Jackson Stephens

Jackson T. Stephens (1923 to 2005) ran the investment bank Stephens Inc. of Little Rock from 1957. He was a classmate of Jimmy Carter at the United States Naval Academy, class of 1947, underwrote the first public offering of Walmart, and was chairman of Augusta National Golf Club from 1991 to 1998. In 1977 he introduced the Bank of Credit and Commerce International to the American bank it would secretly acquire. He and his firm gave to Ronald Reagan, George H.W. Bush, and Bill Clinton.¹²

Financial General

In 1977 Stephens Inc. held 268,400 shares, 4.9 percent, of Financial General Bankshares of Washington as part of a dissident group of investors. Stephens was alleged to want the bank's data processing for his subsidiary Systematics Inc., which he denied. He was also helping his friend Bert Lance, who had resigned as Carter's budget director, to sell the National Bank of Georgia. On November 9, 1977, Lance, Stephens, and a Stephens officer, Curt Bradbury, met Abdus Sami of the Bank of Credit and Commerce in Little Rock. The buyer of the Georgia bank was Ghaith Pharaon, acting for the Pakistani bank. A federal court found that its founder, Agha Hasan Abedi, became interested in Financial General "through his contact with Stephens on another matter," and that in November 1977 Stephens recommended the Washington lawyer Eugene Metzger to a foreign bank interested in the stock.²³

Abedi retained Metzger at a Hilton hotel in Washington on November 30. The purchases for the bank's clients were run from day to day by George H. Davis, "an officer of Stephens, Inc.," who was authorized to buy up to 10,000 shares a day so as not to move the price. The stock was placed in an account at Stephens Inc. opened under the name "Eugene J. Metzger, Agent," in the court's words "to shield the identity of the BCCI principals." On January 6, 1978, Stephens Inc. sold 70,000 of its own shares into the accumulation, which by the end of the month held nearly 20 percent of the votes. When the bank's officers were first asked, they "flatly denied making any purchases."²³

Financial General sued on February 17, 1978, naming Lance, the bank, Abedi, Metzger, Stephens, Stephens Inc., and Systematics. The investors added in March were Kamal Adham, described by the court as a minister of the Saudi government, Faisal Saud al-Fulaij of Kuwait, the crown prince of Abu Dhabi, his younger brother, and the financial adviser to their family. Systematics was dismissed on March 22. Hillary Rodham of the Rose Law Firm did legal work for it in the case. On March 18 Stephens and the other defendants consented to permanent injunctions in a separate suit by the Securities and Exchange Commission, No. 78-0469. The court granted Stephens summary judgment on July 20, 1978. The remaining defendants settled in 1980, and the tender offer went through. "The Middle Eastern investors are in control of Financial General Bankshares," the court of appeals noted in 1982. The company was renamed First American Bankshares.²³

Worthen and Lippo

Stephens and the Riady family of Indonesia, owners of the Lippo Group, controlled Worthen Bank of Little Rock together in the 1980s. At the end of 1991 Lippo was the expected buyer of the Bank of Credit and Commerce's failed Hong Kong subsidiary, a plan dropped in February 1992. Worthen, under Bradbury, extended the Clinton presidential campaign a line of credit of about 3.5 million dollars at the start of 1992, the first million drawn on March 4. Stephens's wife, Mary Anne, had run Bush's 1988 campaign in Arkansas, Stephens was a member of the Republican Team 100 of 100,000 dollar donors, and his firm gave 100,000 dollars to a Bush dinner in May 1991. A federal inquiry in 1992 examined Clinton's association with Stephens, according to unnamed government officials, in part to learn whether Clinton was connected with the Pakistani bank.³⁴

James Riady pleaded guilty on January 11, 2001, to conspiring to defraud the United States by reimbursing campaign donors with foreign money, and paid 8.6 million dollars, the largest fine in a campaign finance case. The charge described funds wired to his account at LippoBank and handed to the Lippo executive John Huang in cash "shortly after Riady pledged $1 million in support of Arkansas Governor Bill Clinton's campaign." Huang had pleaded guilty in 1999. A Senate committee recorded that as a Commerce Department official in 1994 and 1995 Huang received 37 intelligence briefings from the CIA, made more than 400 calls to Lippo, and used an office at Stephens Inc. in Washington. On June 23, 1994, James Riady had breakfast with Webster Hubbell, the former Rose partner who had resigned as associate attorney general in April, at the Hay-Adams Hotel, went with Huang and the Little Rock lawyer Mark Grobmyer to see the president at ten, and had lunch with Hubbell at the same hotel. By June 27 a Lippo company, Hong Kong China Limited, had wired 100,000 dollars to Hubbell's account. Huang's appointment at the Commerce Department was approved at about the same time. Lippo also paid for a trip to Jakarta and Bali for Hubbell and his wife. "Both Riady and Hubbell refuse to describe what services, if any, Hubbell performed," House investigators wrote. Hubbell invoked the Fifth Amendment. An associate gave Riady's explanation: "Mr. Hubbell was our very close friend, when he left, we felt we should help him out." Hubbell received more than 700,000 dollars from friends of the president after leaving the department.⁵⁶

Harken

Stephens Inc. was the investment banker to Harken Energy, of which George W. Bush was a director. In 1987 it arranged the company's refinancing through Union Bank of Switzerland, the Pakistani bank's partner in its Swiss affiliate. When the Swiss bank withdrew, its shares went to the Saudi investor Abdullah Taha Bakhsh, whose banker was Khalid bin Mahfouz and whose representative on Harken's board, Talat Othman, attended three White House meetings on the Middle East. Two former Stephens bankers, David and Mike Edwards, introduced Harken to Bahrain, which awarded it an offshore drilling concession on January 30, 1990, two weeks after the Bank of Credit and Commerce pleaded guilty in Tampa.³⁷

Systematics

Walter Smiley founded Systematics in 1968 with Stephens holding 80 percent. It ran the data processing of banks and was sold to Alltel in 1990 for 528 million dollars.⁸ In 1995 a Forbes editor, James Norman, wrote in an article his magazine declined to print that Systematics had been a conduit for the National Security Agency's surveillance of bank transfers using PROMIS software and that Vince Foster had overseen the relationship for the Rose firm. Systematics and Alltel denied it. Representative Jim Leach, chairman of the House Banking Committee, asked the CIA. The agency's briefing paper stated: "We have found no record of any CIA contact or contracts with Systematics, Inc. of Arkansas." Its inspector general's staff and the inspector general of the National Security Agency briefed Leach in person on July 21, 1995. The search terms recorded in the memorandum were Systematics, Mena, and Hadron. Director John Deutch ordered an inspector general's investigation on March 13, 1996, a report was completed that November, and Leach was still sending questions in 1998. Neither the House Judiciary Committee's 1992 report on the INSLAW affair nor INSLAW's own 1994 addendum on the distribution of PROMIS mentions Systematics, Stephens, or Arkansas.⁹¹⁰¹¹

Arkansas

Stephens was born on August 9, 1923, on a farm near Prattsville, the youngest of six children, worked as a boy at the Barlow Hotel in Hope, and joined Augusta National in 1962. He gave 48 million dollars to the University of Arkansas for Medical Sciences, 20.4 million to the University of Arkansas at Little Rock, 20 million to Episcopal Collegiate School, and 10 million to the Naval Academy. He died on July 23, 2005.¹¹

Stephens's brother, Witt Stephens, controlled Arkansas Louisiana Gas. By the late 1960s seventeen of the thirty-five state senators were on the gas company's payroll or retainer. Told that a state supreme court ruling threatened his position, he said, "Well, hell, we'll just change the law." Witt Stephens bought the utility in 1954 and in 1957, after the state supreme court rejected its rate formula, had a replacement passed by both houses and signed in four days. His successor at the utility, Sheffield Nelson, sold gas leases to Jerry Jones that the company bought back in 1986, under Mack McLarty, for far more than it had received, and the transaction was the chief issue when Nelson ran against Clinton for governor in 1990. McLarty became Clinton's chief of staff. The brothers considered buying the Arkansas Gazette in 1991. The family's Stephens Media bought the Donrey Media Group newspapers, including the Las Vegas Review-Journal, and sold them in 2015. It opened a bureau in Little Rock in 1996 to compete with the Arkansas Democrat-Gazette, whose publisher, Walter Hussman, said: "The Stephens people think of themselves as businessmen first and then journalists." In 1995 the Justice Department blocked its purchase of the Northwest Arkansas Times. His son Warren Stephens became ambassador to the United Kingdom in 2025.⁴¹¹