Well, this is rather odd. Every other indicator I’ve read says Harken shares went straight into the toilet, hitting a low of 25 cents a share. Yet your post seems to indicate quite the opposite. I have no doubt your can clarify this, as the facts are, apparently, at your fingertips. Please do.
The suggestion is made that as Harken had only one potential money making project - oil drilling in Bahrain - it was in a very vulnerable position as regards events in the Middle East. When hostilities commenced Iraq/Kuwait wise, Harken stock became toilet paper.
Did George know anybody who might be in a position to advise him that Harken was in “deep doo-doo”? Somebody who might be aware that the trajectory of the shit was about to intercept the locus of the fan?
Of special interest:
“…Bush also borrowed $180,375 from the company - a loan that was later “forgiven.” (In 1989 and 1990 alone - according to the company’s Securities and Exchange Commission filing - Harken’s board “forgave” $341,000 in loans to its executives.)…”
This unworthy one recognizes your assertion that as I am an ignoramus, it is not your resoonsibility to educate me as to certain nuances. After all, you are a busy man.
You insist that the term “audit committee” means what you say in means. And that, despite Mr. Watson’s testimony, “fully informed” in this context means “blissfully ignorant”. Yet, reviewing these assertions I discover that you have neglected to offer any substantiation either a) your definition of an “audit committee” is valid and an accepted fact in corporate circles and b) it applies in this instance to Harken. Some cite, perhaps?
Even though it is not necessarily your responsibility to educate the ignoramii, nevertheless, you seem to be assured that your word alone is adequate. Despite my awed regard for you veracity and sophistication, couldn’t we have just a bit more?
After all, the question centers around what did/when did he know. And the issue of what the “audit committee” did or did not know is central to that question.
I used www.bigcharts.com as Scylla suggested, and reviewed 1990 through 1991. At the begining of 1990, HEC was going for 42 cents a share, by the end of the year it was at 15. By the end of the next year, it was back at .45 with a high that year in the 90s (the source of Scylla’s comments that it was double it’s original price). In fact, I think the .45 in december was a bit of a flux, because early december of 91 and early january of 92 look to be in the 60’s.
Meanwhile, a low pressure front is moving in from the northwest, causing…oh, sorry.
Anyway, it’s there where he said it’d be. I’d link, but their interface discourages it. Use the “interactive chart” with a customer time frame, and you can narrow down to any period you want.
inkblot
Interesting! Seems we have sets of “facts” in conflict here. The info I had was that the shares were sold at ~$4 a share, were quickly down to $2.70, and were $1 by the end of the year.
In my capacity as Thread Host (what? 'cause I said so!) I hereby issue a SDMB Cite Alert! Go forth, minions, and find sources of data other than those already cited.
Unless you’re being ironic, you oughtta say “ignoramuses.” “Ignoramus” is a Latin verb, first-person plural, that means, “We’re being dumbasses” (or, more stodgily, “We don’t know”). Since it’s not a noun in Latin, you shouldn’t pluralize it like you’d pluralize a Latin noun.
If I’m being whooshed, natch, or if I’m remembering my 8th-grade Latin incorrectly, then meae culpae.
Crux of it is, both are true. Harken stock did plummet in value as reported, but regained its standing the following year, eventually exceeding the $4 a share the aforementioned “schmuck” had paid.
So, if the guy had not blown his brains out in despair by the end of 1990, he would have eventually done ok. No great, ok.
Interestingly, this article makes mention of a “credit arrangement” that brings in $23 million bucks into Harken
…By the time Bush sold his stock, the cash crisis had been largely resolved," said Jordan. "By May 21, 1990, the major shareholders had agreed to a credit agreement which put $ 26 mm into the company immediately…
(Jordan is Robert Jordan, George’s lawyer)
Note that this is brought up as exculpatory: because George knew about the arrangement, his sale of stock was legitimate.
Presumably, this refers to the “asset sale”, which remains murky and unresolved, but certainly has the walk-like-duck quack-like-duck characteristics of an illegal manuever. Unless there was some other multi-million dollar arrangement as yet unreported. That seems unlikely.
So - the credit arrangement that made Harken a viable entity was, and remains, at least highly suspect. Further, Mr. Bush’s attorney acknowledges his clients awareness of these arrangements.
Off the track: if anyone out there has $180,000 to lend, and is as extraordinarily forgiving as Harken Energy, please advise me by e-mail soonest! I heartily endorse such open-handedness, and would like to become more familiar with same.
DanielWithrow is entirely correct. I was misled by a rather poor translation of Cicero into an unnatural declension. Alas!
I go now to the nearest river, there to perform the Ancient Tasmanian Ritual of Self-Abasement, accompanied by a Chorus of Bitter Virgins, intoning dirges of Woe and Humiliation.
Sorry your’re not keeping up to well. In one of elucidator’s cites on the first page of this thread an SEC official explains that the late filing is not unusual, or particularly actionable, but adds that he thinks that at one time they did go after a notorious stock manipulator for the offense of habitual late filing.
I’m not providing the cite again, becuase it’s starting to get old when I have to go back and cover old ground. Look for it yourself. Page one.
No. I don’t. What you actually have to do is read the cites if you want to stay current with the debate. I mean Jesus, I beleive it was in the original Krugman link for chrissakes!
“…To compare a $12 million sale of a subsidiary company by Harken to a deliberate attempt to hide $3.8 billion in losses is ridiculous,” said White House Communications Director Dan Bartlett. “The proof is in the results. Harken fully complied with the SEC and restated its losses and by 1991 the value of their stock doubled from its price a year before.” On Wednesday, Harken stock was selling for 45 cents a share. …"
Entirely true, but half true. The 1991 stock price did indeed double from the year before. He neglects to point out that the stock was trash the year before. The company was no longer on life support, but wasn’t well.
"The accounting firm Arthur Andersen was the auditor for both WorldCom and Enron, and was found guilty of obstruction of justice regarding the Enron investigation. Andersen also was the accountant for Harken Energy when Bush sold his stock. "
According to CNN…the Harken stock dipped to $2.38 the day after the new, improved earnings were released, but was back up to $4 a share four days later. So we have Bush selling his stock for $4 per share two months before the SEC forced Harken to restate their losses, at which point the stock dipped to $2.38, but was back up to $4 four days later. So the guy who bought the stock from him didn’t really get ‘hosed.’
I trust that with the aid of www.bigcharts, yahoo, and whatnot (also concurring with my Bloomberg data,) that the issue of the performance oh Harken’s stock after the sale is now satisfactory, and that it occured exactly as I described it.
Let me know if you’re still confused on this.
As for the article you cite, is that what you take issue with:
I’ll attempt to educate and interpret.
The concept of loan forgiveness is a valid one within the corporate structure. It’s done for a couple of different reasons, all legal, and I’ll hit those first.
Taxes - A high-level executive stands to make a lot of money, and pay a lot of taxes. because of things like stock options and such, an executive may have a year where he gets killed by taxes perhaps followed by a year where he doesn’t get hit so hard. The forgivable loan is a little trick that allows the person to get the cash in hand, but spread the tax liability out over several years, or defer it into the future. It can also be used as an incentive. Give somebody a 1/2 million dollars in the form of a five year forgiveable loan. They get the money now, but they only pay taxes on 100k per year. It helps to handcuff a valuable employee to the company, because in this example, if the employee left the firm in year two, they would owe back the remainder of the forgiveable loan, in this case $300,000.
Loans are often extended against the value of stock options in certain kinds of futurecomp plans, and those loans are often also forgiveable as an additional form of compensation.
There is also of course the potential for abuse with such forgiveable loans, and they may take the form of golden parachutes for executives fleeing a sinking ship.
I don’t have the familiarity with Bush’s finances to tell you which category this falls into, but the fact that he received a forgiveable loan from a company with a liquidity crunch doesn’t really tell us anything by itself.
My interpretation is the same as yours. If somebody want to forgive me a couple of hundred k in a loan, I’d take it! As long as the transaction was legal, Bush would have been nuts not to.
I’ll be happy to. Again. For the third time, tell me specifically what part of my explanation of audit committee you take issue with, and I promise I’ll provide cites for it.
If you are still confused about the apparent contradiction with Watkin’s statement that “fully informed,” means Bush knew. Then I’ll refer you to the cite already provided which has the SEC stating that the issue of the transaction in question was known only to the executive committee. Only the executive committee of course excludes the audit committee. I think that it goes without saying that the official report concerning an investigation by the SEC supersedes Mr. Watson’s off the cuff, comments to a reporter, thus suggesting to all intellectually honest people that “fully informed” does not imply omniscience. To wit, Mr. Watson is mistaken (or did not understand the context,) and the audit committee was not fully informed on issues that were the sole provenance of the executive committee.
Absolutely!!
What we have to go on is the SEC’s investigation which presumably has examined the minutes of the relevant meetings of both the audit committee and the executive commitee. From this they have concluded that the audit commitee had no knowledge.
Watson however says as a generalization that the audit committee was kept fully informed on financial matters pertinent to the company. Clearly the transaction was pertinent, so we would presume generally the audit committee would be aware of such transactions as a matter of course.
We can explain this discrepency in a couple of ways.
Watson was mistaken. He thought they were fully informed, but apparently they were not. This would not be the first time an executive committee pulled one over on the rest of the board (witness Enron.)
Watson did not understand from the scope of the question what was implied. For example, “fully informed” is basically a hyperbolous statement no matter how it’s used, and always false if taken literally. Nobody is ever fully informed about anything, particularly something as big as a company. There’s always more to know. So, when he said fully informed what he was implying was that they knew everything they were supposed to know, and did their jobs properly (indeed from the context of the quote this seems to be what Watson is saying.) Naturally that would not include information that was the sole provenance of the executive committee.
Watson’s fully informed includes issues such as the transaction, and in fact the committee was informed. This would mean that Bush was lying and the SEC’s investigation was either very poor in its conclusions or else the investigators conspired to lie in their report.
Now, elucidator, let’s be fair. We just can’t automatically assume number 3, can we?
This should be fairly easy to clear up, as well, and shouldn’t cost the tax payers anything. All we need to do is have a reporter ask Watson specifically if the audit committee was briefed on the transaction, and we’ll have a public answer. It seems to me that instead of asking general questions about corporate policy, that that’s what the reporter should have done in the first place.
Better yet, it doesn’t seem like a big deal to have an SEC investigator pick up the phone, ask Watson, and clear this up either, does it?
Yes, it does seem reasonable to believe that Arthur Andersen had been doing exceedingly poor jobs with their audits for quite some time (to engage in understatement.)
Such a scenario would tend to lend credence to the idea that Bush didn’t have a clear and accurate picture of the companies true financials, especially if you’re implying that AA did its usual hack job.
If by “assessment”, do you mean I concur that some more investigation remains to be done, but of course.
Would I be satsified with a phone to Mr. Watson as the be all and end all. Most likely not. I’m not saying there is so much smoke that there must be fire, only that fire leads the list of possibilities. That, and the abnormal abundance of mirrors in the immediate area.
Perhaps an informal committee, somehow empowered to subpoena, under perjury, testimony and documents. Off the top of my head I would recommend Naom Chomsky, Barney Frank, and the estimable Stoid. Your ideal selection may be at some variance…
—Seriously, hasn’t George Bush admitted to drunk driving?----
Actually, he lied to two different reporters about it. He only admitted it after it was dug up and thrown in his face. To be sure, it was a trivial issue in the past, but the truth thing is the point.
Why Gore got tagged with the spin that he was fast and loose with the truth is beyond me.
Can you provide a cite for your son’s copy of the transcript? Specifically, where did he obtain it? All transcripts are not created equal. If he has a video of the press conference, then I’ll accept it.
Just as the Congressional Record has quotes in it that were not uttered at the time on the floor of Congress by the member, there are edited copies of press conferences.
Hmm…I must be reading things wrong…or HEC is the wrong ticker symbol. I apologize, I have little knowledge of stocks and trading, which is why I’ve obstained from this debate. I am, however, good (normally) at looking things up. I was not terribly good at parsing the information. If anyone can take a moment to explain, I’d appreciate it.
inkblot
SamClem I take your point. No, he got it from the White House web site. Still, I’m pretty sure he’s right, Ari was affirming that “mistakes were made”, the charges in the memo are factual, but the late filings were entirely a result of a lawyerly mixup. No names are given, nor any outline as to how this little boo-boo came about.
A darkly suspicious mind might conjecture that they have not yet designated anyone to fall on his sword.
Of course not, but would it satisfy your outstanding issues regarding the variance with Mr. Watkins said, which seems to disagree with what both Bush and SEC said?
That’s all.
Buddy, I’ve put a lot of effort into spelling this whole scenario out a few posts ago.
It may not even be possible that Bush posessed material nonpublic information in regard to his sale of Harkness.
At this point in time I’m getting somewhat distressed that you haven’t answered any of my questions regarding this issue. I am loathe to accuse you of dodging at this point. Hopefully you will remedy this and allay my concerns.
Specifically:
What material nonpublic information do you beleive Bush acted upon in his sale of Harkness stock.
I’ve gone to a lot of work to lay out what I see is the only credible scenario for illegal insider trading. I would ask: Is this the scenario that you are hypothesizing?
If not, then exactly what scenario do you envision?
I’ll even help you some more:
I suppose what you are thinking goes something like this:
Despite Bush’s and the SEC’s claims to the contrary, you believe that Bush had knowledge of the transaction which was disallowed by the SEC. Presumably, even though it somehow passed indpendant audit, it seemed shaky enough that it left a bad taste in Bush’s mouth and he decided to sell his stock just to be safe, yet he had no foreknowledge of what the SEC was going to do. When the stock when down he said “OH SHIT!”
That’s right, he literally stopped in the middle of the street and screamed “OH SHIT!”
Then he saw that everybody was looking at him funny and he got quiet.
Then he thought “Boy, oh boy, the SEC isn’t gonna like this. AND DAD"S GONNA KILL ME! What do I do now? Hey wait a minute! How about I just don’t tell. I won’t report that transaction, and hopefully the whole thing will blow over. Later on, when everybody has forgotten this whole mess, I’ll just file the form late. Nobody’ll notice, and it’s not like it’s a big deal.”
What I would like you do for me elucidator is read that very carefully, and tell me if that is in fact the scenario you envision.
If it’s not, please tell me what your scenario or scenarios are.
This is getting to be like pulling teeth, trying to get you to answer a question.
Heh. The interesting thing that I haven’t seen whilst reviewing this thread is that Bush did file a form 144, announcing his intention to sell the stock and that he did so on a timely basis (that is, before he sold). The late Form 4 simply made it unknown to investors whether he actually got the stock off, or if he had a sudden change of heart and decided to keep it.