How Rich Men in Greenwich Came to Control Pan Am

Back in the fall of 2014 at this blog I was heavily engaged in a review of Nixon's role in Watergate, while at the same time exploring his connection to Rebe Rebozo. Researching Bebe in depth had led me to Bebe's marriage to high school classmate Clare Gunn, who had their marriage annulled just before she married in 1937 an extremely wealthy man, E. Vose Babcock, Jr. That marriage ended in divorce after only two years. Her final marriage would be to a Pan Am Airways pilot named James N. Gentry.

Although I did promise to continue researching what to be was a quite intriguing connection, i.e., Babcock's connection to the Mellon and Scaife families in Pittsburgh, I neglected to post my followup research. Instead, curiosity about land developers in Florida, among many other subjects,  intervened. Refer back to my previous post to refresh your memory, as the saga continues here.

Vose Babcock, Sr. dies.

Juan Trippe's Social Circle Within a Circle

Prior to his becoming Pittsburgh's mayor, Vose Babcock, Sr. had been a trustee of the University of Pittsburgh with Andrew Carnegie himself a decade or so after  Carnegie sold his steel company to J.P. Morgan and became America's richest philanthropist. Vose Jr., something of a black sheep, did not follow the lead of other wealthy Pittsburgh citizens who married within their class. 

David K.E. Bruce & A. Mellon

Scions from that Pittsburgh group include Richard Beatty Mellon's daughter Sarah Cordelia, for example, who married Alan Magee Scaife, nephew of William L. Scaife, also a fellow trustee with Vose Babcock, Sr.; Sarah's first cousin, Andrew Mellon's daughter Ailsa, married David K.E. Bruce, who himself had a founding role in Pan American Airways, as well as a secretive career in intelligence. Passing the Maryland Bar in 1921, Bruce then "dabbled at the law and began preparing for a career in the State Department at its foreign service school."*  It would be in David Bruce's footsteps a young George H. W. Bush would tread in the years leading up to Bush's rise in power and status as President Richard Nixon was being drummed out of office in 1974, a path which ended in late 1977 upon Bruce's death.

Alan Magee Scaife, graduating in the 1920 class at Yale, had been roommates with Juan T. Trippe there. No doubt that relationship helped Trippe become the founder of Pan American Airways at the age of only 27. David Bruce, Scaife's cousin by marriage, who grew up in Baltimore amongst heirs of Alexander Brown's fortune, became a partner in an investment bank set up in 1926--W.A. Harriman & Co.--which would soon merge with Alex Brown's New York sons' descendants in Brown Brothers, founded in 1825. 

The Brown descendants included the wife of another close Yale friend, Robert A. Lovett, who in 1919 had married Adele Quartley Brown, daughter of senior partner James Brown. In 1926 Lovett became a Brown Brothers partner. That was the same year Trippe broke up with PanAm's former investors, which included Averell Harriman, after the military brass who ran Colonial Air Transport accused Trippe of neglecting the airline's core business--contract mail routes--while trying to build a passenger transport business.** 

Juan Trippe of Greenwich

At that time the core mail routes were Boston to New York and New York to Chicago, but Trippe was more interested in a route to America's Pacific coast, California, and from the Florida keys to Cuba, with a more distant eye to the "Orient."

The man who blew the whistle, as it were, on Juan Trippe's "loose management" was none other than Andrew Mellon's son-in-law David Bruce, whose fellow partners at W.A. Harriman & Co. were Roland "Bunny" Harriman, Knight Woolley, and Prescott Bush--all of whom had been classmates at Yale who had been tapped for Skull and Bones just as America entered WWI in 1917. Another partner, the one with the most banking experience, however, was our old friend George Herbert (Bert) Walker, who became Prescott Bush's father-in-law in 1921.

Founding of W. A. Harriman & Co in 1920

In May of that year Robert Scott Lovett (father of Robert A. Lovett, also a Bonesman from Yale's class of 1918) volunteered to work full-time with the War Council, headed by Henry Pomeroy Davison of Locust Valley, Long Island, New York. Bobby Lovett had moved from Texas to New York at a young age when his father began running E.H. Harriman's Union Pacific Railroad, and grew up alongside the Harriman boys and attended Yale with Davison's son, Frederick Trubee Davison, and Knight Woolley's brother John, in the 1918 class. Prescott Bush and Bunny Harriman were one year ahead of Lovett, who, with Knight Woolley and Neal Mallon, were in Yale's Class of 1917. Averell graduated in the 1913 class. All were in Skull and Bones.

Unnamed industrial finance company being set up by G.H. Walker.

In January 1920 St. Louis investment banker George H. Walker announced he would set up a new "industrial finance company," with many wealthy businessmen, including:

• J. Ogden Armour, the meat packer in Chicago, was involved, as were 
• Averell Harriman, 
• Percy Rockefeller, 
• Sam F. Pryor, and 
• W. C. Potter, among many others. 

On April 10, 1920 the new company,  incorporated as Morton & Co., Inc., announced it would operate a general investment banking business, issuing and underwriting securities, and engaging in all the normal activities of such banks. Its temporary offices were moved on May 15 to 25 Broad Street. Directors and officers were named in the Announcement below:

G. H. Walker, president of Morton & Co.--WSJ 4/10/1920

How did these Yale men meet the St. Louis banker, one might well wonder.

Percy A. Rockefeller had been in the Yale (and Skull and Bones) 1900 class with Frederick Baldwin Adams, Frederic Winthrop Allen from Massachusetts and James Cowan Greenway. In fact, when F.W. Allen's wedding was held in St. Louis in 1911 his Bones classmates attended. Allen's bride was Irene Catlin, daughter of Daniel Catlin, founder of a tobacco company in St. Louis bought out by American Tobacco Company in 1898. Catlin had used the money from the sale to invest in St. Louis real estate and built the Security Building at 319 N. 4th Street, "St. Louis' most costly tall office building." At the corner of Locust and North Fourth, it sat opposite the Federal Reserve Bank in downtown St. Louis. For years the Catlins had lived on Vandeventer Place near the family of David Davis Walker, father of George Herbert Walker. Mrs. Catlin's mother, Mrs. Henry Kayser lived at #59 until her death in 1915.

Fred Winthrop Allen had moved to St. Louis shortly after his Yale graduation in 1900 to work for Simmons Hardware, the same company which hired Prescott Bush after he too graduated from Yale in 1917. Allen had quickly taken his place among St. Louis society folk, making friends with Daniel Catlin, Jr. and his brother Theron, whose sister Allen later married.***

Averell, Bunny's big brother and the senior partner of the investment bank set up with his inheritance from the railroad tycoon, E.H. Harriman, ignored the warnings given him by both David Bruce and Colonial Air Transport (CAT) executive Sherman Fairchild. There are varying accounts of what exactly happened in 1927 (Gabrielle Durepos, Albert J. Mills, Anti-History: Theorizing the Past..., pp. 195-200).; see also pages 4-5 of a paper delivered by the authors which sets out the founding and merger history of Pan Am). One account, written by "leftist" writer, Matthew Josephson, relates that after being fired by the board of CAT, Trippe formed Aviation Corporation of the Americas (ACoAs) with John Hambleton and Cornelius Vanderbilt "Sonny" Whitney, son of Harry Payne Whitney and grandson of William Collins Whitney. Hambleton, son of a Baltimore banker and married to the daughter of the president of the Atlantic Coast Line Railroad, died in a plane crash in the summer of 1929, to be heard from no more. Sonny Whitney, however, turned out to be Juan Trippe's most omnipresent backer, as we will explore in subsequent posts here.

We receive a totally different perspective of Juan Trippe's role in this airline from Rudy Abramson's

biography of Averell Harriman, Spanning the Century. Abramson states that Averell, who graduated from Yale four years earlier than his brother and other Skull and Bones partners at W.A. Harriman & Co., had begun aviation investments with his brother-in-law, Charles Lawrance, who sold military planes to the French during WWI and to the U.S. Army in 1920. Charles soon became president of the Wright Company, which made the plane Lucky Lindbergh flew to Paris. 

By the time the forerunner to Pan Am was founded, Averell (then 36) was already making his third aviation investment. He teamed up with Bobby Lehman to help Trippe launch Aviation Corporation of America (AVCO), also bringing in Sonny's cousin John Hay "Jock" Whitney, their uncle William H. Vanderbilt, and William G. Rockefeller, Juan's close neighbor in Greenwich, Connecticut. In fact, the part of Greenwich where Trippe, Prescott Bush, Sr. and Jr. lived had been developed out of the vast Rockefeller holdings in that city.

William Rockefeller first acquired land in Greenwich in the 1870's.

Juan Trippe in 1928 married Elizabeth "Betty" Stettinius, daughter of Edward R. Stettinius, Sr. whom Ron Chernow described as the man bearing "the unlovely tag of father of the military industrial complex." [See Chernow, The House of Morgan (page 189)]. President of the Diamond Match Company during 1909-15, Stettinius lived with his family in a mansion called Dongan Hall at Staten Island. Recruited by Thomas Lamont in 1915 to work for J. P. Morgan & Co., he became chief buyer of war supplies for the Allies before the U.S. declared war. In this role he reorganized American manufacturing companies into munitions makers, using Morgan's interest in Guaranty Trust to finance its acquisition of factories by Midvale Steel and Ordnance for that purpose. Midvale then set up Remington Arms Co. in Delaware "primarily to manufacture rifles for the Allies in Europe." Mostly Wall-Street bankers bought up the stock in Remington, Cambria Steel and also Wilmington Steel.

Two men who were most helpful to Stettinius in converting America into a war machine were Samuel F. Pryor and Percy A. Rockefeller. Pryor, who was a director of the Baldwin Locomotive Works, helped negotiate the lease to house the new factory for Remington Arms, of which he would serve as a vice-president. The contracts to sell the rifles were already in place by 1915, and the United States had already racked up a huge trade surplus. Pryor would become a vice president of Union Metallic Cartridge Co. and later serve as a director of Wright-Martin Aircraft with Frederic Wintrop Allen and Frederick Baldwin Adams, both of whom were shareholders in W.A. Harriman & Co. of which George H. "Bert" Walker was president in 1920, as were Percy and Pryor. Percy A. Rockefeller was a major investor in Midvale with his sister's husband, Marcellus Hartley Dodge, and with Frank A. Vanderlip, while Andrew Mellon was a Midvale director. (See Gerald G. Eggert, Steelmasters and Labor Reform, 1886-1923, page 96).

A couple of years later as Assistant Secretary of War in Woodrow Wilson's administration in 1918 Stettinius oversaw procurement and production of supplies for the U.S. Army, spending many months in Europe after WWI on the Advisory Liquidating Board settling munitions contracts and those for "aeronautical material" no longer needed by the U.S. Government. His job was then to terminate contracts established during the the war on terms favorable to the government. Thus, Juan Trippe's father-in-law would have been well qualified to have mentored Richard Nixon, who terminated Navy contracts at the Philadelphia Bureau of Aeronautics office beginning in January 1945. Nixon's entire Naval career is much more intriguing than has heretofore been explored.

Before that assignment Nixon had been an administrative officer at the Alameda Naval Air Station, where Pan American World Airways' Pacific terminal was located. One who collects coincidences might be fascinated to learn that Alameda Naval Air Base was also the point of departure in 1944 for
the last flight (photo below) of James Norman Gentry, the man Bebe Rebozo's ex-wife (Clare Gunn) married after she divorced Bebe. But, again, we're getting ahead of ourselves.

Captain James Norman Gentry, who married Clare Gunn in 1939, crashed in 1944.

When W. A. Harriman & Co. merged into the newly created Brown Brothers, Harriman investment bank in 1931, "six of the twelve partners in the new company had been at Yale with the younger Harriman brother [Bunny]" — adding Robert A. Lovett and Ellery James to the other four Yalies, all of whom had been tapped by Skull and Bones during the time Percy Rockefeller was investing in aircraft with fellow Bonesman F. B. Adams.

A secretive high-level "spook" within State Department and OSS circles, Bruce — in his diaries from WWII, published in 1991 as "OSS Against the Reich"  — recounted his experiences as "a top deputy of William J. 'Wild Bill' Donovan, founder of the Office of Strategic Services," forerunner of Central Intelligence Agency. Bruce had also served as Averell Harriman's assistant in the Department of Commerce.

Like Carnegie, Andrew Mellon and his numerous corporate interests before the 1929 crash had been an integral part of the Morgan banking network of industries then centered around steel, mass transit and mass electrical utility systems and the local street railways, which were recently consolidated into one holding company by Democrat, William Collins Whitney. (See Taking the Golden Eggs, Part I and Part II.) W.C. Whitney had very strong ties to Yale, but wanted to send his two sons to Harvard because of a rift between him and his wife's brother, Oliver Hazard Payne, also a Yalie, but a Republican, heavily invested in Standard Oil, whose owners were incensed at what had transpired under the Democrat President Grover Cleveland and the Republican trust-buster Theodore Roosevelt to their oil monopoly. 

The Rockefellers, Stillmans, and associates in Standard Oil and National City Bank were determined to wrest control of the government and the direction of investment from Whitney's benefactors, and they planned to do it through the power structure at Yale University, in particular through the Skull and Bones secret society. Andrew Mellon had known Texan Jesse Jones since at least 1905, when Jones was a young man managing his uncle's lumber estate. Not long after meeting Mellon, who owned the Lucas oil gusher at Spindletop as part of Gulf Oil, Jones went into the construction business for himself and convinced Mellon to build a headquarters for Gulf Oil in Houston in 1908. Jesse Jones built two Gulf buildings, and a third was constructed by Cadillac Fairview (Bronfman) many years later as part of Texas Eastern Transmission Co.'s Houston Center complex.

Since 1937 Gulf Oil had been in Kuwait as a partner with BP, from whom they “took most of their political advice,” and who “gave them patronizing lectures on how to deal with the Arabs.” [Anthony Sampson, The Seven Sisters, p. 230.] According to Sampson, Gulf “moved into coal and nuclear energy; they bought an insurance company (CNA), an industrial center in Florida, and a whole new town outside Washington called Reston.”

What we need to understand at this juncture is that Miami in 1930 was the center of what was to become America's first international airline corporation and that Yale was strutting to lead the way through Juan Trippe. We learn much of this history from author Rosalie Schwartz in her book Flying Down to Rio: Hollywood, Tourists, and Yankee Clippers.

With the depression, a new type of infrastructure pushed out the old to create an economy based upon the concept of individually automobiles as and the petroleum products used as fuel, thus supplanting the electric-powered street railways. Mellon was in the process of abandoning Morgan interests in favor of Rockefeller-Stillman interests, as his activities during the 1920's, leading up to oil ventures in Venezuela and Colombia in 1930, affirm.


In 2001 a map of the real estate holdings in these counties appeared in the Sarasota Herald, which shows that Babcock Lumber's hardwoods grew in swampy lands later sold to the state for a wilderness preserve. The Babcock heirs declared that nobody had made any money off the cattle and farming operations of the ranch, at least not since Babcock, Sr. turned the lands over to Junior's younger brother Fred Courtney Babcock, a white sheep graduate of Dartmouth, who married and returned to Pittsbugh to head the lumber company even before Vose Senior died in 1948. Fred lived until 1997, dying in Punta Gorda, Charlotte County, Florida.

Smathers firm deprived of these fees!

Fred's heirs in 2001 breathed not a whisper here of the name of black sheep, Vose Jr. What we learn of Clare's husband number two is found in 1957 Florida Senate hearings on the impeachment of Judge George Edward Holt, whom critics alleged received a suspicious loan from an attorney named Joseph Gersten. George Smathers' partner, Jack Thompson, it seems, had been appointed in 1955 to be guardian ad litem for Vose Babcock, Jr. (incapacitated by an unknown blood malady). The guardian apparently would have had some measure of access to Babcock's $8 million trust fund as well as oversight of $4 million in Florida real estate and his cattle spread over several counties (see p. 419 of excerpt at left), all valued in 1950s dollars. According to testimony in the hearing, the Judge revoked the first appointment to the Smathers firm, replacing Thompson with Gersten.  

When Vose Jr. died  in 1956, his obituary in the Princeton Alumni Weekly state he had been a director of the Florida State Cattlemen's Association and a member of the Riviera Country Club at Coral Gables. A 1955 photograph of him appeared alongside Florida's anti-Klan Governor Fuller Warren showing off his purebred Santa Gertrudis bloodline bull acquired from the Texas King Ranch, whose website states:

In 1940, Dick Kleberg, Jr., joined his father, Mr. Dick, and his uncle, Mr. Bob, in managing King Ranch. Together, they initiated a series of innovations that kept King Ranch successful and at the leading edge of the ranching industry. ...After World War II, the ranch’s agricultural business was extended, in part to expand the national and global presence of the Santa Gertrudis breed. Acquisitions came through the purchase of property in Kentucky, Pennsylvania, Mississippi, and West Texas, and through joint ventures and partnerships in Florida.

Clare divorced Babcock in 1939.

Clare Gunn's 1937 marriage to Vose Jr. was over in very short order, as stated in a prior post. She divorced him early in 1939 in Miami in order to marry James N. Gentry, a 1934 mechanical engineering graduate from Georgia Tech, who had joined the Naval Reserve and trained as a pilot in Pensacola, Florida, before moving to Miami to fly for Pan American. By the spring of 1940 they were living in Fort Myers, and he tended his cattle on the Crescent B Ranch, which covered a large part of Lee, Charlotte, Hendry and Collier Counties' swampy range. Vose Babcock and his brother Fred were in Fort Myers to look after the 156,000-acre Crescent B. Ranch their father had begun buying from timber speculators in 1914. The ranch was then still part of Manatee County and would not be divided into Charlotte and Lee Counties until seven years later. What remains of that real estate investment is now the Babcock Ranch community east of Punta Gorda.

Vose Babcock remarried again so quickly, we might wonder whether  Clare caught him fooling around with the young widow, Georgie Areca Stone Moore, whom he married in short order. Born in Punta Gorda around 1915, Areca was a 1933 graduate of Fort Myers High School and lived with the family of her deceased husband, Charlie Swoope Moore, Jr. who died December 8, 1937. Charlie's father fancied himself as something of a defender of national security, serving on the Fort Myers Defense Council during WWII. 

After the marriage, to Areca, Vose Babcock soon moved down to the Miami area, where the 1947 directory finds him in Coral Gables in a large Spanish colonial ranch home just east of the golf course named for the historic Biltmore Hotel a few feet from the Babcocks' front door. Intriguingly, thirteen months after Vose died, Areca married Guy B. Bailey, who became one of the founders of the Country Club of Miami, which announced its golf pro would be Arnold Palmer, then the hottest golfer on the PGA circuit. After the club opened, however, it turned out Arnie was too hot to spend much time at all in Miami, and he was replaced when his contract expired.

Clare too quickly remarried. The U.S. Census recorded in April 1940 reveals Clare was already remarried to James Norman Gentry and living at 24-29 51st Avenue in Douglaston, Little Neck, New York, ten miles east of La Guardia Airport, the New York terminal for Gentry's employer, Pan American Airlines. To get to work and back, Gentry would have had to pass the World's Fair in Flushing (current site of Flushing Meadows tennis center) which did not close until late October 1940. Used as a model for Walt Disney's Epcot Center in Florida, the 1939 World’s Fair "sprawled over 1,216 acres of former marshland adjacent to Flushing Bay."

1942 Miami Directory

Incidentally, Bebe Rebozo lived with his mother and sister in this same neighborhood in 1942 before he and Clare married for a second time and were listed in the 1947 Miami Directory at 7200 School House Road (now known as SW 52nd Avenue)!






During the 1920's Florida was the hottest market for real estate, as we have explored in many posts that appear in this blog (see label 'Florida Land Boom'). It was also struggling to build airports during those years and attracted the interest of two important men—Glenn H. Curtiss and Juan T. Trippe.
Here we return to review what happened in Florida after WWI, trying to understand how the new transportation technologies led to that state becoming central to the growth of an intelligence empire.

Florida and Airplanes--the 1920's

Wall Street invaded Miami in the 1920's, but a hurricane in 1926 and another in 1929 brought recession, just as the stock market crash ushered in the Great Depression. Prior to the crash investors were zeroing in on the latest technology—airplanes.

The three biggest American names in the field at that time—Wright, Curtiss and Martin—would soon be swallowed up into one conglomerate. The Great War (WWI) had razed the playing field, forcing the winner to become a partner with the federal government, which dangled the most lucrative contract, air mail, like a carrot before corporate eyes.

One of the foremost pioneers of the "aeroplane," Wilbur Wright, died in 1912, and his brother Orville, after winning a patent-infringement lawsuit against Glenn H. Curtiss in 1914, sold out to a New York investment syndicate, headed by William Boyce Thompson, formerly a copper miner in Montana, was involved. For a mere $250,000, one-quarter of what the Wright company had initially raised in 1909, Thompson's group of investors included Charles H. Sabin of the Morgan-affiliated Guaranty Trust.

Wright plane in 1910

The new syndicate which acquired Wright's stock merged it with that of Glenn L. Martin, forming in 1917 a new corporation called Wright-Martin Aircraft Corporation, which began manufacturing aircraft in New Brunswick, N.J. at the Simplex automobile factory which Wright had also acquired. Preferred and common shares of Wright-Martin, which were authorized to raise a total of $10 million, were oversubscribed by $5.2 million.

Percy, mgr for Wear team

Wright-Martin quickly evolved into Wright Aeronautical Corporation, filed in Albany, New York, in October 1919 by Frederick Baldwin Adams and others, shortly before Adams joined with the other shareholders involved with Averell Harriman and G. H. "Bert" Walker in W. A. Harriman & Co. Walker's brother-in-law, Jim Wear, played football at Yale while Percy Rockefeller was the football manager.

Adams had also been tapped for Skull and Bones the same year as Percy. Wright Aeronautical operated for ten years, until June 1929 when both it and rival Glenn Curtiss were acquired by a $70 million holding company called the Curtiss-Wright Corporation.

The Curtiss-Wright Corporation would eventually become a subsidiary of a huge conglomerate formed in 1915, the American International Corporation, which Antony Sutton referred to as "a Morgan-controlled firm," with William Boyce Thompson high up in its management. Eustace Mullins has also written about AIC, stating that it was

"funded by J.P. Morgan, the Rockefellers, and the National City Bank. Chairman of the Board was Frank Vanderlip, former president of National City, and member of the Jekyll Island group which wrote the Federal Reserve Act in 1910." 

Mullins also wrote that the directors included George Herbert Walker along with an assortment of other well known men. Although many of those he mentioned were original directors of AIC, Walker was not, as evidenced by the absence of his name in the article published in Washington Post of November 24, 1915.

G.H. Walker, USGA

By 1929, however, when the corporation advertised to sell $25,000,000 in gold debentures, Walker, then president of  W.A. Harriman & Co., was listed as a director of AIC. That year also saw both Averell Harriman and G. H. Walker sitting as directors of The Aviation Company (AVCO), a connection begun possibly in 1928 when AIC's Matthew Brush was on the board of Petroleum Bond and Share, a Delaware corporation, with Averell and Walker.

Until passage of the Federal Reserve Act in 1913 the United States had had no official central bank, but historians have stated that J. P. Morgan had acted as an unofficial central bank. When Morgan died in 1913, four years after W. A. Harriman's father, the railroad tycoon, had passed from the scene, many investment bankers aspired to replace the role Morgan had played. George Herbert Walker was one of those men who aspired to such heights, but he was one who hid in the shadows. My project to shed light on him and his extended family extends to five segments, which can read at QJ. Something triggered his ambition to broaden his banking interests in 1916, the year he was named president of the New Orleans, Texas & Mexico Railway Company, whose chairman was Houston attorney Frank Andrews.

G.H. Walker named President of new railway company, 1916.

Central banks provide the nation with one financial voice to speak for it in commercial matters abroad. Morgan had been that voice for years. With his death in 1913, Woodrow Wilson stood ready to appoint the first director to head the new central bank, and the following year chose W. Boyce Thompson, an ingenue Republican millionaire who favored Theodore Roosevelt's progressivism over Taft's policies. It could only have been a political ploy designed by Colonel House of Texas, who was pulling Wilson's strings from behind the curtain in an obvious  attempt to garner favor with the Roosevelt progressives who had helped the Democrats defeat Taft.

The New York branch of the Federal Reserve from which Thompson came was then as now comprised of the biggest, wealthiest banks on Wall Street. In 1914 the member banks were chomping at the bit, with WWI looming in Europe, to cash in on financing the war. American International Corporation, an entity set up by this Wall Street branch of the new central banking establishment, wanted to leverage millions of dollars in federal grants, together with stocks and bonds issued by its member Wall Street banks, to buy American companies able to produce weapons, ammunition, and other equipment, such as airplanes--all then in great demand by the warring nations.

Glenn H. Curtiss had

Glenn Curtiss

developed an airplane that could land on water for the Navy, but he soon found himself in a legal battle with the Wright Brothers, who held a patent on their wing-warping system. While the Wrights won in court, Curtiss paid no penalty, and a Wall Street syndicate formed the Curtiss Aeroplane & Motor Company, with Curtiss as president. ... When the company underwent major financial reorganization in 1920, Curtiss moved to southern Florida, where he became a real estate developer during the 1920s.

As WWI approached, eleven manufacturers of airplanes and parts set up Manufacturers' Aircraft Association as a clearing house to avoid litigation which would delay the manufacture of aircraft needed to sell to Europeans engaged in the war. They put all patents used by manufacturerd into a pool and members of that pool were able to use all these developments in their aircraft without having to pay exorbitant royalties.

NOTES:

*David E. Koskoff's The Mellons.
**(Anthony J. Mayo, Nitin Nohria, Mark Rennella, Entrepreneurs, Managers, and Leaders... published in 2009, (p. 47). The footnotes at the end of chapter 2 of their book are quite useful for those engaged in further research.)
*** Theron, who was 6 foot 4, was elected as a Republican to the Missouri Legislature in 1906, and was elected to the U.S. Congress in 1910. He had barely taken his seat when the Democrat Patrick F. Gill, who had contested the election, Fred's bride, Irene Catlin Allen, served with a subpoena on the day of her wedding. Gill ultimately prevailed in the House Elections Committee by proving that Fred's father-in-law, millionaire Daniel Catlin, had spent $10,000 getting his son elected and that he spent more than twice the allowed amount of $660 on his campaign. 

 

Being the House Player at the Casino

Renaissance Technologies Founder James Simons

Robert Mercer's preference for right-wing politics seems to stand in stark contrast to the political views of his predecessors at Renaissance Technologies--James Harris Simons and Howard Lee Morgan, the co-founders in 1982 of the company originally designed to revive dying companies.

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."

The story goes that Simons denounced Taylor's statement that the U.S. could win the Vietnam War in a letter to the New York Times, which  published it. He then told a reporter "his survival strategy was to stop working on IDA projects and spend all of his time on his own research, until the U.S. left Vietnam. Ultimately, for the first and only time in his life, Simons was fired." That was 1968, the same year he joined Stony Brook University in New York, collaborating with Shiing-Shen Chern. They created a geometric theory that crosses over into physics and the quantum field theory. 

Within ten years Simons had begun his finance career in 1976 by trading in currencies with his own money, and after two years he left the university. He created an investment fund called Limroy and a hedge fund called Monemetrics--both involved in odd transactions based in the Bahamas and British Virgin Islands, to which we will return later.

RenTec--from Geometry to Physics to Computer Analytics

Simons, possibly sensing a need to add computer analytics to his investment formula, set up Renaissance Technologies (RenTec) in 1982 with Howard Lee Morgan. Morgan served as president of Renaissance Tech from 1983 through 1989. He had graduated from City College of the City University of New York in 1965 and taught there while working on his doctorate,
awarded by Cornell in 1968. Dr. Morgan then relocated to Philadelphia, teaching first in the Department of decision sciences at Wharton School of Finance (from which Donald Trump had graduated the same year Morgan arrived), and then he was professor in computer and information sciences at Moore School of Electrical Engineering ("birthplace of the computer industry"), both colleges part of the University of Pennsylvania, which he left in 1985. 

After 1985 Morgan taught briefly at Cal Tech and also at Harvard Business School. According to his bio at Edge Foundation, "His research on user interface technology, and on optimization of computer networks led to his bringing the ARPAnet to Philadelphia in 1974. As a result of this early participation in the internet, he advised many corporate and government agencies on the uses of electronic and voice mail, implementing it throughout the Wharton School in the mid 1970s."

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. 

RenTec also infused $6 million into Franklin Computer Corporation, which had reverse-engineered Apple technology and then designed compatible applications. The money thus rescued Franklin from bankruptcy after it lost a lawsuit for copyright infringement. They negotiated joint use patent-sharing agreements with Apple, then took Franklin public in 1985 and manufactured Ace 2000 computers, compatible with Apple software. The company also spun off Franklin Electronic Publishers, Inc., which made electronic Bibles. As of 2002 Simons was still a director of Franklin Electronic Publishers, as well as on the boards of Numar Corporation, Cylink Corporation, Segue Corporation, and Kentek Information Systems. He was also named as  "founder and director of the Sanford Group, an industrial holding company in South America." Two years earlier, it was reported, RenTec's Medallion Fund "made a killing in the volatile oil futures market," but a mortgage-backed derivatives fund he backed "in 1995 swooned after two fine years."

Speech Recognition in Quantitative Finance

Mercer at IBM

In 1984 the New York Times mentioned "Bob" Mercer as part of a team lead by Fred Jelinek of Briarcliff Manor, developers of an office computer which could recognize and display words spoken into it. Jelinek had left a full electrical engineering professorship at Cornell in 1972 to lead the team of physicists, electrical engineers and computer scientists, who accumulated data, which was "statistically analyzed to predict patterns in the ways words are used and pronounced.... The team's goal was continuous speech recognition in what experts in the field call ''real time.'' That is, team members worked to produce a machine that could process and immediately display sequences of words and sentences as they are normally spoken."

The article gave a brief biographical summary of Jelinek, who was Mercer's boss at IBM:

Mr. Jelinek came to the United States with his mother and sister in 1949, at the age of 17, having lost his father in a concentration camp. Although he had wanted to become a trial lawyer in Czechoslovakia, he now had to cope with a new language and decided to study electrical engineering. After completing the last six months of high school, he spent four years at City College in New York City, attending classes at night and working during the day to help support his family as a lab assistant for a small manufacturer of transformers for fluorescent lights. A turning point came for him when a group called the Mid-European Studies Center awarded him a full scholarship to the Massachusetts Institute of Technology. He remained at M.I.T. to pursue a doctorate in electrical engineering, becoming an instructor there as well as a lecturer at Harvard University. In the last year of his doctoral program at M.I.T. he audited courses taught by Noam Chomsky, the renowned linguist....

Scott Patterson, Quants: ...New Breed of Math Whizzes, 114

The continuous-speech recognition team, with Dr. Jelinek as manager, consists of four groups headed by Lalit Bahl and Bob Mercer, both of Yorktown Heights, Ken Davies of Croton and Gideon Shichman, who commutes from Manhattan.

More than one IBM official, including Mercer and Peter Brown would leave in 1993 to work for Renaissance Technologies, and Bahl would soon follow them. In time, according to Scott Patterson, author of The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, Mercer was known as the "big gun." Patterson quoted one of the analyst/ traders, a former cryptographer, who said speech recognition training (referred to by financial experts as "statistical arbitrage and quantitative finance") gave Renaissance's Medallion Fund enough of an advantage to liken it to "being the house player at a casino. You have a small edge on every bet, and you have to know how to handle that." (p. 115)

IBM clearly did not have the iron-clad non-compete employment contracts that Simons implemented at RenTec. When two RenTec physicists--Pavel Volfbeyn and Alexander Belopolsky--tried to leave their jobs for another hedge fund, RenTec wasted no time suing for intending to violate its trade secrets. The physicists alleged in a court pleading that they left RenTec because it engaged in illegal trades "involving swap transactions, which they describe[d] as 'a massive scam' ... [which] violated U.S. Securities and Exchange Commission and National Association of Securities Dealers rules governing short sales." To escape the lawsuit, Millenium managed by Israel Englander, the Defendant hedge fund which hired them, paid $20 million to RenTec and fired Volfbeyn and Belopolsky, who remained as defendants--a dire warning designed to prevent similar exits or accusations.

After the 2008 collapse of the housing market, Simons testified before Congress, citing his credentials and negating claims that had been made by the former employees. He explained what his company did as follows:

Renaissance, an SEC-registered Investment Adviser since 1998, manages what are termed quantitative funds -- funds whose trading is determined by mathematical formulas designed to predict market behavior. Individual trades are generated by computers, based on work continually developed by our researchers. Naturally, human beings carefully monitor the trade execution process, making sure that all parts of the system are behaving properly. We operate in only highly liquid, publicly listed securities, such as stocks, bonds, currencies, and commodities, and do this on exchanges throughout the world. This means, for example, that we do not trade in credit default swaps or collateralized debt obligations, neither of which satisfies the above criteria. In the stock trading of our Medallion Fund, we hold balanced portfolios in each country, i.e., portfolios very close to being equally long and short. Our trading models tend to buy stocks that are recently out favor and sell those recently in favor.

Simons retired in 2009, and Robert Mercer replaced him. A piece in 2009 for Zero Hedge--"Time To Revisit RenTec's Allegedly Illegal Dark Pool, Limit Order and Swap Transaction Strategies"--points toward Renaissance quantitative equity hedge funds as the ultimate in a banker's wet dream. Just as much of last century's science and technology spy gadgets and remote viewing experiments were designed to accomplish a sure-fire way to make money in the stock market, Renaissance now hires hundreds of geeky PhD's to do the same thing for its highly secretive funds. A Bloomberg Markets article called one of RenTec's funds "the commercial version of the Manhattan Project," because of its secrecy. The confidential oath that employees sign makes it impossible for them to ever work for anyone else.

The next segment will explore how Renaissance Technologies used its math wizards to make money--effectively monetizing mathematics by crossing over into the fields of marketing, advertising, and even politics.

Computational physics has become the new magic wealth-creating formula that philanthropists, prime ministers and even mobsters (like Felix Sater) now seek.

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."