Since Harvard was already enmeshed with Bush and Harken, it would be difficult for it to claim it was unaware of Bush's rush to dump his stock before Harken's inevitable reversal of fortune. Harvard might then have been required to reveal that knowledge, thus not only hanging Bush out to dry, but also implicating itself in insider trading.
Organizations like Harvard Watch and Charles Lewis's Center for Public Integrity had already established that Harvard had become a dumping ground for Harken's stiff of a stock. But it took Massachusetts CPA Steve Rose, who once prepared charitable organization returns for one of Harvard's venture capital arms, Aeneas, to show that Harvard most likely bought Bush's shares as well.
Rose had discontinued working for Harvard because he was uncomfortable with its questionable business practices. When its Harken investments came to light, he decided to do what accountants call a reconciliation. Approaching it as a puzzle to be solved -- kind of like an advanced form of su doku -- he zeroed in on the SEC's website.
Corruption in Action
An SEC filing is a land where investigators and journalists fear to tread. Its sheer bulk and eye-glazing itemizing flag it as a text best steered clear of. But we're fortunate to have Rose scouting out this desolate terrain for us. He'll show us the guideposts indicating exactly how Harvard appears to have taken George Bush's Harken stock off his hands.
Now let's step into the badlands of Harvard's Aeneas Venture Corporation SEC Form 13D/A.
In March 1990, as part of its selfless campaign to offload Harken stock, Aeneas bought 868,450 shares. Then it transferred all those shares to another one of Harvard's affiliates, Phemus Corporation. Yet, despite divesting itself of those shares, Aeneas bought more -- exactly 50,000.
Stranger still, the sale of those 50,000 shares went unreported in the filing. Then how do we know it occurred? Because Rose did the math.
Why buy 868,450 shares and shuffle them along, only to buy 50,000 more shares from the same company? One can't help but wonder if the two sellers were different actors in the same company. Transferring the institutional-sized purchase might have been a sleight of hand by the buyer, Harvard, intended to obscure the personal-sized purchase. Especially if the 50,000 were bought from Bush and bore the stink of insider trading.
But Harvard was just getting warmed up for the shell game to follow.
Next, Rose bushwhacks his way through amendment five of the filing, in which he finds Aeneas increasing its Harken shares by 228,250. Again, there's no mention of the purchase. The numbers just kind of appear on the table. Bear in mind that when it wants to, Harvard is capable of itemizing that's as conscientious as it is scrupulous. (For an example, see Phemus's transactions on pages 87 and 88 of amendment five.)
But one can only gaze in awe at the audacity Harvard displays in slipping 228,250 shares -- unannounced -- into a SEC filing. Implicit in such an act are two assumptions, both dripping with arrogance: that the press finds SEC filings daunting and that the SEC doesn't bother to check the filings.<>
Other transactions also slipped in through the back door. In amendment five, the President and Fellows of Harvard College (the college itself) failed to mention its disposal of an armload of Harken shares, while another of Harvard Management's entities, Harvard Yenching Institute, added a handful.
Meanwhile, Michael Eisenson, who also owned shares under the umbrella of Harvard Management, must have thought the double life he led as a director for both Harvard and Harken wasn't enough of a red flag. He too left transactions unexplained, as did Donald Beane.
Now for the scene of the ambush. When Rose totals the unreported shares Aeneas bought between amendments four and five, he arrives at the number 212,750. Recall that Bush sold 212,140 shares during the same period. Only 610 shares separate what Aeneas bought and Bush sold! Your tolerance for coincidence has to be awfully high to ignore the obvious -- that Harvard bought Bush's shares.
As Rose is fond of repeating, "The devil is in the details."
