# The Return of the Revenge of the Son of "Bush is a crook" **URL:** \ **Category:** Great Debates\ **Created:** [October 10, 2002, 1:14am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613 "2002-10-10T01:14:37Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 12:53am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/21 "2002-10-11T00:53:07Z")
Xeno: > [@](#): > > According to the article, Harken had only a 16% interest in the partnership. Looking at the assets listed, this was entirely insufficient to actually cover the Harken debt (as opposed to merely hiding it). The article indicates that, during the resulting ?bubble? in Harken stock value, the Harvard fund sold 1.6 million shares. I don’t know what value that stock had during this period, so I can’t say how this much these sales offset the $26 million in Harken drilling operations funded by the partnership plus the $20 million in Harken debt and liabilities that were transferred to the partnership. You forgot a couple of things 1. Harvard placed $64.5 mm in unrelated assets into the partnership, combined with Harkens net $6mm contribution, that gave Harken a 16% stake in a $70.5mm partnership. That’s the $11.2 mm stake in the venture I just calculated for you in the previous post. 2. Harvard paid Harken $30mm for the assets and liabilities it placed in the partnership. That’s a $46.4mm potential reduction in debt. > [@](#): > > [Reasonable Supposition] > Of course the Harken stake in the partnership was not entered into to be profitable to Harken, nor were the Harken assets transferred to the partnership intended to do anything but counterbalance the debt also transferred. This was a mock bail out at the expense of Harvard investors, and was designed purely to portray a healthier Harken than existed in reality. > [/Reasonable Supposition] That’s not a reasonable assumption. It’s one that flies directly in the face of the observed facts. The exact purpose of the transaction was to create a healthier more profitable Harken. Guarranteed. If you open your eyes, you can see it. In the last sentence of my previous post I suggest that there’s a sound reason Harvard would want to do this. I guess I need to spell it out. This is a workout. Harvard was holding $47.5 million worth of Harkens debt that they stood to lose if Harkens declared bankruptcy. You’ll notice that this $47.5million bears more than a passing resemblance to the net debt reduction Harkens saw as a result of the transaction. That was the whole point of the thing. To wit: 1. Harvard injects cash to keep Harkens viable 2. Harkens can service it’s remaining debt and stay in business 3. Shareholders see a net increase in equity (and it ain’t fraud or “artificial” if net equity increases) 4. Harvard gets a large share of additional assets to offset the increased risk incurred by the cash infusion, and some debt (presumably serviceable by those assets.) 5. Harkens gains additional management fees from the partnership which increase cash flow. It’s a **great** workout for Harkens and shareholders and they wouldn’t have gotten such a great deal if Harvard weren’t exposed to an imminent $47.5 mm hit. As for your interpretations and opinions of Bush’s business acumen, who gives a shit? You don’t know what you’re talking about enough to have a valid opinion on the topic, and I’m not interested in debating your opinions. You can have them. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 1:20am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/22 "2002-10-11T01:20:38Z")
The other thing of note is that Harvard subsequently sold shares (I’m guessing in the value of $7mm) after this arrangement. I share Black’s opinion that this was an unusual arrangement for an Institutional Investor to make. I would guess that they made the decision to go ahead with it based on a couple of factors. -The Harvard Fund having to explain a $47.5 million dollar loss would be no fun for the managers, and they would seek to do everything possible to keep the debt on the books at par so as not to get their asses chewed off. -The Harvard fund had other energy holdings that it could consolidate and perhaps get advantage from in this transaction -Bush was an important and influential businessperson with great contacts, and it might be politically advantageous to do a firm he was associated with a good turn. That they lightened up their stock afterward is good sense, as their exposure to Harkens had just dramatically increased. ---
**Author:** ![SuaSponte](https://avatars.discourse-cdn.com/v4/letter/s/67e7ee/32.png) [@SuaSponte](https://boards.straightdope.com/u/SuaSponte)\ **Post date:** [October 11, 2002, 1:37am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/23 "2002-10-11T01:37:37Z")
But … but … but … Bush is a Yalie!! I really gotta go with the two facts here. 1. This dude Black, an experienced regulator (and a Democrat), found the whole blessed thing to be perfectly legal; and 2. Bush’s ethical and legal obligation as a board member of Harken was to protect and advance the interests of Harken in such manner that accords with the law. Here, he fulfilled his obligation. Sua(Reqistered Democrat)Sponte ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 1:46am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/24 "2002-10-11T01:46:33Z")
Sua: But you **know** what a hotbed of right-wing conservative ideology Harvard is! ---
**Author:** ![SuaSponte](https://avatars.discourse-cdn.com/v4/letter/s/67e7ee/32.png) [@SuaSponte](https://boards.straightdope.com/u/SuaSponte)\ **Post date:** [October 11, 2002, 1:48am UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/25 "2002-10-11T01:48:28Z")
Dammit, **Scylla** , yer right. I change my mind. This was obviously a plan by the Great Right-Wing Conspiracy[sup]TM[/sup] to funnel monies to the Bushies. Sua ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 11, 2002, 12:18pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/26 "2002-10-11T12:18:06Z")
> [@](#): > > You guys have demonstrated a total ignorance of familiarity with GAAP, Securities laws, and Corporate Finance it, and compounded it with an innane political agenda. I am sure we are all grateful for **Scylla’s** patience and forbearance in dealing with us Unworthy Ones. It is regrettable that he has only enough time to point out our ignorance, and not enough time to dispel it. Of course, as **Scylla** is demonstrably unhindered by any political agenda, I think he will agree with him that we should simply take his word on this. > [@](#): > > The whole transaction is incredibly beneficial to Harken and it’s shareholders. That is the entire point. The operative word here is “incredible”. Just so. > [@](#): > > …gets rid of $17.6 million in additional debt… Such technical phrasing is quite beyond us “ignoramuouses”. Where did that debt go? Did it vanish into another dimension? Are we to assume that the persons or institutions to whom the money was owed simply shrugged and said “Oh, well…” > [@](#): > > The question raised by the article is why Harvard engaged in what on the surface appears to be an extremely unfavorable and unusual transaction? Now we’re getting somewhere! **Scylla** will now show us the error of our thinking, if such enlightenment is possible given our feeble intelligence. > [@](#): > > I’ll leave the answer to that question as an exercise for an astute reader (should one show up.) Wherein we are disappointed. We can be assured, however, that the afforementioned “astute reader” can be easily identified by his utter and unswerving agreement with **Scylla**. ( **Scylla** , in the space of a few posts you have managed to insult anyone with the temerity to disagree with your august self. Not once, but several times. Are we given to understand that the persons quoted in the article, who have credentials that, I dare say, might compare favorably with your own, that they, too, are victims of towering ignorance and “inane political agendas”?) ---
**Author:** ![xenophon41](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xenophon41/32/253_2.png) [@xenophon41](https://boards.straightdope.com/u/xenophon41)\ **Post date:** [October 11, 2002, 12:32pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/27 "2002-10-11T12:32:36Z")
**Sua** : that’s “Vast Right-Wing Conspiracy™”, m’kay? And you’re absolutely right. Bush’s ethical and legal obligations were to advance the interests of Harken stockholders, and the Harvard fund managers’ obligations were to _their_ investors. That’s why they all hid what was happening and painted the happy-smilie Harken image for all those stockholders and investors. It was for their own good, y’see. They just wouldn’t ‘a’ understood how valuable an asset baby Bush was. Nobody who mattered got screwed, and there were no legal violations. No ethical problems here… These aren’t the crony capitalists you’re looking for… Move along… Move along… ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 12:39pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/28 "2002-10-11T12:39:28Z")
> [@](#): > > \*Originally posted by elucidator \* > \*\*Such technical phrasing is quite beyond us “ignoramuouses”. Where did that debt go? Did it vanish into another dimension? Are we to assume that the persons or institutions to whom the money was owed simply shrugged and said “Oh, well…” \*\* Your ignorance is your finest weapon. They sold an asset along with some debt. A portion of the debt was paid off with the proceeds of the sale, a portion was transferred to the partnership. I’ve said that three times, and I can’t think of any simpler terms for you. > [@](#): > > \*\*Now we’re getting somewhere! **Scylla** will now show us the error of our thinking, if such enlightenment is possible given our feeble intelligence. \*\* Admittedly a big “if.” > [@](#): > > \*\*( **Scylla** , in the space of a few posts you have managed to insult anyone with the temerity to disagree with your august self. Not once, but several times. Are we given to understand that the persons quoted in the article, who have credentials that, I dare say, might compare favorably with your own, that they, too, are victims of towering ignorance and “inane political agendas”?) \*\* No. Just you two. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 12:43pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/29 "2002-10-11T12:43:19Z")
[QUOTE] \*Originally posted by xenophon41 \* \*\ ***Sua** : that’s “Vast Right-Wing Conspiracy™”, m’kay? > [@](#): > > That’s why they all hid what was happening and painted the happy-smilie Harken image for all those stockholders and investors. It was for their own good, y’see. They just wouldn’t ‘a’ understood how valuable an asset baby Bush was. Nobody who mattered got screwed, and there were no legal violations. No ethical problems here… These aren’t the crony capitalists you’re looking for… Move along… Move along… \*\* Who exactly got screwed? Harvard got the opportunity to recoup its loan, Harken and its shareholders got a viable company. ---
**Author:** ![Duck\_Duck\_Goose](https://avatars.discourse-cdn.com/v4/letter/d/50afbb/32.png) [@Duck\_Duck\_Goose](https://boards.straightdope.com/u/Duck_Duck_Goose)\ **Post date:** [October 11, 2002, 1:06pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/30 "2002-10-11T13:06:41Z")
Don’t mind me, I’m just standing here gawping, lost in amazement at the way the thread started out with no functional OP at all, and has miraculously blossomed into Scylla and Xeno doing all the heavy lifting while Elucidator urges them on with happy cries. 😃 But anyway, I went and read the original report, [http://www.people.fas.harvard.edu/~skomarov/harvardwatch/harken\_memo\_full.pdf](http://www.people.fas.harvard.edu/~skomarov/harvardwatch/harken_memo_full.pdf) –and although Scylla and half the pundits out there seems to think it was No Biggie, still it sounds like the HarvardWatch folks and the _other_ half of the pundits out there think it was a Biggie. So, whence this major disagreement? Is it just a question of spin control? Or party politics? ---
**Author:** ![xenophon41](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xenophon41/32/253_2.png) [@xenophon41](https://boards.straightdope.com/u/xenophon41)\ **Post date:** [October 11, 2002, 1:34pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/31 "2002-10-11T13:34:25Z")
**DDG** , I believe “spin control” and “party politics” both explain the split in the rhetoric. Where I think my distinguished colleague and I differ with **Scylla** and **Sua Sponte** (well, _one_ of the areas where we differ) is in the supposition that this partisan split indicates this is a non-issue. Legalities aside, I think the history here is quite relevant to the Bush administration’s handling of the current lack of investor confidence, and also quite relevant to the administration’s leadership of corporate reform. (As I’ve said.) And while I’ve got the soap box, I just want to address the “it was legal and a great deal for Harken investors” argument. Full disclosure: I have limited experience with stock investments; apart from a few minor personal investments, the majority of my exposure has been through my company stock and through my 401k. I am by no means a financial expert, and my professional duties and experience do not go beyond simple corporate accounting. That said, I will also admit that I am no fool, and not easily misled. I can count, and I can look at the larger picture. During the 90’s, I watched the “dot com’s” skyrocket in value, and I marvelled, wondering when these companies which produced nothing and held no assets would finally fall to earth. I was reminded of Seinfeld. (It was a show about nothing, you’ll remember.) When I see a corporation whose holdings consistently fail to produce real profits, but whose stock holds or increases in value, I’m under no illusions that the stock is a sound _long term_ investment. A small minority of stock investors, who cleverly ride the ebbs and flows of the stock, will make a little money. The corporate executives, who have secure compensation packages, will make a lot of money. Major investors will get what they pay for, in political influence or indirect advantage, if not in direct profits. The majority of small investors will lose their money. They may not be _royally_ screwed, but they are the ones who actually fund the losing proposition, and out of whose pocketbooks the big players enrich themselves. In answer to **Scylla** ’s question “who got screwed?” I answer again: No one of consequence. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [October 11, 2002, 1:50pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/32 "2002-10-11T13:50:13Z")
> [@](#): > > _Originally posted by **elucidator** _ > The operative word here is “incredible”. Just so. Just so indeed. I’ll give you credit, **elucidator** , you are at least consistent, and in the previous thread cited, up front as well. There is no interpretation you will accept other than that Bush must have done something dishonest. The facts don’t matter, explanations are ignored, the fact that you do not understand business finance is amply demonstrated at nearly every turn - And over and over, you avow your allegiance to your simple faith - Bush must have done something dishonest. I think I am witnessing the liberal equivalent of creationism - the founding principle of the faith is something that cannot be subjected to re-interpretation. Good luck with the stone wall, **Scylla**. Regards, Shodan ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 2:07pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/33 "2002-10-11T14:07:47Z")
Xeno: > [@](#): > > In answer to Scylla’s question “who got screwed?” I answer again: No one of consequence. How about a straight answer? You blather on with useless generalities, meander about dotcom explosions, and pretend that this somehow all relates to Harvard Harken and the Bush administration? What are you smoking. Who got screwed? It wasn’t Harvard. They did this for a reason. They took on additional risk to recoup their original investment, and while neither I nor Black seem to think this is a prudent move for an II, it apparently worked. It wasn’t Harkens investors. They saw an imminent bankrupty with the attendant total devaluation of their equity investnments completley averted! Bush brought this in. He saved the fucking company for the stockholders, Mom and Pop. It wasn’t Harkens. They sure as hell needed the money. Who got screwed? What fraud was committed? What ethic was violated? How about you and elucidator drop the bullshit and actually make a defensible argument? ---
**Author:** ![xenophon41](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xenophon41/32/253_2.png) [@xenophon41](https://boards.straightdope.com/u/xenophon41)\ **Post date:** [October 11, 2002, 2:11pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/34 "2002-10-11T14:11:30Z")
How about you stick your insulting attitude up your ass? Just a question. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 2:14pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/35 "2002-10-11T14:14:10Z")
When you pull your head out of yours. ---
**Author:** ![xenophon41](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xenophon41/32/253_2.png) [@xenophon41](https://boards.straightdope.com/u/xenophon41)\ **Post date:** [October 11, 2002, 2:14pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/36 "2002-10-11T14:14:55Z")
Hey **Mandelstam** , you out there? Why don’t you take the abuse for a while; I’m on vacation tomorrow and after this afternoon, I won’t be available for **Scylla** ’s poop-throwing exhibition for a whole 'nother week. I got probably two or three more posts I’ll be available for today. ---
**Author:** ![Dewey\_Cheatem\_Undhow](https://avatars.discourse-cdn.com/v4/letter/d/13edae/32.png) [@Dewey\_Cheatem\_Undhow](https://boards.straightdope.com/u/Dewey_Cheatem_Undhow)\ **Post date:** [October 11, 2002, 2:28pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/37 "2002-10-11T14:28:13Z")
I find it telling that \*\* xenophon41\*\*, et al, are more concerned with **Scylla’s** “attitude” than the substantive points he brings up. OK, fine, I’ll grant you that Scylla could have been a little nicer in his presentation. You win the Miss Congeniality prize. Congratulations. Now, how about replying to the substance of his argument? Just answer this simple question: **Who got screwed and how?** Please do not speak in vague generalities. Please make reference to the specifics of this transaction. You’ll find that Scylla’s analysis is perfectly correct. This transaction was (1) legal, (2) fully disclosed to the investing public, and (3) a good deal for Harken, Harken shareholders, and the Harvard Fund. If Bush is a crook this transaction doesn’t prove it. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [October 11, 2002, 2:29pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/38 "2002-10-11T14:29:11Z")
Are you actually goping to answer the question, or are you just going to sit there wearing your indignance as if it were armor? ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [October 11, 2002, 3:17pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/39 "2002-10-11T15:17:54Z")
Who, then, took on this debt that Harken was so happily relieved of? Apparently, this entity Andarko-Harken. Was it repaid? I believe, in my forlorn ignorance, that the thrust of Mr. Black’s comments was to the effect that the debt was transferred to a theoretical entity, a la Enron, so that it appeared that the debt was gone. This had a decidedly beneficial effect on the stock price of Harken, as well it might. Hence, anyone who bought the stock at this point in time was, in essence, misinformed. Such a person, watching the subsequent swan dive into the toilet, might feel badly done by. I am, of course, indebted to **Shodan** for his insights into my various failings. I would hasten to remind him that if he finds my postings distasteful that he is under no obligation to read them, much less to respond. He can ignore them entirely, ignore them selectively, or go pound burdocks. Really, the possibilities are endless. ---
**Author:** ![xenophon41](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xenophon41/32/253_2.png) [@xenophon41](https://boards.straightdope.com/u/xenophon41)\ **Post date:** [October 11, 2002, 3:33pm UTC](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613/40 "2002-10-11T15:33:17Z")
> [@](#): > > This transaction was (1) legal, (2) fully disclosed to the investing public, and (3) a good deal for Harken, Harken shareholders, and the Harvard Fund. Thanks for the list, **Dewey**. (1) No argument here. (2) “Fully disclosed”? I suppose in the same way that Penn Gillette fully discloses the cards in his hand during his act. (3) Right. A good deal for “everyone”. Lots of money went into Harken operations, lots of debt was moved around, and all the executives were well compensated. Harken was _absolutely_ well funded. It’s just that the Harken operations were never, in themselves, money-makers. So, “who got screwed?” I don’t know. -I’ll say it again, just in case anyone missed the admission: I DON"T KNOW WHO GOT SCREWED. However, I can continue to assure you, with utmost confidence, that it was nobody of consequence. BTW, let me apologize right now to **Mandelstam**. It was unfair in the extreme to call on you to once more enter the breach, based solely on your willingness to engage the topic in the previous thread. If I’m not going to continue this myself, I have no right to presume on anyone else. [Previous page](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613.md?page=1) [Next page](https://boards.straightdope.com/t/the-return-of-the-revenge-of-the-son-of-bush-is-a-crook/131613.md?page=3)