In the West Texas energy business, George W. Bush started out researching who owned mineral rights. He later traded mineral and royalty interests and invested in drilling prospects. He had started his own oil and gas company by 1978, taking $17,000 from his education trust fund to set up Arbusto Energy (arbusto means Bush in Spanish). The company fell on hard times when oil prices fell. He made several attempts to revive the business, first by changing the company's name and later by merging with other companies. In 1983, Bush’s company was rescued from failure when Spectrum 7 Energy Corporation, a small oil firm owned by William DeWitt and Mercer Reynolds, bought it. Bush became chief executive officer. Harken Energy Corporation acquired Spectrum 7 in 1986, after Spectrum had lost $400,000. In the buyout deal, Bush and his partners were given more than $2 million worth of Harken stock for the 180-well operation. Bush became a director and was hired as a "consultant" to Harken. He received another $600,000 of Harken stock, and has been paid between $42,000 and $120,000 a year. By the spring of 1987, Harken was in need of cash. So Bush and his fellow Harken officials met with Jackson Stephens, head of Stephens, Inc., an investment bank in Little Rock, Arkansas (Stephens contributed $100,000 to the Reagan-Bush campaign in 1980 and gave another $100,000 to the Bush dinner committee in 1990.) Stephens arranged for Union Bank of Switzerland (UBS) to provide $25 million to Bush’s company in return for a stock interest in Harken. As part of the deal, Sheikh Abdullah Bakhsh, a Saudi real estate tycoon and financier, joined Harken's board as a major investor. Stephens, UBS, and Bakhsh each had ties to the infamous, scandal-ridden Bank of Credit and Commerce International (BCCI). In 1990, Bush sold his remaining stock options and left the oil business. Writer Jack Colhoun revealed some details of that stock sale, referring to Bush by his childhood nickname “Junior”:
On June 22, 1990, George Jr. sold two-thirds of his Harken stock for $848,560-a cool 200 percent profit. The move was well timed. One week after Junior sold his stock, Harken announced a $23.2 million loss in quarterly earnings and Harken stock dropped sharply, losing 60percent of its value over the next six months. On August 2, 1990, Iraqi troops moved into Kuwait and 541,000 U.S. forces were deployed to the Gulf.
"There is substantial evidence to suggest that Bush knew Harken was in dire straits in the weeks before he sold the $848,560 of Harken stock," asserted U.S. News & World Report. The magazine noted Harken appointed Junior to a 'fairness committee' to study possible economic restructuring of the company. Junior worked closely with financial advisers from Smith Barney, Harris Upham & Company, who concluded "only drastic action could save Harken."
