The incompetence which has been the hallmark of the world’s ‘most powerful man’ has left the world with a legacy we can only begin to rub our eyes at: George W. Bush’s successful derailing of concerted action on climate change; an energy crisis; a $3 trillion war (that’s just the cost to the Americans of Iraq) and a downwardly mobile world economy which will leave millions with little hope of escaping poverty, to name but a few of the major items. Dubya and his family, the prominence of which may have led some to believe that they had inherited some kind of leadership gene, have much to answer for. Now that George W. Bush’s days in the White House are thankfully at an end, we could be excused for being impatient to move on. Who wants to linger at the site of a road crash? Who wants to dwell on the crony capitalists who inspired today’s holy mess? But we should. The second (and hopefully last) presidential library devoted to a member of the Bush family should be gift-wrapped in the crap he bequeathed.
Some of the entanglements of the Bush family have been presented as a conspiracy – a hidden and mysterious plot at the apparent centre of which lies the Bush alma mater Yale University’s Skull and Bones society – a variation on the Masonic Lodge. An early member of the Skull and Bones was Prescott Bush Snr., father of the first President Bush. A scion of New York’s financial establishment, Prescott Bush was a director of Brown Brothers Harriman & Company, the oldest private bank in the United States. He was also a director of the Union Banking Corporation, a bank set up along with two banks in Europe in the 1920s by August Thyssen, the German industrialist. The banks were used to shuffle profits made from the Nazi war economy out of reach of any government, not just the Nazis. Thyssen had learnt in the aftermath of World War One that it was best to maintain escape routes for his wealth.(1)
Brown Brothers Harriman, of which Prescott Bush was a director, assisted in the investment of American funds into Thyssen’s empire. Thyssen’s profits were then able to flow back to the US via the Union Banking Corporation, also under the watchful gaze of UBC director Prescott Bush. This trade continued even after war had been declared between Germany and Britain. It was not until orders were made under the U.S. Trading With The Enemy Act late in 1941 that Bush’s activities were constrained. According to John Loftus:
‘The enormous sums of money deposited into the Union Bank prior to 1942 is the best evidence that Prescott Bush knowingly served as a money launderer for the Nazis. Remember that Union Bank’s books and accounts were frozen by the U.S. Alien Property Custodian in 1942 and not released back to the Bush family until 1951. At that that time, Union Bank shares representing hundreds of millions of dollars worth of industrial stocks and bonds were unblocked for distribution.’ (2)
That U.S. interests assisted Hitler’s rise to power is now beyond doubt, but the Bush connection was generally ignored. With the United States’ post-war transition from ally to enemy of the Soviet Union, the perspective of the administration and public opinion allowed considerable forgiveness (or perhaps forgetfulness) for those who had forged links with Nazi Germany, even those which continued for the whole of the war. Notable examples of that climate can be found with the Bank for International Settlements (BIS) which kept open financial ties with Nazi Germany throughout the war (even to the extent of receiving interest on First World War reparation payments paid in gold extracted from the victims of the Holocaust), and the welcome given to hundreds and possibly thousands of Nazi war criminals into the U.S. to aid the anti-communist effort. Two prominent supporters of this post-war approach were well placed to keep the issue of the Bush family’s involvement as low key as possible. Brothers John Foster and Allen Dulles held senior and trusted government positions such that they were able to interfere with any investigations of Nazi industrialists’ money laundering. Both brothers also held directorships in, or were lawyers for, Nazi interests, including those represented by the Bush family. They protected their interests, as did the Thyssens, whoever was in power.
Prescott Bush was no loner in this business. The Rockefellers’ Chase National (now Chase Manhattan) Bank also played a similar role, along with a number of other prominent U.S. businesses. From their law firm, Sullivan and Cromwell, the Dulles brothers acted on behalf of the Rockefellers’ interests as well as for Bush. Allen Dulles served on the board of Shroeder Rockefeller and Company, investment bankers, whom Time magazine described as being ‘the economic booster of the Rome-Berlin axis.’(3)
By the early 1950s the Bush family was well-heeled, with some of their wealth a product of the Nazi war economy – released to them by the US Alien Property Custodian. The origin of their family fortune was created by Samuel Bush, George W’s great grandfather, who made a fortune from selling ammunition to the U.S. government during the First World War.
In terms of power, the Bushes were clearly well connected, but still they must have been second rank. Perhaps that is what spurred Prescott’s son, George H. W. Bush to go south and prospect for oil himself. He had been working for and was expected to become the new president of Dresser Industries, a company which his father had restructured and taken public in the 1920s through Brown Brothers Harriman.(4)
George H. W. Bush’s move from the northern U.S. to Texas was an adventurous move of sorts. Not only would he have to find oil, he would also have to find a new approach to political power, since Texas was overwhelmingly Democratic at that time. He was to accomplish this through a company he founded called Zapata Oil, a very interesting history of which appears on Wikipedia and is well worth looking at, so will not be repeated here. Suffice to say that for Bush, Zapata provided a useful cover for CIA activities. The CIA’s Bay of Pigs fiasco was even code-named Zapata. Through Zapata, Bush got the political propulsion he required.(5)
Carlyle
One of the most rewarding aspects of being a has-been statesman is the lucrative market for speeches; and George Bush Snr’s retirement was no exception. A single appearance could be had for a mere $80,000 to $100,000. Some of these he would deliver on behalf of the private investment bankers, Washington D.C.-based Carlyle Group. Carlyle, with headquarters conveniently close to the White House, employed Bush as its top advisor and salesman, although the latter word of course is not theirs. One of Carlyle’s specialities is defence contracts, so it is not surprising that a high degree of crony capitalism is behind the firm’s success. Amongst Carlyle’s other advisors have been Bush’s former Secretary of State James Baker III; Arthur Levitt, former chairman of the SEC; former Reagan administration Secretary of Defence, Frank Carlucci; ex budget chief Richard Darman; and former Chairman of the Joint Chiefs of Staff, Gen. John Shalikasvilli. Similar politerati pepper Carlyle’s international credentials, with such august names as John Major, the former British Prime Minister notable amongst them. These people do, of course, have to make a living; but again and again the same pattern emerges: senior politicians shaking the taxpayers’ tree for private profit is the chosen method of doing business.
George Snr’s advice on his son’s Middle Eastern field of activity reflected these influences. In Saudi Arabia, the Carlyle Group has advised the royal family, trained the Saudi National Guard which protects the royal family, and helped the Saudis with their ‘Economic Offset Program’ which funnelled back to local Saudi businesses a percentage of the price paid for U.S. arms sales to Saudi Arabia – most of these businesses were connected to the royal family.(6)
Other connections also proved lucrative. The Chevron Oil Corporation weighed in with $657,000 donations to the Republican cause (George Snr had contacts with the oil minister of Kuwait on behalf of Chevron in 1998); and the Mirage Casino Corporation, in which one of his sons had an interest, gave $449,000 to Republican coffers (George Snr. lobbied then President Carlos Menem before Mirage was given an Argentinean gambling license).(7)
Given the litigious nature of the Barrick Corporation, a mining company, we must be careful how we describe the Bush-Barrick connection. What is established fact is that at the same time as Bush Snr. was about to be given an honorary degree at the University of Toronto, his friend Peter Munk, Barrick’s Chief Executive, was also about to give $6.4 million to the university. Professor Peter Fitting asked,
‘Does the [university] president really pretend this is a coincidence? If they aren’t prepared to give us some more criteria, given the two ones they’ve given are so laughable, we have no other choice but to think that the other reason has to be the corporatisation of the university, a quid pro quo.’
Not at all, said the university president, Robert Prichard, ‘This isn’t for Peter Munk. This is about Mr Bush coming to Toronto and giving a lecture on the end of the Cold War.’(8) So at least we can say without fear of libel that Bush and Munk knew each other. Indeed, it would be hard for them not to, since Bush was appointed a ‘senior counsel’ to the Barrick Corporation in 1995.
Another senior figure involved in the company was Brian Mulroney, a former Prime Minister of Canada. But what of the ‘corporatisation’ concerns of Professor Fitting? Joseph Rotman, a Barrick Gold director, was a University of Toronto governor. So was William L’Heureux, a key executive of Munk’s TrizecHahn Corporation. University Senate member Trevor Eyton was another Barrick board member. As we can see, Prof. Fitting’s concerns are without foundation, as he recognised himself:
‘Out of the blue, they picked George Bush, an U.S. ex-president, and they said “Oh guess what we’re in luck. Bush is available.” They don’t seriously expect anybody to believe this do they?’(9)
George W.
‘Thanks to the integrity of my dad and mom,’ George W. is quoted as saying in the New York Times, ‘I’ve inherited a great name that has sometimes opened doors and sometimes slammed them shut…But the business world is a world of results and performance.’(10) So far it has been difficult to find a single door that was slammed shut in young George W’s face. Bush claims to have started his own company in the oil business in 1977 with just $17,000, all that was left of his educational trust fund. The name of the company was Arbusto, or ‘bush’ in Spanish. Thankfully, George W’s New York connection – in the shape of Uncle Jonathan Bush, an investment banker – came up trumps.
‘I introduced him to clients. I marketed his firm. I think I was pretty helpful. It didn’t hurt him the fact that his father had been in the oil business, so he knew a lot of the players. At the time there were big tax advantages in drilling oil wells. In those days, it behoved you to drill. You didn’t have to do terribly well in order to do well because you got so many write-offs. So it was an attractive way to invest money and save taxes.’(11)
By 1981 private investments in his company totalled $1.7 million.(12) A typical investor was Russell Reynolds, who described the hard-headed process which led him to say yes to Arbusto:
‘Jon Bush called me one day and told me about his nephew George, who was in the oil business. He asked me if I would be interested in investing. So George W. came to see me. And I thought he was an absolute star. A very attractive guy. Being a great friend of the Bushes, I put a small amount of money in two of the partnerships.’
Other investors included John D. Macomber and William H. Draper, a venture capitalist. Both were to be appointed to the U.S. Import-Export Bank under the Reagan and Bush administrations. Russell later told the press ‘These [the donors] were all the Bushes’ pals. This is the A-team.’ He went on to raise $4 million for George Snr’s 1988 presidential campaign.(13)
True to form, Arbusto failed to discover much oil and seems to have rewarded its investors chiefly in the form of tax write-offs given to encourage energy production. Thus began George W’s history as a ‘welfare recidivist,’ as opposed to the reputation as a thrusting Texan entrepreneur as which he might rather be remembered. The welfare he benefited from came not only from the use of his name and his family’s many contacts, but the tax handouts so essential to the Texan oil exploration miracle.
Crony capitalism
‘Crony capitalism’ is the phrase coined to describe the entrepreneurial activities of those who fit George W’s mould. Risktaking is minimised by the use of networks which are denied to true entrepreneurs. George Bush’s business career was built upon one unique selling point – contacts and his family’s name, from which one can infer not merely a clique of wealthy individuals but political clout. The latter is subjugated to the needs of the former, of course, but one might hope that in the affairs of a democracy there would be some division between political and business interests amongst the political class – as if democratic politics really mattered. Such a wish is predicated on the idea that the two are not natural bedfellows, a view obviously not shared by crony capitalists, who see the state’s function as an adjunct to their activities, its only raison d’etre being to give them succour in times of need and to make no demands when they are feeling self-sufficient. But there are rarely any times when the crony capitalist is not in need, as the continuing history of George W’s business career readily testifies.
Arbusto’s fortunes, or the lack of them, led George W. in 1982 to sell 10 per cent of the company – a share worth, according to its book value, $38,237 – for $1 million to Philip Uzielli, a friend of James Baker III, who became George Snr’s Secretary of State. When later asked why he had invested in such a loss-making venture, Uzielli just shrugged the matter off as a wildcatting bet that didn’t pay off – saying that the ‘good Lord didn’t put any oil there’ – in an oil patch known as one of the richest in Texas. George W. was undaunted. He changed the company’s name, and sought fresh investors – or another bailout, depending on your perspective. The absorption of Arbusto (or Bush Exploration) into Spectre 7 was facilitated by William DeWitt Jnr, a classmate of George W’s at Yale University. DeWitt simply bought out Bush’s business and installed him as Spectre 7’s Chief Executive Officer on $75,000 a year and gave him 1.1 million shares in the company’s stock. Bush was thus rising up the rich list stakes: his original investment in Arbusto, despite the company’s mediocre performance had risen from his original $17,000 (plus money he had borrowed) to $362,000. But by 1986, with Bush in charge at Spectre 7, another bailout became necessary.
Harken
This time it was Harken Energy which came to the rescue, paying $2 million to Bush and his fellow directors for a company which was laden with debt. Harken’s background made it a perfect match for the Bush way of doing things. Harken Energy was formed in 1973 by two oilmen who would benefit from a successful covert effort to destabilise Australia’s Labour government (which had attempted to shut out foreign oil exploration). A decade later, Harken was sold to a new investment group headed by New York attorney Alan G. Quasha, a partner in the firm of Quasha, Wessely and Schneider. Quasha’s father, a powerful attorney in the Phillippines, had been a staunch supporter of then president Ferdinand Marcos. William Quasha had also given legal advice to two top officials of the notorious Nugan Hand Bank in Australia, a CIA operation.(14) Bush came out of the deal with $600,000 in Harken stocks and an annual $120,000 consulting fee – which allowed him to spend most of 1987 and 1988 working on his father’s presidential campaign. Harken’s founder Phil Kendrick, speaking of his new consultant said ‘His name was George Bush. That was worth the money they paid to him.’(15)
Harken’s fortunes picked up around about the time George Bush Snr. won the keys to the White House. A major investment came from Harvard University’s endowment fund, on whose board of directors sat an old Bush family friend, Robert Stone Jnr. Then in 1990 came Harken’s biggest coup – winning a Bahrain deal against bids from oil giants Amoco and Chevron. This was despite the fact that Harken had never been engaged in international oil exploration before, and would need a significant injection of cash to be able to undertake the work. It seems that in preparation for this deal, Harken established an offshore subsidiary in 1989, the Harken Bahrain Energy Company, in the Cayman Islands tax haven. Much later, after he had become President, and after the Enron collapse and other corporate scandals, Bush was clear in his condemnation of tax-avoidance: ‘I think we ought to look at people who are trying to avoid U.S. taxes as a problem. I think American companies ought to pay taxes and be good citizens.(16) When it emerged that he had been a director of just such a company, he – or rather his spokesmen – sought to deny it. They said Bush had opposed the Bahrain deal and opposed the tax haven set-up. But the evidence points to the opposite. Minutes of a Harken Board meeting held on the 6 December 1989, unearthed by the Centre for Public Integrity, show that the Board unanimously approved the Bahrain arrangements, and that Bush was present at the meeting with no sign of his dissent recorded.(17)
Why Harken should have won this deal is still a matter of speculation, mostly hinged on whether Bahrain was simply trying to curry favour with the President of the United States. For Bahrain was not just some neutral Arab state of little interest to the U.S.. Its new air base was used by the U.S. during the Gulf War, after which President Bush Snr. had visited the country to reaffirm his support. Sam Zakhem, U.S. ambassador said
‘They’re very happy with Harken, and I hope they’re going to have a huge find to make Bahrain a major oil-producing country in the gulf. Bahrain, ounce for ounce and inch for inch, is America’s best friend not only in that part of the world but probably throughout the world. They have been so forthcoming, so supportive, so up front in their dealings with us.’(18)
What is clear, too, is that Harken already had close ties with a number of Gulf interests. These were closely allied to senior executives of the Bank of Credit and Commerce International (BCCI) as authors Peter Truell and Larry Gurwin demonstrated:
‘When he set up Arbusto Energy Inc. in the 1970s, some of the financing came from James R. Bath, the Texas businessman who…….was allegedly involved with Khalid Bin Mahfouz in the purchase of airplanes from the CIA. Bath had other ties to BCCI insiders: he has invested money in the United States on behalf of Bin Mahfouz and Ghaith Pharaon………..Harken’s investment banker is the same firm that helped Abedi’s [of BBCI] front men scoop up stock in First American: Stephens Inc. It was Stephens Inc. that helped Harken cope with its debts in 1987………..Bahrain’s Prime Minister, Sheikh Khalifa bin-Salman al-Khalifa, helped to ensure that Harken was awarded the offshore drilling contract. Sheikh Khalifa, a brother of Bahrain’s ruler, was a BCCI stockholder……….Sheikh Abdullah Taha Bakhsh, a big shareholder in Harken, has made investments in Saudi Arabia with Ghaith Pharaon, BCCI’s most important front man….’(19)
With the involvement of Sheikh Bakhsh, came the appointment of his representative Talat Othman on Harken’s board. After the Bahrain deal, Othman met with the President, and his National Security Advisor, Brent Scowcroft, three times in 1990.(20) Bush Snr. also met with the Saudi bin Laden family, in 1998 and 2000 in Jeddah. Jean Becker, his Chief of Staff said, ‘President Bush does not have a relationship with the bin Laden family. He’s met them twice.’ (21) Speculation about the relationship between the Bush family and the bin Laden family was sparked by the fact that James Bath, who had invested $50,000 in Arbusto, ‘acted as a representative of Osama bin Laden’s older brother, Salem bin Laden between 1976 and 1988 (when Salem bin Laden died in a plane crash).’(22) Bin Laden’s Jeddah-based SBG group also invested $2 million in the investment fund Carlyle Group for which Bush Snr., as previously noted, serves as an advisor.
Cash-strapped Harken found the $25 million it needed to fund the Bahrain deal soon enough, although not from the then troubled BCCI. Amongst the top-ranking Republican Party donors were the Bass brothers of Texas – Sid, Robert, Edward and Lee – estimated to be the fourth richest family in the United States. Their fortune was based on an inheritance of $11 million left to them by Sid Richardson – one of LBJ’s mentors – to his nephew, Perry Richardson Bass, the brothers’ father. By 1998, Forbes magazine estimated that they had turned that $11 million into $11 billion.(23) They owned a large slice of Disney, and were compared to Rupert Murdoch in importance in the media world, although they shied away from publicity. According to one source:
‘They [the Basses] may have felt some obligation to help George W’s company as a kind of payback; after all, his father’s administration had given $2 billion in tax-exempt subsidies to a group of “vultures” (to use Newsday’s generic term) headed by Robert Bass, to help pick the carcass of the $16.3 billion American Savings and Loan, the biggest insolvent S&L in the country.’(24)
The Bass’s $25 million helped Harken out of what was described as its ‘moribund’ condition, and its stock value rose accordingly, even though the two wells it sunk in Bahrain proved dry.
The Bahrain deal was signed early in 1990, and Bush decided it was time to get out later that year. He was keen to join a group that was purchasing the baseball team, the Texas Rangers, and needed $500,000. He borrowed the money from the United Midland Bank, of which he was formerly a board member, and used his Harken shareholding as collateral. He was able to repay the loan when he sold his Harken shares for $850,000. Two months after the sale, Harken announced a quarterly loss of $23 million. Since Bush served on Harken’s Internal Audit Committee, it has been alleged that he must have known of the company’s worsening position, and therefore had effectively benefited from insider trading. He had not filed all the papers he should have about the sale with the Securities and Exchange Commission (SEC) – he was 34 weeks late, in fact. A subsequent inquiry into the sale by the SEC found that he had done nothing wrong. It was said that although Bush Snr. had appointed top officials to the SEC, they were ‘screened out’ of Bush Jnr’s inquiry. Bush Jnr. was not interviewed.
Whilst Bush bailed out just before Harken’s share value nose-dived, it is has been claimed that had he hung on he would have seen the shares climb back up in value – as they did – so in effect he should be exonerated. As Bush himself said ‘I sold into good news, not bad news.’25 But quite how did the company recover its position after having failed to make any money in Bahrain, and having been in considerable debt? The remedy was an Enron-style accounting scam, cooked up with Harvard Management. We have already noted the close ties between Harvard and Harken, with Harvard’s huge investment in Harken at risk. Harvard proposed that Harken set up a ‘special purpose entity,’(SPE) to take its debts off its books and be largely owned by Harvard, but which would be ‘managed’ by Harken for a large fee, thus generating income for Harken. In this way, Harken would appear to have cleared its debts and be generating income. Harken’s shares had fallen to $1.25 in late 1990 but shot up to $8 in 1991. When the Harken’s stock value increased, Harvard unloaded 1.6 million shares and so helped themselves reduce the value of the SPE’s debt.(25)
America’s game
George W’s switch into baseball moved him into his biggest money making deal yet. The Texas Rangers was a stagnant, drifting enterprise when Bush put together a $75 million bid for it. Although his share was only $500,000, his partners were persuaded to join in because of his name and connections. He became the managing general partner on a salary of $200,000 a year, and was granted a 10% share of the team by his partners should they recoup their investment plus 2% interest. Bush set about rebuilding the team with his usual panache. The first challenge was to build a new stadium, which would be able to offer all the usual executive boxes and other commercial add-ons. His partners were threatening to look beyond the team’s existing ground in Arlington, a Dallas suburb, for a new site; but this may have been a tactic to blackmail Arlington city council to offer them an appropriate inducement to stay. The council offered to increase local taxes to raise the $135 million needed, provided Bush’s partners stumped up the remaining $50 million to complete the new development. The partners agreed, and promptly raised their share by increasing ticket prices. Thus, the new stadium was built at a price of $185 million and at no cost to Bush and his partners. By 1998, the newly endowed Texas Rangers were bought by a Bush donor and friend Thomas O. Hicks for $250 million. Bush made $14.9 million from the deal.(26) The local taxpayers, of course, made nothing. The Texas Rangers deal may actually in some ways reflect fairly well on George W’s business skills – at least this time he helped make his partners some money, even though much of it was raised by increased taxation.
A great many people involved in helping George W. Bush become a multimillionaire were the same people who were members of his father’s ‘Team 100’ political donors, or were his own ‘Pioneers,’ people who were each committed to raising $100,000 dollars for his 2000 Presidential campaign. The blessings of liberty indeed! For a long time, possession of, or association with, the Bush name has been a veritable boon, as a closer examination of the Bush family testifies.
China
George Snr’s brother, Prescott Bush Jnr, was adamant that although he ‘sometimes relied on his name to open doors’, it was his own hard work that had produced the results. George Snr. had been U.S. Ambassador to China for two years in the mid-1970s, and perhaps that explains in part why Prescott Bush Jnr. took an interest in that country. But some of his dealings appeared to have devalued the coinage. In 1989 he met with business and government leaders in the immediate aftermath of the massacre in Tiananmen Square; in 1988, a Japanese firm, Aoki, which was in partnership with Bush’s Shanghai business, was reportedly seeking business contracts by bribing Panamanian leader Manuel Noriega; in 1989 questions were asked about his links to U.S. firm Asset Management, of which his company, Prescott Bush and Co. was a consultant – it was the only business to avoid U.S. sanctions on communications satellites to China. Of this deal, Prescott Bush Jnr was to tell the Wall Street Journal: ‘There’s no conflict of interest. It doesn’t hurt that my brother is the president of the United States.’(27) Later in 1989, President Bush granted a national security waiver to allow the sale of Hughes Aircraft Co. satellites to China – part of his effort to keep on good terms with the Chinese government.(28)
Asset Management went bust later that year, but Prescott Bush was able to arrange a buyout with West Tsusho, a Japanese investment firm controlled by Susumu Ishi, who headed one of largest Japanese crime groups before retiring in 1990. The buyout netted Prescott Bush and Co. a fee of $250,000, and $250,000 for each of the three years thereafter. West Tsusho also invested in another Bush-connected business, Quantum Access Inc. of which he was a director and which his nephew, Draper Kauffman headed.(29) Prescott Bush Jnr’s relationship with West Tsusho Inc. turned sour in June, 1992 when he countersued them for $8 million, saying that when he set up the various deals for the now-bankrupt Asset Management, he was not aware that West Tsusho Inc. was not a ‘legitimate business company, but rather a front engaged in nefarious criminal activities in Japan and the United States.’(30)
Prescott Bush Jnr said, ‘You can get a meeting because of it [the family connection] but I don’t get a lot of business because my nephew is president or my brother was president.’(31) George W’s brother Jeb Bush echoed this sentiment: ‘There are people who have a misinformed notion that being associated with the first family can benefit them. The opposite is true. If you want to do business with the federal government, you don’t deal with the first family.’(32) One wonders whether Jeb really understood what ‘opposite’ means. But perhaps Jeb’s definition of ‘first family’ is unnecessarily narrow, since it no doubt excludes buddies and cronies. Jeb’s own buddies and cronies have distinctly shady histories.
Jeb’s story
Jeb’s dabble in entrepreneurialism started with banking in Texas and Venezuela, and was followed by a stint in Miami’s real estate business – Bush Real Estate Management. For ten years, Bush’s partner was Armando Codina, a Cuban-American developer. Their dealings were not always successful. In 1985 they had to repay $505,000 on a loan they had from the Broward Federal Savings and Loan Association of Florida, part of a $4.6 million loan they had obtained for the purchase and resale of properties – a deal that went belly-up. The outstanding $4 million-plus was picked up by the taxpayer.(33)
More damagingly, in the mid-80s Jeb entered a business relationship with one Camilo Padreda, a fellow officer of the Dade County Republican Party. Padreda, a former intelligence officer for deposed Cuban dictator Fulgencio Batista, hired Jeb Bush as the leasing agent for a $1.4 million building Padreda had used federal money to build – money from the corrupt Department of Housing and Urban Development.(34) Four years earlier, in 1982, Padreda had been indicted for embezzling $500,000 from the Jefferson Savings and Loan Association in McAllen, Texas. The indictment never went to court. Padreda’s partner, Hernandez Cartaya, had allegedly been a CIA agent and the charges were transmuted into a single count of tax evasion. Perhaps Jeb was unaware of Padreda’s shady past in Texas, but a further example exploded under his nose in Miami in 1985, when Padreda had effectively bribed a local official to ensure a piece of land in his possession was given a different, more profitable planning status. In 1989, Padreda was to plead guilty to defrauding the Housing and Urban Development Department of millions of dollars.(35)
Meanwhile, in a city that was suffering a glut of vacant office space, a tenant was found for Padreda’s empty building. International Medical Centres (IMC) paid Bush $75,000 to locate a suitable building for IMC, although strangely he does not seem to have located this one, since he reportedly failed to identify any suitable premises for IMC’s owner, Miguel Recarey, a known associate of Miami Mafia godfather Santo Trafficante Junior. Jeb’s usefulness to Recarey became clear soon enough. IMC was not interested in running its new health centre according to Medicare rules, which stated that at least 50% of patients at the facility should be fee paying. What IMC wanted was that a far higher percentage of patients should be Medicare funded – a far easier route to fraud and overcharging. Bush contacted the Department of Health and Human Services (HHS) in Washington on IMC’s behalf. C. McClain Haddow, the former chief of staff to then HHS Secretary Margaret Heckler, said that Bush asked to ‘see if we could help him [Recarey] out’, commenting that Recarey was a strong supporter of the national and local Republican parties.(36) A waiver came through – IMC could have 80% Medicare patients. However, sadly for Recarey, he was to be indicted on bribery charges and was also to face criminal proceedings on illegal bugging charges. But before he could be tried, he fled to Venezuela, where he has lived comfortably ever since, untouched by the U.S. authorities. A clue as to why that might be lies in the strong possibility that the extra money being defrauded from Medicare was being used by Recarey to fund medical aid for the Nicaraguan Contras. Whilst a Congressional Intelligence Committee found no evidence to support this theory, former CIA operative Jose Basulto told the Wall Street Journal in 1987 that he had been at meetings at IMC headquarters in Miami with Contra leaders Adolfo Calero and Felix Rodriguez.(37)
Let’s take the Bush family denials at face value; let’s pretend that a string of beneficial coincidences have been the bane of their WASP-like philosophy of never supping at the table of sleaze, corruption or graft. It’s just as Jeb innocently told the Miami News when he was helping Recarey the crook: ‘I want to be very wealthy.’(38) It is just unfortunate that on the way to fulfilling his not uncommon dream of becoming very and uselessly rich, he should behave just like the rest of the first family of self-serving brothers down the generations. Yet Jeb, as far as can be ascertained, has not bled the taxpayers as much as has his brother Neil.
Neil Bush
Neil Bush was at least punished for his misdeeds, although relative to the damage he wrought, his punishment was slight. Neil was a director of the Silverado banking and Savings Loan Association from 1985 to 1988, when it went under. During the 1980s, savings and loans associations were deregulated, a curse which brought about one of the biggest disasters in U.S. financial history. As opposed to being fairly straightforward and dependable mortgage lenders, savings and loans became free to lend to whomever they pleased, and in the case of Neil Bush this meant to his friends and business colleagues. Two of his business partners borrowed over $100 million from Silverado, and they in turn lent him $100,000, which he never repaid.(39) Regulators determined that Neil was dependent for his income on his partners. His partners defaulted on their loans to Silverado, leaving the taxpayer to bail it out at a cost of $1 billion. Neil was found to have had a conflict of interest, and was ordered to pay $50,000. Taking pity on him, the Bush family friend, former Congressman and Washington lobbyist Thomas W.L. Ashley set up a hardship fund to help Neil pay his $250,000 legal expenses. ‘It’s a friend of the family helping a friend of the family’ said Ashley, who also the headed the Association of Bank Holding Companies, at the same time as the Association was pushing the administration for more deregulation.(40)
An unresolved aspect of the Silverado case is the suggestion that regulatory action against Silverado in the fall of 1988 was delayed following a phone call to the office of the Federal Home Loan Bank Board based in Topeka, Kansas. According to a report in the Washington Post:
‘In June 1990, Kermit Mowbray, president of the Topeka bank board and the top federal regulator for a four-state region that included Colorado, told the House Banking, Finance and Urban Affairs Committee that two weeks before the [presidential] election, his office received the phone call from his superiors in Washington, resulting in a decision to postpone the shutdown of Silverado until December 1988. The phone call came after Topeka regulators had informed Washington officials that Neil Bush had been one of the directors of the failing thrift, Mowbray testified.’(41)
It is deeply ironic that a major plank of George W. Bush’s campaign in the 2000 election campaign was to lambast the corruption and sleaze of politics inside the ‘beltway’, Washington’s ring road. So far as his family is concerned, the beltway has never been a barrier to these ailments.
Some of the money that circulated in Silverado’s very circular deal went to Neil Bush’s own attempts to get very wealthy in the oil business. These ventures seemed to rely heavily on two factors: the Bush name (government influence) and access to easy cash (government funds). His company JNB International sought to break into Argentina. Neil had often played tennis with Carlos Menem, Argentina’s president. His other oil venture, Apex Energy of Denver, in which he had invested all of $3,000, received more than $2 million from two companies subsidised by the taxpayer through the Small Business Administration. A friend and long-time financial backer of Bush Snr., Louis Marx, an heir to a toy fortune, controlled the two companies. Neil was able to pay himself $160,000 a year, but left in 1991 at a time when Congressional inquiries had commenced into the business.(42)
Following these misadventures, which saw Marx’s two investment companies go belly up, Neil Bush moved into the media business with help from, amongst others, Bush Team 100 donor Bill Daniels, a cable TV executive who gave Bush a $60,000 job with TransMedia Communciations of Houston. More recently, he has used his media knowledge in a new business venture, called Ignite. This is a company devoted to producing better equipped American children, making educational software available to schools – at a price. Consultants to the firm include Bill Brock, former senator and chair of the Republican National Committee; Bob Stearns, a George W. appointee to a Texas technology board; Peter Su, a former presidential campaign advisor, and two executives from George Snr’s outfit that manages his investments, the Bessemer Trust. Mark Schneiderman, director of federal education policy for the Software and Information Industry Association, explaining why Neil Bush had been ask to speak at their annual convention, said that in a ‘combination of reasons’ why the invitation had arisen, ‘One of them is that his brother is president.’(43)
Conclusions?
What is one to make of all of this? One could easily become a member of the liberal ‘elite’, so memorably described in the words of one of Dick Cheney’s Vice Presidential predecessors, Spiro Agnew:
‘….the raised-eyebrow cynics, the anti-intellectual intellectuals, the pampered egotists who sneer at honesty, thrift, hard work, prudence, common decency, and self-denial [and who have a] lust to divorce themselves from the ordinary mortals [as] they embrace confrontation as a substitute for debate….’(44)
Self-denial – a virtue of the Republican elite? Bush’s appointment of so many hard working, thrifty and prudent former corporate executives and lobbyists to public office is clear evidence of self-denial. But then Agnew lived – and came a cropper – in those simpler, more honest times before Watergate brought down Nixon, whose downfall shortly led to Richard Cheney’s first job at the White House.
The renewed shift towards ‘crony capitalism’ which Bush’s leadership of the United States has been so comfortable promoting, has recently taken a nose dive, just when it was thought that the New Deal, and inter alia the crash of ’29, had been expunged from the collective memory. The virtues which Agnew preached but didn’t practise himself were meant to be those which have been restored to the American body politic, or at least the rhetorical account of it. The New Deal and its root – the crash – were thought historical glitches, to be safely left in the hands of grandpa and grandma with their heart-touching stories of self-induced hardships. Little was it imagined that ‘infectious greed’ – in the words of former Chairman of the Federal Reserve Bank, Alan Greenspan – could make such a nasty comeback. Little was it imagined that greed could return in such an unregulated way. But even Mr Greenspan could make mistakes. Today’s system is supposed to make greed infectious, albeit dressed up as honesty, thrift, hard work (yes, particularly hard work, since no CEO could possibly confess to working less than 25 hours a day), prudence, etc. Mr Greenspan’s fuller quotation on ‘infectious’ greed reads as follows: ‘An infectious greed seemed to grip much of our business community. Our historical guardians of financial information were overwhelmed.’(45) Overwhelmed – or complicit?
Business accounting scandals, which the Democrats said numbered 993 and involved $1.276 trillion dollars worth of dodgy corporate bottom lines by the time Bill Clinton replaced Bush Snr., continued to go unchecked throughout the Clinton years. The Democratic National Committee asserted:
‘While Democrats fought to rein in deceptive business practices in the 90s, Republican majorities in Congress killed, cut and undermined sensible policies that protected the small investor. The GOP opposition created an environment that led directly to the business scandals affecting your investments today.’ (46)
Whether Republican opposition was the cause of the scandals is perhaps stretching the truth somewhat. But as the Financial Times reported:
‘The large Wall Street firms have seen an unprecedented wave of deregulation come out of Washington in recent years, capped by the 1999 law known as Gramm-Leach-Bliley, which broke down 1930s-era walls preventing brokerage firms from moving into other financial services, such as insurance…….Part of Wall Street’s success in keeping regulators and legislators at bay……is the immense amount of money the firms spend on political donations and lobbying.’
The report noted that Citigroup spent $25 million on lobbying during the three years prior to the Gramm-Leach-Bliley Act – ‘one of the largest expenditures on influence peddling by any U.S. company over the period.’(47)
Citigroup was heavily involved in deals with Enron, one of those financial institutions about whom a Senate Investigation Committee said ‘[they] not only understood that Enron intended to engage in this deceptive accounting, they actively aided Enron in return for fees and favourable considerations in other business dealings.’(48)
Some of the measures which Republicans did stymie or stop included:
- watering down a Senate bill from Democrat Barbara Boxer giving greater protection to retirement accounts;
- efforts by Securities and Exchange Commission Chairman Arthur Levitt to end too-cosy relationships between auditors and the audited (and then Bush appointed the man who led the anti-Levitt campaign to replace him);
- Clinton’s Treasury Secretary, Lawrence Summers’ attempt to stop the use of offshore tax havens to conceal accounting abuses;
- and efforts to regulate new and complex energy-derivative schemes.(49)
No-one seemed particularly bothered about the gross over-valuation of the U.S. energy sector in the wake of deregulation in the 1990s. Nor about the 1990s dot-com bubble until it was about to burst. Indeed the share price boom helped keep a smile on Clinton’s face and on his majority. But then recriminations in a bull market are hard to find. So while the Democrats may now point the finger of blame, they were willing to take full credit for the Clinton boom while it lasted. They now urgently need to demonstrate that their boom time wasn’t just another case of building a house on a mountain of debt with much of it hidden from inspection, and a political triangulation strategy that borrowed too much from the Bush model of crony capitalism. Am I alone in thinking it is too early to say goodbye to all that?
Colin Challen is the MP for Morley and Rothwell.
His Too Little Too Late: the politics of climate change will be published by Picnic Publishing in February 2009.
Notes
- John Loftus, ‘Former Federal Prosecutor confirms Bush-Nazi scandal’ at <www.john-loftus.com/bush_nazi_scandal.asp>
- Ibid.
- Charles Higham, Trading With The Enemy: the Nazi-American Money Plot 1933-49 (London: Robert Hale, 1983) p. 22
- The Scotsman, 12 January 2002. This is the same Dresser which eventually became part of the Halliburton conglomerate under Cheney, and went to Iraq to repair Saddam Hussein’s oil industry in the 1990s after Bush Snr’s Gulf War, as well as Bush Jnr’s Iraq adventure.
- <http://en.wikipedia.org/wiki/Zapata_Corporation#Zapata>
- Boston Herald 11 December 2001
- <www.gregpalast.com/poppy-strikes-gold/>
- Toronto University Varsity News 14 October 1997
- Ibid.
- New York Times 8 May 1999
- Bill Minutaglio, First Son: George W. Bush and the Bush Family Dynasty, (New York: Times Books, 1999) p. 199
- <http://mediamatters.org/items/200603280005>
- Minutaglio (see note 11). Jonathan Bush, a Republican state finance chairman in New York from 1982 to 1988 was in 1991 fined more than $30,000 for violations of securities laws in Massachusetts and Connecticut.
- Stephen Pizzo, Bush Family Value$, MOJOwire Magazine Sept/Oct 1992 at <www.motherjones.com/news>. This report continues: ‘Harken’s $25 million stock offering in 1987 was underwritten by a little Rock, Arkansas, brokerage house, Stephens Inc. which placed the Harken stock offering with the London subsidiary of Union Bank – a bank that had surfaced in the scandal that resulted in the downfall of the Australian Labour government in 1976 and, later, in the Nugan Hand Ban scandal. (It was also Union Bank, according to congressional hearings on international money laundering, that helped the now notorious Bank of Credit and Commerce International skirt Panamanian money laundering laws by flying cash out of the country in private jets, and that was used by Ferdinand Marcos to stash 325 tons of Philippine gold around the world.)’
- Toronto Star, 21 July 2002
- <http://query.nytimes.com/gst/fullpage.html?res=9A02E7DC163BF932A3575BC0A9649C8B63>
- <www.publicintegrity.org/dtaweb/report>
- Newsday, 2 April 1991
- Peter Truell and Larry Gurwin, BCCI: The inside story of the World’s Most Corrupt Financial Empire, (London: Bloomsbury, 1992) pp. 369/370. MOJOwire (see note 14) shed more light on a Bush-BCCI connection: ‘Stephens, Inc., also helped introduce the BCCI virus into US banking in 1978 when it arranged the sale of Bert Lance’s National Bank of Georgia to BCCI front man Ghaith Pharoan.’ (The head of Stephens, Inc. Jackson Stephens, is a member of President Bush’s [Snr] exclusive ‘Team 100’ a group of 249 wealthy individuals who have contributed at least $100,000 each to the GOP’s presidential campaign committee.)
- MOJOWire (see note 14)
- The Weekend Australian, 29 September 2001
- Ibid
- The Times, 6 September 1999. The inheritance was $50 million according to Newsday, 17 August 1995.
- <www.bushfiles.co/bushfiles/fertilize>
- <www.corpwatch.org/news>
- New York Times, 8 May 1999
- Quoted in MOJOwire (see note 14).
- Washington Post, 4 July 1992
- New York Times, 19 April 1992
- Washington Post, 4 July 1992
- USA Today, 18 February 2002
- Los Angeles Times, 10 May 1992
- New York Times, 19 April 1992
- MOJOwire, (see note 14)
- MOJOwire, (see note 14)
- Washington Post, (see note 30)
- MOJOwire (see note 14)
- The Guardian 2 December 2002
- New York Times, (see note 33)
- Los Angeles Times, (see note 32)
- Washington Post, (see note 30)
- New York Times, (see note 33)
- <www.motherjones.com/news/outfront/2001/05/neilbush.html>
- Steve Fraser and Gary Gerstle (eds), The Rise and Fall of the New Deal order, 1930-1980 (Princeton University Press, 1989) p. 262
- Financial Times, 17 July 2002
- Democratic News, Democratic National Committee, 18 July 2002
- Financial Times, 24 July 2002
- Ibid.
- Sean Wilentz, ‘A Scandal of our time: Republicans ruled, ergo, Enron’, in The American Prospect, 25 February 2002 at <www.prospect.org>