Historians will not be kind to the Bush Family
In 1991, President Bush bristled at a flurry of news accounts that
questioned the business ethics of three of his sons. "The media ought to
be ashamed of itself for what they're doing," Bush complained. "They [the
boys] have a right to make a living, and their relation****ps are
appropriate," added a White House spokeswoman in June 1992.
Secret Service agent who had been assigned to Bush-family security.
"We warn them but that's all we can do. We can't stop these kids from
associating with someone they want to be with. All we can do after warning
them is to sweep these guys with metal detectors when they come around."
What follows is a sourcebook of concerns about the president's three sons.
George W. Bush, Jr.
None of George Bush's offspring is more his father's son than George W.
Bush. George Jr., or "Shrub" as Molly Ivins refers to him, began his own
Texas oil career in the mid-1970s when he formed Bush Exploration. Like
the business dealings of his brothers, George's company was not a success,
and it was rescued in 1983 by another oil company, Spectrum 7, run by
several staunch and well-heeled Reagan-Bush sup****ters. But by mid-1986, a
soft oil market found Spectrum also near bankruptcy.
Many oil companies went belly-up during that time. But Spectrum had one
asset the others lacked -- the son of the vice-president. Rescue came in
1986 in the form of Harken Energy, just in the nick of time. Harken
absorbed Spectrum, and, in the process, Junior got $600,000 worth of
Harken stock in return for his Spectrum shares. He also won a lucrative
consulting contract and stock options. In all, the deal would put well
over $1 million in his pocket over the next few years -- even though
Harken itself lost millions.
Harken Energy was formed in l973 by two oilmen who would benefit from a
successful covert effort to destabilize Australia's Labor Party government
(which had attempted to shut out foreign oil exploration). A decade later,
Harken was sold to a new investment group headed by New York attorney Alan
G. Quasha, a partner in the firm of Quasha, Wessely & Schneider. Quasha's
father, a powerful attorney in the Philippines, had been a staunch
sup****ter of then-president Ferdinand Marcos. William Quasha had also
given legal advice to two top officials of the notorious Nugan Hand Bank
in Australia, a CIA operation.
After the sale of Harken Energy in 1983, Alan Quasha became a director and
chairman of the board. Under Quasha, Harken suddenly absorbed Junior's
struggling Spectrum 7 in 1986. The merger immediately opened a financial
horn of plenty and reversed Junior's fortunes. But like his brother Jeb,
Junior seemed unconcerned about the characters who were becoming his
benefactors. Harken's $25 million stock offering in 1987, for example, was
underwritten by a Little Rock, Arkansas, brokerage house, Stephens, Inc.,
which placed the Harken stock offering with the London subsidiary of Union
Bank -- a bank that had surfaced in the scandal that resulted in the
downfall of the Australian Labor government in 1976 and, later, in the
Nugan Hand Bank scandal. (It was also Union Bank, according to
congressional hearings on international money laundering, that helped the
now-notorious Bank of Credit and Commerce International skirt Panamanian
money-laundering laws by flying cash out of the country in private jets,
and that was used by Ferdinand Marcos to stash 325 tons of Philippine gold
around the world.)
Stephens, Inc., also helped introduce the BCCI virus into US banking in
1978 when it arranged the sale of Bert Lance's National Bank of Georgia to
BCCI front man Ghaith Pharoan. (The head of Stephens, Inc., Jackson
Stephens, is a member of President Bush's exclusive "Team 100," a group of
249 wealthy individuals who have contributed at least $100,000 each to the
GOP's presidential-campaign committee.)
If any of these associations raised questions in the mind of George Bush,
Jr., he had little incentive to voice them. Besides getting Harken stock
through the deal, Junior was paid $80,000 a year as a consultant (until
1989, when his wages were increased to $120,000; recently they were
reduced to $45,000). He was also allowed to borrow $180,375 from the
company at very low interest rates. In 1989 and 1990, according to the
company's Securities and Exchange Commission filing, Harken's board
"forgave" $341,000 in loans to its executives. In addition, Junior took
advantage of the company's ultraliberal executive stock purchase plan,
which allowed him to buy Harken stock at 40 percent below market value.
Such lavish executive compensation would suggest a company doing quite
well indeed. But in reality, Harken had little going for itself. One Wall
Street analyst called Harken's web of insider stock deals and mounting
debt "a lot of jiggery-pokery." Harken was not making money and could not
have continued into 1990 without at least some means of convincing lenders
and investors that the company would soon find a lot of oil.
Suddenly, in January 1990, Harken Energy became the talk of the Texas oil
industry. The company with no offshore-oil-drilling experience beat out a
more-established international conglomerate, Amoco, in bagging the
exclusive contract to drill in a promising new offshore oil field for the
Persian Gulf nation of Bahrain. The deal had been arranged for Harken by
two former Stephens, Inc., brokers. A company insider claims the
president's son did not initiate the deal -- but feels that his presence
in the firm helped with the Bahrainis. "Hell, that's why he's on the damn
board," the insider says. "...You say, 'By the way, the president's son
sits on our board.' You use that. There's nothing wrong with that."
Junior has told acquaintances conflicting stories about his own
involvement in the deal. He first claimed that he had "recused" himself
from the deal; "George said he left the room when Bahrain was being
discussed 'because we can't even have the appearance of having anything to
do with the government.' He was into a big rant about how unfair it was to
be the president's son. He said, 'I was so scrupulous I was never in the
room when it was discussed.'"
Junior alternately claimed, to re****ters for the Wall Street Journal and D
Magazine, that he had opposed the arrangement. But the company insider
says, to the contrary, that Junior was excited about the Bahrain deal.
"Like any member of the board, he was thrilled," the associate says. "His
attitude was, 'Holy ****, what a great deal!'"
Through the Bahrain deal, the ties between BCCI and Harken Energy grew
tighter. Sheikh Khalifah, the prime minister of Bahrain and brother of the
emir, was also a shareholder in BCCI -- and it was Khalifah who played the
key role in selecting Harken for the job. Sheikh Abdullah Bakhsh, in turn,
was a business associate of BCCI front man Ghaith Pharoan; he bought a
chunk of Harken's stock and placed his representative, Talat Othman, on
Harken Energy's board of directors.
Did Junior or any of the other Harken Energy executives trade on the Bush
name in these speculative business deals? None of the principals will
answer questions. But this much is known: after the Harken-Bahrain deal
was settled, Othman was added to the list of fifteen Arabs who met with
President George Bush and National Security Adviser Brent Scowcroft three
times in 1990 -- once just two days after Iraq invaded Kuwait -- while
serving on Harken's board of directors.
The promise of hitting it big in the oil-rich gulf was certainly critical
for Harken. News of the Bahrain deal kept investors buying stock and
lenders making loans. Still, Harken had nowhere near the capital required
for such a large offshore operation halfway around the world. This
required real money. But not to worry: The billionaire Bass brothers
stepped up to the plate and said they'd be happy to underwrite the cost of
the drilling in return for a piece of the action. (Robert Bass is a member
of President Bush's Team 100; he and other Bass family members have
contributed $226,000 to George, Sr.'s, cause since 1988.)
But even well-heeled friends like the Bass brothers could not protect
Harken from the troubles of the world. Just four months after the Bahrain
deal was sealed, storm clouds developed over the gulf region, threatening
the oil-exploration deal. In May 1990, the U.S. State Department sent a
chilling but still classified re****t to Scowcroft. The re****t warned that
Iraqi president Saddam Hussein was out of control and was threatening his
neighbors:
May 16, 1990
SECRET
Attached is a paper containing a list of options for responding to recent
actions and statements by the Government of Iraq. ...We ask that you pass
this paper to Robert Gates [CIA] for his review.
Under "options" the memo suggested:
Ban Oil Purchases: The largest benefit Iraq receives from the US is
through our oil purchases...
PRO -- A total ban on oil purchases would have some short-term impact.
CON -- Such action might also have an impact on US Oil prices.
Oil companies had learned, during the years of the long Iran-Iraq war,
that trouble in the gulf hurts companies with oil interests because, for
one thing, at the first sound of a rifle shot in the gulf region, Lloyds
of London jacks up insurance rates on oil tankers and company
installations. The "wartime" rates are very high and cut deeply into
company profits and investor confidence. If things really get out of hand,
pipelines are destroyed and waterways are mined.
The secret memo augured ill for Harken's fledgling venture. To compound
matters, that same month, Harken's own financial advisers at Smith Barney
produced a hand-wringing re****t voicing alarm at the company's rapidly
deteriorating financial condition. (A former company official told Mother
Jones that Harken owed more than $150 million to banks and other creditors
at the time.) Since Harken wasn't producing anything, it was hard to find
a
revenue stream, unless you count the river of fees, stock options, and
salaries running into the pockets of Junior and other top Harken
executives. Junior, as a member of Harken's restructuring committee, could
not have been ignorant of the re****t, since the board had met in May and
worked directly with the Smith Barney consultants.
In June 1990, Junior suddenly unloaded the bulk of his Harken stock --
212,140 shares -- for a tidy $848,560. A former business associate says
that Junior's motivation was his desire to buy an expensive new house in
Dallas, for which he wanted to pay cash. The June 1990 transaction was an
insider stock sale, and security laws required that it be re****ted no
later than July 10, 1990. But Junior filed no such re****t, at least not
then.
Then, in August, Iraqi troops marched into Kuwait, and Harken shares
plummeted 25 percent. Junior would have lost $212,140 if he'd waited to
sell his shares until then. Still, he didn't file his SEC disclosure until
seven months later, in March 1991 -- well after U.S. troops had finished
fighting and the gulf war had moved off the front pages. Harken stock
rebounded briefly, but quickly collapsed again.
Were government secrets discussed, directly or indirectly, that would have
given Harken Energy a leg up in exploiting the Bahrain deal? The White
House won't say. If Junior traded on exclusive, nonpublic, insider
information, he committed a gross violation of SEC rules. Taken together,
the company's critical need for success in its Bahraini deal and a
possible oil embargo to be imposed by his father provided Junior with
strong motivation to bail out of Harken stock before the public discovered
either piece of news. (SEC spokesman John Heine says he is unaware of any
enforcement action pending.)
The folks at Harken Energy weren't the only ones in Texas taking care of
Junior during the 1980s. He was appointed the managing partner of the
Texas Rangers baseball team, even though his partner****p contribution was
only a fraction of the team's purchase price. Among those coughing up the
money to buy the Rangers were William DeWitt and Mercer Reynolds, major
contributors to the president's campaign who had also been in on the
rescue of Junior's oil company.
Junior doesn't deny that being a Bush has helped him become a millionaire.
"I recognize what my talents are and what my weaknesses are," he told
Texas
re****ters last year. "I don't get hung up on it. Being George Bush's son
has its pluses and minuses in some people's minds. In my thinking, it's a
plus."
Junior might have been thinking that among the minuses were questions
about his role at Harken. As this article was being prepared -- and in the
midst of extensive interviewing of former and current Harken business
associates -- Junior announced a six-month leave of absence as a
consultant and member of the Harken board. His role in the presidential
campaign, the statement said, precluded Junior's active involvement at
Harken through the remainder of 1992.
In any case, Junior is stepping away from a company in deep trouble.
Harken stock is trading near its all-time low. Recently, test wells in
Bahrain turned up dry and the company has not produced anything else.
"Harken is not hard to understand -- it's easy," says Charles Strain, an
energy-company analyst in Houston. "The company has only one real asset --
its Bahrain contract. If that field turns out to be dry, Harken's stock is
worth, at the most, 25 cents a share. If they hit it big over there, the
stock could be worth $30 to $40 dollars a share. It's a pure crapshoot."
John Ellis ("Jeb") Bush
After graduating from Texas University, Jeb Bush served a short
apprentice****p at the Venezuelan branch of Texas Commerce Bank in Caracas
before settling in Miami, in 1980, to work on his father's unsuccessful
primary bid against Ronald Reagan. Campaigning for Dad was hardly a paying
job. But Jeb was about to learn that being one of George Bush's sons means
never having to circulate a résumé.
In the next few years, financial sup****t flowed to Jeb through Miami's
right-wing Cuban community. Republican party politics and a series of
business scandals -- including Medicaid fraud and shady S&L deals -- were
inextricably intertwined. A former federal prosecutor told MJ that, when
he looked into Jeb's lucrative business dealings with a now-fugitive
Cuban, he considered two possibilities -- Jeb was either crooked or
stupid. At the time, he concluded Jeb was merely stupid.
Jeb and Armando Codina
Shortly after arriving in Miami, Jeb was hired by Cuban-American developer
Armando Codina to work at his Miami development company as an agent
leasing
office space. A couple of years later, Jeb and Codina became business
partners, and in 1985 they purchased an office building in a deal partly
financed by a savings and loan that later failed.
The $4.56 million loan, from Broward Federal Savings in Sunrise, Florida,
was granted in such a way that neither Codina's nor Bush's name appeared
on the loan papers as the borrowers. A third man, J. Edward Houston,
borrowed the $4.56 million from Broward and then re-lent it to the Bush
partner****p. When federal regulators closed Broward Savings in 1988, they
found the loan, which had been secured by the Bush partner****p, in
default.
As Jeb's father was fini****ng his second term as vice-president and
running for the presidency, federal regulators had two options: to get Jeb
Bush and his partner to repay the loan, or to foreclose on their office
building. But regulators came up with a third solution. After reappraising
the building, regulators decided it wasn't worth as much as was owed for
it. The regulators reduced the amount owed by Bush and his partner from
$4.56 million to just $500,000. The pair paid that amount and were allowed
to keep their office building. Taxpayers picked up the tab for the unpaid
$4 million.
After the Broward Savings deal was revealed, Jeb described himself and his
partner as "victims of cir***stances."
Jeb and Camilo Padrera
By 1984, Jeb had been made chairman of the Dade County Republican party,
and it was as Republican party chief that he nuzzled up to con man Camilo
Padreda. Padreda was serving as Dade County GOP finance chairman and had
raised money for the party from Miami's Cuban community. (He had also been
a counterintelligence officer for deposed Cuban dictator Fulgencio
Batista.) Padreda made his living as a developer who specialized in deals
with the corrupt Department of Housing and Urban Development. In 1986, he
hired Jeb as the leasing agent for a vacant commercial-office building,
which Padreda had built with $1.4 million in federal loans -- loans
approved by HUD officials, oddly enough, even though they knew there was
already a glut of vacant office space in Miami.
Like so many of those who would attach themselves to the Bush sons over
the years, Padreda brought some hefty luggage with him. In 1982, four
years before teaming up with Jeb, Padreda, along with another right-wing
Cuban exile, Hernandez Cartaya, was indicted and accused of looting
Jefferson Savings and Loan Association in McAllen, Texas. The federal
indictment charged that the pair had embezzled over $500,000 from the
thrift. (Cartaya was also charged with drug smuggling, money laundering,
and gun running.) But the Jefferson Savings case would never go to trial.
Soon after the indictment, FBI officials got a call from someone at the
CIA warning the agents that Cartaya was one of their own -- a veteran of
the failed Bay of Pigs invasion -- according to a prosecutor who worked on
the case. In short order, the charges against Padreda were dropped and the
charges against Cartaya were reduced to a single count of tax evasion.
(Assistant U.S. Attorney Jerome Sanford was furious and filed a demand
with the CIA, under the Freedom of Information Act, for all do***ents
relating to the agency's interference in his case. The CIA, citing
national-security reasons, denied Sanford's request.)
In 1989, Houston Post re****ter Pete Brewton wrote about Jefferson Savings
and Cartaya in a series of stories alleging that CIA operatives and
contractors had systematically misused at least twenty-six savings and
loans during the 1980s as part of a secret program to fund illegal
"off-the-shelf" covert operations, particularly those aiding the
Nicaraguan contras. (CIA officials denied the charge, but admitted to the
House intelligence Committee in 1990 that former CIA operatives had been
working at four of the S&Ls named in Brewton's article. A CIA spokesman
claimed that agency operatives had done nothing illegal.)
The Jefferson Savings affair occurred four years before Jeb Bush met
Padreda, and it is possible he missed earlier re****ts. But he could hardly
have passed over the next batch of stories involving Padreda's
questionable
practices, because they were spread across the front pages of Miami's
papers in 1985, just months before the two teamed up. These stories, in
Jeb's hometown paper, alleged that Padreda had improperly influenced a
local politician -- the Dade County manager, to be precise, who'd been
made a secret partner when Padreda ran into trouble getting a parcel of
land rezoned. The property was promptly rezoned, and the county official
made a quick $127,000 profit when Padreda, in turn, "sold" it to an
offshore Padreda partner****p. That partner****p was controlled from Panama
by a fugitive Miami attorney, who had already been indicted for laundering
drug money. (The official resigned, but Padreda was not charged in the
case.)
Yet the 1985 scandal did not seem to lessen Jeb's enthusiasm for Camilo
Padreda. Jeb enthusiastically accepted the task of finding tenants for
Padreda's empty HUD-financed office building. Padreda, the government
officials involved, and Jeb all refused to answer questions about the
scandal. But of allegations that Padreda engaged in illegal behavior,
there remains no doubt. In 1989, he pleaded guilty to charges that he
defrauded HUD of millions of dollars during the 1980s.
Jeb and Miguel Recarey
With Miami awash in empty office space in 1986, it was no small event when
bagged International Medical Centers as a key tenant for Padreda's
HUD-financed building. IMC, which leased nearly all the space in Padreda's
vacant building, was at the time one of the nation's fastest-growing
health-maintenance organizations (HMO) and had become the largest
recipient of federal Medicare funds.
IMC was run by Cuban-American Miguel Recarey, a character with a host of
idiosyncrasies. He carried a 9-mm Heckler & Koch semiautomatic pistol
under his suit coat and kept a small arsenal of AR-15 and Uzi assault
rifles at his Miami estate, where his bedroom was protected by
bullet-proof windows and a steel door. It apparently wasn't his enemies
Recarey feared so much as his friends. He had a long-standing relation****p
with Miami Mafia godfather Santo Trafficante, Jr., and had participated in
the illfated, CIA-inspired mob assassination plot against Fidel Castro in
the early 1960s. (Associates of Recarey add that Trafficante was the money
behind Recarey's business ventures.)
Recarey's brother, Jorge, also had ties to the CIA. So it was no surprise
that IMC crawled with former spooks. Employee résumés were studded with
references to the CIA, the Defense Intelligence Agency, and the Cuban
Intelligence agency; there was even a fellow who claimed to have been a
KGB agent, An agent with the U.S. Office of Labor Racketeering in Miami
would later describe IMC as a company in which "a criminal enterprise
interfaced with intelligence operations."
Recarey also surrounded himself with those who could influence the
political system. He hired Jeb Bush as IMC's "real-estate consultant."
Though Jeb would never close a single real-estate deal, his contract
called for him to earn up to $250,000 (he actually received $75,000).
Jeb's real value to Recarey was not in real estate but in his help in
facilitating the largest HMO Medicare fraud in U.S. history.
Jeb phoned top Health and Human Services officials in Wa****ngton in 1985
to lobby for a special exemption from HHS rules for IMC. This highly
unusual waiver was critical to Recarey's scam. Without it, the company
would have been limited to a Medicare patient load of 50 percent. The
balance of IMC's patients would have had to be private -- that is, paying
-- customers. Recarey preferred the steady flow of federal Medicare money
to the thought of actually running a real HMO. Former HHS chief of staff
McClain Haddow (who later became a paid consultant to IMC) testified in
1987 Jeb that directly phoned then-HHS secretary Margaret Heckler and that
it was that call that swung the decision to approve IMCs waiver.
Jeb admits lobbying HHS for the waiver, but denies talking to Secretary
Heckler -- and denies as well the charge that his call won the HHS
exemption. "I just asked that IMC get a fair hearing," said later. After
the IMC scandal broke in 1987, Heckler left the country, having been
appointed U.S. ambassador to Ireland, a post she held until 1989. (Heckler
is now a private citizen living in Virginia. We left a detailed message
with her secretary, outlining our questions, but she declined to respond.)
In any case, the highly unusual waiver by federal officials allowed IMCs
Medicare patient load to swell -- to 80 percent -- and the money poured
in. At its height in 1986, IMC was collecting over $30 million a month in
Medicare payments; in all, the company would collect $1 billion from
Medicare. (Jeb would not discuss the IMC affair with Mother Jones. But in
an opinion piece he wrote for the Miami Herald last May, he insisted that
he had worked hard for IMC, looking for real-estate deals, and had earned
his $75,000 in commissions. While acknowledging making a telephone call to
one of Heckler's assistants on IMC Is behalf, he claimed the waiver was
not
granted on his account. The allegation of a connection, Jeb wrote, "is
unfair and untrue.")
Despite Jeb's involvement, trouble began brewing for IMC when a low-level
HHS special agent in Miami, Leon Weinstein, discovered that Recarey was
defrauding Medicare through overcharges, false invoicing, and outright
embezzlement. Weinstein had been following Recarey's activities since
1977, and as early as 1983 he believed he had enough information to put
together a case. However, he found his HHS superiors less than receptive;
they took no action on Weinstein's information.
But Weinstein kept digging and in 1986 renewed his investigation of
Recarey and IMC -- and again his HHS superiors blocked the probe.
"Wa****ngton just refused to pursue my evidence," Weinstein, now retired,
told Mother Jones last spring. "And they made it perfectly clear that I
was not to pursue IMC. When I did, they threatened me and threatened my
job."
Weinstein dug in his heels. "I had them this time. I told my superiors I
would fight this time because I had nothing to fear. I had just reached
retirement age. They immediately backtracked," he says. Weinstein was
allowed to continue his investigation -- though HHS still took no formal
action against Recarey. Eventually Weinstein turned to Congressmen Barney
Frank (D-NY) and Pete Stark (D-CA) with his information, sparking
congressional hearings into the scandal.
Had it been up to HHS, Recarey would still be running his Medicare racket.
But by chance, the now-disbanded U.S. Miami Organized Crime Strike Force
was also investigating Recarey. (Recarey was bribing union officials in
order to get them to sign workers up as patients at IMC, apparently so
that IMC could meet its reduced non-Medicare patient requirements of 20
percent.) "We didn't know anything about the HHS investigation," former
Organized Crime Strike Force special attorney Joe DeMaria says. "Recarey
was bribing union officials.... But HHS never contacted us or told us
anything."
Before Recarey's trial on bribery charges began, DeMaria's investigators
also caught Recarey using his former spooks to wiretap IMC employees in an
effort to discover who was talking to federal agents. DeMaria had Recarey
indicted a second time, for the illegal listening devices. During
Recarey's trial on the bribery charge, a lawyer who handled the bribe
money testified that the money IMC gave him was not bribe money but
"commissions" he had earned while doing work for the company. "See, that
commission thing was Recarey's MO. They didn't call them bribes, they
called them commissions," DeMaria explains.
After he was convicted, Recarey resigned from IMC and was immediately
replaced by John Ward. (Ward had been law partner to Reagan-Bush campaign
manager John Sears. And Sears had also been a lobbyist for IMC.) But
Recarey's Medicare scam would never get to a public courtroom airing.
Before his trial on the wiretap charge, Recarey skipped the country. His
getaway was remarkable: just in time for his flight, the normally
tight-fisted IRS expedited a $2.2 million income-tax refund, which Recarey
claimed he had coming.
The tax refund was a windfall for Recarey. "Yeah, that was his getaway
money," says a former IRS investigator who worked in the Miami office at
the time but asked not to be named. "Though there is a special IRS
procedure to expedite tax refunds for companies in financial distress, I
don't think you can overlook the possibility that there was influence from
the administration."
Recarey's last act before becoming a fugitive was an attempt to wire
$30,000 into the bank account of Wa****ngton consultant and lobbyist Nick
Panuzio -- whose partner was then managing George Bush's 1988 presidential
campaign. (The wire transfer failed only because, in his haste, Recarey
had
gotten Panuzio's account number wrong.) It was only after Recarey was
safely out of the country that the U.S. attorney in Miami -- a political
appointee -- filed formal charges of Medicare fraud against him.
Whistle-blower Leon Weinstein retired in disgust from HHS and tried to get
the IMC case before a judge by filing a Qui Tam suit. Such suits allow a
private citizen to sue to recover money for the government in return for a
share of any settlement. In his case, Weinstein named IMC and Recarey as
defendants. But HHS continued to fight Weinstein, first challenging his
right to bring such a suit and later accusing him of stealing HHS
do***ents before leaving his job. When the courts sup****ted Weinstein, HHS
then stepped in, took over his lawsuit, and shouldered him out. The case
remains in the courts and is still unresolved.
HHS officials now pursuing the litigation claim that Recarey defrauded the
Medicare system of at least $12 million. Leon Weinstein says the
government
is lowballing the loss and that Recarey's take from his IMC scam could
easily be many times that figure.
Since skipping Miami in 1987, Recarey has been living comfortably in
Caracas, Venezuela. Thomas Holladay, the consul general of the U.S.
Embassy in Caracas, told Mother Jones that officials there were aware of
Recarey's presence and had formally requested his extradition. "We made a
formal request for his extradition," Consul General Holladay says. "But we
can't do anything until the Venezuelans turn him over to us, and they have
not done that." The conversation then ended abruptly. "You know, I'm
really not supposed to be talking to you about this," Holladay says.
In May, following inquiries from Mother Jones, Congressman Pete Stark, who
sits on the powerful House Ways and Means Committee, wrote to both the
Department of Justice and the Venezuelan ambassador in Wa****ngton,
demanding an explanation for six years of inaction on the Recarey case.
Jeb and the Contras
The fact that Recarey is living free in Caracas rather than in shackles at
Fort Leavenworth could well be a result of the role IMC may have played in
Oliver North's secret contra-supply network. Though members of the House
Intelligence Committee claimed they found no reason to believe that
Recarey was using IMC's Medicare facilities and funds to aid the contras,
the evidence that IMC was involved remains compelling. In 1985, the same
year that Jeb Bush was dialing for dollars to HHS officials for IMC, Jeb
also hand-carried a letter from Guatemalan physician Dr. Mario Castejon to
the White House -- directly to his father's office in the Executive Office
Building. Dr. Castejon's letter to Vice President Bush requested U.S.
medical aid for the contras. George Bush penned a note back to the doctor,
referring him to Lt. Col. Oliver North -- whose pro-contra activities the
president now claims he knew little about.
An entry in North's diary reads:
22-Jan-85
Medical Sup****t System for wounded FDN in Miami -- HMO in Miami has oked
to help all WIA [wounded in action] ... Felix Rodriguez.
(Rodriguez was a former CIA official who advised Vice-President Bush's
national-security adviser, Donald Gregg, currently U.S. ambassador to
South Korea.)
Veteran CIA operative Jose Basulto told the Wall Street Journal in 1987
that he had personally attended meetings at IMC headquarters in Miami
along with contra leader Adolfo Calero and Felix Rodriguez. Basulto also
said that he had personally brought sick and wounded contras to IMC
hospitals in Miami, where they received free medical treatment. Former HHS
agent Leon Weinstein is not surprised that Recarey has not been returned
to
the United States. "My investigation," Weinstein says, "led me to conclude
that there may have been a deliberate attempt to obstruct
justice...because Recarey, his hospital, and his clinics were treating
wounded contras from Nicaragua...and part of the $30 million a month he
was given by the government to treat Medicare patients was used to set up
field hospitals for the contras."
Jeb and "Manny" Diaz
Manuel C. Diaz, another Jeb Bush business associate, runs a commercial
nursery with headquarters in Homestead, Florida. Manny Diaz's previous
business sidekick, Charles Keating, Jr., is now sitting in a California
prison. But during Keating's days at the helm of the $6 billion Lincoln
Savings, Diaz became a Keating insider, confidant, and beneficiary. For
example, in 1987, as federal regulators closed in on his crumbling empire,
Keating instructed his attorneys to transfer a large chunk of prime
Phoenix
real estate to Diaz, for just $1. And right before filing for personal
bankruptcy, Keating transferred his $2 million mansion on the island of
Cat Cay in the Bahamas to Diaz.
At the same time Diaz was palling around with Keating, Jeb, then serving
as Florida's secretary of commerce, arranged a private meeting for Diaz
with Florida's Republican governor Bob Martinez. Promptly afterward, Diaz
Farms landed a lucrative, $1.72 million, state-highway-landscaping
contract -- despite the fact that Diaz had little prior
highway-landscaping experience. This raised howls of protest and charges
of political influence-peddling from other contractors. But state
officials explained that the extraordinary speed in issuing the contract
had occurred because the state was anxious to spruce up 113 miles of
freeway for the coming visit of the pope.
Did Jeb know about Diaz's business association with Charles Keating? Did
he have reason to believe Diaz was qualified for the Florida highway
contract that he helped Diaz land? These are the kinds of detailed
questions that the Florida chairman of the Bush re-election campaign
refuses to answer.
Neil Bush
In the March/April issue of Mother Jones, I detailed Neil Bush's
activities and therefore only sketch his involvement here. Neil served as
a director of Silverado Banking, Savings and Loan in Denver, Colorado,
from 1985 until 1988. During that time, the now-dead thrift made over $200
million in loans to Neil's two partners in JNB Exploration, Neil's
abysmally unsuccessful oil company. Silverado's failure was due at least
in part to the fact that Neil's two partners welshed on $132 million in
loans.
Federal regulators determined that, while Silverado was pumping loans to
Neil's two associates, Neil was completely dependent on the two men for
his income. The failure of Silverado -- its closure delayed until after
the 1988 election -- cost taxpayers about $1 billion. After almost two
years of hand-wringing had passed, an expert hired by regulators declared
that Neil suffered from an "ethical disability," and he was required to
pay a $50,000 fine for his ethical lapses at Silverado. Neil's estimated
$250,000 in legal bills generated by the scandal are re****tedly being paid
for him by a banking-industry lobbyist who is fighting to get banks
deregulated.
After Silverado failed, Neil started a new oil company, Apex Energy. This
time, his money came from a $2.35 million loan through a Small Business
Administration program, a loan arranged by an old family friend. When news
of this reached the press in March 1991, the SBA discovered that the
companies through which the loan was approved were technically insolvent,
and it gave them up to thirty months to "self-liquidate." This meant that
Apex would have to repay its SBA-guaranteed loans. Neil took this as his
cue to move on, and he left Apex -- and its debts -- for others to worry
about. If Apex Energy can't be sold for more than it owes, the SBA, and
ultimately the taxpayers, will be stuck with the difference. The last time
we checked, Apex's only known asset was an oil lease, which the company
had
purchased from Neil for $150,000 before he bailed out. That means
taxpayers
could get stiffed for another $2.2 million as a result of Neil Bush's
wheeling and dealing. The public won't learn the precise outcome until
later this year, though. The SBA allowed thirty months for liquidation of
the SBA investment in Apex, putting the resolution date just past the 1992
general election.
President George Bush claims that only a return to traditional family
values can cure the "poverty of spirit" that plagues places like our
decaying inner cities. But after a closer look, particularly at his adult
children, one cannot help but wonder about the values that matter to his
own family.
Bush says he is proud of his sons. One of them rented himself out to a
crooked developer who scammed HUD and helped pry millions out of Medicare
to fuel a giant health-care scam. A second may have profited from an
insider stock transaction in a gulf oil deal at the very time that U.S.
soldiers were dying to make that region safe for oil. And the third son
ran a savings and loan into the ground while shoveling millions of its
taxpayer-backed dollars into the pockets of two deadbeat partners.
When President Bush speaks of the lack of family values he, of course, is
referring to broken marriages, single mothers, and inner-city kids who
join gangs and sell dope. But are these the only villains -- or the most
im****tant ones -- responsible for the shredded social fabric? What about
well-to-do white boys who trade on family connections, welsh on loans, run
with con men, and leave financial ruin in their wake as they line their
own
pockets? What about grown men, with access to the most powerful public
office in the land, who participate in scandal but show no remorse for any
of it -- and who take no responsibility for the consequences of their own
actions?
It's certainly reasonable for candidate Bush to engage the public in a
discussion of family values, to use his office as a bully pulpit on modern
morals. But what of George Bush's inability or unwillingness to grasp the
crisis of values festering within his own family? The pattern of behavior
by the president's three sons raises questions -- about them and their
father. These issues have yet to get the prime-time exposure of fictional
Murphy Brown's fictional fatherless child.
Stephen Pizzo is author of Inside Job: The Looting of America's Savings
and Loans.
Research assistance by Peter Willmert and Chris Rosché.
Files/Archives for Historians' Research
Bush Family Value$
News: The Bush clan's family business
By Stephen Pizzo
September 1, 1992
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