Harken Energy scandal

The Harken Energy scandal refers to a series of transactions entered into during 1990 involving Harken Energy. These transactions are alleged to involve either issues relating to insider trading, or influence peddling. No wrongdoings were found by any investigating authorities although the matter generated political controversy.

George W. Bush ran an energy company called Spectrum 7 during the 1980s. In the mid-1980s the oil market was in a slump, with prices dropping daily. The firm was in serious financial trouble until another company, a distressed oil properties specialist, Harken Energy, purchased Spectrum 7 in 1986. Part of the attraction for Harken's management to purchase Spectrum 7 was having Bush on its team — his father was then vice-president, he had extensive "connections" and knowledge of the oil and gas business. Harken Energy offered Bush a seat on its board of directors along with stock worth about $500,000 at the time. Bush received a consulting contract worth between $80,000 and $120,000 annually as well.

In 1987 and 1988, George W. Bush dedicated himself (and much of his efforts) to the presidential campaign of his father George H.W. Bush. Fortunes turned for Bush, and the following year he invested in the Texas Rangers baseball team. To help pay for this investment, he borrowed a sum of $600,000; to pay off the loan, he sold his stock in Harken Energy. That investment paid off handsomely for him, not only monetarily. As team owner, the popularity derived from his public persona lead to the invitation to run for governor of Texas and ultimately, two terms as president.

George W. Bush sold 212,140 shares of Harken Energy at $4 a share on June 22, 1990, for a grand total of $848,560. Two months later, on August 20, Harken announced a larger than expected loss for the previous quarter. Surprisingly, the price of the company's stock shares barely declined at first, following these two negative, or "bearish," events. In the ensuing months, Harken's stock price did drift downward to $1.25 per share by the end of the year. However, the stock price then recovered its value and more the following year, which was strange behavior for the stock. The sale of the large block of shares had become widely publicized and allegations of the use of insider information, and improper stock transactions, were leveled at Bush.

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