Born into a Yankee family of wealth and achievement, George Herbert Walker Bush bolted to the oil fields of West Texas as a young man to establish his independence and escape the shadow of a prominent father. Bush, the son of a U.S. senator, followed his father into politics only after he had proved himself in business.
Remarkably, the same pattern has continued in the President’s family. Shunning such conventional careers for the well-born as the law and banking, some of Bush’s brothers and his sons have sought to make their fortunes in the rough-and-tumble world of entrepreneurs and deal-makers.
His oldest son, 45-year-old George W. Bush, now managing general partner of the Texas Rangers, and his youngest, Neil Bush, 37, followed closely in their father’s footsteps by starting their own oil companies. Second son John Ellis (Jeb) Bush, 39, set up a real estate business in Miami. And brother Prescott S. Bush Jr., 69, left a secure insurance brokerage to become an international business consultant.
Now, however, as the President prepares to seek reelection in a rugged political climate, questions are being raised about whether this represents an admirable saga of energy and pluck or instead adds up to trading on the family name for business advantage and profit.
Over the last few weeks, Democratic Party leaders have let it be known that they are collecting potentially embarrassing information involving the business dealings of Bush’s family members.
Likewise, conservative commentator Kevin Phillips recently criticized the President for looking the other way while his relatives blazed “a trail of vaguely sleazy deals, apparent influence-peddling and periodic legal wrist-slappings.”
For their part, members of the Bush family hotly deny any impropriety. In a rare interview, Jeb Bush charged that the President’s critics and the news media are dredging up old allegations against his family in a partisan effort to counterbalance the unflattering stories that have been written and broadcast about the personal life of Arkansas Gov. Bill Clinton.
“This is an effort to hurt George Bush,” Jeb Bush declared.
While no one has accused the President of any wrongdoing, there is evidence suggesting that Bush family members are exploiting their relationship with the White House, sometimes even using their influence to win favors from the federal government for themselves and their business associates.
As a director of the defunct Silverado Savings & Loan in Denver, Neil Bush was found by federal regulators to have engaged in a conflict of interest by participating in the approval of loans totaling $132 million from the S&L; to his own business partners.
In 1990, when George W. Bush’s little-known firm, Harken Energy, was awarded a lucrative contract from the Persian Gulf nation of Bahrain, the deal was widely seen as an effort on the part of Bahrain’s royal family to win favor with the White House.
In 1985, Jeb Bush interceded with officials of the Health and Human Services Department on behalf of Miguel Recarey Jr., the owner of a health-maintenance organization who later fled the country after being charged in what is believed to be the nation’s biggest Medicare scandal. Jeb Bush received $75,000 from Recarey for a business deal that never materialized.
Likewise, Prescott Bush has been accused of taking advantage of his brother’s sympathetic approach to China to negotiate business deals in that country.
Of course, this is not the first time a President’s relatives have been accused of exploiting their connections and embarrassing the White House. Presidents Franklin D. Roosevelt, Lyndon B. Johnson, Richard M. Nixon and Jimmy Carter all had relatives who were accused of similar conduct.
“I would love to find a President’s family that did not trade on the name,” said Stephen Hess, a presidential scholar at the Brookings Institution. “The temptations must be tremendous.”
Hess said he viewed the efforts of some of Bush’s relatives to profit from their relationship to the President as “tacky,” but not illegal. “We should expect better from First Families, and particularly from a family that works so hard at being on the up and up, ‘holier than thou,’ almost sanctimonious about it,” he said.
For the most part, Bush family members do not deny that they are sometimes offered business opportunities that would not be available to them if their last name were “Smith.” When Prescott Bush was questioned about his success as a business consultant, he noted: “It doesn’t hurt that my brother is President of the United States.”
In several cases, Bush’s relatives have been recruited for business deals by much wealthier persons who were either seeking favor with the Administration or credibility for their ventures. Routinely, Bush’s relatives were asked to make only modest financial commitments–if any–in exchange for an opportunity to reap potentially generous financial rewards.
The White House declined to discuss in any detail the business relationships maintained by members of the Bush family. In response to inquiries, deputy press secretary Judy Smith said: “The President and Mrs. Bush are proud of their children’s accomplishments. They have a right to earn a living and their relationships are appropriate.”
Critics contend, however, that members of Bush’s family ought to pass up such business opportunities because they are not being invited to participate either for their business expertise or for the money they can bring to these projects.
“When you are asked to serve on the board of a savings and loan and you have no experience in banking, you sure should be smart enough to know why you’ve been invited,” said Hess, referring to Neil Bush’s appointment to the board of Silverado Savings & Loan.
Jeb Bush, the only Bush family member who agreed to be interviewed by The Times for this story, stressed that while he tries to discriminate between legitimate and opportunistic business proposals, he cannot be expected to reject every opportunity that comes his way, even if some of them might be motivated by a desire to exploit the Bush name.
“I can’t control what the whole world assumes or thinks about the name Bush,” he said. “I live with this day in and day out. I cannot be expected to go into a shell and be something I’m not. . . . I am as careful as I can be, but I have to make a living.”
In many cases, business opportunities are offered to Bush relatives by corporate executives who also have contributed heavily to the President’s political campaign. As a result, some critics see them as attempts by special interests to circumvent the limits on campaign contributions and influence policy decisions at the White House.
“It’s just another way to curry favor with the President–another wallet that can be opened by special interests to cement their relationship with the White House,” said Ellen Miller, executive director of the Center for Responsive Politics, a bipartisan think tank devoted to reform of the campaign finance system.
Jeb Bush acknowledged that people do try to curry favor with the Administration by offering business opportunities to Bush family members, but he insisted that such efforts are counterproductive.
“There are people who have a misinformed notion that being associated with the First Family can benefit them,” he said. “The opposite is true. If you want to do business with the federal government, you don’t deal with someone in the First Family.”
White House counsel C. Boyden Gray, who is said to have discussed business ethics with a number of the President’s relatives, noted that when Bush ascended to the presidency in 1989, he sent instructions to Secretary of State James A. Baker III and all American embassies abroad to avoid any contact with Bush family members that would create even the appearance of impropriety.
But Gray declined to disclose what advice he has given family members or whether the President has cautioned his relatives against influence-seekers.
“I really don’t want to talk about what I do or don’t say to the President or to his family,” said Gray. “I just don’t think that’s appropriate.”
Although they may welcome business opportunities that come their way as a result of the family name, Bush’s sons are clearly involved in an effort to establish their own identity–to escape the shadow of their father.
“I don’t want to be considered George Bush’s son. I want to be considered Jeb Bush,” Jeb told the Miami Herald in 1986.
Both George W. and Jeb Bush seem to share a desire to follow the same path that their father took by making money as entrepreneurs before pursuing political careers. George W. Bush, who failed in a bid for Congress in 1978, is said to be preparing to challenge Texas Gov. Ann Richards in 1994.
Jeb Bush has said in the past that he wants to make enough money to provide a secure future for his family before he runs for public office. He has talked about running for Congress, but has said he would not challenge the congressman who currently represents his home district, 75-year-old Rep. Dante B. Fascell (D-Fla.), chairman of the House Foreign Affairs Committee.
Although George W. Bush serves as an unpaid adviser to his father’s presidential campaign, his primary job is with the Texas Rangers. In 1989, George W. Bush and a group of well-heeled partners purchased controlling interest in the team for a reported $54 million from Eddie Chiles. George W. Bush’s personal investment was said to be $500,000.
To facilitate the purchase of the Rangers, then-Baseball Commissioner Peter V. Ueberroth helped organize a group of investors including two rich Texans, Richard Rainwater, a Ft. Worth businessman, and Rusty Rose of Dallas. George W. Bush recruited four Ohio investors, including Dudley S. Taft, president of Taft Broadcasting, and William DeWitt and Mercer Reynolds, partners in Reynolds DeWitt & Co.
In June, 1990, George W. Bush sold 212,140 shares–or 66%–of his stock in Harken Energy Corp. to repay bank loans connected with his investment in the baseball team. At the time, the stock was worth $848,560. He has been accused of selling the stock on inside information shortly before the price dropped and of failing to notify the Securities and Exchange Commission until eight months later.
Robert W. Jordan, spokesman for George W. Bush, denied those allegations and insisted that the stock was sold in response to an unsolicited offer at a time when “the entire mix of information he knew about the company was positive.” In addition, he said that while George W. Bush may have failed to file one of two required SEC notices at the time of the sale, the other notice was filed promptly.
George W. Bush, who receives a $42,000-a-year consulting fee from Harken, knows that his position on the board may enhance the reputation of the company, according to Jordan. But he contends that he is no different from any other outside director recruited for that purpose.
“Outside directors of companies tend to be well-known by the public,” Jordan said.
Members of two rich families–the Bass family of Texas and the DeWitts of Ohio–have assisted George W. Bush in his endeavors. Bass Enterprises Production Co. is helping to finance the Harken drilling in Bahrain. Robert M. Bass contributed $100,000 to the Bush presidential campaign in 1988.
George W. Bush’s original exploration company was salvaged in the mid-1980s by DeWitt and Reynolds, who also helped him purchase the Rangers. DeWitt, son of the former owners of the Cincinnati Reds and a friend of George W. Bush, is a regular contributor to the campaigns of George W. Bush’s father.
In 1990, although Harken was virtually unknown in the oil industry, the firm won the oil rights for Bahrain, a tiny island nation in the Persian Gulf. Harken officials deny widespread speculation that the Bahrain government sought out Harken for political reasons.
Jordan said that George W. Bush was not involved in the negotiations with Bahrain and, in fact, expressed doubts about the deal. He said George W. Bush has no way of knowing whether the Bahrain royal family saw this deal as a way to seek favor with the President. “It is impossible to confirm or deny that because you can’t get into their minds,” he said.
More than any of the other Bush relatives, Neil Bush, the youngest son, has a history of accepting outright financial favors. But he apparently has never shared his brothers’ interest in a political career.
Neil Bush declined to be interviewed for this story.
Like his father and his older brother, Neil Bush established his own oil exploration company, JNB Exploration Inc., in Denver in 1983. His original investment was $100; his two partners, Bill Walters and Ken Good, put up $160,000. Before the company fell apart in 1989, Neil Bush received at least $550,000 in salary.
In addition, Good gave Neil Bush $100,000 to play the commodities market in 1984. When all the money was lost, Good forgave the loan. Neil Bush said he saw nothing unusual about the deal.
But federal regulators refused to accept Neil Bush’s argument that he did nothing wrong in his role as a paid director of Silverado between 1985 and 1988. The Office of Thrift Supervision found that the President’s son ignored an obvious conflict of interest when, as director, he approved $132 million in loans to Good and Walters.
Last year, OTS asked the Treasury Department to investigate the testimony of one high-ranking former thrift regulator, who claimed that he was asked by Administration officials to delay the seizure of Silverado until after the 1988 presidential election. Treasury officials said they handed the information over to the FBI.
As punishment, Neil Bush was prohibited by the OTS from serving as a director of a financial institution in the future, except under certain conditions. The directors of Silverado agreed to pay $49.5 million to the Federal Deposit Insurance Corp. to settle a lawsuit against them stemming from the $1-billion collapse of the federally insured thrift.
According to James Nesland, his attorney, Neil Bush must pay $50,000 of the settlement.
But Neil Bush did not have to worry about paying his legal fees in connection with the case, which were said to have run about $250,000. In Washington, former Rep. Thomas (Lud) Ashley, who currently heads the Assn. of Bank Holding Companies, created a legal defense fund and solicited contributions to assist Neil Bush.
Although Ashley provided his assistance to Neil Bush at a time when his lobbying group was also pushing for bank deregulation, he denied that his generosity was anything but a friendly gesture. “The President and Lud have been good friends for a long, long time,” said Sandy Rink, an assistant to Ashley. “It’s a friend of the family helping a friend of the family.”
Ashley was not the only person who rushed to Neil Bush’s assistance.
While he was battling the government over Silverado, Neil Bush got help from another old friend of the Bush family: Louis Marx, heir to the Marx toy company fortune. With $2.3 million in government-guaranteed funds provided by two small-business investment corporations owned by Marx and $3,000 of his own money, Neil Bush started another company: Apex Energy.
Neil Bush’s starting salary at Apex was $160,000, and one of his first decisions was to spend $150,000 to buy an oil and gas lease that he personally owned with a partner, Brent J. Morse.
By making such risky investments, Marx’s investment corporations quickly went into default and are currently being liquidated, creating anticipated losses for the government.
Neil Bush also has received financial help from two leading executives of the cable television industry–another active Washington lobby. Fred Vierra, a Denver cable television official, has made $125,000 in personal loans to Neil Bush since 1988. Bill Daniels, another cable television executive, gave him a $60,000-a-year job with his company, TransMedia Communications of Houston.
Daniels is a leading GOP contributor and a member of Team 100, a group that includes all contributors of at least $100,000 to President Bush’s campaigns.
Unlike George W. or Neil Bush, Jeb Bush did not go into the oil business. Instead, he moved to Miami shortly after his father was elected vice president in 1980 and joined a real estate firm established by one of the city’s most prominent developers, Armando Codina.
Although Codina was a Bush backer in 1980, Jeb Bush said their business relationship had nothing to do with politics: “I wasn’t using him and he wasn’t using me.”
With a Mexican wife, a Cuban-American business partner and a strong command of the Spanish language that he obtained while working for a Texas bank in Venezuela, Jeb Bush quickly became an accepted member of Miami’s Latino community.
That is apparently how Jeb Bush met Miguel Recarey Jr., a Cuban-American who owned the International Medical Centers, a chain of HMOs.
In 1985, while negotiating a real estate deal with IMC, Jeb Bush telephoned top officials at the Department of Health and Human Services on behalf of Recarey, who was seeking an exception from a newly imposed rule that prohibits HMOs from having more than 50% of their patients on Medicare and Medicaid. By his own account, Jeb Bush contacted HHS official Kevin Moley, who had worked for the Bush campaign in 1984.
At the time, Jeb Bush said, Recarey was a man with a good reputation in Miami. Jeb Bush said he asked Moley to give IMC “a fair hearing” on its petition for an exemption and insisted that his call was not responsible for the exemption being granted. He noted that HHS also was contacted by a number of high-powered Washington lobbyists on Recarey’s behalf to argue his case.
Jeb Bush now regrets making the call because of the attention it has received. “Today, I wouldn’t have done what I did, but that does not mean that what I did was wrong,” he said.
Jeb Bush acknowledged that he received $75,000 from Recarey’s firm more than a year after he made the call to HHS, but he insisted that it was payment owed to him for many months of work he put in trying to find a corporate headquarters for IMC. He said he arranged several real estate purchase deals for IMC, though none of them was ever consummated.
In 1987, when Recarey’s HMO company failed and he was under indictment on labor racketeering, wiretapping and other charges in what is believed to be the nation’s biggest Medicare scandal, he fled the country. Shortly before he disappeared, he managed to get an expedited income tax refund of $2.2 million from the Internal Revenue Service.
Although Recarey has been widely reported to be living in a posh suburb of Caracas, he has never been extradited by the U.S. government. Dean St. Denis, spokesman for the Justice Department, said U.S. officials are still “actively seeking” Recarey.
“Unfortunately,” St. Denis added, “he’s not been found yet.”
The Bush relative with the most extensive foreign business contacts is Prescott Bush, who at age 69 is still actively soliciting international clients, primarily in Asia.
Prior to the President’s tour of Japan, South Korea and China in 1989, Prescott Bush toured those same countries seeking business. He managed to sign an $18-million deal with Aoki Corp. to build a golf course in China. Aoki has been identified by the Senate Foreign Relations Committee as a firm that paid $4 million in bribes to former Panama strongman Manuel A. Noriega.
In 1989, Prescott Bush helped arrange a $5-million deal in which West Tshusho Co. of Japan bought into Asset Management, International Financing & Settlement Ltd., a New York-based firm that Prescott Bush served as a board member. At the time of the deal, Prescott Bush was retained by Asset Management as a $250,000-a-year consultant for three years.
But in June, 1991, Japan’s Kyodo News Service reported West Tshusho was owned by retired underworld boss Susumu Ishii. In response, Asset Management, by then in the throes of bankruptcy, revealed that it was suing West Tshusho to recover a $530,000 loan. Company officials said they did not know West Tshusho was linked to “Japanese gangsters.”
Robert Fisher, bankruptcy trustee for Asset Management, said Prescott Bush is not listed among the company’s creditors. “Whatever he got, he got, but he’s not due any more,” said Fisher.
Prescott Bush, who could not be reached for comment, has said that he steers clear of the U.S. government in his business dealings in order to avoid any conflict of interest stemming from by his relationship to the President. Yet in 1989, when President Bush decided to waive an embargo that would have prevented the shipment of two communications satellites to China, a principle beneficiary of the decision was Asset Management.
Asset Management officials acknowledged that the President’s decision to permit the shipment of two satellites by Hughes Aircraft Co. would be “advantageous” to them. At the time, the firm had a contract to provide communications links connecting more than 2,000 professional and university offices in China.
Both the President and Prescott Bush said they were unaware of any connection between the waiver and Asset Management’s project in China.
To a lesser extent, the business activities of another Bush brother, Jonathan, also has raised questions. Last year, a New York securities brokerage firm owned by Jonathan Bush was fined $30,000 by Massachusetts regulators for failing to register in the state.
Democrats readily admit that they have been collecting information about the business affairs of the Bush family for possible use in the upcoming election.
But Dee Dee Meyers, press secretary for Clinton, whose personal life has been an issue in the Democratic primaries, said Bush’s likely challenger has no intention of attacking the President for the actions of his family members.
“We would prefer to debate him on the economy,” Meyers said.
Bush Family Business Ties
Democratic Party leaders have let it be known that they are collecting potentially embarrassing information involving the business dealings of Bush’s family members. Any claims of impropriety have been hotly denied by the family. Here are some of the areas where they may be vulnerable: George W. Bush– 45, of Dallas For a personal investment of $500,000 he became managing partner of the Texas Rangers. He is also part owner of Harken Energy Corp., a tiny company chosen to explore for oil in Bahrain. John Ellis (Jeb) Bush– 39, of Miami A real estate investor and GOP activist, he intervened with the Department of Health and Human Services in 1985 on behalf of an HMO owner who later fled the country after being charged with defrauding the government. He later got $75,000 from the HMO for a failed business deal. Neil Bush– 37, of Houston As a director of the defunct Silverado Savings & Loan, he was found to have engaged in a conflict of interest by participating in the approval of loans totaling $132 million to his own business partners. Prescott Bush Jr.– 69, of Greenwich, Conn. As an international business consultant, he has been involved in numerous business deals in Asia, including one with a firm that has been linked by Tokyo police to a retired Japanese gangster.