Remembering the Harken Money

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.

By David Armstrong

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.) 

Texas Observer archives

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."

LBJ's Strange Links to C.R. Smith of American Airlines

C.R. Smith

All this inquiry has taken us far afield of our original interest in the Fort Worth preacher, J. Frank Norris, and his sponsorship by the attorney who set up the first Southern Air Transport (SAT) in Texas. It was this location from which John Birch was launched to the very site in China where he would come to the aid of Doolittle's Raiders. Was this a mere coincidence or was it part of someone's insidious plan?

Those of us who struggle to learn "the secret history" are well aware of the Florida company by that name and what the SAT was was known to transport in Asia. Helliwell links the OSS and the military's Air Transport Command through the Central Intelligence proprietary company re-created years after the Dallas company's incorporation. This blog has spent many words exploring Helliwell's background, as you can find by using the search engine to the right.

We can learn even more about Southern Air Transport's links to Claire Chennault from an excerpt, "Heroin in Southeast Asia," from Henrik Kruger's book, The Great Heroin Coup – Drugs, Intelligence, and International Fascism:

Pawley 1918 passport

[William D.] Pawley eventually built five large airplane factories around the world. It is also likely that he was involved in the CIA's Double Chek Corp. in Miami, as he had similarly been in the Flying Tigers. The CIA's air proprietaries are said to stick together. When in 1958, CIA pilot Allen Pope was shot down and taken prisoner in Indonesia, he was flying for CAT. When he was released in 1962 he began flying for Southern Air Transport, another agency proprietary, which operated as late as 1973 out of offices in Miami and Taiwan. 

Pawley, it seems, had ties to Cuba going back as early as 1918, according to his passport application (above right). Secret intelligence operatives fighting communism along with Claire Chennault and the Flying Tigers would obtain their funds for that continuing war from laundered profits that came from the sale of heroin refined from poppies produced in Southeast Asia. The laundering mechanism was Southern Air Transport, a corporation set up in 1947 by CIA paymaster, Paul Helliwell, also a Florida attorney. Is there a connection between this corporation in Florida and the earlier one in Texas? Norris' Searchlight would come in handy now, to help us look for those links.

Norris' newspaper.

Back in Fort Worth

Norris' anti-Catholic rhetoric had inspired the wrath of Henry C. Meacham, who in addition to owning a retail store was also Fort Worth's mayor from 1925-27. Meacham, a Catholic, allegedly asked his friend Dexter Elliott Chipps, referred to as an angry drunk, to reason with the preacher. So says Don Graham in a Texas Monthly piece:

Mayor Meacham

By the mid-twenties Norris oversaw a virtual communications empire. Besides producing a steady stream of articles for his tabloid, The Searchlight , he broadcast sermons and political rants on his radio station, KFQB, which billed itself “Keep Folks Quoting the Bible.” Everything came to a head in the summer of 1926, after Mayor H. C. Meacham sought to heavily tax Norris’s empire. Norris responded by accusing the mayor of graft and dropping hints about a sexual relationship between Meacham and a young woman. The mayor retaliated by firing several employees of his department store for refusing to give up their membership in the First Baptist Church. This kind of heavy-handed tactic only gave Norris another reason to bash the mayor, which he did on an almost daily basis. Many people in Fort Worth wanted Norris dead, and one of them, a friend of the mayor’s named D. Elliott Chipps, decided to deal with Norris personally. Known to be belligerent when drinking, Chipps confronted Norris in his church office on a hot July afternoon in 1926. The visit ended when Norris fired three bullets into Chipps’s body, an act that captured the nation’s attention. 

Norris was acquitted of murder charges, based on public threats made against him by the victim, and he continued to preach against all forms of vice — and against Communism — until his death in 1952.

World Fundamental Baptist Missionary Fellowship

Norris antagonized the "Southern Baptists" and their SBGCT organization as well as the seminary he organized in Fort Worth, and as a consequence set up a a new one to replace the first, which was too liberal for his taste. His friend Pemberton was a trustee.

Dr. Louis Entzminger relates that Norris organized his own seminary in downtown Fort Worth in 1939 called the Fundamentalist Baptist Bible Institute (page 55), but changed the name in 1938 for accreditation purposes. Located within the First Baptist Church of Fort Worth, the institute, or seminary, was an impressive structure. His most well- known student was Captain John M. Birch.

The following item appeared on the front page of the Big Spring, Texas, Daily Herald on March 3, 1938:

Dr. Entzminger, who maintains headquarters in Chicago and Fort Worth, is engaged principally in organization work and seeking contributions which go directly to missionary fields in China, Europe and Africa and the Spanish field around San Antonio. He said that the movement had doubled in the past six months, that he had travelled 11,000 miles since the first of the year, spoke to 60,000, converted 1,000 and made contacts with more than 1,000. He is accompanied by Dr. J. Frank Norris, Fort Worth, who is unofficially connected with the movement.

In 1940 Entzminger lived in an apartment building which is at the same address as today's YMCA building.

Cutting Red Tape in FDR's State Department

Entzminger tells in his book how his first trip to the Far East came about:

[FDR's] Former Secretary of State Cordell Hull, I know, rendered him [Norris] several special favors. For instance, when I went to the Orient, I did not know I was going until Thursday night before I left on Sunday night. I had no passport, I had made no preparation. Dr. Norris said, "You're going to China and Japan." I appreciated his enthusiasm but deplored his judgment, as I knew it was impossible. But, to my surprise, Friday morning he called up the Secretary of State and though I had not made any application, he told the Secretary of State he had to have the passport by the following Sunday morning, two days afterwards. The Secretary of State said, "You get the application in, and I will get the passport back to you." That was only two days before. I filed the necessary application and early Sunday morning a Special-Delivery registered letter came, and it was my Passport to China, Japan, Manchuria and Korea. That was really cutting the Washington red tape in a hurry.

C.R. Smith, FDR's Air Transport Command

Then there remained the question of transportation. Dr. Norris was a great personal friend of Mr. C.R. Smith, President of American Airlines, and he called him and secured my round-trip ticket from Detroit to Seattle and upon my return from the Orient the proper plane reservation from San Francisco to Los Angeles and then to Fort Worth and on back to Detroit. Then he had another friend who was agent for the biggest shipping company and secured steamer passage without delay on that trip. Everything went according to clockwork and I got back to Detroit within two minutes of my scheduled time, after going half way around the world and back.

Thus, not only are we led to understand that the relationship between the preacher and the Buck family, the attorneys for both C. R. Smith and A. P. Barrett and their airline and radio companies--a relationship which began in 1909--continued during Cordull Hull's tenure as Secretary of State for FDR from  1933 through 1944--but that the State Department was responsible for obtaining authority for Norris and his staff to travel internationally without using the normal channels.

This could only mean that whatever Norris was doing abroad, he was linked to the highest echelons of the Department of State's permanent bureaucracy, most likely handled through the office of the Chief of Protocol, James Clement Dunn. We will return to this connection in future posts, after briefly noting a few interesting data which tie this office to Fort Worth.

Dunn had married Mary Augusta Armour, daughter of Kirkland Brooks Armour, president of Armour Packing Co., who died in 1901. Mary's portion of the estate left to her in trust was almost a million dollars in 1901, when she was only seven years old. When the company went public in 1923, Mary Dunn would not only have become much wealthier, but the Armour family also became more politically connected, as shown below. J. Ogden Armour was one of her father's relations, who was in 1917 a director of American International Corporation and associated with many directors of the new Federal Reserve Bank of New York:

Among the directors of AIC were Frank A. Vanderlip, President of the National City Bank of New York, Theodore N. Vail,  President of American Telephone and Telegraph, shipping line magnates Robert Dollar (Dollar Lines) and J. P. Grace (director of National City Bank), Percy A. Rockefeller (son of William Rockefeller and Isabel Stillman--heir to National City Bank), Pierre S. du Pont (heir to explosives company that created chemical industry and owner of General Motors; cousin of the owner of 120 Broadway), J. Ogden Armour (meat-packing heir), Robert S. Lovett (attorney and president for both the Union Pacific and Southern Pacific while owned by E.H. Harriman), William E. Corey (director of Sinclair Oil at 120 Broadway), Otto H. Kahn (of Kuhn, Loeb and Co.), C. A. Coffin (chairman of General Electric), John D. Ryan (National City Bank), W. S. Saunders (director of New York Fed at 120 Broadway), G. L. Tripp (Chase National Bank), A. H. Wiggin (Director of Federal Reserve Bank of New York in the early 1930s), James Stillman (National City Bank), R. F. Herrick, Beekman Winthrop (Secretary of the Navy and Governor of Puerto Rico), Edward S. Webster and Charles Augustus Stone (both of Boston engineering firm of Stone and Webster).

Lyndon Johnson appointed Rev. Norris' close friend, Cyrus Rowlett Smith, Secretary of Commerce in 1968. Five years earlier, on March 23, 1963, Smith had introduced President Kennedy at a speech he gave at the Conrad Hilton Hotel Civic Luncheon in Chicago. In 1968 Smith campaigned with John Connally for Richard Nixon, according to an article by Leo Janos in the July 1973 Atlantic. The article appeared as part of the FBI's 201 file set up on Lee Harvey Oswald.

It should also be mentioned that Smith and his manager Ralph Radcliffe were also recommended less than one month after the JFK assassination by the FBI Dallas SAC for a personal letter from J. Edgar Hoover to thank them for their "unusual assistance" in the FBI's investigation of Kennedy's assassination. We all know the results of that so-called investigation.

Sugar Daddy of John Birch Society

A popular "conspiracy" author, G. Edward Griffin, member of the John Birch Society, narrated a documentary about John Birch in the 1960s, which readers may find interesting. It depicts the heroic life of Birch as a missionary who was on the scene to rescue the Doolittle Raiders, who had a secret mission to bomb the Japanese mainland in April 1942. Corporal Leland D. Faktor was killed during the raid and was buried in a service presided over by Rev. Birch.

Who exactly was this man, Robert Welch, who in 1958 founded a group in honor of John Birch? Besides being the man who gave us Sugar Daddies, Sugar Babies, Milk Duds and Junior Mints, he also gave us the father of the Koch Brothers, chief funders of the Tea Party movement today. Jane Mayer wrote in her 2010 article in The New Yorker, "Covert Operations: The Billionaire Koch Brothers' War Against Obama":

A Republican campaign consultant who has done research on behalf of Charles and David Koch said of the Tea Party, “The Koch brothers gave the money that founded it. It’s like they put the seeds in the ground. Then the rainstorm comes, and the frogs come out of the mud—and they’re our candidates!”

Did the Tea Party Spring from John Birch's Ashes?

Robert Henry Winborne Welch, Jr., was born near Elizabeth City, North Carolina, in 1899, growing up on the farm Frances Hallowell Welch, his grandmother, owned. Her son, Robert, Sr., wife Lina Verona (James) Welch, and their children farmed the land with help from six black workers who lived there. Even after the candy-making brothers left home, the youngest son William Dorsey Welch would remain on this northeastern North Carolina farm surrounded by his grandmother's Hallowell relatives.

Something of a prodigy, young Bobby entered college at Chapel Hill, North Carolina, at the age of 12 and graduated from that institution in 1916. The cities of Chapel Hill and Durham were the agricultural, industrial and financial domain controlled by Julian Shakespeare Carr and his wife Nannie--who in 1924 made application to the National Society of the Sons of the American Revolution, the same year he died. After Carr's tobacco company had become successful, he sold it in 1898 to James Buchanan Duke of nearby Durham, who had begun mass producing cigarettes in the 1880s. Duke died only months after Carr's death, but not before James B. Duke, his father and brother had helped to change this section of North Carolina forever.

• J.B.'s older brother, Benjamin Newton, had launched the family into the textile business as early as 1892. As their textile interests developed, the need for economical water power led the 
• Dukes into the hydroelectric generating business. In 1905, they founded the Southern Power Company, now known as Duke Power, one of the companies making up Duke Energy, Inc. Within two decades, this company was supplying electricity to more than 300 cotton mills and various other factories, electric lines, and cities and towns primarily in the Piedmont region of North and South Carolina.
• Lifelong Methodists, the two brothers practiced the kind of financial stewardship encouraged by their church and instilled in them by their father. Ardent Republicans and sympathetic to the downtrodden, the Dukes, individually and collectively, gave to a number of causes. 
• In December, 1924, James B., who was by far the wealthiest member of the family, established The Duke Endowment as a permanent trust fund with designated beneficiaries. In so doing, he was following the family's long-standing patterns of philanthropy. 
• In 1892, Washington Duke had helped a Methodist-related institution, Trinity College, relocate to Durham, and since 1887 Ben had been a member of the school's Board of Trustees. A new university built around Trinity was to be the prime beneficiary of the Duke Endowment, and at the insistence of Trinity President William Preston Few, the college was re-chartered as Duke University in honor of Washington Duke and his family.

Back in 1880 Trinity College enrolled a "special" student, its first international student-- a young Chinese boy who would later be known as Charlie Soong, who spent the summer of 1881 in Durham with his sponsor, Julian S. Carr. It was a decade later that Trinity was relocated to Durham, the name being change to Duke. The Duke University Board of Trustees was established the year Carr died and the year James B. Duke created his endowment. James B. Duke and his wife had only one child, Doris Duke, born in 1912. When he died in 1925, he left another $67 million to the endowment.

Too young to join the military, he enrolled at Annapolis Naval Academy, according to the Documentary History of John Birch Society:

Bobby Welch

Robert H.W. Welch enrolled in the U.S. Naval Academy at Annapolis MD during World War I, and during World War II he served on the Advisory Commission of the Office of Price Administration [one of 50 advisers] for the candy industry. In 1922, Welch founded the Oxford Candy Company and was its Sales Manager in 1935. Beginning in 1940, he was Vice President and Director of Sales and Advertising of his brother's candy company, The James O. Welch Company of Cambridge MA. In 1947, Welch was the recipient of the Kettle Award by the candy industry. From 1940-1944, Welch was a Board member of the Massachusetts Chess Federation.

From 1951 to 1954, he was a member of the Belmont MA School Committee and served as Director of several small businesses and one bank. He served as Chairman of the Board of the Washington Commission of the National Association of Candy Manufacturers and also was a member of the Board of Directors of the United Prison Association. From 1951-1957 he was a Director of the National Association of Manufacturers, being its Vice President from 1955-1957. In 1941, he authored the book, The Road To Salesmanship. In 1952 his book, May God Forgive Us was published and in 1954, The Life of John Birch.

In conducting research on certain persons in Fort Worth, Texas, this blog writer came across the fact that John Birch, for whom Welch named his group, had attended a Baptist seminary in that city in 1940 and arrived in China only months before the U.S. entered the war against Japan. Rick Perlstein wrote in Before the Storm: Barry Goldwater and the Unmaking of the American Consensus, that Welch's book, The Life of John Birch:

told the tale of a young American Baptist missionary-cum-spy who learned at the close of World War II of the Communists' secret plan to take over China. He was assassinated, and his murder was supposedly covered up by State Department quislings who knew if the story got out their own complicity in Mao's victory would be revealed.

Armed with that information, I began to wonder why Robert Welch was drawn to use John Birch as the name of a supposedly libertarian society, given the fact that foreign missionaries were engaged in such an internationalist role abroad, and that Norris' seminary was so closely tied to, and financed by, an international network of airline companies. Notwithstanding that curious anomaly, it should also be pointed out that descendants of some of Welch's original members are today involved with equally incongruous activities.

Fred C. Koch

For example, during the early days of the JBS, it has been revealed in a recent memoir by Claire Conner, Wrapped in the Flag: A Personal History of America's Radical Right, how much influence Welch exerted on her father, Stillwell J.Conner. The author talks about  Fred C. Koch, who was on the original board of the JBS with Welch, and about his two sons, Charles and David Koch, the subject of another recent book, Koch Brothers Exposed. The Koch brothers, as we all know, set up the infrastructure for today's "libertarian" Tea Party, based upon their pouring of:

hundreds of millions of dollars into right-wing organizations like Institute for Humane Studies, the Cato Institute, the Mercatus Center at George Mason University, the Bill of Rights Institute, the Reason Foundation, Citizens for a Sound Economy and the Federalist Society.

These foundations are not unlike the propaganda mill which used the millions of dollars made available after World War II through the Marshall Plan in Europe, which these so-called libertarians have long ranted against. It is also similar to funds like INCA which spread propaganda throughout South and Central America.

The Candy Man Can

What was it that inspired Welch to start funding this libertarian movement? After completing his studies in Chapel Hill, North Carolina, Welch spent two years at the Naval Academy at Annapolis. He then moved to Cambridge in 1919 to attend law school at Harvard until 1921. While he was was preparing to be a lawyer, however, he met a Wellesley girl in the Class of 1922 named Marian Lucile Probert, whose father (George Ernest Probert) had immigrated to the U.S. from England and worked in the area of Pittsburgh before settling down in Akron, Ohio. As a freshman at Wellesley, therefore, Marian may have encountered May-ling Soong (eventually Madame Chiang Kai-shek),who graduated from Wellesley College in 1917. Or perhaps Robert walked in the steps trod by her brother T.V. Soong, who finished college at Harvard in 1915 and was Finance Minister of the Nationalist party in China by 1927.

When Robert and Marian married  in the Wellesley College Chapel, his bride had recently returned from a trip to Europe with college friends. The newlyweds remained in the Cambridge area while Robert worked in his brother's candy factory, giving up a career in law. By 1928 he was treasurer of the Oxford Candy Company at 185 Albany Street and had moved to the Watertown suburb of Cambridge, Massachusetts. In August 1929 Marian again returned from a trip to England with their two sons, Robert III and Hillard, but if Robert accompanied them, he returned on his own through an unreported means of transport. The year 1930 found the Welch family living on Long Island at Hempstead, New York, while he commuted to his own candy factory in Brooklyn. A younger brother, Miles Edward Welch, lived with the family and helped in the manufacture of the candy.

Several years later, as early as 1939, both Robert and his brother, James Overton Welch, lived almost next door, both owning homes on Fletcher Road in Belmont, MA. We are told that Robert took a trip to England in 1946 to study socialism's negative impact on the country:

In 1946, Welch journeyed to England to study the destructive impact on that country of its socialist Labor Government. He was alarmed and distressed by the pursuit of similarly destructive policies by our own federal government. He was even more alarmed by the foreign policies of the Truman State Department, which were betraying our allies and assisting with the establishment of Communist regimes in Europe and Asia.

However, according to an item appearing in a June 1947 newspaper in Portland, Maine, Welch had spent "several years" in England. Although it is not clear from any source found that Welch ever served in any military capacity, or exactly how he studied the socialist economy, it is noteworthy that he and his wife, Marian, spent some time in the British island of Bermuda, returning on a PanAm flight from Kindley Field in September 1949. That would have made them one of the first tourists to visit Bermuda by air, if they were indeed tourists and not visiting the island for business purposes.

Welch then became a candidate in the 1950 Republican primary for Lieutenant Governor of Massachusetts, coming in second to Laurence Curtis, who lost in the general election to his Democrat opponent. 

The James O. Welch Co. began expanding in 1955, purchasing Mansfield chocolate factory, which made packaged candies like Peppermint Patties, Junior Mints and Milk Duds. In 1961, Welch bought the 40-year-old Merckens Chocolate Co. of Buffalo, N.Y., and transported half a million pounds of Merckens’ machinery to the Mansfield plant. In 1963 the National Biscuit Company bought James Welch's company. James Welch, Sr. served as a director of Nabisco from 1963 until his retirement in 1978, and his son was president of the company, which in 1988 was the subject of much interest for takeover. But by then, Robert had left the company, ostensibly to pursue his intellectual interests and writing.

Was there more to his story?