Files Cast Doubts on Bush Son’s Oil Stock Sale
Securities and Exchange Commission documents cast some doubt over George W. Bush’s explanation about his sale of stock in an oil company several weeks before it reported a $23-million loss.
Bush denies wrongdoing, and the SEC declined to act against him last year after an insider-trading investigation. Nevertheless, the case has emerged as an issue in the Texas governor’s campaign.
Bush, the eldest son of the former President, contends he “sold into good news” on June 22, 1990, when he unloaded $840,000 in stock--nearly two-thirds of his holdings--in Harken Energy Corp. Bush served as director and as a paid consultant to the Dallas-based oil company but left the company’s board in 1993.
The SEC files offer a decidedly mixed picture about Harken’s financial prospects at the time of the stock sale. Harken could deservedly boast about a major oil-drilling agreement with the government of Bahrain in the Persian Gulf.
Harken analyst Charlie Andrews of 13D Research Inc. of Brewster, N.Y., urged investors in March, 1990, to buy Harken’s stock because “the potential inherent in the Bahrain oil exploration deal is so great.”
But Harken’s bankers had clamped down on the company after it violated terms of a $115-million loan package, according to SEC documents obtained through the Freedom of Information Act.
The renegotiated loan agreement, reached May 21, 1990, featured strict terms, including a high interest rate, less credit for acquisitions, a $750,000 fee and requirements by some major stockholders to guarantee $22.5 million in debt.
The next day, Harken announced plans to raise $40 million, $15 million of which would repay bank debt. The balance would infuse cash into two of its companies and fund acquisitions.
Bush’s attorney, Robert Jordan, defended Bush’s “selling into good news” statement, saying the loan restructuring “was extremely good news to the company because it showed the supreme confidence of these two major shareholders in the future of the company.”
Jordan said two shareholders agreed to guarantee loans as part of the credit agreement.
The SEC investigated Bush for possible insider trading, the allegation of selling the stock with an insider’s knowledge of non-public, market-moving news, such as a poor earnings report. The agency, which polices the securities markets, finished its investigation of the Bush trades on Oct. 18, 1993, and said it wouldn’t bring enforcement action against him.
Jordan correctly noted that details of the Harken loan restructuring had been publicly disclosed at the time.
“My sale of Harken stock was entirely legal and proper,” Bush said this month.
“I sold into good news, not bad news,” he told the Austin American-Statesman newspaper in 1993.
Bush, who was traveling Wednesday and Thursday, wasn’t available to discuss the loan restructuring, his campaign office said.
