George At Work
People like to assume that George got rich from oil speculation. It's a simpler and more inspiring explanation than the truth. He did launch an oil business, Arbusto Energy, in 1978. But it was a financial disaster from the very beginning and never turned a profit. Fortuitously, it got swallowed up in a 1982 merger with another energy company named Spectrum 7. The merger was engineered by a couple of Bush family friends. For some reason they opted to rescue the son of the Vice President of the United States from his own financial catastrophe and make him the CEO of the merged entity.
Four years later, Spectrum 7 was itself floundering underneath $3 million in debt. Which is when Harken Energy, yet another company run by a family friend, came in and bailed out Bush's enterprise a second time. George was given a fat wad of stock options and a $120,000 annual salary, but no actual work to do.
Technically, Bush's official capacity was as a member of the company's audit committee, charged with overseeing the major deals and transactions to ensure that everything was on the up-and-up. But as the son of the U.S. President, Bush's true function was to act as a lure for investment money. His task was schmoozing business contacts and outside investors, interested in converting cash into a friendly acquaintanceship with the President's offspring. And he was good at it. Hi, my name is George Jr. My Daddy lives in the White House. Let me show you around.
This investment capital really helped prop up Harken as it was secretly bleeding money out of every orifice. As a matter of fact, Harken was hiding massive debts through shell companies and byzantine practices masterminded by the now-infamous accounting firm of Arthur Anderson. One such deal was the putative "sale" of Aloha Petroleum to Intercontinental Mining and Resources Ltd in 1989. In actuality, IMR Ltd was just another company owned by three members of Harken's board. And the terms of the sale were extremely sketchy: although IMR agreed to pay an exorbitant $12 million for Aloha Petroleum, they wouldn't be required to make any payments for three years. Nevertheless, Harken immediately booked an $8 million profit.
The technical term for that is fraud. But you can't really blame George for that, can you? It wasn't like he was serving on the corporation's audit committee or anything... oh wait, he was. In fact, Bush signed off on the Aloha Petroleum deal. This deception helped maintain the illusion that Harken was -- what's the word? -- solvent for several months after it had actually run out of money.
A few weeks before the house of cards finally came tumbling down, Bush engaged in a little insider trading and sold off $848,560 in Harken stock. Then he waited eight months to notify the SEC of his sale. After Harken's stock price fell into the toilet, the SEC finally figured out something was wrong and began poking around. At which point, George offered up this lame excuse:
"In the corporate world, sometimes things aren't exactly black and white when it comes to accounting procedures."
But George's daddy was still President of the United States, and the SEC headed by Bush family friends, so they took no action.
Baseball
Sometime during Harken's fraud-ridden implosion, George realized that his true calling wasn't managing the business end of things, but rather being its public face. In April 1989, Bush invested $500,000 of borrowed money in the Texas Rangers. In return, he received an annual salary of approximately $200,000 and the title of Managing General Partner. It meant that he represented the investors, but everybody pretty much treated him as though he were the sole owner.
Unlike some major-league baseball owners, Bush avoided day-to-day operations. He stayed out of personnel and staffing issues. He didn't make strategy. He didn't handle player trades. All of that stuff was left to other people. He attended the games, arranged for promotional events, even had baseball cards printed up with his own face on them. The team's general manager described Bush's role this way:
"George was the front man. George was the guy that you met when you wanted to be introduced to Ranger baseball. He was the spokesperson. He dealt with the media, he dealt with the fans, and it was obvious to us right from the start that that's what he was made for... George chose to sit right next to the dugout, with the fans, every day... I mean, it's 100 degrees down there. He's there from before the game, half an hour before the game, didn't leave his seat except to go to the bathroom, cheering for the ball club, signing autographs, listening to hecklers, accepting well-wishes from season-ticket customers."
