Bush Sold Stock Despite Promise

(CBS MarketWatch)  Two and a half months before George W. Bush sold his stock in Harken Energy Corp., he signed a "lockup" letter promising to hold onto the shares for at least six months, according to internal company documents obtained by the Washington Post.

The Post reported late Tuesday that the letter, signed by Bush on April 3, 1990, is now being compared with the account his lawyers gave federal securities regulators who examined the stock sale as a possible insider trade.

According to the Post story, the letter Bush signed promising to hold onto the stock was released by the Securities and Exchange Commission under the Freedom of Information Act. At the time he signed it, Harken was considering a public stock offering to raise money to solve a cash flow problem.

The President's lawyers have said that Bush had a pre-existing plan to sell his stock in Harken and other companies to pay a tax bill and a loan he owed for his stake in the Texas Rangers ball team.

In June 1990, Bush sold about $850,000 in shares of Harken, just weeks before the oil and gas company reported an unexpected loss. Eventually, the SEC forced Harken to restate its financials to show a loss of $12.6 million for 1989, disallowing the accounting it used for the sale of a subsidiary to a group of insiders. Bush was a director of the company, which had acquired Bush's own energy firm, Spectrum 7.

SEC regulations require a Form 4 to be filed by all corporate insiders, such as officers, directors and major stockholders, when they buy or sell shares.
Bush filed the required Form 4 about 34 weeks late. Bush was not charged with any violation of securities laws or regulations following an investigation into illegal insider trading in 1991. The SEC concluded that Bush did not have any material, nonpublic information when he sold the shares.

The story in the Washington Post quotes White House spokesman Dan Bartlett as saying Monday that the lockout letter was "made irrelevant and obsolete" by the time Bush sold his stock in 1990 because the public stock offering it affected never went through. But the document calls into question his lawyers' account to the SEC, the Post story notes. Also, the SEC did not interview Bush, so the only account of the sale came from what his attorneys told regulators.

The Post article quotes a Houston attorney and expert in securities law as saying the signing of the lockup agreement "undercuts" Bush's lawyers' explanation for the early sale of the Harken stock. "If his accountant told him that he needed to sell stock to pay a debt obligation for his interest in the Texas Rangers, it does not make sense that he would subsequently sign an agreement promising not to sell his shares of Harken stock for six months." Thomas R. Ajamie told the Post.

The article states Bartlett said there was a general strategy to go forward in selling assets to pay off the debt and "I don't think they were looking for any magic time frame."