Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years (6 page)

For Poppy, well-connected investors like Meyer weren’t hard to come by. Though start-ups are risky, there were incentives. For one thing, income tax rates for the rich back then were so high—90 percent in some cases—that losses could be recouped almost dollar for dollar in taxes saved. For another, when you invested in a young Poppy Bush, you got the older, more influential Prescott in the bargain. And the extended Bush clan truly represented a kind of private-public business combine. For example, within months of Prescott being named to the Joint Congressional Committee on Atomic Energy, Uncle Herbie formed a partnership to invest in commercial nuclear energy businesses.
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The news business, the policy business, and the intelligence business had a lot in common: they were all about who you knew and what you knew. In fact, so was the oil business. The Bushes’ skill at cultivating connections was evident in 1953, when Poppy joined forces with a couple of brothers from Tulsa, Hugh and Bill Liedtke, to form Zapata Petroleum. The Liedtkes’ contacts were nearly as interesting as the Bushes’, with strands leading to, among others, the millionaire former bootlegger Joseph P. Kennedy and Ray Kravis, the father of the famed corporate raider Henry Kravis. Based on a “hunch” of Hugh Liedtke’s, the company drilled 127 consecutive “wet” holes, and the firm’s stock exploded from seven cents a share to twenty-three dollars a share.

There is no dispute that the Liedtkes handled much of the operational side of the company. But the accounts of the Bush-Liedtke partnership leave out something quite significant. As documented in chapter 11, the Liedtkes would later involve themselves in political operations with Poppy Bush that would contribute to the demise of Richard M. Nixon.

Pirates of the Caribbean

Zapata Offshore, which provided perfect cover for activities in a host of hot spots around the world, may have been the brightest stone in Allen Dulles’s crown. On April 10, 1953, exactly two weeks after Zapata Offshore’s land-based sister, Zapata Petroleum, was launched,
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Neil Mallon wrote to CIA director Dulles about an upcoming meeting at D.C.’s Carlton Hotel. “In addition to Bob Johnson, I have invited a close personal friend, Prescott Bush. We want to talk to them about our Pilot Project in the Caribbean and have you listen in.”
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The letter was written in a kind of code-speak. Prescott Bush was well known to Dulles, as was his close relationship to Mallon and the fact that he was a sitting United States senator. He had brought Mallon and Dulles together, and the two had become close friends, visiting each other, exchanging gifts, and sending notes on important family occasions.

Mallon would play a crucial role for Dulles by introducing him to the powerful new-moneyed oil elites in Dallas that would, along with a separate group in Houston, become the leading funders of off-the-books covert operations in Latin America. They would commence with efforts to overthrow Latin American and Caribbean leaders in the 1950s. The efforts would continue, under Poppy Bush, with Iran-contra in the 1980s.

What was the “pilot project” to which Mallon referred? Very likely it was Zapata Offshore, launched by Poppy in 1954, just as the U.S. government, under an administration dominated by the Dulles-Bush circles, began auctioning offshore mineral rights. The funding, again, came courtesy of Uncle Herbie, who organized a stock issue.

In 1958, Zapata Offshore’s drilling rig
Scorpion
was moved from the Gulf of Mexico to Cay Sal Bank, the most remote group of islands in the Bahamas and just fifty-four miles north of Isabela, Cuba.
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The island had been recently leased to oilman Howard Hughes, who had his own long-standing CIA ties, as well as his own “private CIA.”
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Hughes would even lend his ship to the CIA to dredge for a Soviet submarine.
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By most appearances, a number of CIA-connected entities were involved in the operation. Zapata leased the
Scorpion
to Standard Oil of California and to Gulf Oil. CIA director Dulles had previously served as Gulf’s counsel for Latin America. The same year that Gulf leased Bush’s platform, CIA veteran Kermit “Kim” Roosevelt joined Gulf’s board. This was the same Kermit Roosevelt who had overseen the CIA’s successful 1953 coup against the democratically elected Iranian prime minister Mohammad Mossadegh, after Mossadegh began nationalizing Anglo-American oil concessions. It looked like the Bush-CIA group was preparing for operations in the Carib -bean basin.

The offshore platforms had a specific purpose. “George Bush would be given a list of names of Cuban oil workers we would want placed in jobs,” said one official connected to Operation Mongoose, the program to overthrow Castro. “The oil platforms he dealt in were perfect for training the Cubans in raids on their homeland.”
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The importance of this early Bush connection with Cuba should not be ignored in assessing his connections to contemporaneous events. For example, it sheds light on the 1963 memo from J. Edgar Hoover discovered by reporter Joseph McBride. The memo, which mentioned a briefing about Cuban activity in the wake of the JFK assassination, had been given to “George Bush of the CIA.” Years later, many figures from the Bay of Pigs operation would resurface in key positions in administrations in which Poppy Bush held high posts, and during his own presidency.
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Others would show up in off-the-books operations run by Poppy’s friends and associates.
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George H. W. Bush did not, however, limit himself to the Caribbean. This period of his life was characterized by frenetic travel to all corners of the world, though Zapata had only a handful of rigs. The pattern would continue through his entire career. He set up operations for Zapata Offshore in the Gulf of Mexico, the Persian Gulf, Trinidad, Borneo, and Medellín, Colombia. Clients included the Kuwait Shell Petroleum Development Company, which began his close association with the Kuwaiti elite.

Facing Fidel

That a lot of what was labeled “national security” work was largely about money—making it, protecting it—was fairly transparent. Through the story of the Bushes and their circle runs a thread of entitlement to resources in other countries, and anger and disbelief when others challenged that claim.

Upon coming to power in 1959, Fidel Castro began to expropriate the massive properties of large foreign (chiefly American) companies. The impact fell heavily on American corporations that had massive agricultural and mineral operations on the fertile island, including Brown Brothers Harriman, whose extensive holdings included the two-hundred-thousand-acre Punta Alegre beet sugar plantation.
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After Castro took power, the Eisenhower administration began a boycott of Cuban sugar, which is a crucial component of the island’s economy. The Cubans in turn became increasingly dependent on the USSR as supplier of goods and protector.

Poppy swung into gear the same year that Castro began nationalizing those properties. He severed his ties to the Liedtkes by buying out their stake in Zapata Offshore, and then moved its operations to Houston—which, unlike the remote Midland-Odessa area, had access to the Caribbean through the Houston Ship Channel.
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Meanwhile, back in Washington, after extensive planning, the Bay of Pigs project began with Eisenhower’s approval on March 17, 1960.

For anyone who asked about the origins of Zapata Petroleum’s name, Bush had a good story. A theater in downtown Midland happened to be showing the Marlon Brando film,
Viva Zapata!,
a biography of Emiliano Zapata, the Mexican revolutionary. Bush would claim that the partners had a flash that Zapata represented the image of independence their oil company was seeking. Ironically enough, General Zapata had fought for land redistribution on behalf of peasants, with resulting losses for precisely the kinds of people who staked Bush’s companies.

Moreover, Bush and his friends were hardly “independents.” To the contrary, they were connected to some of the wealthiest and most powerful people in the country, who owned enormous expanses of land throughout Latin America and elsewhere—exactly the kind of people Zapata loathed. The key thing—and possibly Bush’s telegraphed message—was that Emiliano Zapata gained international repute for one thing: overthrowing a government.

Beyond providing a staging area for Cuban rebels, Zapata Offshore appears to have served as a paymaster. “We had to pay off politicians in Mexico, Guatemala, Costa Rica, and elsewhere,” said John Sherwood, chief of CIA anti-Castro operations in the early 1960s. “Bush’s company was used as a conduit for these funds under the guise of oil business contracts . . . The major breakthrough was when we were able, through Bush, to place people in PEMEX—the big Mexican national oil operation.”
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Bush’s Mexican Connection

The complicated PEMEX affair began in 1960, when Zapata Offshore offered a lucrative secret partnership to a competing Mexican drilling equipment company, Perforaciones Marinas del Golfe, or Permargo. George H. W. Bush did not want this relationship exposed, even decades later. When investigative reporter Jonathan Kwitny tried to document Bush’s precise involvement with Permargo for a 1988 article, he was told by an SEC spokeswoman that Zapata filings from 1960 to 1966 had been “inadvertently destroyed” several months after Bush became vice president.
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Bush’s Mexican counterpart in this arm’s-length relationship, Jorge Diaz Serrano, was ultimately sentenced to ten years’ imprisonment for defrauding the Mexican people of fifty-eight million dollars. Diaz Serrano later admitted to remaining a personal friend of Bush and visiting the vice president in Washington shortly before his fraud conviction in Mexico.
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He told Kwitny that Poppy Bush’s interest in the oil business seemed limited: “In those days, I remember very clearly, he was a very young chap and when we were talking business with him at his office, he spent more time on the telephone talking about politics than paying attention to the drilling affairs.” As in other respects, father would be mirrored by son, as George W. Bush, too, would become well-known in the oil business for his preference for anything but the task at hand.

Evidence that Zapata Offshore was more than just Poppy Bush’s oil company surfaced in the years that followed. Bush increasingly spent his time on politics, and others were brought in to transform the company into a larger entity that could more credibly run global operations. According to former Zapata executive Bob Gow:

After George lost his first bid for public office . . . we had a number of discussions with a man named Bill Clements, who was president of a company named Sedco . . . I was very surprised to become aware during some of those discussions that George did not really care if Bill Clements was to be head of a combined company of Zapata and Sedco. I believe he would have been happy to have Bill Clements assume that role . . . George’s real interest was in politics.
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(Clements did not take over Zapata, but the two companies did enter into a joint venture in the Persian Gulf. Clements became deputy defense secretary under Nixon, and then governor of Texas, where he gave a job to an eager new arrival to the state named Karl Rove.)

Bush’s reward for all his troubles may have come in 1965, when one of the company’s rigs was ostensibly lost in Hurricane Betsy. For the first time in its history, the insurance giant Lloyds of London paid out an oil-platform disaster claim without physical evidence. Zapata received eight million dollars for a rig that had cost only three million.
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The fate of the rig remains a mystery. “The platform was stable at the time,” recalled Vincent “Buddy” Bounds, the last man evacuated from it. “I remember we were taken off just before dark . . . I was surprised to hear it disappeared without a trace; it was awfully big.”
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Poppy’s brother Bucky recalled the fears expressed by Zapata Offshore staff that it would be impossible for an insurance claim to be paid because of the absence of any wreckage. But Poppy himself was calm, reassuring his people that “everything is going to be all right.”
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In February 1966, Poppy left Zapata to run for Congress. Members of his circle stepped in at the offshore company to ensure continuity. One of them was Poppy’s former aide William Stamps Farish III, who also began managing Poppy’s assets in a blind trust. Farish fit in nicely. He was heir to an oil fortune, and his family went way back with the Bushes. In 2001, he was named ambassador to Britain by George W. Bush.
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The financials of Zapata, like those of latter-day Enron, were almost impossible to understand. This appears to have been by design. A bit of this can be gleaned from the words of the company’s former executive Bob Gow, another in a small army of Bush loyalists who show up repeatedly in the family story—and by extension the nation’s.

Resetting the Sales

Bob Gow may be the only person in American history to be employed by one future president (Poppy Bush—at Zapata) and to later employ another (George W.—at Gow’s post-Zapata agricultural mini-conglomerate Stratford of Texas).