Spectators of world political events, like the denizens of Plato's cave, are often unaware of what was really happening in what is now being
referred to as "the deep state," as their attention is always drawn to the shadows moving across the cave's wall.
The deep state has been defined by one writer as the "
unelected power structures" within the official state. I once referred to such power figures as vassals, those men in a
feudal system who receive blessings from the ruler in power in return for rendering homage, fealty, and usually military service or its equivalent to a lord or other superior. Unlike feudal times, however, today it seems to be the vassal who gives the ruler his power within a democratic, without which the vassal could not prevent the loss of his own personal wealth.
In order to exist, the deep state must have secrecy. The vassals who manipulate their appointed rulers can only operate as long as their strings are hidden from sight.
With this lesson in mind, this blog shares with its reader an excellent research article written in 1991 by investigative journalist David Armstrong, who also wrote a shorter summary of some of the events mentioned, which appeared the same year in the Texas Observer.
Z Magazine/November 1991
GLOBAL ENTANGLEMENTS:
THE POLITICAL ECONOMY OF A TEXAS OIL CO.
Transcribed by Nuriya Janss
A map of the Persian Gulf emirate of Bahrain dominates the lobby of Harken Energy Corporation's modest Grand Prairie, Texas headquarters. It is a potent image, a totem of sorts to the tiny island nation and the vast mineral wealth Harken hopes to extract from its shores.
Despite the emphasis Harken places in this oil-rich sheikdom, however, a more appropriate corporate symbol might well be a map of the earth. For Harken is truly a global enterprise. Its interests and influence extend worldwide. Its financial ties to some of the richest and most powerful men on the planet belie the image of a struggling small oil company.
Among the many noteworthy figures associated with Harken are:
- George W. Bush, eldest son of the president;
- the billionaire Bass brothers* of Fort Worth, Texas, who will finance Harken's Bahrain expedition;
- a South African tobacco, liquor, and natural resources magnate; and
- a prominent attorney with ties to former Philippine dictator Ferdinand Marcos.
In addition, Harken has numerous ties to institutions involved in gun running, drug smuggling, foreign currency manipulation, the alleged looting of foreign treasuries, and the U.S. Central Intelligence Agency-assisted destabilization of the Australian government. (See "
Oil in the Family," Texas Observer, July 1991.)
While there is no evidence of wrongdoing on Harken's part, it is clear the company has benefited from these relationships. More importantly, Harken and its associates have repeatedly profited from American intervention in foreign affairs. And it is here that the company's true significance becomes apparent: For if nothing else, Harken offers a fascinating case study in how U.S. foreign policy is shaped by (and for) multinational corporate interests.
HUMBLE BEGINNINGS
Harken began inauspiciously enough as a two-person venture headed by Phil Kendrick, Jr. and Harry L. Mulligan. Kendrick and Mulligan (the Harry and Kendrick from whom the company derives its name) first met in the trenches of Wall Street while serving as account executives for the investment banking firm of White Weld & Co. Kendrick had grown up in the oil field of Texas, where his father, Phil Sr., founded the Abilene-based Kendrick Oil Company in 1913. After graduating from the University of Texas in 1950, young Kendrick joined the family business, and remained an active partner until selling the company during the oil bust of the mid-1960s.
Kendrick had oil in his blood, however, and always knew he'd return to the industry. "I went to New York for the specific purpose of learning all I could [about finance] while the oil business was so dead and would be hopefully knowledgeable when the time was right for it to come back again," he told the Observer. By 1973, he'd decided the time had come and called his friend Harry Mulligan to inform him of his decision. "I told Mr. Mulligan I was going back in the oil business and he said, well, he was sick and tired of the brokerage business and could he go with me," Kendrick recalled. "I said, 'If you want to, I'd be glad to have you. I always need someone to help raise money.' "
Harken was incorporated in California July 18, 1973. Its original offices were located in Pasadena, California and New Haven, Connecticut, where Kendrick and Mulligan had settled while working for White Weld & Co. By the end of 1974, the company had relocated to Kendrick's native Abilene. Harken grew steadily, if slowly, over the next five years, adding employees and participating in the exploration of more than 300 wells, primarily in Texas and Oklahoma. it was not until 1979, however, that the company's first truly big break came along.
BUYING THE FARM
Phil Kendrick's quest for oil knew virtually no bounds. While Harken continued sinking holes in the Oil Patch, Kendrick kept one eye on other prospects. "I had always been interested in Australia and always intended to get into the Australia play," Kendrick said. "I'd read and studied the Australian situation for numerous years....It's a very large, unexplored country with a lot of area to find oil and gas."
Before Harken, or any other company, could explore Down Under, however, there was one major obstacle to be overcome--the Australian government. In 1972, the citizens of Australia elected a progressive Labour Party government for the first time in 23 years. Under the leadership of Prime Minister Gough Whitlam, the new government launched an ambitious program of reforms unlike any the country had ever seen. As Mother Jones reported in 1984, "In its first 100 days in office, the new
Labour government recognized the People's Republic of China; abolished racial criteria from immigration policy;... banned all-white South African sporting teams; conceded land to the
Aboriginals; promoted equal pay for women; added contraceptives to the list of federally subsidized drugs; outlawed the killing of endangered species; announced plans for a free national health service; posted a government reward for the best national anthem to replace 'God Save the Queen'; and withdrew all Australian forces from Vietnam."
While these policies raised hackles in Washington, DC, business leaders were livid over Australia's new energy program. Whitlam's minister for minerals and energy was Reginald Francis Xavier Connor, nicknamed "The Strangler" for the time he'd grabbed a nosy reporter in a headlock. In his new post, Connor oversaw the management of Australia's bounteous natural resources: iron ore, bauxite, lead, coal, nickel, copper, manganese, silver, tin, uranium, and, of course, oil. Connor's vision was of a self-sufficient Australia, richer and stronger than the United States, applying modern technology to the country's untapped resources. More importantly, he advocated 100 percent Australian ownership of his nation's fuels and minerals, including oil and gas, a proposal that curried no favor in the boardrooms of multinational corporations. "The Labour government," Kendrick said, "made it impossible for anyone other than Australians to explore for oil and gas. And so all of the American companies pulled out and even the Australian companies dropped their leases. They just made it impossible. With the taxation and rules and regulations, etc., no one could possibly operate
under the political climate at that time."
As the Labour government's term in office wore on, investment from the United States, Europe, and Japan evaporated. While this was in part due to the worldwide recession of the period, Connor rightly assumed he was the target of an economic boycott. In 1975, faced with mounting inflation, unemployment, and popular discontent, Connor turned to his fellow cabinet ministers for the authority to raise the $4 billion he needed to regain control of Australia's economy and natural resources, or as he put it, "buy back the farm." Connor's plan was approved, and within weeks he
was introduced to a middle-aged Pakistani commodities dealer who claimed he could obtain the loans for Connor at extremely attractive rates. What Connor didn't know, but should have, was that the commodities trader, Tirath Khemlani, was a well-known hustler with a long history of shady associations. As details of the loan arrangements and Khemlani's ties to international arms traffickers dribbled out, Connor was forced from office.
With the Labour government still reeling from the scandal, a coalition of conservative parties huddled with their lawyers to discuss plans for ridding themselves of Whitlam and his policies once and for all. Upon close scrutiny of the Australian constitution, the conservatives reasoned that the governor general, a representative to the queen of England, could, at least in theory, dismiss and entire government with the stroke of a pen. All that was needed, they argued, was the appropriate crisis.
The "Loans Affair," as it became known, was made to order.
The office of governor general is a formal relic from Australia's colonial past. The post was entirely nominal, appointed by the prime minister and traditionally filled by an elder statesman, whose primary responsibilities included attendance at the funerals of foreign dignitaries and state balls. But the governor general is also tasked with "advising" the queen to commission the leader of the ruling party as prime minister. The queen, of course, never declines. But what, the conservatives wondered, would happen if the governing party were unable to pass its annual budget? Could the governor general then declare them unable to rule and install the opposition party as a caretaker government in their place? The conservatives believed he could, and set about putting their plan in motion. Citing the Loans Affair as evidence of mismanagement, the conservatives blocked the Labour budget proposal. Before the Labour government could act, Governor General Sir John Kerr canceled Whitlam's commission. Thus for the first time in modern Australian history, a "queen's representative" had dismissed a constitutionally elected national government in what has become known as "the Constitutional Coup." Although an election was held several weeks later, Whitlam's supporters were apparently not prepared to wage a constitutional revolution, as the conservatives were swept into office.
MEANWHILE, BACK IN THE STATES
Labour's defeat was good news indeed for Phil Kendrick. "When the conservative government won the election," he said, "they then changed all the rules and regulations and laws and made it attractive to acquired acreage [for exploration]. If that hadn't happened, nobody ever could have gone back in there. That was crucial."
In this newly attractive business climate, Kendrick began looking for Australian investments. He eventually discovered a small Canadian firm known as Coral Reef Petroleum, Inc.,
which, through its subsidiary Earth Energy, Inc., owned the prospecting
rights to approximately 35 million acres of Australian oil and gas
lands. Kendrick jumped at the opportunity and Harken purchased the
companies in exchange for stock, along with their Australian assets. By
the time the deal was completed a year later, Harken, in conjunction
with a consortium of companies headed by Esso Exploration and Production
Australia, Inc., a subsidiary of Exxon Corporation, controlled the
exploration rights to nearly 50 million acres of prime oil and gas
drilling territory in Queensland, Australia.
By
1983, there were 13 discoveries made on Harken's Australian properties.
Before production began and the money started rolling in, however,
Kendrick and Mulligan sold their interest in Harken to a group of East Coast investors with virtually no experience in the oil business.
Uncomfortable
with the notion of a wildcat prospect half a world away, Harken's new
owners sold the company's Australian holdings for the security of a sure
thing. "As I recall," Kendrick said, "they sold our Australian
subsidiary for $4 million cash. So that turned out to be profitable, but
not nearly as profitable as it would have been if they'd kept the
property. There's now a tremendous amount of production on those
properties."
Harken
and its investors, no doubt, believed they had simply capitalized on an
attractive business venture. Whether they realized it or not, however,
they had been the beneficiaries of an intelligence operation perpetrated
against the Australian government....
When
Harry Mulligan and Phil Kendrick sold their stake in Harken in 1983,
they were bought out by a group of investors headed by New York attorney
Alan G. Quasha. Quasha, a partner in the firm of Quasha Wessely
& Schneider, shelled out $250,000 for 100,000 shares of the
company. The remaining 10 investors, including Quasha's brother, Wayne, a member of their father's Philippines law firm,
paid $775,000 for 310,000 shares. Kendrick, however, recalls being
perplexed by the deal. "I never could understand why Alan Quasha wanted
to buy an oil and gas company at a time when he knew nothing about oil
and gas and especially at a time when everything was beginning to go
downhill and fall apart," Kendrick said. It was not the last time
Kendrick would be surprised....
Curious
as Quasha's activities may have been, individuals whom he brought to
Harken have also raised eyebrows. Quasha, who now sits on Harken's
board, is also a director of North American Resources, Ltd. (NAR), a British Virgin Islands
company and Harken's second-largest stockholder. According to Harken's
proxy statement, NAR is a partnership between the Quasha family and the Richemont Group Limited, a publicly traded Swiss company controlled by South African billionaire Anthony E. "Anton" Rupert. Rupert, through his companies, Richemont and the South African-based Rembrandt Group, controls such well-known enterprises as Rothmans International, manufacturers of Dunhill cigarettes, luxury-jewelry retailer Cartier International, and MontBlanc pens.
NAR
is also the parent company of Intercontinental Mining and Resources
Limited (IMR), another major Harken stockholder. IMR "and its
affiliates" also own large stakes in two Harken subsidiaries, according
to Harken's proxy.
Quasha's
most interesting affiliation, however, is not financial but familial.
Quasha's father, William Howard Quasha, is a powerful Philippines
attorney with some interesting associations of his own. The senior
Quasha, the only U.S. attorney licensed to practice in the Philippines,
has numerous ties to individuals involved in Australia's infamous Nugan
Hand Bank, an institution utilized by CIA officers Theodore Shackley and
Thomas Clines of Iran-contra fame, along with their subordinate Edwin
Wilson (who is currently imprisoned for selling plastic explosives to
Libya), to fund a variety of covert operations, including the
destabilization of Gough Whitlam's Labour government in 1975.
Australian government investigations during the late 1970s and early 1980s
also revealed Nugan Hand's involvement in gun running, drug-money
laundering, and close ties to the U.S. military and intelligence
communities. The scandal-ridden bank collapsed in June 1980, six
months after its co-founder, Frank Nugan, was found shot to death in his
Mercedes Benz 90 miles outside of Sydney. Found on Nugan's body was the
calling card of his attorney--former CIA director William Colby.
In April 1980,
as Australian government investigators closed in on Nugan Hand, the
co-administrators of the bank's Manila offices, U.S. Gen. LeRoy J. Manor
and British subject Wilfred Gregory, turned to their lawyer, William
Quasha, for advice. In addition to his duties with Nugan Hand, Manor was
chief of staff for the U.S. Pacific Command and the U.S. government
liaison with Philippine dictator Ferdinand Marcos. Gregory was Nugan
Hand's original representative in the Philippines and a personal friend
of Marcos's brother-in-law, Ludwig Peter Rocka, whose family
deposited $3.5 million in the bank. Gregory has stated that Manor's
decision to flee to the Philippines to avoid imprisonment was inspired
by a conversation with Quasha. Gregory says Quasha "arranged for Manor
to leave the country," according to The Crimes of Patriots. "He told me to go too. He said, 'You could wind up in jail.' "
Manor,
however, denies ever receiving legal counsel from Quasha. He says he
knew Quasha only through their work with the Boy Scouts of America. "I
didn't deal with him in that regard,
professionally," Manor told the Texas Observer.
"I knew him in the Scouts and I knew him somewhat socially." Quasha,
however, acknowledges counseling both Manor AND Gregory, but says that
attorney-client
privilege prevents him from saying whether he told them they faced
possible imprisonment, or whether he advised Manor to leave the
Philippines. "[Gen. Manor] had a problem here and I handled his work,"
Quasha said. "I don't discuss clients' business."
What
Quasha WILL discuss is that he had additional dealings with Gregory. "I
did a little emigration work for [him]," Quasha said. "Now that may
have been paid for by the firm [Nugan Hand], but I billed him."
William
Quasha's ties to Nugan Hand do not end there, however. The bank's
president, retired Adm. Earl "Bud" Yates, says he met Quasha on "maybe
two occasions" during social functions in the Philippines. Although
Yates cannot recall who introduced them, Quasha says it was Gen. Manor.
Quasha also says he was introduced to Nugan Hand cofounder Frank Nugan.
"I met him at a social affair as well," Quasha said. Asked whether Frank
Nugan had been involved in his meeting with Yates, Quasha replied, "I'm
not prepared to say."
Even more intriguingly, the Thailand offices of William Quasha's law firm, Quasha Asperilla Ancheta Pena & Nolasco,
are in the same Bangkok building that Nugan Hand occupied. In fact,
when the bank held a gathering of its newly expanded staff in January 1978, the chosen venue for the three-day affair was this same Dusit Thani Building.
Quasha says he was unaware of the bank's presence in the building. "We
have had an office in Bangkok since that building was erected," Quasha
said. "That was 23 years ago and there are many, many tenants in that
building. I never even knew that that company that you mentioned [Nugan
Hand] had an office in that building."
Quasha
insists that he never had any dealings with Nugan Hand directly. "I'm
not at liberty to tell you why, but it would have represented a conflict
of interest," he said. "I represent an insurance company that had a
claim against them [Nugan Hand]. I'm not prepared to give details, but
it would have precluded, in any event, my ever representing them." Asked
why this conflict did not prevent him from counseling either Manor or
Gregory, Quasha replied: "My counselling of Gen. Manor and Mr. Gregory
were regarded as personal. I did not see this [as] a conflict of
interest. Besides, I had started advising them before I learned about
this conflict between our client and Nugan."
In
a 1982 interview with the Wall Street Journal, William Quasha's client,
Wilf Gregory, called Philippine dictator Ferdinand Marcos "the best
thing that ever happened to the Philippines since it was discovered by
the Spanish.... The Marcoses are bringing the simple things to people
that you and I take for granted." Although not quite as blunt about it,
Quasha has also expressed his admiration and support for Marcos.
At
the height of the "People's Power" revolution that eventually toppled
Marcos and his bloody regime in early 1986, Quasha and his American
business associates in the Philippines were getting edgy. "What we
worried about, and it has come to pass, were two things," Quasha said.
"Number one was the loss of American bases. We knew that as long as
Marcos was there the bases were safe. And the second thing we worried
about was the growth of communism in the Philippines." Quasha feared
that if presidential candidate Corazon Aquino took power, "we'd have
trouble with the communists. It was the opinion of all responsible
Americans in the American Chamber of Commerce," Quasha
said.
When
Marcos was openly accused of stealing the election, Quasha fired off a
telegram to Republican Congressperson Dan Burton of Indiana, urging the
United States not to intervene on Aquino's behalf. Calling the election
"the least dishonest and least bloody" since the independence of the
Philippines, Quasha warned Congress against prejudging the situation
based on the "spate of distorted reports" in the media. Quasha also
indicated that at least 40 U.S. business people in Manila, including the
Philippine
head of Proctor & Gamble, shared his view. Burton later read
the cable on the floor of the House, stating that in two days time,
Quasha and his U.S. business associates would produce evidence of as
many as 50 cases of alleged vote fraud perpetrated by the Aquino forces.
When
new of Quasha's telegram reached the Philippines, it sparked a rash of
angry denials. The Philippines branch of the American Chamber of
Commerce issued a public disavowal of Quasha
and his views. "The
American Chamber of Commerce of the Philippines, representing some 500
members, unequivocally disassociates the chamber from the statements of
attorney William H. Quasha, as reported in the press, regarding the
recent elections," the Chamber wrote in a public statement that appeared
in the Manila press. "The AMCHAM board deplores the partisan approach
taken by attorney Quasha, which is contrary to AMCHAM policy. The AMCHAM
board has no knowledge of 40 chamber members supporting Quasha's
views."
Quasha,
however, insists that the chamber sanctioned the cable from the
beginning. "I had signed the thing, but it was not anything to do with
trying to influence public opinion in the Philippines," Quasha said. "It
was sent at the request of the American Chamber of Commerce." According
to Quasha, the chamber only backed away from the statements when the
negative consequences of their pro-Marcos stand became apparent. "These
guys got all excited because their names were in the paper," Quasha
said. "The head of Proctor & Gamble had a hemorrhage because he
thought that Cory [Aquino] would boycott his company."
"We
had information that there was funny business on both sides of [the
election]," Quasha said. "They [Aquino's supporters] had agents out
buying votes.... What we wanted was for America to keep her hands off
this election, which she had no business involving herself in."
The
controversy eventually became serious enough that it caught the
attention of the U.S. government. On the day the chamber's denouncement
of Quasha appeared in the press, an unidentified U.S. embassy official
contacted Washington, DC. In a now-declassified State Department
memorandum, the unidentified embassy official stated, "The Quasha letter
is a wildcard thrown out on the table by men whose lives and fortunes
revolve on relationships with the Marcos government."
That
view was substantiated a few days later when the debate spilled over
into Congress. During a session of the House Subcommittee on Asian and
Pacific Affairs, Rep. Burton reiterated Quasha's remarks. That,
according to Stanley Roth, staff director of the subcommittee, sparked a
lively exchange between Burton and the subcommittee's chair, New York
Democrat Stephen Solarz.
"He [Quasha] was one of the only pro-Marcos
voices heard during the People's Power revolution," Roth said. "It got
into a little flap at our hearing because we found out that this guy
worked at
a law firm that included [the] Marcos [family]. So we pointed out that this guy wasn't exactly a neutral person."
In
fact, listed as a member of Quasha's firm is one "Mariano P. Marcos
(1937-1985)," exactly the same name as Ferdinand Marcos's father, a
lawyer, who was stoned to death during World War II for collaborating
with the Japanese. Quasha says the Mariano P. Marcos in his firm died in
1985 and "was no relation to President Marcos," although he lived on
Mariano P. Marcos Street in metro Manila. Quasha calls this "very, very
coincidental."
Although
Quasha contends that he "was not benefited in any way during Marcos's
time," he openly admits his admiration for the Philippine dictator. "In
all, Marcos was never unkind to me personally," Quasha said. "Whenever I
went to see him on behalf of a client...he was quite friendly. And I
liked his man-to-man approach.... We had respect for each other."
Even
Quasha, however, grudgingly acknowledges Marcos's transgressions. "Now,
of course, we see what a crook he was," Quasha said, "but it was not
evident to the public eye [at the time]. Even after all this time, five
years, they still have not proven it. But certainly there's a lot of
evidence that he was robbing the country."
THE SWISS CONNECTION
Further
evidence of Marcos's malfeasance surfaced recently when a Philippine
official announced that the former dictator's body could be allowed into
the country for burial in exchange for $5 billion in gold allegedly
stolen from the nation and hidden in a Swiss bank. David Castro, chair
of a presidential commission charged with recovering funds Marcos
allegedly stole from the Filipino people, said the gold could be used as
evidence of Marcos wrongdoing during his 20-year-old rule, according to
the Los Angeles Times. Castro said Marcos deposited the gold, 325
tons, at the Union Bank of Switzerland. The bank denies the claim,
according to the Times.
Union
Bank is an institution with which Harken is well acquainted. In 1987,
Harken unveiled a $25-million stock offering through the securities firm
of Stephens, Inc. of Little Rock, Arkansas. Stephens placed the stock
with a Union Bank subsidiary in London. In October 1988, Business Week
reported that Union Bank held a 5.5 percent stake in Harken. The bank
later sold its Harken shares to a wealthy Saudi Arabian businessperson,
Abdullah Taha Bakhsh, who is now the company's third largest
stockholder.
But
Union Bank's name also turned up in Australia's Constitutional Coup in
1975. The Loans Affair that brought down the Whitlam government first
erupted when a package of fake documents used to start the scandal was
sent off with a cover letter on Union Bank letterhead. "By the time the
opposition parliamentarians who received the package had turned its
contents over to the press, the signature had been torn off the letter,"
according to The Crimes of Patriots. "Even though the documents
were later exposed as bogus, their publication helped weaken and
ultimately destroy the Whitlam government."
Union
Bank's connection to Nugan Hand is not limited to the 1987 stock
purchase. Bernie Houghton, a secretive Texan described in The Crimes of Patriots
as "the mystery man of Nugan Hand [and] perhaps its most important
figure," was well acquainted with a traveling Union Bank official.
Houghton, who may actually have introduced Nugan Hand cofounder Frank
Nugan to his future partner, Green Beret war hero and CIA operative
Michael Jon Hand, introduced the Union Bank official to Nugan Hand
representatives in Asia, according to The Crimes of Patriots.
Frank
Nugan himself also had dealings with Union Bank. After Nugan was found
shot to death in his car in January 1980, it was discovered that he had
forged the signature of New South Wales attorney general Frank Walker on
a letter to Union Bank, opening an account in Walker's name. At the
time, Walker was directing criminal fraud proceedings against Nugan and
his brother Ken (who was also charged with obstruction of justice and
embezzlement) for their role in a stock scandal involving the
family fruit business. "The only reason for writing such a letter," according to The Crimes of Patriots, "would be to try to frame Walker, to embarrass or blackmail him. But Walker says he
never heard about it until the letter was found after Nugan's death."
Union
Bank was also identified in congressional testimony as one of several
institutions that deliberately skirted Panamanian guidelines aimed at
curbing drug-money laundering. In an effort
to reduce this illegal
laundering activity, the Panamanian Bankers' Association in 1984
proposed a voluntary $5 million limit on the amount of U.S. currency
that any one bank could return to Panama. But in a deposition before
the House Subcommittee on Terrorism, Narcotics and International
Operations in 1988, Amjad Awan, the former manager of the infamous Bank
of Credit and Commerce International (BCCI) and deposed Panamanian
dictator Gen. Manuel Noriega's personal banker, stated Union Bank and
other Swiss banks deliberately avoided compliance with the restrictions
by chartering aircraft to fly currency out of the country.
Several
key Harken figures also have ties to Union Bank. William Quasha's son,
Alan, who sits on Harken's board, is also the chair of Frontier Oil and
Refining Co. of Denver, Colorado, where Harken President Mikel Faulkner
is a director. Frontier is controlled by Anton Rupert, the Quasha
family's partner in Harken. When Rupert acquired Frontier in a
leveraged buyout in 1988, he announced an $85 million "revolving credit
facility" with Union Bank of Switzerland, replacing all of the refiner's
previous "working capital facilities," according to National Petroleum News.
Faulkner
told the Texas Observer he was unaware of Union Bank's connections to
Nugan Hand. "No, I didn't know that," Faulkner said. Alan Quasha did
not return repeated phone calls. Anton Rupert did not respond to the
Observer's request for an interview.
SLICK DEAL
When
Harken's $25 million stock offering was placed with Union Bank in 1987,
the transaction was handled by brothers David and Mike Edwards, account
managers with Stephens, Inc. (David Edwards had made headlines in the
late 1970s, when he blew the whistle on irregular foreign currency
transactions at Citibank in New York.) After leaving Stephens and
starting an investment
firm with his brother, David Edwards played a key role in landing the Bahrain deal for Harken.
In
April 1989, Bahrain was looking for a company to explore its offshore
acreage. They employed the services of Michael Ameen, the American-born
son of Arab immigrants, who spent 22 years with the Arab American Oil
Co. (Aramco), the world's largest petroleum outfit, and 13 years running
Mobil Oil's Middle East operations. Edwards, an old friend of Ameen's,
put him in touch with Harken. After months of negotiations, Harken
signed a production-sharing agreement with Bahrain in January 1990. The
deal gives Harken the exclusive exploration, development, production,
transportation, and marketing rights to most of Bahrain's offshore oil
and gas reserves. The territories covered by the pact lie sandwiched
between the world's largest oil field, off the shore of Saudi Arabia,
and one of the biggest natural gas fields, off the shore of Qatar. Bass
Enterprises Production Co., the oil and gas exploration and development
arm of the Fort Worth's billionaire Bass family, will finance Harken's Bahrain venture in exchange for a cut of the profits.
At
the time the deal was announced, oil industry analysts marveled at how
this virtually anonymous company had landed such a potentially valuable
concession. "This is an incredible deal, unbelievable for this small
company," Charles Strain, a Houston energy analyst told Forbes magazine
last September. Forbes, however, failed to point out Harken's powerful
political connections. Notably absent from the article was any reference
to President Bush's eldest son, George W. Bush Jr., who sits on
Harken's board of directors and is a $50,000-a-year "consultant" to the
company's chief executive officer. Bush, who is the managing general
partner of the Texas Rangers baseball club and frequently mentioned as a
future candidate for statewide office, also holds roughly $400,000 in
Harken stock.
BEATING AROUND THE BUSH
George W. Bush Jr.'s involvement in Harken first came under scrutiny
last October when Houston Post investigative reporter Pete Brewton
discovered that the President's son had sold off much of his Harken
stock just weeks before Iraq's invasion of Kuwait on August 2, 1990.
Within days of the invasion, the value of Harken shares dropped
dramatically, primarily due to fears that a war would jeopardize the
company's agreement with Bahrain. Even armed with the knowledge of the
Bush's transaction, however, Brewton could find no record of it on file
with the Securities and Exchange Commission (SEC).
The mystery of the missing documents was finally resolved on April 4,
1991, when the Wall Street Journal reported that Bush had failed to
report the "insider" stock sale until March of this year, nearly eight
months after the federal deadline for disclosing such transactions.
According to the Journal, documents filed with the SEC indicate that on
June 22, 1990, Bush sold 212,140 shares of his Harken stock for $4 per
share. The sale represented 66 percent of Bush's holdings in the company
and raised
$848,560.
Bush sold his Harken shares at near top market value. Just one week
after Iraqi troops marched into Kuwait, for example, Harken traded for
just $3.03 per share, down nearly 25 percent from the price Bush
received for his shares seven weeks earlier. Until recently, Harken had
been trading for around $4 per share and had dropped as low a $1.12
during the past year. Over the past several weeks, Harken's stock has
fluctuated wildly, hitting an all-time high of $8.75 on July 28, before
settling back to a more realistic $6.63 the following day. Analysts
attribute the sudden price surge to Harken's plans to begin drilling its
first well in Bahrain in October.
Under SEC regulations, Bush should have reported the sale of his Harken
holdings by July 10, 1990. According to the Journal, however, Bush did
not disclose the transaction until the first week of March 1991. In the
past, the SEC has mounted civil suits against flagrant violators of
insider-trading rules, but such actions are uncommon. "The commission
can take a variety of actions in cases in which SEC filing rules are not
complied with," said Mary McCue, director of the SEC's Office of Public
Affairs.
"I don't want to speculate on actions because each case is analyzed
individually.... In fact, we neither confirm nor deny that
investigations are underway."
President Bush did not return the Observer's phone calls. The White
House press office said it had "nothing to share" on the matter.
OIL'S WELL THAT ENDS WELL
On a visit to Australia in 1982, former CIA director and then vice
president George Bush gave Labour Party leaders his personal assurance
that the CIA was not involved in either the Nugan Hand Bank scandal or
the destabilization of Gough Whitlam's government. But this was purely
subterfuge, for the CIA clearly DID engage in operations designed to
alter the course of Australia's domestic affairs, as it has so many
times, in so many countries, to the benefit of so many
multinationals--including Harken.
But this should come as no surprise, really, for U.S. foreign policy is
driven by the interests of these multinationals. The fact that Harken
and its high-powered associates, for example, profited from the CIA's
activities in Australia, American support for Marcos in the Philippines,
and George Bush's
recent war in the Middle East, is not exceptional.
It is merely a crystalline example of the interrelation between U.S.
corporate and political interests. For Harken, unfortunately, is not the
exception, but the rule.
Texas Observer intern Tracy Shuford provided research assistance for this story.
* The Bass Brothers fortune dates back to Sid Williams Richardson, an
oilman and rancher born in 1891. Mr. Richardson was a lifelong bachelor
whose closest relative and sometime business partner was his only
nephew, Perry Bass.
When Mr. Richardson died in 1959, Perry Bass
maintained a share of his companies, and each of Perry's four sons
[Sid, Lee, Ed and Robert] inherited $2.8 million. In 1960, the sons combined their assets to form
Bass Brothers Enterprises.
Perry Richardson Bass's wife, Nancy, is also deceased.
Another blog related to Quixotic Joust contains an article written by the same author, Linda Minor about the Sid Richardson's influence in Texas as well as national politics. See "Wealth--Vassal to Power."
Although all three men were brilliant in the field
of mathematics, unlike Mercer, Simons became a politically moderate-leaning mathematician. He entered MIT at the age of 15, studying under Warren Ambrose and I. M. Singer. Only 23 when he obtained his doctorate from the University of California at Berkley (Bert Kostant thesis adviser) in 1961, and taught at MIT and Harvard until 1964. As Vietnam heated up after JFK's assassination, Simons agreed to work for the Institute for Defense Analyses (IDA), run by Maxwell Taylor, who had been Kennedy's chairman of the
Joint Chiefs of Staff. He told Congress in 2008 that he was a "code cracker for the NSA."
An early investment Simons made in 1979 involved his putting $350,000 into Proximity Technologies, a company set up by a young California mathematician who created a spell-checking application and other features for word processing. In 1984 Renaissance Technologies invested in the first liquid crystal display (LCD) developer, CrystalVision, which focused on the technology now used in today's flat screen computer monitors and television. 
