Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years (89 page)

25
. Allen Dulles also served as a member of Schroder’s board of directors. Several Schroder’s official splayed important roles in war time intelligence activities. See Richard Roberts,
Schroders:
Merchants and Bankers
(London: Macmillan, 1992), p. 295. According to
Forbes
, Gilliam was subject to a three-year FBI probe for alleged stock manipulation and wire fraud, though he was never charged.

26
. Gilliam also brought in Raffie Aryeh, who was from one of the wealthiest families in Iran—afamily that had literally financed the shah in exile, shortly before the CIA brought him back in the 1953 coup against the democratically elected president Mohammad Mossadegh. According to Klausmeyer, through Schroder the immediate family of the shah may have also been involved with Lucky Chance. “One of their clients was the shah of Iran,” Klausmeyer said. “And he wanted to buy some gold mines in the United States.”

27
. E-mail from David Klausmeyer to the author, May 22, 2007.

28
. The firm brought in Daniel Lezak, an accountant and reorganization specialist with his own checkered past and future. Lezak, working with Poppy Bush’s ex-lieutenant Gow in another corporate reorganization, was compelled to sign a consent decree with the Securities and Exchange Commission over failure to make proper disclosures to shareholders. (By the millennium, regulators had become totally fed up with Lezak and barred him from securities practice altogether.) “Lezak sometimes was called ‘Sleazak,’ ” former Lucky Chance board chairman Ernest Lambert told me with a chuckle.

29
. Marting’s father, Walter Marting Sr., ran the Ohio-based Hanna Mining Company, which was founded by Mark Hanna, who was William McKinley’s political mentor and considered a role model for Karl Rove.

30
. Around the time of the Lucky Chance takeover, Gow and Klausmeyer had dined with Jerome Schneider, author of
How to Profit and Avoid Taxes by Or ganizing Your Own Private Bank
and
Complete Guide to Offshore Money Havens
. In 2004, Schneider would plead guilty to conspiring to help his clients evade tax laws, and be sentenced to twenty-four months in federal prison. See David Cay Johnston, “Pioneer of Sham Tax Havens Sits Down for a Pre-Jail Chat,”
New
York Times,
November 18, 2004; and Robert Gow’s
You Can’t Direct the Wind, You Can Only Reset
the Sails: My First 62 Years
(Houston, Xixim Publishing, 2002).

31
. Author interview with Ernest Lambert, May 17, 2007. Americans are generally taxed on their worldwide income; any reported income, even that collected in Bermuda, would be taxable.

16: THE QUACKING DUCK

1
. This included more than $600,000 in stock and options—and a consulting contract eventually worth about $220,000 a year in today’s dollars.

2
. Richard Behar, “The Wackiest Rig in Texas,”
Time,
October 28, 1991.

3
. Its proprietor, Phil Kendrick, had grown up working in his family’s oil company, left to becomea stockbroker, and returned to try his own hand at the game. The company, then known as Harken Oil and Gas Inc., started doing well enough for itself—by 1980
Inc
. magazine listed it as among the “100 Fastest Growing Companies in America”—but by 1983 it was reeling from the industry-wide price collapse and looking to merge or get bought out.

4
. Americans steeped in intelligence work and covert operations have flocked to the Philippines to hunt, literally, for treasure. Among these are General John Singlaub, who became a star figure in the Iran-contra scandal. One venture ostensibly set up for treasure hunting was a corporation founded by Singlaub, whose days in intelligence go back to the war time OSS and who served as chairman for one of the principal cold war organs, the World Anti-Communist League. His gold-hunting company cofounder was Major General Robert Schweitzer, who had been deputy director of the National Security Council under the Reagan-Bush administration.

5
. According to the Securities and Exchange Commission (SEC), “A reverse stock split reduces the number of shares and increases the share price proportionately. For example, if you own 10,000 shares of a company and it declares a one for ten reverse split, you will own a total of 1,000 shares after the split. A reverse stock split has no affect on the value of what shareholders own. Companies often split their stock when they believe the price of their stock is too low to attract investors to buy their stock. Some reverse stock splits cause small shareholders to be ‘cashed out’ so that they no longer own the company’s shares.”

6
. According to the SEC filing “Nar Group Ltd, et al. • SC 13D/A • Harken Energy Corp,” SECFile 5-31404, January 30, 1995. Available online at
www.secinfo.com/dsvr4.a44.c.htm
.

7
. What in the world was Soros, of all people, doing in this mess? In 2002, the
Nation
’s David Corn attended the opening of Soros’s Open Society offices in D.C., and sought to find out. David Corn, “Bush and the Billionaire: How Insider Capitalism Benefited W.,”
Nation
, July 17, 2002.

While chatting with one of his employees, I said to her, “One day, you should ask Soros what he knew about the Harken deal and why his company took on Bush.” She blanched and mumbled that she could never raise that with Soros.

Later, when I saw the billionaire almost alone, I sidled up to him. “Nice offices,” I said. “But can I ask you about some ancient history?” Sure, he said, with a good-natured smile. What was the deal with Harken buying up Spectrum 7? I inquired. Did Soros know Bush back then?

“I didn’t know him,” Soros replied. “He was supposed to bring in the Gulf connection. But it didn’t come to anything. We were buying political influence. That was it. He was not much of a businessman.”

8
. The conservative pantheon would almost universally revile Soros, with one Fox News wag referring to him as “the Dr. Evil of the whole world of left-wing foundations.” Transcript from
The
O’Reilly Factor
, Fox, April 23, 2007.

9
. Harvard currently manages a thirty-five-billion-dollar endowment with a 13.3 percent annual growth rate—the largest in higher education. In a 2008
New York Times
op-ed, alumna Carroll Bogert marveled that the university “can cover next year’s entire undergraduate financial aid Budget with what it earns in the market in eight and a half days.” Carroll Bogert, “Enjoy the Reunion. Skip the Check,”
New York Times
, May 25, 2008.

10
. As Bogert points out, Harvard, unlike Gates, is not required to pay taxes or spend 5 percent of its income per year. “Nor is it bound by most of the strictures of financial reporting that make spending at Gates transparent and publicly accountable.” (See ibid.) Lawmakers are catching on: in 2008, the
Wall Street Journal
reported that Massachusetts legislators are considering plans to levy a 2.5 percent yearly tax on college endowments exceeding one billion dollars. John Hechinger, “College Endowment Tax Is Studied,”
Wall Street Journal
, May 9, 2008.

11
. Alexander J. Blenkinsopp, “Harvard Stock Under Scrutiny,”
Harvard Crimson
, July 19, 2002.

12
. Ibid.

13
. Beth Healy and Michael Kranish, “Harvard Invested Heavily in Harken,”
Boston Globe
, October 30, 2002. As the
Globe
wrote:

It was a moment of deep embarrassment in 1991 when Harvard University’s prestigious endowment fund admitted it had just experienced its worst loss ever. Jack Meyer, Harvard Management Co. president, said at the time he hoped the fund would never again take such a big hit, a $200 million write-down.

Back then there was relatively little focus on one major reason for the loss: Harvard Management’s large and ill-timed bet on little-known Harken Energy Co., whose board included George W. Bush, then the son of the US president and now the president himself. Even as losses mounted, Harvard Management bailed out the troubled company, first by splitting up Harken and then by sheltering Harken’s liabilities in a partnership.

Indeed, even as Bush was dumping the bulk of his Harken holdings—about $848,000 in stock sold to a buyer whose name has never been disclosed— Harvard Management plowed millions more into the firm . . .

. . . The Texas-based energy company was, in 1990, the seventh-largest stock holding in Harvard’s portfolio, bigger even than the university’s stake in Exxon Corp. In all, Harvard Management risked 1 percent of the university’s endowment in the small, struggling company, a surprisingly large bet by any measure, but particularly given Harken’s dismal prospects . . .

The Globe review also found no evidence to support the contention by some critics of Harvard Management and some adversaries of Bush that its deep involvement in Harken was a political favor to the Bush family.

14
. Ibid.

15
. Ibid.

16
. In 1989, following Poppy’s inauguration as president, and while Harvard was deeply involved with Harken and George W., Robert G. Stone was elected to the board of a large, private, Greenwich-based financial services executive recruiting firm called Russell Reynolds Associates. Another board member was W.’s uncle Jonathan Bush. And another was Landon Hilliard, a partner in Brown Brothers Harriman. Both Russell Reynolds and Jonathan Bush had been lead fund-raisers for Poppy Bush’s presidential campaign. Russell Reynolds Associates is not only private, but it is also unusual in the way it operates: although executive recruiting firms by definition seek to bring experienced personnel from one firm to another, and though most of its competitors seek to lure recruiters from each other, Reynolds is distinguished by its preference to recruit and train its own personnel while they are still green. One might call it a kind of Poppy Bush approach.

17
. Stone’s grandfather Galen L. Stone had cofounded the investment firm Hayden, Stone (which later became part of the giant, oft-renamed brokerage firm Shearson Lehman). In 1919 Galen Stone had hired a young fellow named Joseph P. Kennedy, giving him a start on his way to the riches that would, paradoxically, finance the political career of another, more liberal Harvard alumnus, John F. Kennedy. (A World War II Liberty ship, the S.S.
Galen L. Stone
, was named in honor of the banker.)

Robert G. Stone Jr. interrupted his Harvard studies to serve in World War II, and after the war married Marian Rockefeller, daughter of Godfrey Rockefeller. (Godfrey was the grandson of John D. Rockefeller’s brother William, who had been a major investor in the railroad that had employed George W. Bush’s great-grandfather Samuel Bush early in his career.) Godfrey, Andover class of 1942, was a trustee of the Fairfield Foundation, which provided funds to a British publication later financed by the CIA. In addition, Fairfield financed the Congress for Cultural Freedom, also exposed as a CIA front. Prescott and Dorothy Bush were not only good friends with Godfrey and Marian Rockefeller; more important, they had been instrumental in introducing Godfrey to his future wife, who knew Dorothy from St. Louis. It was truly all in the family.

18
. Marcella Bombardieri, “Robert G. Stone Jr., a Fund-raising Stalwart for Harvard; at 83,”
Boston
Globe
, April 25, 2006.

19
. Healy and Kranish, “Harvard Invested Heavily in Harken.”

20
. Stone’s father-in-law, Godfrey Rockefeller, identified in 1970s congressional inquiries as having been involved with CIA-fund-disbursing private foundations, sat on the Freeport board for a remarkable
fifty years
.

21
. John Newman,
Oswald and the CIA
(New York: Carroll & Graf, 1995), pp. 123–24.

22
. Many Americans came to the Philippines to make their fortune. One of them was Henry Crown, who would go on to be the controlling shareholder of the giant military contractor General Dynamics, and in effect the boss of Albert Jenner, the Warren Commission counsel who so ineffectively interrogated George de Mohrenschildt.