Unsavory in Texas

LOOK WHAT'S come back to bite President Bush. A stock deal that looked very much like insider trading, and that netted the future president $848,560 when it took place in 1990, is suddenly in the news -- again.
It has never hurt him in the past. It has come up in one campaign after another, and voters just never got excited about something as arcane as insider trading. It never had any traction. With the economy booming, it just never looked like an issue.

But it sure does now.

Twelve years ago, before he got into politics, George W. Bush was sitting on the board of directors of a company called Harken Energy -- a post he got largely through the magic of his name -- and after receiving memos warning that big trouble was brewing, he unloaded a large chunk of stocks just weeks before the share price tanked. If he was acting on the basis of information not available to the public, he was breaking the law.

Mr. Bush waited eight months past the deadline before filing the required documents. This week he blamed his lawyers for the delay. The Securities and Exchange Commission investigated the deal, but closed the case without taking any action.

The president has been very stern recently about bad actors in the corporate world -- and in the past year there have been plenty of them. He has proposed a new set of standards for business that would tighten the rules on audits and hold executives more accountable when things go wrong. That's fine, a skeptic might point out: He already got his.

As a young businessman, Mr. Bush ran an oil company that went deep into the financial mire, and it would have expired if he hadn't been bailed out, several times, by his father's friends. Finally, his firm was taken over by Harken, and he was rewarded with a consulting contract, $300,000 worth of stock and a seat on the board.

He was a member of Harken's audit committee, but he says that despite the memos he was given he had no idea that financial problems were threatening the company. If he had known, he says, he never would have sold all that stock in June 1990.

Interestingly, Mr. Bush said he had to sell his Harken stake to pay back money he had borrowed when he became a partner in the Texas Rangers. As a partner he was essentially a local figurehead. But again there's that magic name. When he later sold his Rangers share, it brought him $18 million.

In other words: He parlayed a failing company into stock in another company that he bailed out of just before it, too, began to fail; he used the proceeds to support his minimal investment in a baseball team that he eventually cashed in for $18 million. Where do we get in line for that kind of work?

None of this before ever stuck to him. But Americans are starting to get a better feel for just how rancid the system can be. Pals, connections, inside dope, duplicity and political pull characterize an unsavory corner of the business world -- and the president was very much a part of it. The SEC's chief during the time it was investigating him had been a friend of his father, and the agency's general counsel, James R. Doty, had been the lawyer who arranged the sale of the Rangers to Mr. Bush's partnership in 1989. It's only the suckers who get taken.