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Insider Trading and George Bush:
Oily to Bed, Oily to Rise
by Mitchel Cohen,
Brooklyn Greens / Green Party USA
The role of oil and insider dealing in the Bush White House is nothing new,
but it is always startling. In late 1990, Mobil Oil took out an ad in The
N.Y. Times claiming that the company was doing nothing more than passing
along to consumers increased costs imposed on it, and was not profiting at
all from the US military build-up in Saudi Arabia. "On average, the price
of crude oil has risen 24 cents a gallon," Mobil stated, "[while] gasoline
prices have also gone up an average of 24 cents a gallon."[Mobil Corp. Ad,
NY Times, 1990.] The company said that the statistics "refute the
ill-conceived notion that there has been any 'price gouging' on our part."
Shell Oil claimed that it, too, had exercised "restraint in passing through
these cost increases to consumers." At one point, prices at the wellhead
doubled to a high of $41 per barrel (there are 42 gallons of oil in a
barrel) even though there had been no reciprocal decrease in the world's
oil production. In fact, by all accounts there had been an oil GLUT. Saudi
Arabia even expanded its output by two million barrels a day to more than
offset the amount of oil "lost" to the invasions, sanctions and boycott. By
the capitalist law of supply and demand, prices to consumers should have
crashed. But they didn't.
Contrary to Mobil's claims that it was just "passing along" to consumers
nothing more than what the company had to pay at the wellhead, in reality
prices at the retail pump rose far faster than the increased costs to the
company. But, just as today's press barely touches George Bush and the
larger context in which his relationship to Harken Oil takes on profound
significance beyond a little "insider trading," the oil companies' arrogant
statements and outright lies twelve years ago simarly went unchallenged by
the press.
In fact, petroleum companies oiled their slick propaganda machines and
spent millions of dollars on ads portraying themselves as the biblical
David fighting against Saddam Hussein's Goliath. They asserted that they
were champions of the consumer demand for cheap oil, and yelped that it was
Saddam, not them, who was causing US consumers to get ripped off. To hear
them, you'd think they were barely able to keep up with rising costs in
their efforts to keep prices down; how could anyone possibly accuse "our"
oil companies of exploiting our helplessness for their own profit?
So it was with great interest that I looked up the business reports for the
final quarter of 1990. In the course of the military build-up, Mobil's
profits increased by an astounding 46 percent. Far from simply limiting
themselves to passing along additional costs to consumers, the giant
corporation made $651 million off of consumers in that single quarter.
Shell's profits jumped 69 percent to $446 million.
Exxon's profits were up 21 percent in the last three months of 1990, for a
quarterly profit of $1.4 billion. (Its profits were actually up 220
percent, but Exxon used sleight of hand accounting, amortizing all sorts of
debts. Here's another set of accounting procedures for the Enron-watchers
to examine!)
Texaco's profits were up 35 percent.
Amoco's profits were up 46 percent.
Chevron made $633 million.
All together, the top five oil companies made $4.8 billion in profits in
the last quarter of 1990 alone. Meanwhile, the average rate they paid in
taxes was slightly less than 4 percent -- equal to the tax-rate for an
individual earning under $5,475 a year.
It is in this context that we have to look at George W. Bush's involvement
with Harken Energy Corporation a context that the press has not covered.
The US military build-up in Saudi Arabia began in August of 1990. George
Bush Sr. was the President, and he gave his famous speech calling for a New
World Order on September 11th of that year. He said: "We have before us the
opportunity to forge for ourselves and for future generations a New World
Order, a world where the rule of law, not the law of the jungle, governs
the conduct of nations."
The "rule of law," as it turns out, was a boon to his son George Bush Jr.,
who was a director, large stockholder and $120,000-a-year consultant to the
Harken Energy Corp. until a month before the US troops arrived in the
Persian Gulf. Harken "just happened" to hold a "rule of law" contract
guaranteeing it "exclusive rights to develop, produce and market oil and
gas off the shores of Bahrain." The contract had begun in January 1990. The
company was actually $150 million in debt by the time hundreds of thousands
of US troops began arriving in the region. One Houston-based energy
analyst, Charles Strain, told Forbes Magazine that such an exclusive
contract was "an incredible deal, unbelievable for this small company."
None of this has appeared in the American press. One would think that the
current President's economic investments, which were fostered by the US
military build-up in Saudi Arabia and the subsequent bombardment of Iraq,
would be a subject worth examining! As it was, the US bombardment killed
200,000 people outright and destroyed the countryside, drinking water,
sanitation facilities for a generation.
How was it that George W. Bush could profit so handsomely from "the rule of
law" while other investors in the company were forced to eat the $150
million deficit? Who else was in the know?
Harken's Board of Directors included a who's who of the Bush
administration, then and now. In addition to one of South Africa's
wealthiest and most powerful industrialists, a number of people involved in
the notorious Nugan Hand Bank conspiracy of 1982 -- one of the most
important and yet hardly reported bank collapses in history with ties to
the CIA, drug dealing and the Iran-Contra scandal -- sat on the Board.
(George Bush Sr., as Vice-President, had done a remarkable job of covering
it up. Shades of his involvement with the Carlyle Group today, its billion
dollar dealings in Saudi Arabia and its involvement with the Unocal oil
pipeline now slated for Afghanistan!) Among those on the Harken Board were
principals in the $1.4 trillion Savings & Loan bail-out. The lead attorney
for Nugan Hand Bank was William Quasha, the father of Harken's CEO Alan G.
Quasha. One Nugan Hand launders the other.
In May of 1990, a classified U.S. State Department report warned of Saddam
Hussein's growing frustration with Kuwait's undercutting of Iraq's oil
pricing in violation of longstanding agreements. At the time, Saddam
Hussein was an important ally of the United States; the CIA even had a hand
in installing Saddam Hussein to power in Iraq. Iraq had just emerged from 9
years of bitter warfare against Iran at the United States' behest, leaving
more than 1 million people dead. But then Kuwait's emirocracy was
discovered to be "slant drilling" into Iraqi territory and stealing Iraq's
oil. Saddam openly discussed the pros and cons of an oil embargo and
possible incursion into Kuwait as a means to rectify Iraq's legitimate
grievances. Under instructions from the Bush White House, US State
Department emissary April Glaspie met with Hussein in Baghdad and gave him
the "green light" to go into Kuwait to protect Iraq's sovereignty.
In June 1990, George Bush Jr., who had borrowed almost $200,000 from Harken
Oil, suddenly sold most of his Harken stock for $848,560. In August, Iraqi
troops moved into Kuwait, Harken stock plummeted by 25 percent, and Junior
saved himself $212,140 by selling his shares just before the military
operations began. What luck! (And still nothing about any of this context
in the press today other than an occasional query of whether Bush knew that
his stocks would drop!)
Writing in the Houston Post, reporter Peter Brewton noted that Harken's
"potentially lucrative drilling rights in the Persian Gulf are being
protected by American troops" sent there, ostensibly, to face Iraq.
[Guardian, Dec. 12, 1990.] It took a full two years after the end of the
bombing of Iraq before Timothy Phelps, reporting for NY Newsday, broke the
story that a former U.S. ambassador to Bahrain named Sam Zakhem -- a
political associate of brewery magnate Joseph Coors -- and two leaders of
the conservative movement in Washington were indicted on charges of
promoting American intervention in the Persian Gulf while secretly paid
millions of dollars by Kuwait between August 1990 and June 30, 1991.
[Timothy Phelps, "Ex-Envoy Indicted in Gulf War Fraud," NY Newsday]
Brewton was investigating the CIA connection to the Savings & Loan scandal
in which the Bush family figured heavily from both the CIA and the S&L
ends. He wrote story after story for the Houston Post exposing the Bush
family's sordid theft of billions of dollars from the people of the United
States, but few other media wanted anything to do with it. One certainty:
the war buildup did boot the Savings & Loan bail-out scandal off the front
page just as today it is doing the same with Enron and the rest -- Ralph
Nader calls the orchestrated war hysteria a "Weapon of mass distraction" --
saving the Bush offspring from public exposure and contempt. [e.g., Martin
Tolchin, "Mildest Possible Penalty Is Imposed on Neil Bush," The NY Times,
April 19, 1991.] While blue-blooded "dimwit" George Junior and his brothers
Neil and Jeb raked in the cash, Papa Bush sent the blue collar sons and
daughters of working class Americans to kill teenage Iraqi draftees,
burying thousands alive beneath tons of desert sand.
****************************************
SIDEBAR:
Bush progeny, Neil, was also involved in an oil company with interests in
the region. In fact, he was at the time running Houston-based Zapata
Offshore Oil & Drilling Co., founded by his dad, George H.W. Bush Sr.
Zapata Oil eventually evolved into the giant Pennzoil company, based in
Houston Texas, and owned nearly 9 percent of the stock of Chevron -- worth
over $2 billion. Chevron's Gulf Oil subsidiary has historically been the
U.S.-based transnational oil company with the biggest special interest in
Kuwaiti politics.
In a Nov. 13, 1990 Pennzoil Co. stock report, Standard & Poor's wrote the
following: "Revenues and profits in the near term could be highly volatile
owing to uncertainties following the Aug. 2, 1990 Iraqi invasion of Kuwait."
George Bush always did his best to eliminate those "uncertainties" and
certify his company's profits. He hired the lawfirm of Baker & Botts to
represent the interests of Zapata Oil (and later, Pennzoil). This firm was
headed by James Baker, a multi-millionaire oil corporation lawyer whose
family held extensive investments in Exxon, Mobil, Atlantic Richfield,
Standard Oil of California, Standard Oil of Indiana, and Kerr-McGee, the
company exposed by worker-activist Karen Silkwood for its radiation
poisoning of workers and which has been blamed for her murder. Around the
time of the Gulf war, Papa George named Baker U.S. Secretary of State.
Corporate establishment figures sitting on the Board of the Baker family's
Texas Commerce Bank included former U.S. President Lyndon Johnson's wife,
Ladybird, and former U.S. President Gerald Ford (who also sat on the
LBJ-appointed Warren Commission which had preposterously attributed John F.
Kennedy's murder to the work of a lone gunman). Gerald Ford, it turns out,
was at the time of the Gulf War a director of the U.S. subsidiary of the
Kuwait Petroleum Corporation.
Also on Baker's bank's Board: Exxon Coal & Mineral Company director Terry
Kirkley; Exxon Oil and Gas Company director Forrest Hoglund; Mosbacher
Energy Company Chairman Robert Mosbacher (who doubled as Bush Sr.'s
Secretary of Commerce); CONOCO's chief executive officer Constantine
Nicandros; Tenneco director Kenneth Reese; Oil and Gas producers Richard
Moncrief and Cyrial Wagner; and Scurlock Oil Company and Ashland Oil
Company director Jack Blanton. [Bob Feldman, "The Bush/Baker Oil
Connection," Downtown Weekly, New York City.] All of these oil men sat on
the board of Baker's family bank and helped shape US government policy,
despite the fact that several years earlier, in 1986, Texas Commerce had
been fined $1.9 million for not reporting cash transactions (money
laundering). Then, as today, the corporate honchos who ripped off billions
of dollars from small investors, trade union pension funds and retirement
accounts while sending the youth of America off to kill Iraqis (and to
return with Gulf War Syndrome), faced little in the way legal charges. The
Democrats, like the Republicans, just went on with business as usual, while
the rest of us paid the price.
[For more on the Bush boys, see Stephen Pizzo, "Family Value$: The inside
story of how three of the Bush boys built private fortunes by trading on
their father's name, running with con men, lining their own pockets, and
leaving financial ruin in their wake," Mother Jones, Sept./Oct. 1992. Also,
Tim Wheeler, "The Bahrain Connection: Live skeletons in the Bush family
closet," People's Weekly World, April 6, 1991; and, Jonathan Kwitny, "The
Crimes of Patriots -- A True Tale of Dope, Dirty Money, and the CIA."]
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