Allegations of stock dumping by IPALCO officials investigated
By Mark Jewell, Associated Press
INDIANAPOLIS – Indiana securities investigators have subpoenaed White House
budget director Mitch Daniels as part of an inquiry into alleged stock dumping at
a Hoosier utility, a regulator said yesterday.
Daniels, who said Tuesday that he is leaving his White House job, is among about
30 former executives of IPALCO Enterprises Inc. asked to provide
information about their sales of stock leading up to the utility’s 2001 acquisition by
AES Corp of Arlington, Va., said Keith Griffin, deputy commissioner of the
Indiana Securities Division.
Griffin said, “We’re looking into the whole transaction to see if any parts of it
violated Indiana securities laws.”
Daniels’ resignation sets up a likely run for Indiana governor. He is expected to
announce his gubernatorial run by summer.
Griffin declined to comment further on the subpoenas, which were issued Friday in
a year-long state investigation of the sale….
IPALCO also is the subject of a lawsuit by former employees who suffered losses
in their retirement funds when AES shares plummeted from $49.60 after the
merger closed in March 2001. Shares hit 92 cents last October but have since
recovered some, closing yesterday at $6.25 on the New York Stock Exchange.
A separate shareholder lawsuit alleges securities violations, claiming that the
directors knew or should have known that AES shares were far more volatile than
IPALCO stock. Securities rules prohibit execution from trading on information not
available to other shareholders.
When Daniels left IPALCO’s board to join the Bush administration in January 2001,
he sold millions of dollars worth of stock, including 60,000 shares of IPALCO, for
a profit of $552,540….
Daniels is not a defendant in the lawsuit over the retirement fund losses, but is
named in the securities lawsuit.
July 19, 2002
His Call for Corporate Responsibility Raises
Questions of His Business Past
By Chris Bury
SincePresident Bush went to Wall Street demanding, “a new ethic of personal
responsibility in the business community,” the stock markets have responded with
a resounding “raspberry.” . . .
Bush’s clarion calls for cleaning up corporate corruption have largely fallen on deaf
ears, analysts suggest, because Wall Street sees them more as rhetoric than
reform. Even that rhetoric has lost steam since it has collided with questions
about the president’s own business past.
Bush has insisted, often quite testily, that such questions have long been put to
rest. Stories about a Securities and Exchange Commission investigation into his
activities in the Harken Energy Company did surface briefly in previous Bush
campaigns, including his 2000 race for president.
But the recent wave of corporate scandals has reporters re-examining old SEC
documents posted on the Web site of a Washington watchdog group, the Center
for Public Integrity. Its director, Charles Lewis, says the documents
demonstrate a certain “hypocrisy” in the president’s current calls for corporate
“Here he is lecturing Wall Street about corporate responsibility, including loans to
themselves … when he himself was with a company that was skating on the edge of
propriety,” notes Lewis.
Bush Got Loans of Type He Now Condemns
In his Wall Street speech, President Bush called for “an end to all company loans
to corporate officers.” But back when Bush was a corporate director at Harken,he got the very loan deals he now condemns.
In 1986 and 1988, those loans allowed him to buy 105,000 shares in the company at
interest rates far below the prevailing prime rates. Such loans, while perfectly
legal, are surely politically inconvenient in today’s climate.
Other questions involve allegations of insider trading when he sat on Harken’s
board of directors. In June, 1990, Bush sold about $850,000 worth of Harken
stock. Two months later, the company revealed a quarterly loss of$23 million.
The stock temporarily tanked.
For more than two years, the SEC enforcement division investigated whether Bush
sold his stock knowing that the company was about to report a huge loss. In the
end, the SEC took no action.
One internal memo says, “the vast majority of the [second quarter] loss was
unknown to management, let alone to Bush.” But other SEC documents criticize
Bush for filing notice of his stock sale 34 weeks late.
Aloha Accounting Maneuvers
Over the years, Bush’s explanations for that late filing — technically a violation of
the law — have changed. In 1994, when he was running for governor of Texas,his
campaign blamed the SEC for losing the notice.
Now, the White House faults a “mix-up” among Harken’s corporate attorneys; an
explanation that government watchdog Lewis derides as a, “dog ate my homework,”
excuse. Adds Lewis, “It depends what day you ask him what the reason is why he
didn’t report promptly. “
In light of his recent scolding from the bully pulpit, the most troublesome item
from the president’s past may be something known as,“the Aloha deal.”
In 1989,Harken Energy sold a big stake in Aloha Petroleum — a chain of gas
stations in Hawaii. The buyers?Harken’s own chairman, a company
director, and other investors. They put up only $1 million and gave
Harken an “IOU,” for the remaining $11 million.
But the company counted its paper profits on the insider deal — profits that were
never realized — as income. That accounting maneuver, courtesy of the
beleaguered accounting firmArthur Andersen, allowed Harken to hide $8
million in losses at a time the company was struggling.
PR Problem for President
Albert King, vice chairman of Valuation Research Corp., an independent firm that
measures corporate value, compares the Aloha transaction to accounting abuses at
“At Enron, they did exactly the same thing. They sold assets to
‘independent companies’ that were essentially owned by Enron
management and they reported a profit and it wasn’t a real sale.”
The president, in a July 8th press conference, dismissed the Enron comparison. “In
the corporate world, sometimes things aren’t exactly black and white when it
comes to accounting procedures.” He cited “an honest difference of opinion”
between Harken and government investigators.
But in 1991, the SEC, in a rare move, forced Harken to restate its earnings —
minus most of the Aloha transaction.
The public relations problem for the president? He served on Harken’s audit
committee at the time.
The White House and Harken Energy have so far refused to release
minutes of meetings that Bush attended.
Says Charles Lewis, “He either had knowledge of something that was
essentially a shady transaction”as a member of the audit
committee,“and if he didn’t know, he should have known.” . . .
Embattled Chairman Resigns, Faced Criticism Throughout Tenure
The Associated Press
W A S H I N G T O N — Securities and Exchange Commission Chairman Harvey
Pitt resigned under fire tonight.
“The chairman tendered his resignation to the president,” Christi Harlan, SEC
Three administration officials, speaking on condition of anonymity, said the White
House welcomed the resignation of a regulator who had created a host of political
problems for President Bush in the runup to tonight’s elections.
The latest came when Pitt failed to share with fellow commissioners information
about William Webster, the newly named chairman of an accounting industry
oversight board, before the agency voted last week to put the formerCIA and
FBI director in charge of the panel.
The revelation led SEC commissioners, including Pitt, to request an internal
investigation Thursday of Webster’s selection — and renewed the almost daily
drumbeat of calls from Democrats and other Pitt critics for his resignation.
Political Thorn for Bush
Pitt, who first worked at the SEC in the late 1960s and built his career as an
attorney in appearance-conscious Washington, has been criticized for meeting with
the heads of companies under SEC investigation and for his close ties to the
accounting industry — at a time when the SEC is investigating major accounting
fraud at big corporations. Pitt represented the Big Five accounting firms
while in private practice.
In this latest instance, Pitt withheld information about Webster’s lead role on the
auditing committee for U.S. Technologies, a company facing investor lawsuits
alleging fraud. Webster told The New York Times that Pitt assured him that SEC
staff had looked into the issue and it would not pose a problem.
Last month, Democrats asked Bush to remove Pitt, whom they accused of bowing
to the accounting industry by opposing the appointment of John H. Biggs to head
the oversight board.
Supporters of Biggs, a pension fund administrator, believed he would advocate
tough regulation of the accounting industry….
Copyright 2002 The Associated Press. All rights reserved.
* * *
November 12, 2002
Webster Resigns From Oversight Panel
The Associated Press
Former FBI Director William Webster resigned Tuesday as head of a special
accounting oversight board, saying he wanted to avert “new distractions” as the
congressionally created agency seeks to rebuild public confidence after a series of
The move capped nearly two weeks of speculation regarding Webster’s future in a
debacle that already has brought the resignations of Bush appointee Harvey
Pitt, chairman of theSecurities and Exchange Commission, and the SEC’s
Webster declined Tuesday to blame Pitt for not informing fellow SEC
commissioners that Webster had headed the audit committee of a company now
under investigation for fraud. But he acknowledged that the information should
have been shared. Pitt, a Bush appointee, resigned a week ago over that. . . .
Pitt, whose 15-month tenure has been marked by a series of political missteps, has
remained in office pending President Bush’s naming a replacement to be confirmed
by the Senate.
Bush last week voiced confidence in Webster’s integrity, although the president
also said he wanted to see the outcome of an investigation of the circumstances
surrounding Webster’s selection. . . .
Pitt is facing investigations into whether he concealed from other SEC members
Webster’s role for a company that is under investigation. The SEC voted 3-2, along
party lines, to appoint him on Oct. 25. Pitt and the other two Republicans approved
Webster and the two Democrats opposed his appointment.
In a statement accepting the resignation, Pitt made no mention of the controversy
surrounding Webster’s appointment. “I continue to believe that investors would
have benefited from Judge Webster’s dedication to the best interest of the
American people,” he said.
News of Webster’s resignation came a day before the oversight board was
scheduled to have its first meeting. His letter to Pitt was dated Monday and
released Tuesday afternoon. . . .
The turmoil comes at a time when the government is trying to bolster the
confidence of investors and consumers shaken by corporate scandals over the past
year and the SEC is investigating questionable accounting at dozens of big
Webster’s appointment was pushed by Pitt and endorsed by the Bush White House.
Democrats preferred John Biggs, head of the largest teachers’ pension fund,
whom they believed would be tough on the accounting industry.
Creation of the oversight board was mandated by Congress last summer in
legislation responding to the wave of accounting scandals at Enron, WorldCom
and other big companies. The five-member board, to be independent of the
accounting industry, will be armed with subpoena authority and disciplinary powers
and financed by fees from publicly traded companies.
The SEC inspector general and Congress’ auditing arm, the General Accounting
Office, are investigating the circumstances surrounding Webster’s appointment
and the Senate Banking Committee plans hearings.
Websterhas said he told Pitt that he headed the audit committee at U.S.
Technologies, which is considered insolvent and has been sued by shareholders
alleging fraud. The office of the chief accountant, Robert Herdman, then told
Pitt that information did not create a problem for Webster’s selection.
Webster fired U.S. Technologies’ outside auditors last year when he headed the
board of directors’ auditing committee.
The auditing firm, BDO Seidman, recentlyalleged that Webster
had made “false and misleading statements” about how much he
knew about the company’s financial problems.
BDO Seidman also released documents showing that in a July 13, 2001, conference
call with the audit committee, its accountants warned the committee members of
“material weaknesses in internal accounting control.”
Webster said last week that the auditors did voice concerns, but not in an urgent,
“house on fire” way. He continued to insist that BDO Seidman was fired because
the audit committee believed it was charging too much and taking too long to do its
audits —— not because of a warning about the company’s financial controls.
Pitt announced Tuesday that the SEC commissioners had unanimously chosen
Jackson Day, the agency’s deputy chief accountant, as acting chief accountant
until a permanent replacement is named.
(*Editors Note | This page contains two stories. The first, yesterday’s Reuters
news wire report of Dick Cheney’s call for the overthrow of Saddam Hussein. The
second is an account his business dealings with the Iraqi government. Cheney
originally denied that Halliburton under his tenure as CEO had in fact
circumvented US law to do business with Hussein’s Iraqi government. He was later
forced to retract his denials when presented with evidence of Halliburton’s
June 20, 2002
Cheney Sees ‘Gathering Danger’ in Iraq
By Reuters | New York Times
DETROIT (Reuters) – Iraqi President Saddam Hussein represents a
“gathering danger” to the United States, Vice President Dick
Cheney said on Thursday, while warning that Washington will act
preemptively against threats of terrorism.
“We are greatly concerned about any possible linkup between
terrorists and regimes that have or seek weapons of mass
destruction,” said Cheney. “In the case ofSaddam Hussein, we’ve got a
dictator who is clearly pursuing and already possesses some of these weapons,” he
“A regime that hates America and everything we stand for must never be
permitted to threaten America with weapons of mass destruction,” the vice
president added, referring to Saddam and the Iraqi forces he fought as defense
minister under President Bush’s father during the Gulf War in 1991.
Cheney, who spoke at a political fund-raiser here, stopped short of saying
there were any established ties between Baghdad and the al Qaeda network, or
the Sept. 11 attacks that took about 3,000 U.S. lives.
But he said the possibility of such links was too great to ignore, especially in light
of Saddam’s defiance of U.N. weapons inspection programs and international
“This gathering danger requires the most urgent, deliberate and decisive
response,” he said.
“It is very clear that our enemies are determined to do further significant damage
to the American people,” Cheney said, citing recent intelligence reports.
“Wars are not won on the defensive,” he added. “We must take the battle to the
enemy anywhere necessary, to preempt greater stress to our country,” he said.
(In accordance with Title 17 U.S.C. Section 107, this material is distributed
without profit to those who have expressed a prior interest in receiving the
included information for research and educational purposes.)
November 13, 2000
Cheney Made Millions Off Oil Deals with
by Martin A. Lee / San Francisco Bay Guardian
Here’s a whopper of a story you may have missed amid the cacophony of campaign
ads and stump speeches in the run- up to the elections.
During former defense secretary Richard Cheney’s five-year tenure as chief
executive of Halliburton, Inc., his oil services firm raked in big bucks from
dubious commercial dealings with Iraq. Cheney left Halliburton with a $34 million
retirement package last July when he became the GOP’s vice-presidential
Of course, U.S. firms aren’t generally supposed to do business with
Saddam Hussein. But thanks tolegal loopholes large enough to steer an oil
tanker through, Halliburton profited big-time from deals with the Iraqi
dictatorship. Conducted discreetly through several Halliburton subsidiaries in
Europe, these greasy transactions helped Saddam Hussein retain his grip on power
while lining the pockets of Cheney and company.
According to the Financial Times of London, between September 1998 and last
winter, Cheney, as CEO of Halliburton, oversaw $23.8 million of business
contracts for the sale of oil-industry equipment and services toIraq through two
of its subsidiaries, Dresser Rand and Ingersoll-Dresser Pump, which helped
rebuild Iraq’s war-damaged petroleum-production infrastructure. The combined
value of these contracts exceeded those of any other U.S. company doing business
Halliburton was among more than a dozen American firms that supplied Iraq’s
petroleum industry with spare parts and retooled its oil rigs when U.N. sanctions
were eased in 1998. Cheney’s company utilized subsidiaries in France, Italy,
Germany, and Austria so as not to draw undue attention to controversial business
arrangements that might embarrass Washington and jeopardize lucrative ties to
Iraq, which will pump$24 billion of petrolunder the U.N.-administered
oil-for-food program this year.
Assisted by Halliburton, Hussein’s government will earn another $1
billion by illegally exporting oil through black-market channels.
With Cheney at the helm since 1995, Halliburton quickly grew into America’s
number-one oil-services company, the fifth-largest military contractor, and the
biggest nonunion employer in the nation. Although Cheney claimed that the U.S.
government “had absolutely nothing to do” with his firm’s meteoric financial
success, State Department documents obtained by the Los Angeles Times indicate
that U.S. officials helped Halliburton secure major contracts in Asia and Africa.
Halliburton now does business in 130 countries and employs more than 100,000
Its 1999 income was a cool $15 billion.
In addition to Iraq,Halliburton counts among its business partners
several brutal dictatorships that have committed egregious human
rights abuses, including the hated military regime in Burma
EarthRights, a Washington, D.C.-based human rights watchdog, condemned
Halliburton for two energy-pipeline projects in Burma that led to the forced
relocation of villages, rape, murder, indentured labor, and other crimes
A full report (this is a 45 page pdf file – there is also a brief summary) on the
Burma connection, “Halliburton’s Destructive Engagement,” can be accessed on
EarthRights’ Web site
Human rights activists have also criticized Cheney’s company for its questionable
role in Algeria, Angola, Bosnia, Croatia, Haiti, Rwanda, Somalia, Indonesia,
and other volatile trouble spots.
In Russia, Halliburton’s partner, Tyumen Oil, has been accused of committingmassive fraud to gain control of a Siberian oil field.
And in oil-rich Nigeria, Halliburton worked with Shell and Chevron, which were
implicated in gross human rights violations and environmental calamities in that
country. Indeed, Cheney’s firm increased its involvement in the Niger Delta after
the military government executed several ecology activists and crushed popular
protests against the oil industry.
Halliburton also had business dealings in Iran and Libya, which remain on the
State Department’s list of terrorist states. Brown and Root, a Halliburton
subsidiary, was fined $3.8 million for reexporting U.S. goods to Libya in violation
of U.S. sanctions.
But in terms of sheer hypocrisy, Halliburton’s relationship with Saddam Hussein is
hard to top. What’s more, Cheney lied about his company’s activities in Iraq
when journalists fleetingly raised the issue during the campaign.
Questioned by Sam Donaldson on ABC’s This Week program in August, Cheney
bluntly asserted that Halliburton had no dealings with the Iraqi regime while he
was on board.
Donaldson: I’m told, and correct me if I’m wrong, that Halliburton, through
subsidiaries, was actually trying to do business in Iraq?
Cheney: No. No. I had a firm policy that I wouldn’t do anything in Iraq even
arrangements that were supposedly legal.
And that was it! ABC News and the other U.S. networks dropped the issue like a
hot potato. As damning information about Halliburton surfaced in the European
press, American reporters stuck to old routines and took their cues on how to
cover the campaign from the two main political parties, both of which had very
little to say about official U.S. support for abusive corporate policies at home and
But why, in this instance, didn’t the Democrats stomp and scream about Cheney’s
Iraq connection? The Gore campaign undoubtedly knew of Halliburton’s smarmy
business dealings from the get-go.
Gore and Lieberman could have made hay about how the wannabe GOP veep had
been in cahoots with Saddam. Such explosive revelations may well have swayed
voters and boosted Gore’s chances in what was shaping up to be a close electoral
The Democratic standard-bearers dropped the ball in part because Halliburton’s
conduct was generally in accordance with the foreign policy of the Clinton
administration. Cheney is certainly not the only Washington mover and shaker to
have been affiliated with a company trading in Iraq. Former CIA Director John
Deutsch, who served in a Democratic administration, is a member of the board of
directors of Schlumberger, the second-largest U.S. oil-services company, which
also does business through subsidiaries inIraq.
Despite occasional rhetorical skirmishes, a bipartisan foreign-policy consensus
prevails on Capital Hill, where the commitment to human rights, with a few notable
exceptions, is about as deep as an oil slick.
Truth be told, trading with the enemy is a time-honored American corporate
practice or perhaps “malpractice” would be a more appropriate description of
big-business ties to repressive regimes.
Given that Saddam Hussein, the pariah du jour, has often been compared to
Hitler, it’s worth pointing out that several blue-chip U.S. firms profited from
extensive commercial dealings with Nazi Germany.
Shockingly, some American companies – including Standard Oil, Ford, ITT, GM,
and General Electric – secretly kept trading with the Nazi enemy while American
soldiers fought and died during World War II.
Today General Electric is among the companies that are back in business with
Saddam Hussein, even as American jets and battleships attack Iraq on a weekly
basis using weapons made by G.E.
But the United Nations sanctions committee, dominated by U.S. officials, has
routinely blocked medicines and other essential items from being delivered to
Iraq through the oil-for-food program, claiming they have a potential military
These sanctions have taken a terrible toll on ordinary Iraqis, and on children in
particular, while the likes of Halliburton and G.E. continue to lubricate their
The White House connection: Saudi ‘agents’ close
by Maggie Mulvihill, Jonathan Wells and Jack Meyers, Boston Globe
A powerful Washington, D.C., law firm with unusually close ties to the White House
has earned hefty fees representing controversial Saudi billionaires as well as a
Texas-based Islamic charity fingered last week as a terrorist front.
The influential law firm of Akin, Gump, Strauss, Hauer & Feld has
represented three wealthy Saudi businessmen – Khalid bin Mahfouz,
Mohammed Hussein Al-Amoudi andSalah Idris– who have been
scrutinized by U.S. authorities for possible involvement in financing Osama bin
Laden and his terrorist network.
In addition, Akin, Gump currently represents the largest Islamic charity in the
United States,Holy Land Foundation for Relief and Development in
Holy Land’s assets were frozen by the Treasury Department last week as
government investigators probe its ties to Hamas, the militant Palestinian group
blamed for suicide attacks against Israelis.
Partners at Akin, Gump include one of President Bush’s closest Texas friends,
James C. Langdon, and George R. Salem, a Bush fund-raiser who chaired
his 2000 campaign’s outreach to Arab-Americans.
Another longtime partner is Barnett A. “Sandy” Kress, the former Dallas
School Board president who Bush appointed in January to work for the White
House as an “unpaid consultant” on education reform.
In September, a federal grand jury issued subpoenas for Holy Land records around
the same time terrorist investigators froze the assets of a North Texas Internet
firm hired by Holy Land.
Holy Land shared office space with that firm, InfoCom Corp., which was raided
by police on Sept. 5, just days before the World Trade Center and Pentagon
Holy Land has denied any link to Hamas.
According to Akin, Gump, the firm represents Holy Land in a federal lawsuit filed
against the charity and another suspected Hamas entity by the parents of a man
allegedly murdered by Hamas operatives in the Middle East.
In a statement issued Friday, Akin, Gump said it decided last week to decline a
request to represent Holy Land in its defense of terrorism-related charges made
by the U.S. Treasury Department.
Akin, Gump, which maintains an affiliate office in the Saudi capital of Riyadh, is
also a registered foreign agent for the kingdom. It was paid $77,328 in lobbying
fees by the Saudis during the first six months of 2000, public records show.
In addition to the royal family, the firm’s Saudi clients have included bin Mahfouz,
who hired Akin, Gump when he was indicted in the BCCI banking scandal in the
early 1990s. In 1999, the Saudi’s placed bin Mahfouz under house arrest after
reportedly discovering that the bank he controlled, National Commercial Bank
in Saudi Aabia, funneled millions to charities believed to be serving as bin Laden
A bin Mahfouz business partner, Al-Amoudi, was also represented by Akin, Gump.
When it was reported in 1999 that U.S. authorities were also investigating Al-Amoudi’s Capitol Trust Bank, Akin, Gump released a statement on behalf of their
client denying any connections to terrorism. One year earlier, the firm had co-sponsored an investment conference in Ethiopia with Al-Amoudi.
Akin, Gump partner and Bush fund-raiser Salem led the legal team that defended
Idris, a banking protege of bin Mahfouz and the owner of El-Shifa, the Sudanese
pharmaceutical plant destroyed by U.S. cruise missiles in August 1998.
The plant was targeted days after terrorists – allegedly on the orders of bin Laden
– bombed two U.S. embassies in Africa. The U.S. Treasury Department also froze
$24 million of Idris’ assets, but Akin, Gumpfiled a lawsuit and the government
later chose to release the money rather than go to court. Idris, who insists he
has no connection whatsoever to bin Laden or terrorism, is now pursuing a second
lawsuit with different attorneys seeking $50 million in damages from the United
Charles Lewis, executive director of the Center for Public Integrity, a
Washington, D.C.-based non-partisan political watchdog group, said Akin, Gump’s
willingness to represent Saudi power-brokers probed for links to terrorism
presents a unique ethical concern since partners at the firm are so close to the
The concern is more acute now, Lewis said, because Bush has faced stiff
resistance from the kingdom in his repeated requests to freeze suspected
terrorist bank accounts.
“The conduct of the Saudis is just unacceptable by international standards,
especially if they are supposed to be one of our closest allies,” Lewis said.
Speaking of Akin, Gump partner Kress’ office in the White House, Lewis added:
“That’s not appropriate and frankly it’s potentially troublesome because there is a
real possibility of a conflict of interest. Basically you have a partner forAkin, Gump . . . inside the hen house.”
But another longtime Washington political observer, Vincent Cannistraro, the
former chief of counter-intelligence at theCentral Intelligence Agency, said
the political influence a firm like Akin, Gump has is precisely why clients like the
Saudis hire them.
“These are cozy political relationships . . . If you have a problem in Washington,
there are only a few firms to go to and Akin, Gump is one of them,” Cannistraro
Cannistraro pointed out that Idris hired Akin, Gump during the Clinton presidency,
when Clinton confidante Vernon Jordan was a partner at the firm. “He hired
them because Vernon Jordan had influence . . . that’s a normal political exercise
where you are buying influence,” he said.
Akin, Gump is not the only politically wired Washington business cashing in on the
Burson-Marsteller, a major D.C. public relations firm, registered with the U.S.
government as a foreign agent for the Saudi embassy within weeks of the Sept. 11
One of Burson-Marsteller’s first public relations efforts for the Saudis was to run
a large advertisement in the New York Times reading: “We Stand with You,
The Washington chairman for Burson-Marsteller, which also maintains an office in
Saudi Arabia, is Craig Veith, who ran communications for the Republican Party in
the 1996 elections.
Other GOP heavyweights who have held top positions at the PR giant includeSheila Tate, the campaign press secretary for the elderGeorge Bush; Leslie
Goodman, deputy director of communications for the 1992 Bush-Quayle
campaign;Craig L. Fuller, chairman of the 1992 Republican National Convention
and elder Bush’s vice presidential chief-of-staff.
~ ~ ~
PART II – Bush advisers cashed in on Saudi gravy train
By Maggie Mulvihill, Jack Meyers and Jonathan Wells
Many of the same American corporate executives who have reaped millions of
dollars from arms and oil deals with the Saudi monarchy have served or currently
serve at the highest levels of U.S. government, public records show.
Those lucrative financial relationships call into question the ability of America’s
political elite to make tough foreign policy decisions about the kingdom that
produced Osama bin Laden and is perhaps the biggest incubator for anti-Western
Nowhere is the revolving U.S.-Saudi money wheel more evident than within
President Bush’s own coterie of foreign policy advisers, starting with the
president’s father, George H.W. Bush.
At the same time that the elder Bush counsels his son on the ongoing war on
terrorism, the former president remains a senior adviser to the Washington D.C.-based Carlyle Group. That influential investment bank has deep connections to
the Saudi royal family as well as financial interests in U.S. defense firms hired by
the kingdom to equip and train the Saudi military.
Last year, former President Bush visited Saudi Arabia’s King Fahd bin Abdul
Aziz Al-Saud, but a Carlyle spokesman said the two did not discuss Carlyle
business as previously reported. The elder Bush is reportedly paid between
$80,000 and $100,000 for each Carlyle speech he makes. The company declined
comment on the former president’s pay.
The Carlyle Group has also served as a paid adviser to the Saudi monarchy on
the so-called “Economic Offset Program,” an arrangement that effectively
requires U.S. arms manufacturers selling weapons to Saudi Arabia to give back a
portion of their revenues in the form of contracts to Saudi businesses, most of
whom are connected to the royal family. A company spokesman said yesterday that
arrangement was ended “a few months ago,” but said he did not know whether it
was terminated before or after the Sept. 11 attacks.
A spokesman for former President Bush, reached yesterday, had no immediate
comment on his work for the Carlyle Group.
These intricate personal and financial links have led to virtual silence in the
administration on Saudi Arabia’s failings in dealing with terrorists like bin Laden,
said Charles Lewis, executive director of the Center for Public Integrity, a
Washington, D.C.-based government watchdog group.
“It’s good old fashioned ‘I’ll scratch your back, you scratch mine.’ You have
former U.S. officials, former presidents, aides to the current president, a long line
of people who are tight with the Saudis, people who are the pillars of American
society and officialdom,” said Lewis.
“So for that and other reasons no one wants to alienate the Saudis, and we are
willing to basically ignore inconvenient truths that might otherwise cause our blood
to boil. We basically look away,” he said. “Folks don’t like to stop the gravy train.”
Some foreign policy observers said as long as American power brokers in lucrative
business deals with the Saudis do not simultaneously craft U.S. foreign policy,
there is no conflict of interest.
“To have Bush Sr. on the board of Carlyle is not necessarily a significant problem
because Carlyle has interests all over the world,” said Vincent Cannistraro, a
former counter-intelligence chief for the Central Intelligence Agency.
Companies regularly entice powerful political figures to work for them, he said.
“It’s kind of business as usual. Where it really affects things is when someone
with a financial interest in a company also has a policy position in the
administration,” Cannistraro said.
A significant portion of the millions of dollars U.S. companies and their politically
influential executives have earned in deals with the Saudis has been through
The Carlyle Group had a major stake in the large defense contractor B.D.M.,
which has multimillion-dollar contracts through its subsidiaries to train and manage
theSaudi National Guard and the Saudi air force, U.S. Department of
Defense records show. In 1998, Carlyle sold its controlling interest in B.D.M. to
defense giant TRW International.
Meanwhile, the boards of directors of the Carlyle Group, B.D.M.
and TRW are all stocked with high-level Republican policy makers.
Frank C. Carlucci, a former secretary of defense under President Reagan,
was chairman of B.D.M. for most of the 1990s. Carlucci, who also served as
Reagan’s national security adviser and a deputy director of theCIA, now heads
the Carlyle Group.
Along with former President Bush, other officials from past Republican
administrations now at the Carlyle Group include: former Secretary of State
James A. Baker III; ex-budget chief Richard Darman; and former
Securities and Exchange Commission chairman Arthur Levitt.
President Bush is himself linked to the Carlyle group: He was a director of one of
its subsidiaries, an airline food services company called Caterair, until 1994. Six
years later, when Bush was governor of Texas, the board of directors of the
Texas teachers’ pension fund – some of whom were his appointees – voted to invest
$100 million with the Carlyle Group.
The president of B.D.M. is Philip A. Odeen, a former high-level Pentagon
official in the Nixon administration. During the Clinton administration, Odeen
chaired the Pentagon task force that planned the restructuring of the U.S.
military for the 21st century. Currently, he is the vice-chair of the Defense
Science Board, which advises the Pentagon on emerging threats.
TRW, the new owner of B.D.M., has its own noteworthy board members, including
former CIAdirector Robert M. Gates andMichael H. Armacost, who
served as undersecretary of state under President Reagan and as ambassador to
Japan for former President Bush.
Big Saudi money also makes its way back to Texas and the Bush family. The
family of Saudi Arabia’s longtime U.S. ambassador, Prince Bandar bin Sultan
bin Abdul Aziz, gave $1 million to the Bush Presidential Library in College
The revolving door
Another example of the complex web connecting U.S. and Saudi powerbrokers is
Dick Cheney, who moved from the Pentagon to the international oil business and
back as vice president last year.
After serving as the elder Bush’s secretary of defense, Cheney was hired to run
oil-services giant Halliburton Co., where he worked until he resigned last year
to campaign with the younger Bush. In 2000, his last year with Halliburton, Cheney
received $34 million when he cashed out from the company.
Not surprisingly, Halliburton’s links to Cheney and other Washington power
brokers appear to have helped the company’s business prospects in the Middle
Just last month, Halliburtonwas awarded a$140 million contract to develop
an oil field in Saudi Arabia by the kingdom’s state-owned petroleum firm, Saudi
Aramco, and a Halliburton subsidiary, Kellogg Brown & Root, along with two
Japanese firms, was hired by the Saudis to build a $40 million ethylene plant.
Cheney isn’t the only member of President Bush’s inner circle whose work for
firms connected to the Saudis has paid big dividends.
The current national security adviser,Condoleezza Rice, is a former longtime
member of the board of directors of another giant oil conglomerate with business
in the Saudi desert, Chevron, which merged with Texaco this year. Rice even
has a Chevron oil tanker named after her.
Substantial profits received by U.S. leaders in private sector deals with the Saudis
have helped to squelch criticism of the royal family’s refusal to address the role
its country has played in fueling Islamic terrorism, Lewis said.
“There’s a disconnect there,” Lewis said. “I’m fascinated that we don’t lay this at
Saudi Arabia’s doorstep. But the chances to cash in and the amount you can cash in
for are starting to become absolutely astronomical. Who wants to look like the Boy
Scout complaining about it and potentially jeopardize their own post-employment
Former advisers to the president’s father also hold key positions with U.S. firms
which have teamed up with the Saudis on major oil deals.
Former Bush Secretary of the Treasury Nicholas Brady and a former Bush
assistant, Edith E. Holiday, are both on the board of directors of Amerada
Hess, an American petroleum firm currently teaming up with several powerful
Saudi families to develop oil fields in Azerbaijan.
Another company that has done business with wealthy Saudis is international
energy firmFrontera Resources Corp. based in Houston. Until recently,
Frontera was a 30 percent investor in a $900 million project to develop oilfields
in Azerbajian. Also investing in the project were Azerbaijan’s state-run oil
company and Delta-Hess, a joint-venture created by the Saudis’Delta Oil and
Randy Theilig, a Frontera spokesman, said the company relinquished its interest in
the project in July because it was no longer “economically viable,” and has no
current business dealings with the Saudis or in Azerbajian.
Members of Frontera’s board of advisers, which includes former CIA director
John Deutch and former Secretary of the Treasury and U.S. Sen. Lloyd
Bentsen, have been active financial supporters of the Democratic Party.
Shining a bright light on the web of financial connections between the power elite
in the U.S. and Saudi Arabia is critical, Middle Eastern foreign policy experts said.
“I think the fact that they have these connections makes it
important for this information to be made public,”said Henry Siegman,
a senior fellow on the Middle East at the Council on Foreign Relations.
Larry Noble, executive director of the Center for Responsive Politics in
Washington, D.C., a non-partisan group that examines money and politics, said the
Bush-Carlyle connection is a concern.
“It is well known that the father is a close adviser to his son and
therefore it does raise concerns,” Noble said.
“It’s not necessarily that the father has been compromised, but
the danger is that it leads people to question George W. Bush. The
public has a right to feel their leaders are making independent
judgments without the influence of private interests.”
(In accordance with Title 17 U.S.C. Section 107, this material is distributed
without profit to those who have expressed a prior interest in receiving the
included information for research and educational purposes.)
For more on the MONEY / RACKETEER connections, GO TO > > > Apollo
“The state is resuming its right and its
prestige as the sole and supreme interpreter of
the needs of society.”
– Benito Mussolini, 1934
December 14, 2001
Bush rejects subpoena in two House
President’s claim of executive privilege angers lawmakers
by Ellen Nakashima, The Washington Post
WASHINGTON, D.C. – President Bush invoked executive privilege for the first
time yesterday, rejecting a congressional subpoena for prosecutors’ records
related to the Clinton administration campaign finance probe and a 30-year-old
Boston mob case.
The flexing of executive muscle angered lawmakers from both parties, who called
it an unprecedented effort to deny Congress access to records that in the past
had been routinely disclosed.
But it drew approval from some GOP legal experts who lauded Bush’s attempt to
restore the notion of executive privilege, badly eroded during the Clinton
Disclosure, Bush wrote in a memo telling Attorney General John Ashcroft not to
release the documents, would “inhibit the candor necessary” to the deliberative
process in the executive branch and would be “contrary to the national interest.”
(Hunnh? Does this sound like the same Dubya who said, “Is your children
“This is not a monarchy,” Rep. Dan Burton, an Indiana Republican who is chairman
of the House Government Reform Committee, said at a hearing yesterday focusing
on the Boston case.“The legislative branch has oversight responsibility to make
sure there is no corruption in the executive branch.”
Burton’s committee had subpoenaed documents regarding the FBI’s handling of
mob informants in Boston dating to the 1960s, excluding those relating to open
cases. The panel had also subpoenaed records dealing with former attorney
general Janet Reno’s decision not to appoint a special counsel to investigate
charges of campaign finance abuses by then-Vice President Al Gore.
Burton is particularly incensed about the now-closed case of Joe Salvati, a man the
FBI knew was innocent when he went to prison for 30 years on murder charges.
Burton said Salvati was convicted on the basis of lies told on the stand by Joe
“The Animal” Barboza, an FBI informant who had a grudge against Salvati.
The committee had also subpoenaed Ashcroft himself. Originally scheduled to
appear on Sept 13, the Sept 11 terrorist attacks postponed the hearing until
yesterday. Justice Department Criminal Division Chief of Staff Michael Horowitz
appeared in his stead. . . .
Joseph diGenova, a former U.S. attorney, praised Bush’s move as one that begins
to restore the principle of executive privilege after its “profligate use” by former
president Clinton. . . .
But Mark Rozell, author of the 1994 book “Executive Privilege,” said he thought
the White House had picked poor cases for establishing the principle. A better
argument would involve protecting national security, he said. . . .
Rozell and diGenova said Clinton had abused executive privilege by invoking it in
inappropriate cases, for instance, to conceal wrongdoing or matters unrelated to
government business, such as an affair with a White House intern.
But even Clinton did not assert executive privilege over the types of prosecutorial
records that panel is seeking, Burton said.
December 16, 2001
The President’s Papers Are the People’s
By Steven L. Hensen
How can a democratic people have confidence in elected officials who hide the
records of their actions from public view?
On Nov. 1, with no announcement, President Bush signed Executive Order 13233,
overriding the 1978 Presidential Records Act, which provides that a president’s
papers will be made available to the public 12 years after he leaves office.
Bush’s new order gives the White House, as well as former presidents, the right
to veto this release of documents, thereby taking the responsibility for
administering presidential papers away from the archivist of the United States. By
forcing citizens to go to court to obtain the right to view an administration’s
records, the order effectively blocks access to information that enables
Americans to hold our presidents accountable for their actions. . . .
Bush’s executive order is titled “Further Implementation of the Presidential
Records Act.” But rather than “implementing” that law, the order abrogates the
core principles of the act and violates both its spirit and letter.
The Presidential Records Act was created out of the legal morass surrounding the
Watergate scandals and legitimate congressional fears that former president
Nixon would never allow public access to the records of his administration. The
legislation established once and for all — or so we thought — the principle that
presidential papers represent the official records of activity by the highest office
in our government of, by, and for the people — and that they therefore belong to
the U.S. government and, by extension, its citizens. . . .
Executive Order 13233 directly subverts the intent of the Presidential Records
Act by placing ultimate responsibility for decisions regarding access to presidential
papers not only with President Bush, but with any sitting president in the future,
as well as every ex-president, and, even further, the family members and heirs of
former presidents, apparently without limit.
Administration officials have acknowledged that the new order is intended to
prevent the release of records from the Reagan administration, which the
White House has been delaying by various means since January. This has led
to speculation that the administration is trying to shield members of Bush’s
own administration, as well as his father, from a variety of uncomfortable
revelations, including possible connections to the Iran-contra scandal.
But it should be noted that this executive order also fits a pattern suggesting that
the Bush administration may be hostile to the basic ideals that the public has a
right to know what its elected officials are doing, and that the records of
government are in fact owned by the people.
Last January, Bush, as outgoing governor of Texas, shipped his official records to
his father’s presidential library at Texas A&M University. By doing so, he
succeeded in removing his gubernatorial papers not only from the custody of the
Texas State Library and Archives, but also, possibly, from the ownership,
oversight and right of access of the people of Texas.
The Texas archives law does permit the designation of “an institution of higher
learning or alternate archival institution” as the repository for gubernatorial
records (the records of former governor John Connally, for instance, are at the
Lyndon B. Johnson presidential library, and those of Bill Clement are at Texas
A&M). But the bill requires that any governor seeking to place his records
elsewhere consult fully with the Texas State Library and Archives Commission to
develop clear policies regarding processing of and access to the records.
While there was some preliminary consultation over Bush’s papers, no final
agreement was reached. The records were simply packed up and shipped off — to
the great surprise of many, including officials at the Bush presidential library.
Under no circumstance does the Texas bill permit the transfer of the records’
“ownership” from the people of Texas to any other entity. The Connally and
Clement records, though not technically in the archives, are still administered
according to Texas records law.
But the confusion likely to reign over the question of who “owns” the Bush
gubernatorial records may be sufficient to keep them out of public sight until
well after the conclusion of George W.’s presidency. In the meantime,
requests from journalists, historians or others to view the documents could be
delayed indefinitely, denying the public potentially valuable insight into how
Bush’s policies as Texas governor on matters from energy to the death
penalty may be informing current decisions.
And there’s more.
On Oct. 16, Attorney General John Ashcroft issued a memorandum telling federal
agencies that when they decide to withhold records in response to Freedom of
Information (FOIA) requests, they can “be assured” that the Department of
Justice will defend their decisions.
The memorandum supersedes a 1993 directive by then-Attorney General Janet
Reno, directing federal agencies to resolve ambiguous situations in favor of
openness. Though Ashcroft’s memo suggested that the present reversal on FOIA
requests was necessary for protecting “national security, enhancing the
effectiveness of our law enforcement agencies, protecting sensitive business
information and, not least, preserving personal privacy,” the fact is that these
categories of information are already exempted from release under our freedom
of information laws.
Like Bush’s executive order, Ashcroft’s FOIA memorandum has the effect of
limiting our ability as citizens to know what our government is doing, and why. . . .
Engaged as we currently are in a struggle against terrorism and totalitarianism, it
does us no credit to adopt policies that reflect the principles of our enemies more
than they do our own democratic traditions. Bush should demonstrate the values
and openness of our government and of his administration by canceling this order
and directing the attorney general to revoke his memorandum.
It shouldn’t have to take legal proceedings, congressional action or public
pressure for Bush to come to the understanding that the president’s papers
are not in fact the president’s papers, but rather the records of the people’s
– Steven Hensen, director of planning and project development at Duke
University’s Rare Book, Manuscripts and Special Collections Library, is president
of the Society of American Archivists.
(In accordance with Title 17 U.S.C. Section 107, this material is distributed
without profit to those who have expressed a prior interest in receiving the
included information for research and educational purposes.)
George W. Bushhas embarked on perhaps the most radical course of any
president in US history.
Without consulting or even informing Congress, Mr. Bush this week terminated
the landmark 1972 Antiballistic Missile Treaty that has been the cornerstone
of global nuclear arms control for three decades.
And that was just for openers.
While the entire country was obediently watching the Osama bin Laden video Mr.
Bush was quietly invoking for only the third time in U.S. history Powers of
Don’t be. Amidst the chaos, destruction and distraction of the past year Mr. Bush
has set about, by “whatever means necessary,” reshaping America to conform to a
vision that is — his to know — and ours to find out.
A fundamental redefinition of the entire U.S. tax structure, fast track
authority to unilaterally formulate U.S. trade agreements world-wide, plans to
privatize social security, a sweeping overhaul of the entire U.S. justice
system… and this is only the ninth month.
Any one of these social and political developments in years gone by would have set
off a whirlwind of controversy. Today, while TV broadcast news keeps the nation
transfixed on the hunt for bin Laden, Mr. Bush is presiding over a truly radical 180
degree reversal of America’s fortune. In little more than a year we have gone
from enjoying peace and the most prosperous economy in our history, to a nation
plunged into war, recession and fear. This is a nation being transformed before our
Democratic resistance to the Bush agenda is not surprising, but to put into
perspective the enormity of these events, consider the reaction from many
prominent republicans: Dan Burton, the Republican Chairman of the powerful House
Ways and Means Committee, said in reaction to Mr. Bush’s invocation of Executive
Privilege, “This is not a monarchy.”
Arch Republican conservative New York Times columnist William Safire titled his
essay on the subject of Mr. Bush’s order authorizing secret military tribunals:
“Seizing Dictatorial Power.”
Senate Republican Stalwart Arlen Specter titled his Op-Ed in the New York Times;
“Questioning the President’s Authority.”
Questioning the President’s Authority indeed, now might be a very good time —
while the opportunity still exists.