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Through the length of Bill Clinton's presidency, the press scrounged for details on the arcane Whitewater controversy. Will it do the same for Harken Energy?
Jul 13, 2002 | Press coverage during Week 2 of the Bush/Harken energy controversy will likely determine whether the uproar surrounding the president's past business dealings continue to dog the White House or simply fade away.
You would be hard-put to find anybody inside the administration who thinks the press has gone easy thus far on Bush and the question of whether he used insider information to dump his Harken stock 12 years ago. Questions about Harken dominated last Monday's press conference as the president, looking annoyed, continued to suggest the matter was "old news." And for a few days, at least, media outlets appeared to be moving aggressively on the story.
But much of the coverage, especially in the early days of the controversy, simply explored the political difficulties Bush faces as he urges corporations to act responsibly when he himself has come under past scrutiny. Most press reports noted the U.S. Securities and Exchange Commission investigated Bush's actions and in 1992 determined not to pursue a prosecution. The subtext: Bush faces political heat today for appearing hypocritical, but since the SEC looked into all of this, he does not face any substantive charges of wrongdoing regarding his stock or trying to interfere with the investigation.
As the week ended, more stories were pressing for details about the SEC investigation. But if reporters and editors do not press that inquiry exhaustively -- after spending years chasing a similarly arcane financial transaction known as Whitewater involving President Bill Clinton, a Democrat -- they will have to answer their own questions about hypocrisy.
Let's recap: Looking to raise money to pay off his investment in the Texas Rangers baseball team, Bush sold two-thirds of his Harken stock on June 22, 1990, for $4 a share, pocketing $848,560. Harken soon after announced that, for the quarter ending June 30, 1990, it lost $23 million, dwarfing the company's previous largest loss. Soon after Bush sold, Harken stock was trading for just $1. Critics wondered whether Bush, a member of Harken's three-person audit committee, sold his stock knowing the company was about to announce huge losses. Adding to his troubles, Bush then waited 34 weeks before filing forms with the SEC notifying it of his insider stock sales. Bush did promptly file forms back in June 1990 notifying the SEC of his intent to sell.
The troubled transaction became a minor story in Bush's 1994 campaign for governor of Texas, and an even more minor story during his run for presidency. In the wake of June's WorldCom collapse though, and widespread accusations of fraudulent behavior among corporate officers, Bush for the first time is facing sustained queries about his Harken stock sales.
During Whitewater reporters often refused to accept any explanation or official inquiry that exonerated Clinton, and were obsessed with apparent conflicts of interest and relatively small sums of money. Today, it's tough to look back at the SEC probe of Bush and not notice the lingering questions. And they're not much different from the types of questions that were pursued relentlessly during Whitewater.
Why was Bush himself never interviewed as part of the SEC "voluntary" investigation? And did Bush waive his attorney-client privilege, allowing the SEC to interview his attorneys, specifically so he wouldn't have to be questioned by SEC investigators? Did the SEC ever interview the investor or investor group that purchased Bush's stock to determine if they were trying to bail Bush out as he was trying to pay off his baseball investment? Why did one Harken board member, Stuart Watson (reminiscent of Whitewater's Jim McDougal), publicly contradict Bush's claim that he did not know the energy company was about to announce a major loss just days before Bush dumped his stock? And why wasn't Watson ever interviewed by the SEC? Why, in a reportedly rare gesture of goodwill, did the SEC come to Bush's aid during his 1994 campaign for governor by writing a letter stipulating that no prosecution would be filed against him regarding the Harken case? How conclusive was the SEC probe, considering the fact the commission's chairman and general counsel were close Bush family friends and associates? Did the SEC chairman ever discuss the politically sensitive probe with anyone inside the White House when Bush's father was president? After all, Clinton's deputy treasury secretary, Roger Altman, was dismissed after he created a political firestorm by giving top White House aides a briefing on the possible civil case against the Whitewater-related savings and loan, Madison Guaranty. During the administration of Bush pere, did the White House ever receive a similar heads-up regarding the SEC probe?
Much of the current controversy stems from the fact that in 1994 while running for governor of Texas and trying to explain why it took him 34 weeks to file forms with the SEC regarding his Harken stock sale, Bush told reporters the commission had lost the paperwork. On July 3 this year, White House spokesman Ari Fleischer changed that explanation and said it was in fact a "mix-up" by Harken attorneys, not the SEC clerks.
But if Bush thought the SEC had lost his form, wouldn't that have been addressed during the 1991/1992 SEC investigation? And if during that investigation Bush's attorneys blamed the SEC for losing the key documents, what was the SEC's reaction? In other words, was the SEC surprised in 1994 when Bush publicly blamed the commission for fouling up his paperwork? And if Bush and his attorneys didn't confront the SEC about losing his form during the initial investigation, than why did Bush start blaming the SEC during his 1994 campaign, only to revise his story this summer? And specifically which Harken attorney failed to file the forms on time?
Most of those queries could be answered if Bush allowed all the relevant documents to be released, including the minutes of Harken board meetings where future losses were discussed. But after eight years and three elections (two for governor and one for president), Bush refuses to let the public and reporters take a look.
During Whitewater, the Clinton administration was held to a standard requiring complete and unfettered access to documents. But thus far in the brief life of the Harken controversy, the reaction on editorial pages has been much more tempered. The Washington Post, on Friday, called Harken a "distraction" and said the threads of the Harken story are not "compelling."
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