http://www.opinionjournal.com/extra/?id=65000071 EXTRA Investigating Al Gore The vice president, Armand Hammer and zinc. Saturday, August 12, 2000 12:01 a.m. EDT Micah Morrison, senior editorial page writer for The Wall Street Journal, has taken two close looks at Vice President Al Gore's financial background, in particular his family's connections to Armand Hammer, the business executive famous for his friendship with the Soviet Union and for pleading guilty to making illegal campaign contributions in the Watergate affair. In June, Mr. Morrison detailed Mr. Gore's zinc-mining concession. The Gore family obtained the property in question from Mr. Hammer. Last September, in the Gore half of a two-part series on the financial background of Mr. Gore and George W. Bush, he detailed Mr. Hammer's connections, starting when Al Gore was a child and his father a Senator. http://www.opinionjournal.com/extra/?id=65000067 VETTING THE NOMINEE Al Gore, Environmentalist and Zinc Miner Originally published in The Wall Street Journal, June 29, 2000. BY MICAH MORRISON Saturday, August 12, 2000 12:01 a.m. EDT "The lakes and rivers sustain us; they flow through the veins of the earth and into our own. But we must take care to let them flow back out as pure as they came, not poison and waste them without thought for the future." --Al Gore, "Earth in the Balance" "He taught me how to plow a steep hillside with a team of mules. He taught me how to clear three acres of heavily-wooded forest with a double-bladed axe. . . . He taught me how to stop gullies before they got started. He taught me how to drive, how to shoot a rifle, how to fish, how to swim. We loved to swim together in the Caney Fork River off a big flat rock on the back side of his farm." --Al Gore on his father, Sen. Albert Gore Sr., from algore2000.com CARTHAGE, Tenn.--On his most recent tax return, as he has the past 25 years, Vice President Al Gore lists a $20,000 mining royalty for the extraction of zinc from beneath his farm here in the bucolic hills of the Cumberland River Valley. In total, Mr. Gore has earned $500,000 from zinc royalties. His late father, the senator, introduced him not only to the double-bladed ax but also to Armand Hammer, chairman of Occidental Petroleum Corp., which sold the zinc-rich land to the Gore family in 1973. It also seems that zinc from Mr. Gore's property ends up in the cool waters of the Caney Fork River, an oft-celebrated site in Gore lore. A major shaft and tailings pond of the Pasminco Zinc Mine sit practically in the backyard of the vice president's Tennessee homestead. Zinc and other metals from the Gore land move from underground tunnels through elaborate extraction processes. Waste material ends up in the tailings pond, from which water flows into adjacent Caney Fork, languidly rolling on to the great Cumberland. Mining is intrinsically a messy business, and Pasminco Zinc generally has a good environmental record. But not one that would pass muster with "Earth in the Balance," Mr. Gore's best-selling environmental book. As recently as May 16, the Tennessee Department of Environment and Conservation issued a "Notice of Violation." It informed Pasminco that it had infringed the Tennessee Water Quality Control act due to high levels of zinc in the river. Those zinc levels exceeded standards established by the state and the federal Environmental Protection Agency. A "sample analysis found that total zinc was 1.480 mg/L [milligrams per liter], which is greater than the monthly average of .65 mg/L and the daily maximum of 1.30 mg/L." Pasminco "may be subject to enforcement action pursuant to The Tennessee Water Quality Control Act of 1977 for the aforementioned violation," the notice stated. This was not the first time Mr. Gore's mining benefactor had run afoul of environmental regulations. In 1996, the mine twice failed biomonitoring tests designed to protect water quality in the Caney Fork for fish and wildlife. Mine discharge "failed two acute tests for toxicity to Ceriodaphnia dubia," a species of water flea, according to a mine permit analysis by Tennessee environmental authorities. "The discharge of industrial wastewater from Outfall #001 [the Caney Fork effluent] contains toxic metals (copper and zinc)," the analysis stated. "The combined effect of these pollutants may be detrimental to fish and aquatic life." Tests for The Wall Street Journal by two independent Tennessee laboratories, conducted in September 1999 and this month, showed trace amounts of zinc and other metals in the Caney Fork that were in compliance with federal standards. But soil tests revealed what one lab called problematic "large quantities" of heavy metals in the riverbank soil downstream of the Caney Fork effluent. In both sets of tests, samples of water and soil were provided to the labs by the Journal. Soil samples drawn from the mine effluent and downstream "contained large quantities of Barium, Iron, and Zinc, as well as smaller amounts of Arsenic, Chromium and Lead," Warner Laboratories found in September. "The soil from each of these sites seems to have some problems according to our findings. The levels of Barium, Iron and Zinc far exceed any report limit [a detection threshold within the testing system] and it should be noted that these results are extremely high compared to typical soil found in a populated neighborhood." Tests conducted in June by the Environmental Science Corp. found similar traces of heavy metals in the water and soil. The report found the soil samples to contain relatively high levels of "Barium, Iron, Zinc, and several of the other metals, including Aluminum, Calcium and Magnesium." The ESC report also noted traces of cyanide in some water and soil samples. Pasminco is not required to test soil along the banks of the Caney Fork. Both labs, while noting anomalies in the soil, believe the results do not warrant concern as environmental hazards. The water and soil clearly are not, however, "as pure as they came," as Mr. Gore demands in "Earth in the Balance." A 1998 study by the Environmental Working Group, a Washington-based organization, criticized the zinc-mining operation for purchasing a toxic waste that included sulfuric acid and reselling it as fertilizer. The mine buys acid waste from steel plants, uses it as purification agent in zinc processing, and then sells the waste to fertilizer companies, according to a report in the Tennessean, a Nashville newspaper. Most soil scientists say the procedure is safe. Tennessee environmentalists disagree. "Clearly, when you spread those types of chemicals around on a farm or on the land, you're going to get a lot of runoff," Brian McGuire, executive director of Tennessee Citizens Action told the Tennessean. "So it's going to get into the water. We're poisoning ourselves." A Pasminco official noted that the mine has had few violations and works to uphold a "very strict standard" of environmental quality. The Gore campaign did not respond to requests for comment. But some Tennessee residents say Mr. Gore becomes testy when questioned about the zinc mine. Tom Gniewek, a retired chemical engineer from Camden, Tenn., has studied the zinc mine for years and tried to question Mr. Gore about it at town-hall meetings. "He gets real angry," Mr. Gniewek says. "Instead of answering the question, he attacked my motives and accused people like me of vandalizing the earth." Mr. Gore's original purchase of the zinc-rich land is of some interest as well, shedding light on his long relationship with Mr. Hammer, the former Occidental Petroleum chief. A controversial influence peddler who trafficked in politicians of all stripes and parties, Mr. Hammer pleaded guilty in 1975 to providing hush money in the Watergate scandal. Mr. Hammer cut a wide swath across Washington from the 1930s until his death in 1990 at 92. His controversial career was marked by decades of profitable business dealings with the Soviet Union, which were closely watched by the FBI. He leapt into the big time by acquiring Libyan oil rights for Occidental Petroleum through what biographer Edward Jay Epstein has characterized as a combination of shrewd business dealings and bribery. After his 1975 conviction, Mr. Hammer spent the rest of his life campaigning for a pardon, which President Bush granted in 1989. Mr. Hammer cultivated close relationships with many politicians, but he was closest to Mr. Gore's father, a U.S. senator from 1953 until 1971. Mr. Hammer's Occidental Minerals snapped up the zinc-bearing property in 1972. The senior Mr. Gore's farm is on the opposite bank of the Caney Fork. Mr. Hammer paid $160,000, double the only other offer, according to the Washington Post, which first disclosed details of the arrangement during the 1992 presidential campaign. According to deed documents in Carthage, a year later Mr. Hammer sold the land to the senior Mr. Gore for $160,000, adding the extremely generous $20,000 per year mineral royalty. Ten minutes after that sale, the former senator executed a deed selling the property, including the mineral rights, to his son, the future vice president, for $140,000. Albert Gore Sr. told the Post he kept the first $20,000 royalty for himself, evening up the father-son transaction. The purpose of the sale appears to have been transferring the annual $20,000 payment from Mr. Hammer to the young Mr. Gore. The Post reported that the "$20,000 a year amounts to $227 an acre, much more than the $30 an acre Occidental Minerals, part of Hammer's oil company, paid the senior Gore and some neighbors a few years before the 1973 arrangement." In 1992 then-Sen. Gore told the Post that although he had been working for "slave wages" as a newspaper reporter, he quickly came up with a $40,000 down payment from two previous real-estate investments. In 1974, the zinc mine began annual payments of $20,000 to Mr. Gore, an important source of income to the young politician for many years. After the senior Mr. Gore lost his 1970 Senate re-election bid, Mr. Hammer named him chairman of Island Creek Coal, an Occidental subsidiary, and appointed him to the board of directors of Occidental Petroleum. The late Mr. Gore's estate is conservatively valued at $1.5 million, including a block of Occidental stock worth between $250,000 and $500,000. The vice president is executor and trustee of his father's estate, with "sole discretion" to manage a trust on his mother's behalf. As Albert Gore Jr. rose through the political ranks, Mr. Hammer continued to assist him. The Hammer family and corporations made donations up to the legal maximum in all of Mr. Gore's campaigns, according to Mr. Hammer's former personal assistant, Neil Lyndon, writing in London's Daily Telegraph. Mr. Gore regularly dined with Mr. Hammer and Occidental lobbyists in Washington, Mr. Lyndon wrote. "Separately and together, the Gores sometimes used Hammer's luxurious private Boeing 727 for journeys and jaunts." The former Hammer aide noted that the "profound and prolonged involvement between Hammer and Gore has never been revealed or investigated." Mr. Hammer was famous for his dealings with the Soviet Union, and received a humanitarian award in Moscow in 1987 from International Physicians Against Nuclear War. Mr. Gore, who had been elected to the Senate in 1984, delivered a speech to the same convention, saying conventional arms should be cut along with nuclear weapons. As vice president, Mr. Gore became the Clinton administration point man on relations with Russia. Mr. Gore would be well served to get the facts out about his relationship with Mr. Hammer, beginning with the zinc bounty. The issue is bigger than whether there is a pollution problem in Tennessee. When Mr. Gore's zinc riches are at stake, he appears unwilling to live by the standards he sets out for others in "Earth in the Balance." His record of uncompromising environmental rhetoric seems another instance of the kind of hypocrisy that has dogged his campaign for months. He's been accused of being a slumlord for providing substandard housing to a tenant on a rental unit adjoining his farm. A well-remembered 1996 speech to the Democratic National Convention, invoking his sister's death by lung cancer and attacking the tobacco industry, also contributed to his reputation for slippery sanctimony when his close ties to Tennessee tobacco were revealed. And of course Mr. Gore has been sharply criticized for posturing on campaign finance reform while under investigation for possible fund-raising crimes in the 1996 campaign. No mention of the zinc mine appears in "Earth in the Balance," on Mr. Gore's campaign Web site or in his speeches. At this point the story of the Tennessee farm, the zinc mine, the politician and the influence peddler is largely one of cant and hypocrisy. This is not a hanging crime in the political world, but the vice president, among others, might note that Bill Clinton's problems also began with a murky land deal and a shady financier. Click here to read "Vetting the Frontrunners." === http://www.opinionjournal.com/extra/?id=65000070 VETTING THE FRONTRUNNERS Albert Gore Jr.: Occidental and Oriental Connections Originally published in The Wall Street Journal, Sept. 29, 1999. BY MICAH MORRISON Saturday, August 12, 2000 12:01 a.m. EDT CARTHAGE, Tenn.--On his 1998 tax returns under "supplemental income," Vice President Al Gore lists a $20,000 royalty payment from Union Zinc Inc. for the right to mine zinc from his 88-acre farm here in the verdant hills of the Cumberland River valley. In the 25 years he has held the zinc lease, Mr. Gore has earned more than $450,000. The man who provided Mr. Gore with that farm and mineral lease is of some note as the 2000 presidential race begins. Mr. Gore's father, former Sen. Albert Gore Sr., acquired the land and mineral rights on what appears to be highly favorable terms from Armand Hammer, the late chairman of Occidental Petroleum Corp. Mr. Hammer, an influence peddler of the highest magnitude, trafficked in politicians of all parties and stripes; he pleaded guilty in 1975 to making illegal contributions to Richard Nixon's campaign in the Watergate affair. But the closest and most sustained of Mr. Hammer's connections seem to have been with the elder Mr. Gore and his family. It was the earliest of a number of controversial associations that tarnish the stiff Boy Scout image of Al Gore Jr. As mentioned in yesterday's story on George W. Bush, this two-part series is not a tale of smoking guns and indictable offenses. Yet voters should know the financial connections of candidates, though they probably will make their decisions on other grounds. And while the candidates will not appreciate questions being raised about the murky areas of their finances, the lessons of the Clinton era suggest that it is better to put matters on the table early, lest they rise Whitewater-like to haunt a new administration. The Hammer-staged zinc payments were first disclosed by Charles Babcock of the Washington Post in 1992, as then-Sen. Al Gore Jr. campaigned on the presidential ticket with an Arkansas upstart named Bill Clinton. An Occidental Petroleum subsidiary, Occidental Minerals, had negotiated the generous terms for Occidental's right to mine minerals beneath the land in 1972. The senior Mr. Gore had set his sights on the land as early as 1970, Mr. Babcock reported. Occidental Minerals purchased the estate from a local widow in 1972; within a year, Mr. Gore Sr. had bought the property and sold it to his son. The $20,000 annual lease payment amounted to $227 an acre, much more than the $30 an acre Mr. Hammer's company had been paying locally only a few years earlier. Until 1985, Mr. Babcock noted, Occidental paid Mr. Gore Jr. "$190,000 for the lease without mining under the property because it never built a mine in the area." In 1985, it sold the lease to Union Zinc, which began mining operations. The mine has changed hands several times since and is now owned by Pasminco, an Australian company. Mr. Babcock's 1992 article said the lease payment was the senator's "most important source of income after his salary." In recent years, Mr. Gore's steady zinc profit has been eclipsed by his environmental bestseller, "Earth in the Balance," which has earned more than $1.1 million in royalties, according to the vice president's tax returns and financial-disclosure statements. After the elder Mr. Gore lost his 1970 Senate re-election bid, Mr. Hammer placed him on Occidental Petroleum's board of directors and named him chairman of an Occidental subsidiary, Island Creek Coal Co.--posts that would bring him more than $500,000 per year. The senior Mr. Gore died in December. He is survived by his wife, Pauline. The vice president was named executor and trustee of his father's estate, and was given "sole discretion" to manage a trust on his mother's behalf. The vice president's 1998 financial disclosures value the estate in a range between $266,000 and $565,000, including a block of Occidental Petroleum stock listed at a value of between $250,000 and $500,000. Local property records, however, place the value of Mr. Gore Sr.'s land holdings alone at more than $1.1 million. Mr. Hammer was generous with the younger Mr. Gore as well, beyond the zinc lease. Occidental Petroleum was one of the largest contributors to Mr. Gore's successful 1990 bid for Senate re-election. The Hammer family and corporations made donations up to the legal maximum in all of Mr. Gore's campaigns, according to Mr. Hammer's former personal assistant, Neil Lyndon, writing in London's Daily Telegraph. Mr. Hammer was Mr. Gore's guest at the 1981 inauguration of Ronald Reagan. In May 1987, Mr. Gore and Mr. Hammer were in Moscow for a convention of International Physicians Against Nuclear War, a group calling for the abolition of all nuclear weapons. Mr. Hammer received a humanitarian award from the group; Mr. Gore delivered a speech saying conventional arms should be cut along with nuclear weapons. A month later, Mr. Hammer hosted a luncheon for presidential candidate Gore in Los Angeles. Mr. Lyndon wrote that the younger Mr. Gore regularly dined with Mr. Hammer and Occidental lobbyists in Washington, and that he and his wife, Tipper, attended Mr. Hammer's lavish parties. "Separately and together, the Gores sometimes used Hammer's luxurious private Boeing 727 for journeys and jaunts," Mr. Lyndon noted. The former Hammer aide added that the "profound and prolonged involvement between Hammer and Gore has never been revealed or investigated." Vice President Gore's office did not respond to a request to discuss Mr. Hammer. Mr. Hammer died in 1990 at 92. The Hammer myth, developed with great care during his lifetime, presented the billionaire industrialist as a generous patron of the arts and a champion of peace during the Cold War. But the reality behind the myth was far different. In his penetrating 1996 book, "Dossier: The Secret History of Armand Hammer," author Edward Jay Epstein demolished the elaborate biographical backdrops Mr. Hammer and his helpers erected. Drawing on FBI documentation and files from Moscow intelligence agencies, Mr. Epstein told the story of Mr. Hammer's extensive business dealings with the Soviet Union. Mr. Hammer helped develop, and exploited for his business purposes, the image of a benign and profitable communist colossus, at a time when Stalin was murdering millions. Lenin himself, Mr. Epstein documents, told Stalin that Mr. Hammer was a "path leading to the American business world, and this path should be made use of in every way." Mr. Hammer mined asbestos and brokered the production of tractors and pencils for Stalinist Russia. He cut lucrative fur deals. He trafficked in Czarist art, real and forged. He laundered millions for the Soviet Union in sham transactions. Later, Mr. Epstein reports, Mr. Hammer leapt into the big time by acquiring Libyan oil rights for Occidental Petroleum through a combination of shrewd dealing and bribery. Much of this was not a secret in Cold War Washington, certainly not to J. Edgar Hoover. But Mr. Hammer also collected politicians, among them Albert Gore Sr. In 1950, Mr. Epstein writes, Mr. Hammer made then-Rep. Gore "a partner in a cattle-breeding business, and Gore made a substantial profit." Over the years, as Mr. Gore rose in prominence and went on to the Senate, many favor-seekers traveled to Tennessee to purchase some very expensive cattle. The profits allowed the senator and his family to live in luxury at Washington's Fairfax Hotel. In return, Mr. Gore provided several valuable services to Mr. Hammer, including fending off the FBI. In 1972, a Hammer operative gave $54,000 in laundered hundred-dollar bills to Nixon fund-raiser Maurice Stans for use in the Watergate coverup. Questioned by the FBI and a Senate committee, Mr. Hammer lied about the money. But his flunkies crumbled under questioning. In 1975, Mr. Hammer pleaded guilty to three counts of making illegal campaign contributions. He spent the rest of his life campaigning for a pardon, which President Bush granted in 1989. Mr. Hammer also had close ties to two lawyers who later would play important roles in the Clinton administration: Mickey Kantor, who served as commerce secretary, U.S. trade representative and White House damage-control specialist, and Gerald Stern, the Justice Department's special counsel for financial-institution fraud. Mr. Stern was on Occidental Petroleum's payroll as senior general counsel before coming to Washington. Mr. Kantor was a key player as outside counsel to Occidental when his law firm, Manatt, Phelps, Phillips & Kantor, waged a long and ultimately unsuccessful battle to open portions of the California coast to oil drilling. Mr. Kantor was the 1992 Clinton-Gore campaign chairman and head of the transition team; Mr. Stern, a boyhood friend of Mr. Kantor's, was staff coordinator of the transition team. At Justice, Mr. Stern managed the department's largely fruitless efforts to get to the bottom of the BCCI banking scandal. A decade earlier, before Mr. Stern worked for Occidental, Mr. Hammer had been deeply involved in his own maneuvering to gain control of Financial General Bankshares, a Washington, D.C., bank holding company. When his takeover attempt did not succeed, Mr. Hammer sold his interest in Financial General to BCCI front men in 1981. BCCI was shut down in 1991 amid charges of global bank fraud. Mr. Gore's lifelong association with Armand Hammer casts some doubt on the popular impression that he was unsullied before accepting the vice presidential nomination on Bill Clinton's ticket. In fact, some of the most controversial figures in the Clinton scandals came into the administration from the Gore camp. Craig Livingstone, the central player in the appearance of hundreds of FBI files at the White House, is a former Gore advance man. Nathan Landow, who entertained former White House volunteer Kathleen Willey while apparently trying to suppress her story about the president's sexual advances, was a Gore fund-raiser, and remains one today. Mr. Landow has denied any wrongdoing in the Willey matter and no charges were brought against him. And Mr. Gore had his own, independent connections with some of the Asian figures made famous by the Clinton scandals. His notorious appearance at a 1996 fund-raiser at the Hsi Lai Buddhist temple in California--where $65,000 was funneled to the Clinton-Gore effort through the use of Buddhist monks as conduits--followed a decade-long association with fundraiser Maria Hsia, who staged the temple event. A Senate Governmental Affairs Committee report identifies Ms. Hsia as "an agent of the Chinese government." The six-volume report details the Gore connection with Ms. Hsia, as well as a lengthy relationship with campaign-finance figures James Riady and John Huang. The dry committee report is engagingly retold for the nonobsessive in Bob Zelnick's useful 1999 biography, "Gore: A Political Life." "Gore and the Buddhists went back a long way," Mr. Zelnick notes, "and always at the center of the relationship was money for the Tennesseean and his campaigns." Ms. Hsia, Mr. Riady and Mr. Huang were instrumental in bringing then-Sen. Gore to Taiwan in January 1989 under the auspices of a lobbying group they had formed a year earlier, the Pacific Leadership Council. Mr. Riady's Lippo Group provided the seed money for the trip; Mr. Huang handled the itinerary. Following Sen. Gore's 1989 trip, Ms. Hsia and the Pacific Leadership Council "helped run numerous fundraising events on his behalf," the Senate Governmental Affairs Committee reported, "organizing Asian-American and Indo-Americans in Tennessee for Gore's re-election." Ms. Hsia, an immigration broker, "enlisted Senator Gore's office in trying to help her arrange business deals--on a commission basis--between Tennessee businesses and Taiwanese business contacts." While offering few details, the Governmental Affairs Committee's final report stated that Ms. Hsia had been "an agent of the Chinese government, that she acted knowingly in support of it, and that she has attempted to conceal her relationship" with it. Ms. Hsia is currently under indictment in the Buddhist Temple scheme; her attorney has denounced the charges as "absolutely false." Ms. Hsia also was no stranger to Peter Knight, the sometime Washington lobbyist who is Mr. Gore's current senior fund-raiser. In his book, Mr. Zelnick reports that Mr. Knight and Leon Fuerth--Mr. Gore's longtime national security assistant--urged Mr. Gore in 1988 to accept Ms. Hsia's invitation to Taiwan. Mr. Knight's interest, Mr. Zelnick suggests, was to develop the Asian-American community both on his boss's behalf and to further his own career as a lobbyist. In 1996, Mr. Knight signed on as campaign manager of the Clinton-Gore re-election effort. As the campaign-finance scandal unraveled, Mr. Knight and Mr. Landow--the Democratic fund-raiser involved in the Kathleen Willey affair--were widely criticized for squeezing a $100,000 donation out of the impoverished Cheyenne and Arapaho tribes of Oklahoma and attempting to extract business concessions from them. Mr. Landow told the Washington Post that he met with the tribes only to be "polite" and did nothing improper in seeking further business with them related to mineral rights in a long-running land dispute with the federal government. These days, he is back in action on Mr. Gore's behalf, helping raise $50,000 at a Maryland event in May. The vice president's office did not respond to a request for details on Mr. Landow's current role in the Gore campaign. Mr. Knight told the Post that he himself had only minimal contact with tribal representatives; according to the Post, his lobbying firm had been seeking a $100,000 retainer and a $10,000-a-month fee from the tribes in the land dispute. Mr. Knight came under congressional scrutiny as well for his lobbying efforts on behalf of Molten Metals Technology, a Massachusetts toxic-waste cleanup firm that donated $90,000 to the Democrats in 1996. In a separate probe, the House Commerce Committee referred to Attorney General Janet Reno questions about a $1 million fee Mr. Knight received after lobbying federal officials to move the Federal Communications Commission headquarters to a building complex controlled by Tennessee developer Franklin Haney, a Gore family friend and Knight client. No charges were brought in either matter. In a separate prosecution, Mr. Haney was acquitted in July on 42 counts of making illegal contributions to Mr. Gore and other politicians. Mr. Gore also raised eyebrows in May with the appointment of former Rep. Tony Coelho to run his presidential campaign. Among hardened political professionals, the move was taken as a sign that the Gore campaign will not overly trouble itself about the ethical quandaries of big-time money raising. In 1989, Mr. Coelho beat a hasty retreat from Congress as scandal clouds gathered around him. The immediate cause of his departure was an undisclosed financial relationship with financier Michael Milken. But Mr. Coelho by that time had become infamous as a pioneer of the hardball political shakedown, threatening business and political action committees for "donations" with the reminder that congressional Democrats were in a position to punish their enemies and reward their friends. It was politics as blood sport, and Rep. Coelho pursued it with a vengeance. One friend that reaped the reward was the savings-and-loan industry. Mr. Coelho raised millions for the Democratic Party from S&L owners, including hosting parties aboard a Potomac yacht named the "High Spirits," owned by Vernon Savings & Loan of Texas. He rewarded his S&L friends in 1987 by helping to gut a House reform package, prolonging a debacle that cost the taxpayers more than $200 billion. Vernon's owner eventually was convicted of looting the S&L, and Mr. Coelho was forced to reimburse the conservators for the use of the yacht. Does any of this matter to the 2000 presidential race and a possible Gore administration? In many respects, Al Gore and George W. Bush have similar histories as sons of prominent politicians. But unlike his putative presidential opponent, Mr. Gore has not relied on his father's connections in cutting deals leading to great personal wealth. He has, however, toiled at the feet of not only Bill Clinton but Armand Hammer, another master of transient morality, and his taste in associates tends to raise doubts about his clean-cut persona. This of course is no disqualification from serving as president. The charitable voter would recall the words of that political sage Mr. Dooley: "Politics ain't beanbag." Click here to read "Al Gore, Environmentalist and Zinc Miner" George W. Bush: From Oil to Baseball to the Governor's Mansion Originally published in The Wall Street Journal, Sept. 28, 1999. BY MICAH MORRISON Saturday, August 12, 2000 12:01 a.m. EDT AUSTIN, Texas--In April, the office of Gov. George W. Bush released a statement summarizing his 1998 taxable income. Mr. Bush had earned over $18 million, the "vast majority" from the sale of the Texas Rangers baseball team. The governor's share of the Rangers sale was $14.9 million, his biggest payday ever. Mr. Bush played a significant role in putting together the investment group that purchased the Rangers in 1989; he later was named a general partner of the franchise. Prior to his career in baseball, he had struggled for more than a decade in the oil business. How Mr. Bush parlayed a lackluster tenure in the oil patch into a $15 million home run and a seat in the governor's mansion is a subtle morality tale about the highways and byways to contemporary political power. Like Vice President Albert Gore Jr., who will be the subject of an article on this page tomorrow, Mr. Bush is the son of an influential politician. Like Mr. Gore, Mr. Bush has crossed paths with some of the seamier characters who gravitate toward political power. And both men--while not without pluck and political skills of their own--have profited from family connections. This two-part series is not a tale of smoking guns and indictable offenses. Yet voters should know the financial connections of candidates, though they probably will make their decisions on other grounds. And while the candidates will not appreciate questions being raised about the murky areas of their finances, the lessons of the Clinton era suggest that it is better to put matters on the table early, lest they rise Whitewater-like to haunt a new administration. Mr. Bush's career with the Rangers baseball team, for example, is likely to come under intense scrutiny in the next 12 months. In 1989, when Mr. Bush brought together his investment group to buy the Rangers, the seller was Eddie Chiles, a longtime friend and supporter of President Bush. Mr. Chiles let the president's son and his group go to the head of the line. But in a pattern repeated through his business career, Mr. Bush's play did not quite make the grade. Baseball Commissioner Peter Ueberroth stepped in, brokering a deal that brought Fort Worth financier Richard Rainwater together with the Bush group. Mr. Ueberroth's pitch to Mr. Rainwater was that he join the deal partly "out of respect" for President Bush, a source close to the negotiations told the New York Times. Mr. Bush ponied up $500,000 as his personal grubstake in the $86 million purchase. He later invested another $106,000, bringing his share to 1.8% of the team. For his organizing efforts, his new partners rewarded him with an additional 10% interest. They also named him a managing general partner, a move that assured Mr. Bush a series of benign cameos in the limelight as he ramped up a run for Texas governor. Mr. Bush kept a low profile as his new baseball partners aggressively and successfully lobbied for a special referendum in which the voters of Arlington, Texas, approved a sales-tax increase to cover the $135 million cost of a new stadium. Texas conservatives denounced the measure as "corporate welfare." Mr. Bush borrowed the $500,000 for his stake in the Rangers from United Bank of Midland, Texas, where he had served as a director from 1984 to 1986. Karen Hughes, a spokeswoman for Gov. Bush, declined to detail the terms of the loan. But she said it was a "fully collateralized, traditional loan, and fully paid off." In fact, the loan was paid off through the sale of stock Mr. Bush had been awarded in his only successful venture in the oil business, as a director of Texas-based Harken Energy Corp. Barely afloat in the tough oil market in the early 1980s, Mr. Bush joined Harken as a director in 1986. He was given 212,000 shares of Harken stock, worth about $500,000, or $2.50 a share, at the end of the year--although he had no daily management responsibilities. He later acquired an additional 133,000 shares through special offerings to company directors, and he was paid between $42,000 and $120,000 a year for the next five years as a consultant. Prior to joining Harken, Mr. Bush's business record was not good. He started his first firm, Arbusto Energy, in 1977, the headiest days of the oil patch, and was buffeted along with all the others by the high interest rates and collapsing oil prices of the next few years. Hoping to boost its fortunes, he changed Arbusto's name to Bush Exploration, then merged it with Spectrum 7 Energy Corp. in an effort to stay afloat. As the hard times continued, Spectrum merged with Harken Energy. Harken viewed Mr. Bush's famous name as an important asset, oil industry executives close to the deal have said. Harken officials will not comment about Mr. Bush, but records show that the company's stock began to climb right after the Spectrum merger was announced, hitting $6 a share within a year before falling back. Mr. Bush was philosophical about losing his management role in the oil business but retaining profit. "I try to talk up Harken whenever I can," he told Forbes magazine in June 1987, "and I'd feel a lot worse if the stock hadn't tripled." In 1989, Harken's stock was trading at between $4 and $5 a share. That's when Mr. Bush put up his shares as collateral for the Rangers loan. In January 1990, with shares trading around $4.50, Harken announced that it had signed a potentially lucrative oil-exploration deal with the government of Bahrain. On June 20, 1990, Mr. Bush sold the bulk of his Harken stock for $848,000, at $4 a share, and paid off the Rangers loan. Eight days later, Harken finished the second quarter with losses of $23 million, and the stock went into a nosedive, losing nearly 75% of its value, finishing the year at a little over $1 a share. Critics of Mr. Bush cried foul, charging that as a Harken director he was in a position to trade illegally on insider information before the stock's decline. Mr. Bush ultimately was cleared by the Securities and Exchange Commission. But suspicions of Mr. Bush's lucky timing had heightened at first, when the SEC, discovering that he had not filed the proper disclosure form, opened an investigation into the president's son. Mr. Bush claimed that he did file the correct form, but that it had been lost. He also said that he had cleared the stock sale with Harken's general counsel. "At the time of the sale," explained Ms. Hughes, the Bush spokeswoman, "he did not know about the losses that would later be posted." Mr. Bush was not selling ahead of bad news, Ms. Hughes said, but into the good news that the Bass brothers, Texas billionaires with deep pockets and overseas drilling experience, were inking a joint-exploration pact with Harken in Bahrain. In October 1993, the SEC sent Mr. Bush's attorney a letter stating that "the investigation has been terminated into the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him." Harken's Bahrain deal was also a piece of exceptional luck. It raised oil-industry eyebrows when the government of that Persian Gulf state announced it had chosen tiny Harken to explore an offshore site for gas and oil. Harken appeared to have little to offer the Bahrainis. It had no overseas experience and no experience with offshore drilling. Bahrain officials have since said they had no idea President Bush's son was associated with Harken, a claim oil-industry sources ridicule. Former Harken exploration chief Monte Swetnam told the New York Times earlier this year that there "was never any question" that Bahraini officials knew about Mr. Bush and that they "were clearly aware that he was the President's son." The Bahrain deal was brokered in part by Arkansas investment banker David Edwards, one of Bill Clinton's closest friends. Formerly an employee of Arkansas investment powerhouse Stephens Inc., Mr. Edwards now runs his own firm in Little Rock and has wide connections in the Middle East. At the start of President Clinton's first term, he brokered a $23 million Saudi contribution for a Middle East studies center at the University of Arkansas at Fayetteville. While Mr. Edwards was at Stephens, one of his clients was Saudi financier Abdullah Taha Bakhsh. In 1987, soon after Mr. Bush joined Harken, Mr. Edwards brought Mr. Bakhsh together with the Texas firm. Harken was struggling with debt and in need of cash. Mr. Bakhsh bought a 17% stake in the company. His American representative, Chicago businessman Talat Othman, was given a seat on Harken's board. By August 1990, Mr. Othman was attending White House meetings with President Bush to discuss Middle East policy. Mr. Bakhsh and Mr. Othman did not respond to an interview request. But in 1995 an attorney representing both men told the Journal that Mr. Othman's visits to the White House were solely based on his "longstanding involvement in Arab-American affairs." Mr. Bakhsh also was a co-investor in Saudi Arabia with Ghaith Pharaon, a front man for the corrupt Bank of Credit and Commerce International, which was shut down in 1991 with some $10 billion in losses following a global looting spree. Mr. Bakhsh's banker in Saudi Arabia was Khalid bin Mahfouz, head of the country's largest bank, National Commercial, and one of the key players in the BCCI scandal. Stephens Inc. also crossed paths with BCCI, handling an early, unsuccessful effort by figures later identified as BCCI front men to acquire Financial General Bankshares, a Washington, D.C., bank holding company. Stephens withdrew from the deal, but within a few years the same group of front men won Federal Reserve approval to buy Financial General. In 1992, Mr. bin Mahfouz was charged by Manhattan District Attorney Robert Morgenthau and the Federal Reserve Board in separate actions with scheming to conceal BCCI's role in U.S. banking. He reached a settlement in which he paid $225 million in fines and restitution, with the understanding that he would not again seek a major role in U.S. banking. Mr. Pharaon has been permanently banned from the U.S. banking industry and fined $37 million for his role in the BCCI scandal. Mr. Bakhsh was never charged with any wrongdoing and his attorney told the Journal that the Saudi financier "was not involved in any way in any of the matters or transactions that constituted the BCCI scandal." It wasn't long after introducing Mr. Bakhsh and his money to Harken Energy that Mr. Edwards again surfaced with another lucrative deal. In 1988, the government of Bahrain had retained Houston oil consultant Michael Ameen, a former head of governmental relations for Aramco and an old friend of Mr. Bakhsh, to handle the search for a company to explore a possible new oil and gas field offshore. Mr. Edwards, who by then had left Stephens, learned of the Bahrain contract from Mr. Ameen and soon was representing Harken with the Bahrainis. Harken quickly beat out the big boys for the oil-exploration franchise; Bahraini officials have explained that they were looking for a small company that would devote full attention to them. Mr. Edwards did not respond to an interview request. A wide-ranging 1991 team report by Wall Street Journal reporters Thomas Petzinger Jr., Peter Truell and Jill Abramson revealed many of the BCCI links to Mr. Bush and Harken, but found no evidence of improbity by anyone connected to the company. "The mosaic of BCCI connections surrounding Harken Energy may prove nothing more than how ubiquitous the rogue bank's ties were," the article noted. "But the number of BCCI-connected people who had dealings with Harken--all since George W. Bush came on board--likewise raises the question of whether they mask an effort to cozy up to a presidential son." Mr. Bush told the Journal in 1994 that he been "against the Bahrain deal" and he had "no idea that BCCI figured into" Harken's financial dealings. Harken officials refuse to release any documents, such as board minutes, that might support Mr. Bush, though two company executives have publicly stated he opposed the Bahrain operation. The Bahrain oil project resulted in two dry holes and Harken Energy abandoned the project. Mr. Bush had pretty much cashed out by then, and in November 1993 he resigned from Harken's board. He was replaced by the well-connected Mr. Ameen. The international oil business has produced a rich set of ties between Saudi Arabia and Texas. To this day, Mr. bin Mafouz of National Commercial Bank and BCCI maintains a palatial home in Houston. He has also had a long and varied business association with James Bath, an aircraft broker and friend of George W. Bush from their days together in the Texas Air National Guard. Mr. Bath invested $50,000 in Mr. Bush's first company, Arbusto Energy. In 1978, Mr. Bath became a director of Houston's Main Bank. Among his fellow investors was Mr. bin Mahfouz, the Saudi banker and BCCI principal; Mr. Pharaon, the BCCI front man; and former Treasury Secretary and Texas Gov. John Connally. Main Bank was absorbed into larger banks in a series of industry mergers in the 1980s. Mr. Bath's interesting connections to Saudi Arabia go back to at least 1976. It was then, according to a report in the Houston Chronicle, that Salem bin Laden, heir to one of the largest building companies in the Middle East, signed a trust agreement appointing Mr. Bath his Houston representative. (Salem bin Laden's half-brother, Osama bin Laden, has in recent years gained world-wide notoriety as a funder of fundamentalist terrorism, though he has reportedly broken with his family in Saudi Arabia). Court documents show that Mr. Bath purchased an airfield in south Texas, Houston Gulf Airport, in 1978 on behalf of Salem bin Laden. Mr. bin Laden died in a plane crash near San Antonio in 1988, and his interest in the airfield passed to Mr. bin Mahfouz, according to the Chronicle. Mr. Bath later founded Southwest Airport Services to manage Houston Gulf Airport and also to provide fueling service at another Houston-area airport, Ellington Field, where the company fueled military aircraft. Mr. Bath also was the president of Skyway Aircraft Leasing Ltd., a Cayman Islands-registered company that acted as a supplier of large passenger and cargo jets. According to a court document cited by the Houston Chronicle, and to someone familiar with Skyway's operation who spoke recently to the Journal, the true owner was Mr. bin Mahfouz. Mr. Bath did not respond to requests for an interview. Questioned by the Houston Post in 1990, Mr. Bush said he had "never done any business" with Mr. Bath, but that Mr. Bath was "a lot of fun." Last month, Ms. Hughes, the Bush spokeswoman, said that other than the Arbusto investment, "Gov. Bush did not have any other financial dealings with Mr. Bath." She said Gov. Bush has seen Mr. Bath once or twice at social events over the past six years. A review of the Bush record as governor finds few traces of the past financial connections reviewed above. The one exception might be the January appointment of Kem Thompson Frost, a lawyer who has represented Mr. Bath, to the Texas 14th Court of Appeals. Ms. Frost's law firm, Winstead, Sechrest & Minick, has contributed to Mr. Bush's gubernatorial and presidential campaigns an amount that "exceeds $50,000," according to Texans for Public Justice, a campaign-finance monitor. In a brief telephone interview, Judge Frost said her work for Mr. Bath "ended in the early 1990s." She added that she had "never met Gov. Bush, never discussed Mr. Bath with any of his representatives, and filled out a standard judicial application." If he wins the presidency, Mr. Bush would have great direct and indirect influence over issues of more moment to his past associates--such as relations with Saudi Arabia. Issues of law enforcement also are particularly sensitive, as we've seen in the Clinton administration. Mr. bin Mahfouz has never been explicitly banned from U.S. banking, for example, and has vigorously tried to rehabilitate his reputation--at one point enlisting the aid of Harvard Law Prof. Laurence Tribe to write a 38-page report denouncing BCCI prosecutors for "scapegoating" the Saudi banker. More recently, Mr. bin Mahfouz was ousted as head of National Commercial Bank in a murky power play reportedly engineered by the Saudi Arabian Monetary Agency. A family representative says Mr. bin Mahfouz then confined himself to a military hospital for treatment of drug abuse; his wife and sons still maintain a substantial stake in the bank. Any president has to balance his public duties with his inevitable private associations. Mr. Bush has collected a rather rich assortment of connections in his career as the son of a man who was president, vice president and director of the Central Intelligence Agency. His personal financial position seems secure, thanks in no small way to friends of his father. This is of course no disqualification from serving as president. Indeed, a charitable voter might consider it a plus, on the assumption that the experience has taught him some lessons and he has learned something about when to keep a healthy distance. -- ----------------------- NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml ----------------------- ________________________________________________________ 1stUp.com - Free the Web Get your free Internet access at http://www.1stUp.com <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. 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