George W's 'scandal'

Posted: Jul 11, 2002 12:00 AM
WASHINGTON -- The dominant subject at President Bush's rare press conference Monday evening was not new corporate scandals that threaten America's capitalist economy. It was a 12-year-old stock sale by private citizen George W. Bush. That caused a Securities and Exchange Commission (SEC) official, who long ago gave Bush a clean bill of health, to ponder the wondrous ways of Washington. That official was not, as National Public Radio suggested Tuesday morning, then Republican SEC Chairman Richard Breeden (appointed by the elder President George Bush). It was SEC enforcement chief William McLucas, now a partner in one of Washington's most prestigious law firms -- and a Democrat. He recently produced the report that revealed the Enron scandal. McLucas told me, "I can see no reason" to replay his 1990 Bush inquiry. The reason, of course, is partisan politics. Corporate frauds stretching from Enron to WorldCom, which have destroyed investor confidence and undermine the economy, do threaten a political opening against the Republicans and Bush. Nevertheless, Democrats could not resist trying to exploit the president's personal conduct by resurrecting an obscure stock transaction. On CBS's "Face the Nation" Sunday, Senate Majority Leader Tom Daschle called Bush's handling of his stock transaction "illustrative of the permissive environment: and this attitude about business that is very destructive and very disconcerting to many of us." The news media ate it up, peppering Bush with no fewer than nine questions in Monday's news conference. Actually, the story is straightforward -- lacking the mysterious twists of Whitewater. In 1990, Bush was out of the oil business and raising money to buy a share of the Texas Rangers baseball team. A board member of Harken Energy Corp., Bush sold $848,000 of the company's stock two months before the company reported millions of dollars in losses, which sharply dropped its stock price after the sale. Was this insider trading? That's what the SEC set out to investigate a dozen years ago (probably triggered by media accounts, according to McLucas's recollection). As a Republican appointee, Breeden wanted no personal part of this and instructed McLucas to charge ahead without fear or favor. McLucas does not remember talking to Breeden, but was well aware that they were investigating the president's son. That made no difference at the SEC, which had not been impeded in the investigation of President Jimmy Carter's good friend Bert Lance and other well-connected targets. A compelling fact was that the Harken stock actually was selling for more at the time of investigation than it was when Bush sold it. That's hardly a good case for insider trading, particularly when no "material non-public information" by Bush was found. The case was closed. The final sentence in the SEC's order saying that Bush was not "exonerated" was legalistic "boilerplate" and meaningless, said McLucas. The major new accusation against Bush has been that he was eight months late filing a confirming report of the stock sale, though he earlier had alerted the SEC as required by law. The tardy report was in McLucas's hand when he ruled. "If you went to court against every late filing with us," McLucas told me, "we would be in court on 2,000 cases." Whatever Willie McLucas says is credible. After more than 21 years at the SEC, he joined the big-time Washington firm of Wilmer, Cutler & Pickering. He was secured by Enron as chief investigator in the internal inquiry that brought down the energy firm's house of cards. Now, with the disclosure of hiding $3.9 billion, WorldCom has signed McLucas to conduct an independent investigation. When Bush the elder was running for re-election as president in 1992, the venerable Democratic Rep. John Dingell requested a SEC briefing about the stock sale but did not hit sufficient pay dirt to go public. Texas Gov. Ann Richards, desperate in resisting the junior Bush's challenge in 1994, raised the issue -- to no avail. The case came up briefly when Bush ran for re-election for governor in 1998 and for president in 2000. Despite these failures, Democratic National Chairman Terry McAuliffe could not resist attacking Bush's personal conduct as payback for the treatment of his patron, Bill Clinton. The irony is that serious threats to the economy offer incomparably richer opportunities for the Democratic opposition.