast of Midland. Enron held 52 percent interest in the well. According to the company’s announcement, 10 percent belonged to Spectrum 7. At that point, Spectrum 7 was still Bush’s company. Harken’s completion of the Spectrum 7 acquisition was announced in early November.