Michael Ameen, who was serving as a State Department consultant assigned to brief Charles Hostler, the newly confirmed U.S. ambassador to Bahrain, put the Bahraini government in touch with Harken Energy.
In January 1990, in a decision that shocked oil-industry analysts, Bahrain granted exclusive oil drilling rights to Harken, a company that had never before drilled outside Texas, Louisiana and Oklahoma – and that had never before drilled offshore.
Nearly two years later, when The Wall Street Journal examined the curious Bahrain transaction, Bush declined to be interviewed but did agree to answer some questions in writing. Some of his responses were snippy, such as his answer to a question about whether his involvement in Dallas-based Harken lent it extra credibility in the Arab world.
“Ask the Bahranis,” Bush shot back.
Nevertheless, the January 1990 deal added to Harken’s stock value, with its shares rising more than 22 percent from $4.50 to $5.50. The run-up in Harken’s stock marked one of George W. Bush’s first successes in the oil business.
That limited success opened the door to Bush’s next step up the ladder, as a popular young owner of the Texas Rangers baseball team.
The beginning of that deal traced back to an idea of George W.’s Spectrum 7 partner, Bill DeWitt, whose father had owned the St. Louis Browns baseball team and later the Cincinnati Reds. DeWitt wanted to pull together a group of investors to buy the Texas Rangers.
To do so, DeWitt understood that he needed a native Texan in his group of investors. George W. fit the bill. The group of investors was missing only one thing – money. To address that need, George W. tapped a Yale fraternity brother, Roland Betts, who brought with him a partner from a film-investment firm, Tom Bernstein, both from New York.
The New York connection became a problem when Major League Baseball Commissioner Peter Ueberroth insisted on more financial backing from Texas-based investors. But Ueberroth was eager to put together a deal for the son of the President, so the commissioner brought in a second investment group headed by Richard Rainwater, who had built a $4 billion empire while working with the Bass family of Fort Worth.
Rainwater agreed to join Betts, Bernstein and George W. in the $86 million deal, but Rainwater imposed a strict limit on George W.’s active participation in the team.
Bush got to be called a “managing partner.” But – under Rainwater’s conditions – George W. would only be the handsome front man for the team; he would have no actual say in how it was run.
Selling Stock
To finance his part of the purchase price, Bush decided to sell two-thirds of his holdings in Harken. He pressed ahead with this decision though he knew that Harken was struggling financially and was planning to sell shares in two subsidiaries to avert bankruptcy.
Outside lawyers from the Haynes and Boone law firm advised Harken officers and directors on June 15, 1990, that if they possessed any negative information about the company’s outlook, a stock sale might be viewed as illegal trading. Bush, who had attended a meeting four days earlier on the plan to sell off the two subsidiaries, went ahead anyway.
On June 22, 1990, Bush sold 212,140 shares to a still-unidentified buyer who spared Bush the trouble of selling on the open market, which likely would have tanked Harken’s lightly traded stock and meant less money for Bush.
The sale also preceded Harken’s disclosure in August 1990 of more than $23 million in losses for the second quarter, which caused the stock to fall 20 percent before recovering for a time. To make matters worse, Bush missed deadlines by up to eight months for disclosing four stock sales to the Securities and Exchange Commission.
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