Jewish World Review July 17, 2002 / 8 Menachem-Av, 5762
In November 1986 George W. Bush, son of then-Vice President George H. W. Bush, sells his struggling oil exploration company to Harken Energy, which is beginning its climb from an $8 million company into a New Economy globalbiz. Harken pays Bush with stock worth $530,000 and later gives its new board member sweetheart loans totaling nearly $200,000 so he can buy more stock. In 1989 Bush is invited to join a group of investors buying the Texas Rangers baseball team; he does, with an overnight $500,000 loan, obtained on the basis of Harken stock, from a bank with connections to his family.
In June 1990, Bush sells 212,000 shares of Harken stock at $4 each, shortly before revelations of a sham transaction force a restatement of profits and drive the stock down. He uses the proceeds to pay off his Texas Rangers loan. Bush's partners in the Rangers later make him a gift of an increased share of the profits. His insider-status investment of $500,000, which derived from his insider-Harken stock, which derived from his insider status as a Bush son, eventually nets him a decent-sized fortune of $14 million. Harken, meanwhile, continues to decline in value. It currently is trading for less than $1 per share.
From where Senate Majority Leader Tom Daschle sits, this little tale is a beautiful thing: a perfect paradigm of the larger horror story of corporate cronyism, insider profit-taking and laissez-faire regulation encouraged by political connections that has the 50 percent of adult Americans who play the stock market frightened and furious.
But the Democrats' ability to really exploit this opportunity is far from obvious. In a recent survey, CNN asked respondents whom they blamed more for today's business scandals: Bush ("because of his close ties to business") or former president Bill Clinton ("because of his moral failings and the climate he set while he was in office"). Thirty-three percent blamed Bush more -- but 40 percent liked Clinton as the fall guy.
The voters figure it this way because they are not stupid. They look at Democrats now in the grim, dim light cast by the years of Our Bill -- the years of the rental of the Lincoln Bedroom, of the White House coffees, of Ron Brown's $50,000-a-seat trade missions, of Johnny Chung and Charlie Trie, of midnight-hour presidential pardons to well-heeled fugitives and felons. It is sometimes hard for voters, in this light, to clearly see the party of the New Deal.
Last week, the anti-bribery interest group Democracy 21 reported that during the past decade, corporations gave $636 million to Republicans and $449 million to Democrats -- $221 million to the former and $161 million to the latter in the 2000 cycle alone. In such a world, the average voter may be excused for concluding that we know, as the old joke has it, what the politicians of both parties are; we're just arguing about the price.
Consider the instructive case of Global Crossing Ltd., which was not long ago absurdly valued at $50 billion, and which filed for bankruptcy in January after losing $7 billion in other people's money.
Global Crossing's record of spreading the wealth among Republicans and Democrats alike is inspiring for those who believe in fair play. In the 2000 elections, the company and its executives contributed $2.8 million to candidates in both parties. Global Crossing's chairman and founder, Gary Winnick, is a big Republican. But the company recruited William S. Cohen, Clinton's defense secretary, to its board, and it paid Anne K. Bingaman, a former Clinton assistant attorney general and the wife of Democratic Sen. Jeff Bingaman, a stunning $2.5 million to lobby on its behalf.
In 1998 former president George Bush was paid $80,000 to give a speech in Tokyo on behalf of Global Crossing. Acting on advice from a friendly company officer, the elder Bush took the payment in stock -- which at its peak was worth $14 million. GOP-Bush corporate cronyism!
But wait -- what's under this rock? Why, in 1997, Chairman Winnick gave a little favor to top Clinton fund-raiser and deep crony Terrence McAuliffe -- the opportunity to buy $100,000 in Global Crossing stock before the company went public. McAuliffe did and cashed out in 1999, before the deluge, with what is reported to have been at least $10 million in profits. McAuliffe's current day job is chairman of the Democratic National Committee.
Well, you can see the Democrats' problem. Still, that won't keep them from trying. Which is fair enough.
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