Link: A Brief History of Bush, Harken and the SEC

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A Brief History of Bush, Harken and the SEC

WASHINGTON – In 1976, George W. Bush was a freshly minted graduate of the Harvard Business School looking for a job.

He had $20,000 left over from his education trust fund, a well-known last name and some great connections. He decided to follow in his father’s footsteps by getting into the oil business, and moved back to his childhood home of Midland, Texas.

The early years

In 1977, Bush organized his first company, Arbusto Energy Inc. (Spanish for bush), an oil exploration venture. After an unsuccessful 1978 run for the House of Representatives, Bush returned to the oil business, attempting to take Arbusto public in 1982 with disappointing results. Bush changed the name of the company to Bush Exploration that same year and struggled on.

By 1984, Bush Exploration was in dire need of capital. In stepped Spectrum 7 Energy Corp. of Ohio, owned by William DeWitt Jr. The two companies merged and Bush was made CEO with a $75,000 salary. As part of the deal, he received 1.1 million shares of stock, or 16.3 percent of the company.

An April 1986 New York Times story described Spectrum 7 as “less concerned with recovering oil than in creating tax shelters.” The company specialized in selling limited partnerships, which generated generous write-offs before the tax laws were revised in 1986.

Spectrum 7 did not fare much better than Bush Exploration – in the 1980s, with the end of the Arab oil embargoes, a flood of cheap, imported crude oil drove many small, domestic producers out of business. Bush was at the helm of another struggling company seeking a bailout. Spectrum 7 was teetering on the brink of bankruptcy, and this time the white knight was Harken Oil.

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