Harken Energy

Harken Energy Corporation, an oil and gas company, was incorporated in California in 1973 and reincorporated in Delaware in 1979; in 1994 its offices were at Grand Prairie, Texas. George W. Bush joined it in 1986 and served as a director and consultant until October 26, 1993. In January 1990 its subsidiary, Harken Bahrain Oil Company, obtained exclusive exploration rights over most of Bahrain's offshore territory.¹²³

Early History

According to Time, Harken "began life in the late 1970s as an unprofitable collection of Texas oil wells for investors seeking tax write-offs." In 1984 Alan Quasha, a lawyer, bought control and became chairman, and traded Harken stock for distressed oil companies; the magazine counted among its investors the Harvard endowment, George Soros and the Rupert family of South Africa. Harken's proxy statement of 1994 gave Quasha's tenure as chairman as 1983 to February 1991, when he was succeeded by the chief executive, Mikel D. Faulkner. Quasha's law firm, Quasha Wessely & Schneider of New York, had collected more than one million dollars in fees from Harken since 1988, according to Time.¹³

"George Bush Jr.'s affiliation with Harken began in the oil-bust year of 1986," Time reported, "when he and a group of partners received more than $2 million worth of Harken stock in exchange for his floundering 180-well Texas oil operation, Spectrum 7 Energy Corp., which had lost $400,000 in the six months before the sale." A director told the magazine: "His properties were pretty well encumbered. The banks hadn't foreclosed, but that was in the wind." The Houston Chronicle traced the company's descent from Bush's first oil venture: "George W. Bush's company, Bush Exploration Co., general partner in the limited partnerships, went through several mergers, eventually evolving into Harken Energy Corp., a suburban Dallas-based company." The Houston businessman James R. Bath had held a 5 percent interest in those partnerships, Arbusto '79 Ltd. and Arbusto '80 Ltd., investing 50,000 dollars.³⁴

Bush served as a consultant to Harken under an agreement dating from April 1987. Time put his fees at 50,000 to 120,000 dollars a year.¹³

Saudi Shareholder

"The year after Bush came aboard," Time reported, "a reclusive Saudi named Abdullah Taha Bakhsh bought an 11% stake in Harken through a Netherlands Antilles shell company." Harken's proxy statement of April 1994 listed Abdullah Taha Bakhsh of Jeddah as the owner of 11.66 percent of its common stock, held of record by Traco International N.V., which he wholly owned, and Atherstone Corporation N.V., which he indirectly owned. The largest holder, at 15.27 percent, was Aeneas Venture Corporation, an affiliate of the Harvard endowment; Michael R. Eisenson, president of its affiliate Aeneas Group and a vice president and director of Aeneas Venture, sat on Harken's board. Talat Othman, a director since 1987, was president of Dearborn Financial, Inc., which the proxy described as "an affiliate of Traco and Atherstone, significant record stockholders of Harken." During 1993 Harken's audit committee consisted of Othman and Bush until Bush's resignation.¹³

Bahrain

Bahrain's rulers awarded the concession, Time wrote, after officials "suddenly and mysteriously broke off promising talks with Amoco" in 1989. Michael Ameen, a former head of Mobil's Middle East operations, told the magazine that a Bahraini minister had telephoned him in search of "a small American company," and that ten minutes later "an investment banking friend in Arkansas" called him and recommended Harken.³ Harken's 1994 proxy recorded that Michael M. Ameen Jr. had served since 1989 as a part-time consultant to Harken "with regard to Middle Eastern exploration projects," paid 20,000 dollars in 1993, and that on February 11, 1994 the board elected him to the seat left vacant by Bush's resignation.¹

In January 1990, according to Harken's annual report for 1993, Harken Bahrain Oil Company "entered into a production sharing agreement with the Bahrain National Oil Company ('BANOCO') which gave it the exclusive right to explore for, develop and produce oil and gas throughout most of Bahrain's Arabian Gulf offshore territories," for a term of thirty-five years. In July 1990 Bass Enterprises Production Company agreed to fund at least the first three exploratory wells, with the option of then earning a fifty percent interest in Harken's rights by funding further drilling. The first well, Jarim No. 2 on the Jarim Reef, was abandoned as dry in March 1992. The second, Muharraq No. 1, begun on December 28, 1992, was plugged and abandoned at 8,778 feet after Harken announced on February 10, 1993 that no shows of oil or gas had been found. On April 8, 1993 the Bass company was released from further drilling obligations on payment of about two million dollars and the well's remaining costs, and Harken let part of the acreage lapse.²

Time reported in October 1991 that "in late June 1990, five months after the deal was sealed and about a month before Iraq invaded Kuwait, young Bush sold 66% of his Harken stake (or 212,140 shares) at the top of the market for nearly $850,000," and that he did not report the sale until March 1991. Bush said the Securities and Exchange Commission had misplaced the report; an SEC spokesman, John Heine, told the magazine: "As far as I know, nobody ever found the 'lost' filing." Harken's chairman, Faulkner, said his Bahraini partners would not let him discuss the terms of the agreement "even with board members."³