Bush Family Value$ The Bush Clan’s Family Business
by Stephen Pizzo
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 relationships are appropriate,” added a White House spokeswoman in June 1992.
Since George Bush has raised “family values” as a campaign issue repeatedly, though, it seems only fair to take a look at his own family. A computer search showed that over the past five years stories have periodically surfaced chronicling the individual business antics of the president’s sons — each riding comfortably through life in the slipstream of his father’s growing power and influence.
Although a handful of good reporters for the New York Times, LA Times, Village Voice, and Wall Street Journal have diligently been digging through business records for months, something has been missing: an overview that “connects the dots” in the myriad deals that have been examined, making it clear that cashing in on influence has become a pattern of behavior extending through the first family.
Instead of criticizing reporters, the president might more wisely begin listening to those in government who have watched his sons with mounting worry. A year ago, I sat across a desk from a Secret Service agent who had been assigned to Bush-family security. I rattled off the names of a half-dozen questionable characters who had found their way into business deals with the Bush boys. How had these characters been allowed to get even close to the president’s sons?
The agent slumped back in his chair and sighed. “We warn them,” he said in a whisper. “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 supporters. 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 supporter 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 reporters 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 shit, 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 report to Scowcroft. The report 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 report 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 report, 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 reported no later than July 10, 1990. But Junior filed no such report, 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 partnership 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 reporters 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 apprenticeship 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 support 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 partnership. When federal regulators closed Broward Savings in 1988, they found the loan, which had been secured by the Bush partnership, in default.
As Jeb’s father was finishing 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 circumstances.”
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 documents relating to the agency’s interference in his case. The CIA, citing national-security reasons, denied Sanford’s request.)
In 1989, Houston Post reporter 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 reports. 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 partnership. That partnership 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 relationship 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 Washington 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. “Washington 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 Washington 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 documents before leaving his job. When the courts supported 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 Washington, 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 Support 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.
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 reportedly 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 important 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.
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