Harvard Stock Under Scrutiny

University denies purchase of President Bush’s Harken shares

The company that manages Harvard’s endowment owned more than $28 million worth of stock in Harken Energy Corporation in 1990, leading some to speculate that the University is the unknown buyer of President Bush’s shares in the Texas-based oil and gas company, though Harvard Management Company (HMC) officials deny the purchase.

At the time of the sale, two top Harvard investment managers also served on Harken’s executive board and held personal stakes in the company, creating further questions about Harvard’s involvement with the company, which has come under scrutiny in recent weeks.

In June 1990, Bush sold 212,140 shares of Harken—about two-thirds of his holdings in the company—for $848,560. Bush, who at the time was serving as a director of Harken, used the proceeds from the sale to pay off loans that helped him purchase a minority stake in the Texas Rangers baseball franchise.

The Crimson reported in 1991 that Harvard owned $28 million worth of Harken common stock and contributed about $64 million worth of oil and gas properties to a limited partnership run by a Harken subsidiary.

The holdings have led some to speculate that Harvard University was the buyer of the future U.S. president’s stock.

The Center for Public Integrity, a Washington D.C.-based nonpartisan watchdog group, says that evidence points to Harvard as the likely buyer.

According to The Buying of the President 2000, a book written by Charles Lewis and published by the center, one document obtained from the Securities and Exchange Commission (SEC) connects Harvard to those involved with the deal.

A spreadsheet used by Ralph D. Smith, the Los Angeles broker who handled the sale for Bush, included the phone number of HMC, as well as the name of Michael R. Eisenson, a top investment manager for the University at the time.

Smith told The New York Times last week that “an institutional investor” purchased the stock, but he would not divulge the specific purchaser of Bush’s shares.

Jack Meyer, the current president of HMC, dismissed claims that Harvard obtained Bush’s shares.

“We didn’t buy George Bush’s stock,” said Meyer, who took over HMC about two months after Bush’s sale.

Bush, who has criticized corporate wrongdoing by companies such as WorldCom and Enron, has recently had to answer questions about his own actions while serving on Harken’s board of directors.

Bush sold his shares in Harken only two months before the corporation announced a $23 million loss. He also delayed for nearly eight months before filing legally required reports of his Harken stock transaction with the SEC.

The delay, along with the timing of the deal, led the SEC to launch an insider trading investigation the following year scrutinizing the deal. The SEC was unable to conclude that Bush was guilty of wrongdoing, though the agency also said that the lack of findings did not exonerate Bush.

White House Communications Director Dan Bartlett told The Times that Bush never knew the identity of the stock buyer.

Bartlett told the Washington Post that Harken’s executive committee—which did not include Bush—knew about the size of Harken’s $20 million worth of losses, which the company announced in August 1990, two months after Bush sold the bulk of his Harken holdings.