Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years (54 page)

The Marcos clique and the Saudis were not the only international elites connected with the Harken-Quasha group while George W. Bush was involved. The South African white apartheid regime was also a bulwark in America’s global anti-Soviet strategy, and like the Marcos government, looked to the Reagan-Bush and then Poppy Bush administrations for protection from the growing demands of home-grown insurgents—in this case, black anti-apartheid activists. Through its gold trading activities on behalf of South Africa, the Union Bank of Switzerland was influential in preserving the African apartheid system for many years.

In 1983, as Alan Quasha was taking over Harken, UBS chairman Niko-laus Senn publicly expressed doubts about democracy in South Africa, reflecting a general sentiment among Swiss bankers that the black majority was not capable of self-governance.
⁵³
At the time, UBS was providing banking services for funds from South Africa, the Philippines, and Saudi Arabia. When a Swiss referendum proposed in 1984 to lift the veil on bank secrecy, threatening to reveal the criminal origins of so much money sloshing through that pristine country, Senn was quoted as warning that it could lead to the withdrawal of so many funds as to cause the collapse of the Swiss economy.
⁵⁴

In an unapologetic 1988 acknowledgment of the mutual obligations incurred, P. W. Botha, the president of the South African apartheid regime, personally bestowed a medal of honor on a UBS official for services rendered to the regime.
⁵⁵

Around this time, with Poppy Bush running for president and George W. Bush sitting on the board at Harken, the company received an infusion from the billionaire Rupert clan of South Africa, which had important holdings in diamonds, gold, liquor, and cigarettes and close ties to the apartheid regime. The Ruperts also invested with Quasha in an American petroleum refiner, Frontier Oil, and became involved in the takeover of the Swiss company Richemont—whose top-drawer luxury brands included Cartier, Mont-blanc, and Dunhill—and put both Alan Quasha and Senn on the board.
⁵⁶

FOR PART OF George W.’s term on the Harken board (during which time he also received a consultant’s fee from the company), he was living in D.C. and working full-time on his father’s presidential campaign, where he was both one of his father’s top advisers and his “enforcer” on the campaign staff. Poppy would certainly have known about his son’s principal business activities at the time. And yet, as far as can be ascertained, neither of the George Bushes has been pressed to explain the geopolitical ramifications of Harken—or even to address the transparent illogic of it as a business enterprise.

Bahrain, in Vain

What W. got out of it—and why he was put into it—gradually became clearer. In December 1988, after Poppy Bush won the election, Harken’s board gave W. an option to buy twenty-five thousand shares of stock. W. exercised the option immediately with the help of a low-interest loan from the company. This was the same type of loan that W.’s own White House would later criticize in regard to Enron and other malfeasance-driven corporate collapses.

The following June, Harken extended W.’s consulting agreement, citing the “positive image” the younger Bush helped create for the company. Who perceived that “positive image” was not clear. It certainly was not the investing public. That year, the company’s problems grew grave. Its petroleum commodities trading subsidiary suffered seventeen million dollars in losses.

In January 1990, Harken, which had never drilled overseas or in offshore waters, came out of nowhere and beat the oil giant Amoco for the rights to drill in the offshore waters of the Persian Gulf island nation Bahrain.
⁵⁷

Asked how Harken got the deal, Quasha, who back then apparently took press calls, replied, “It was not some sort of fix.” But he did not offer a persuasive explanation of what exactly it was instead. Eventually, Harken claimed that Bahrain picked the company
because
of its inexperience, arguing inventively that the emirate wanted a small outfit that could give the project all of its attention.
⁵⁸

The actual drilling work was assigned to major political backers of the Bushes. Harken Energy, of course, lacked not only the experience but also the capital to finance the Bahrain exploration. So it chose, from dozens of suitors, a Fort Worth company owned by the politically wired billionaire Bass family, major GOP donors and friends of the Bushes—who will soon show up in connection with other George W. Bush financial matters, including the Texas Rangers baseball team and a film financing company called Silver Screen.

Lurking in the background of Harken’s activities was the shadow of the Saudi royal family and of BCCI, the intelligence-connected global banking laundry. Indeed, three key figures associated with the drilling deal—the Houston oil consultant who put Bahrain together with Harken, the U.S. ambassador to Bahrain, and Bahrain’s prime minister—all had connections to BCCI.
⁵⁹

Timing Is Everything

Harken may have been an unlikely candidate to look for oil off Bahrain— none was found anyway, but W. did nicely regardless. The announcement of the Bahrain deal sent Harken stock soaring. In April, Bush signed a “lockup” letter requested by underwriters of a planned public stock sale, pledging not to sell his shares for six months after a proposed public offering. Nevertheless, two months later, he cashed out his Harken shares for nearly $850,000.

This transaction, which enabled him to cover a loan he earlier used to join a group in purchasing the Texas Rangers baseball team, was another example of Harvard appearing to take steps to benefit the president’s son.
⁶⁰
The broker who handled the deal has steadfastly refused to identify the institution that bought Bush’s stock. But a former Harvard Management Company accountant, Steve Rose, told me that he found an SEC filing on which the broker had written on a trade ticket “Michael Eisenson,” the name of Harvard Management Company’s president—and also a Harken board member.

Further, Rose found an inexplicable gap of 212,750 shares in Harvard’s total Harken holdings, or almost exactly the 212,140 shares sold by Bush. “That is evidence that Harvard bought Bush’s stock,” he said.
⁶¹
So there was Harvard, having already come into Harken at a crucial moment to save the company in 1986, secretly coming to the rescue of George W. Bush personally, and helping him make a bundle. If Harvard did that, it would seem to be a rather bold use of university funds for some kind of private game well outside the purview of Harvard’s trustees and money managers—and certainly an egregious conflict of interest in the truest sense of the term.

A week after Bush sold his stock (and the day a largely favorable
Forbes
magazine profile of the company appeared), Harken announced a second-quarter loss of $23.2 million. The stock plunged 20 percent. In 2002, it came out that Bush and other insiders had received internal warnings of impending financial collapse just sixteen days before Bush sold his own shares.
⁶²
The company’s problems, according to an internal memo, were mostly caused by losses from impenetrable Enron-type transactions that may or may not have signified true losses.
⁶³
They came also from Harken’s repurchase of the shares held by George Soros, who himself came out with a handsome profit.

Six weeks after Bush sold his shares, the plans to begin exploratory drilling off Bahrain got a jolt. On August 2, Iraq invaded Kuwait over disputed oil lands. Saddam Hussein had received what he interpreted—or at least said he interpreted—as assurances from the U.S. ambassador that the United States would not object. Eight days later, Harken board member Talat Othman, who had been part of a three-man delegation along with Quasha sent from Harken for the Bahrain signing ceremony, joined a small group of Arab Americans in a private meeting with President George H. W. Bush and his top aides.

Another person attending the meeting was A. Robert Abboud, head of First City Bancorp of Texas, one of Harken’s principal banks. Days after that White House meeting with Poppy Bush, the other Harken creditor, Bank of Boston, demanded Harken’s immediate repayment of its loan because of a technical default—and Abboud stepped into the breach by agreeing to assume the Boston bank’s loan. If Abboud had not shown up when he did, Harken might have collapsed, and certainly its stock would have plummeted further. A Poppy Bush supporter with three degrees from Harvard, Abboud claimed he was moved to play white knight based on Harvard’s involvement, not Bush’s. Certainly, the continued Harken rescue operations, even as W.’s own ties to the firm were being severed, suggest the overall importance of the largely unprofitable venture to some larger purpose.

As for George W. Bush, he was never seriously held to account for any of these dealings. Along the way, W. not only accepted remuneration from dubious characters for work he scarcely performed, but he also committed repeated acts of gross negligence. He had seemingly ignored
two
warnings from Harken’s attorneys: about insider trading and about filing forms relating to insider trades in a timely fashion. Eight months would pass before W. filed the required forms. Bush claimed at the time that the SEC had lost his original filing; White House spokesman Ari Fleischer said the delayed filing had been caused by Harken’s lawyers; and at a press conference, Bush himself said he hadn’t “figured it out completely.”
⁶⁴

An inquiry by the SEC under the Poppy Bush administration raised questions about the circumstances of the trade. But somehow no investigators ever spoke with W.; they concluded that he and other company officials were probably unaware of the extent of the losses. Thus, the president’s son faced no consequences for his actions, and the peculiar activities of Harken and its affiliates drew no serious governmental scrutiny. By October 1993, with Bill Clinton in the White House, an SEC memo declared the investigation terminated with regard to Bush’s conduct. It noted, however, that this did not mean that he had been exonerated or that future action was ruled out. Needless to say, there has been no further action.

A month after that SEC memo, Bush resigned as a Harken board member and consultant. He was now a baseball team owner and running for governor of Texas. Asked in 1994 about the Bahrain deal, candidate George W. Bush dismissed speculation about it as “all a giant conspiracy theory.”
⁶⁵

But Alan Quasha and Harken are still around. And Quasha is still interested in relationships with presidents and would-be presidents of both parties. In the period leading up to the 2008 elections, Quasha and his business partner Hassan Nemazee hired Terry McAuliffe, the former chairman of the Democratic Party, to work for them. From there, McAuliffe went on to be Hillary Clinton’s campaign chairman in 2008, with Nemazee serving as a major campaign adviser.
⁶⁶

Like Quasha, UBS retains its own strong interest in people on the path to the White House irrespective of party affiliation: UBS America raised more than one million dollars for Barack Obama’s presidential bid. After a sit-down chat with Obama, the firm’s CEO pronounced himself delighted with the candidate, whom he called “unbelievably smart and refreshing and thoughtful.”
⁶⁷

CHAPTER 17

Playing Hardball

W
. WAS NOT QUITE THE BASEBALL player his father and grandfather had been—but he was the master of a certain kind of pitch.
¹
In the days leading up to the 1988 election, W. was on the phone constantly making sales calls, though not for his father’s candidacy. As Bush family adviser Doug Wead recalled: “It was interesting to sit and listen to him pick up the phone again and again and say: ‘Well, we’re gonna buy a baseball team. Want to buy a baseball team?’ ”

Maybe George W. Bush felt that his father’s election was in the bag. Or maybe he was in a hurry because he thought it was less unseemly for the son of a vice president seeking the presidency to be soliciting funds for personal reasons than for the son of a sitting president to be doing so. Whatever his reason, at that particular moment, baseball was on his mind.

W. has genuine affection for “America’s pastime,” but his decision to acquire the Texas Rangers baseball team was not just about fun. He was creating a legend that would set him on the path to the presidency. How could a man with so few accomplishments be made into an impressive public figure? How could a fellow who had few prospects of honestly earning a fortune be set up in the sort of lifestyle he and his friends expected?

Such questions were certainly on the mind of his informal political adviser Karl Rove. Although the Bush forces would claim that W. had not seriously thought about running for higher office until well into the 1990s, as far back as Poppy’s inauguration Rove had been letting reporters know that there was another Bush waiting in the wings.
²
In fact, W.’s name was floated as a possibility for the 1990 Texas governor’s race, but W.’s mother publicly opposed his bid because of concerns that a loss would be seen as a referendum on Bush Sr.’s presidency.
³

Even back then, Rove was envisioning a path for him and his friend straight to the White House. The Texas governorship would give W. a base, and a bucketload of electoral votes to start with. So in the final days before his father’s victory over Democrat Michael Dukakis, George W. Bush was looking toward his own future—first, a brief baseball “baptism” as a public figure, then political office. “Mostly he was talking about his plan with the Rangers and governor, back then,” recalled Wead. “It was Rangers and governor, Rangers, governor,
Rangerrrrs
. . .”
⁴

ANYONE SEEKING A path to the big leagues could do worse than owning a ball team. George W. Bush and his cadre well understood that a winning sports play, like a steady spot in a forward church pew or an art museum with one’s name on it, accorded instant points—and went a long way toward ameliorating deficiencies (particularly moral ones) on other fronts.

The Bushes and their friends had ownership stakes in a lot of teams—the Reds, the Mets, the Tigers, and other favorites. It all started with W.’s great-grandfather George Herbert “Bert” Walker, who was a force behind professional golf’s Walker Cup and, in fact, the introduction of golf itself into America. He was also a prominent booster of the New York Yacht Club, professional tennis, and premier horse racing. This family legacy culminated in George W. Bush’s successful effort at capturing a new constituency known as the NASCAR voter. Of course, being associated with sports offers obvious benefits in terms of pleasure and ego, but there is little question that the Bush group was adept at leveraging yet one more beloved American institution.

As would be demonstrated by the Supreme Court that would decide the 2000 election in W.’s favor, getting a “fair break” for oneself begins with knowing the referee. Peter Ueberroth, the baseball commissioner at the time W.’s group acquired the Arlington, Texas–based Rangers, was known to be looking for opportunities in politics as he left baseball in 1989, the year Poppy took office. One source close to the negotiations told the
New York
Times
that after W. had failed to persuade the wealthy Texan Richard Rainwater to join the investment group, Ueberroth himself had approached Rainwater and suggested that he team up with Bush, at least partly “out of respect for his father.”
⁵
As commissioner, Ueberroth was succeeded by Bart Giamatti, an Andover alum who became president of Yale; he was succeeded by Fay Vincent, another old friend of the Bushes who had roughnecked in the oil business in Midland, and even lived at the Bush house briefly when W. was growing up.

W. was relentlessly optimistic about his plans to get into baseball. “He’d get off the phone after somebody said no, and there was not even the slightest disappointment or discouragement,” recalled Doug Wead. “You couldn’t even see a whiff of self-doubt. I thought, man, he’d be a great salesman, he doesn’t even have any [sense of ] rejection.”

Not that there was too much rejection. Smart men—and it was virtually only men who invested—knew that this was a good moment to be in business with George W. Bush, the president’s son.

Family and friends understood the plan: turn a nobody with a famous name into a “somebody,” and, while you’re at it, use the famous name, insider connections, and the implied glamour of the project to make a bundle.

According to Comer Cottrell, a black Republican hair products entrepreneur who put up half a million dollars to become a limited partner, “George brought a lot to the table just by being the president’s son and running for governor . . . Everybody wanted to know him.”
⁶

Bush paid six hundred thousand dollars in borrowed money for a 2 percent stake in the Rangers. However, he secured the generous proviso that his share would jump to 11 percent once the partners had gotten their investment out. Thus, the entire deal seemed designed to benefit Bush.

Inside Baseball

For about eighty-six million dollars, Bush and seventy investors bought the team.
⁷
Among the investors were William O. DeWitt Jr. and Mercer Reynolds III, the fellows who had bailed out W.’s Arbusto Energy. This new deal was certainly a natural for DeWitt, who grew up around baseball and whose father served as general manager of the Detroit Tigers and later owned the Cincinnati Reds. Other Rangers investors included the much-investigated Nixon administration “Jew-counter” Fred Malek, who managed Poppy Bush’s 1992 presidential campaign. Malek, who by 2008 was making a bid for the Chicago Cubs, has long been a kind of Bush family handyman. It was he who arranged a job for W. on the board of Cater Air, a subsidiary of the secretive global holding company the Carlyle Group.
⁸

Typically, sports team ownership is a badge of pride. Yet, as with so many other ventures involving George W. Bush, many of the people who invested in the Rangers with him preferred to remain below the radar. “The city went berserk when I got a list of owners,” said attorney Glenn Sodd, who represented plaintiffs suing the city of Arlington and the team owners over private land seizures to make way for the new stadium that would exponentially increase the value of the franchise. “They got the court order to prevent names from coming out. The team was desperate to keep it secret . . . The list didn’t tell you a whole lot, because there were some partnerships [hiding] who the actual people were. For all you and I know, there were Saudis.”
⁹

There certainly were Saudi connections, including the attorney representing Bush as he pursued the Rangers. James R. Doty was a partner with Baker Botts, which represented major Saudi interests, as well as many American companies doing business with the kingdom. Doty had also represented W.’s old friend and Saudi financial agent Jim Bath when Bath sued his business partner Bill White, a saga described in chapter 14. Shortly after handling Bush’s Rangers deal, Doty was named general counsel to the SEC under Poppy Bush’s administration, and though he recused himself, he was there when the agency investigated the possibility of insider trading on W.’s Harken stock sale—and closed the file with no action.
¹⁰

Roland Places His Betts

If Harvard deserves much of the credit for the boost Harken Energy provided George W. Bush on his path to the White House, then Yale deserves some credit for the boost that the Texas Rangers provided. With Yale, however, it was not the school’s money so much as the clubby milieu the school created for private arrangements.

The largest investor in the Rangers deal was Bush’s Yale friend Roland Betts, who put in a hefty $3.6 million. “I’m George’s biggest fan,” Betts once told the
New York Times
. Betts, who served as rush chairman of Delta Kappa Epsilon at Yale while Bush was the fraternity’s president, would subsequently play a unique role over the years in persuading the media that W. was really quite a moderate fellow. As the
Times
wrote in 2005:

When people ask Roland Betts how a New York Democrat can be such a good friend of President Bush, he whips out a ready answer. “Which would you prefer: my being close to him, or some right-wing zealot being close to him?” Mr. Betts said in a recent interview. “Who do you want to have his ear? So it’s not a bad thing. Maybe I give him a little balance. . . . I don’t think he’s as conservative a person as the media generally characterizes him as,” Mr. Betts said.
¹¹

The media loved Betts: not only was he a Democrat friend of Bush’s, but he had also worked for a while in an inner-city school, and he had a black wife. Moreover, Betts was founder and chairman of Chelsea Piers, a popular sports complex on Manhattan’s West Side. After Yale, and after a spell as a teacher and assistant principal during the Vietnam War, Betts moved on to Columbia Law School and then became an entertainment lawyer with the white-shoe Manhattan firm of Paul, Weiss, Rifkind, Wharton & Garrison.

Even better, Betts started his own limited partnership, which cut a deal with the company that is practically synonymous with Hollywood entertainment culture—the Walt Disney Company—and put George W. Bush on the board. Betts’s Silver Screen Management financed nearly every Disney movie made between 1985 and 1991, including
Pretty Woman
,
Beauty and
the Beast
, and
The Little Mermaid
. The company also backed
The Hitcher
, with Rutger Hauer as a psycho-killer hitchhiker, which was derided for its “gizzard-slitting depravity.”

Asked why he brought W. into the film-financing business (Bush remained on the board from 1983 to 1992), Betts told the
Times
it was to benefit from his friend’s common sense. If anyone had common sense, it was Betts himself. Silver Screen got its start-up funding courtesy of the investment house E. F. Hutton. In that period, E. F. Hutton was being run by W.’s uncle Scott Pierce. Before coming to E. F. Hutton, Pierce had worked for the “other” Bush-Walker clan investment firm, G. H. Walker and Company. And the man who preceded Pierce at Hutton and brought him into the company, George Ball, was both a funder of W.’s Arbusto oil venture, and, as noted in chapter 15, presided over Hutton in a period when it engaged in a major check-kiting scheme; the firm later pleaded guilty to two thousand counts of mail and wire fraud.

The Betts family, meanwhile, turns out to mirror the Bushes in many respects: Yale legacy, employment in the Walker brokerage, roots in the spy world.
¹²

The most visible Rangers investors, including Betts, were thought of not just in terms of the financial resources they could provide, but also of demographics. “The first time I met George, he came up to my office and wanted to meet me and told me that he was wanting to have a true American diverse team partnership,” recalled Cottrell, one of Bush’s co-investors. “He says, I would be his black partner, Afro-American. Then he had some Jewish people, and he had some European Americans from Yale. Half the guys were from Yale.”
¹³

Besides Betts, another strong Yale connection was the Bass family of Fort Worth, famously right-wing heirs to the vast Richardson-Bass oil fortune. The man who is generally characterized as putting the baseball financing deal together, the brilliant Texas investment manager Richard Rainwater, had been the investment manager for the Basses. Rainwater was a Wall Street legend for transforming a Bass inheritance of about fifty million dollars in 1970 to more than four billion dollars by the time he went out on his own in 1986. At the time Rainwater partnered with W., the Basses were involved with W. through Harken’s Bahrain drilling deal.

Bush, Betts, and Ed Bass had all been at Yale at the same time, and Bass Brothers Enterprises—Lee, Ed, Sid, and Robert Bass—would be the fifth-largest donor to W.’s Texas gubernatorial and 2000 presidential campaigns, and ninth among his 2004 presidential campaign donors.

Betts’s good fortune with regard to Silver Screen—and W.’s as well—may have come courtesy of the Bass family, who were Disney’s largest stockholder, having saved Disney from a hostile takeover and selected Michael D. Eisner to run the studio.
¹⁴

The Basses shared the ideological and cultural interests of the Bush clan and their secret society confreres. In 1991, Ed Bass’s brother Lee donated twenty million dollars to Yale, his alma mater, and specified that the money—one of the largest donations ever made to the school—was to be used for revitalizing the Western civilization program. In fact, Bass hoped to limit the growing emphasis on multiculturalism; he was worried that the study of Toni Morrison and Malcolm X was pushing out the “classics.” A controversy ensued, and Yale returned Lee Bass’s money. To some, the problem with the Basses’ gambit was not their ideology, but rather their apparent belief that money, rather than vigorous open debate, should be the deciding factor in a matter of broad public concern. As if to confirm this, when Lee Bass’s effort backfired, Lee’s father, Perry (Yale ’37), offered five hundred million dollars to the school to formally declare that his son had done nothing wrong; Yale president Richard C. Levin refused that deal.