_Z_ magazine: THE POLITICAL ECONOMY OF A TEXAS OIL CO.
Christopher White
GLOBAL ENTANGLEMENTS: THE POLITICAL ECONOMY OF A TEXAS OIL CO.
By David Armstrong
Transcribed by Nuriya Janss
A map of the Persian Gulf emirate of Bahrain dominates the lobby
of Harken Energy Corporation's modest Grand Prairie, Texas
headquarters. It is a potent image, a totem of sorts to the tiny
island nation and the vast mineral wealth Harken hopes to extract
from its shores.
Despite the emphasis Harken places n this oil-rich sheikdom,
however, a more appropriate corporate symbol might well be a map
of the earth. For Harken is truly a global enterprise. its
interests and influence extend worldwide. Its financial ties to
some of the richest and most powerful men on the planet belie the
image of a struggling small oil company.
Among the many noteworthy figures associated with Harken
are: George W. Bush, eldest son of the president; the billionaire
Bass brothers of Fort Worth, Texas, who will finance Harken's
Bahrain expedition; a South African tobacco, liquor, and natural
resources magnate; and a prominent attorney with ties to former
Philippine dictator Ferdinand Marcos. In addition, Harken has
numerous ties to institutions involved in gun running, drug
smuggling, foreign currency manipulation, the alleged looting of
foreign treasuries, and the U.S. Central Intelligence Agency-
assisted destabilization of the Australian government. (See "Oil
in the Family," Texas Observer, July 1991.) While there is no
evidence of wrongdoing on Harken's part, it is clear the company
has benefited from these relationships. More importantly, Harken
and its associates have repeatedly profited from American inter-
vention in foreign affairs. And it is here that the company's
true significance becomes apparent: For if nothing else, Harken
offers a fascinating case study in how U.S. foreign policy is
shaped by (and for) multinational corporate interests.
HUMBLE BEGINNINGS
Harken began inauspiciously enough as a two-person venture
headed by Phil Kendrick, Jr. and Harry L. Mulligan. Kendrick and
Mulligan (the Harry and Kendrick from whom the company derives
its name) first met in the trenches of Wall Street while serving
as account executives for the investment banking firm of White
Weld & Co. Kendrick had grown up in the oil field of Texas,
where his father, Phil Sr., founded the Abilene-based Kendrick
Oil Company in 1913. After graduating from the University of
Texas in 1950, young Kendrick joined the family business, and
remained an active partner until selling the company during the
oil bust of the mid-1960s.
Kendrick had oil in his blood, however, and always knew he'd
return to the industry. "I went to New York for the specific
purpose of learning all I could [about finance] while the oil
business was so dead and would be hopefully knowledgeable when
the time was right for it to come back again," he told the
Observer. By 1973, he'd decided the time had come and called his
friend Harry Mulligan to inform him of his decision. "I told Mr.
Mulligan I was going back in the oil business and he said, well,
he was sick and tired of the brokerage business and could he go
with me," Kendrick recalled. "I said, 'If you want to, I'd be
glad to have you. I always need someone to help raise money.'"
Harken was incorporated in California July 18, 1973. Its
original offices were located in Pasadena, California and New
Haven, Connecticut, where Kendrick and Mulligan had settled while
working for White Weld & Co. By the end of 1974, the company had
relocated to Kendrick's native Abilene. Harken grew steadily, if
slowly, over the next five years, adding employees and partici-
pating in the exploration of more than 300 wells, primarily in
Texas and Oklahoma. it was not until 1979, however, that the
company's first truly big break came along.
BUYING THE FARM
Phil Kendrick's quest for oil knew virtually no bounds.
While Harken continued sinking holes in the Oil Patch, Kendrick
kept one eye on other prospects. "I had always been interested
in Australia and always intended to get into the Australia play,"
Kendrick said. "I'd read and studied the Australian situation
for numerous years....It's a very large, unexplored country with
a lot of area to find oil and gas."
Before Harken, or any other company, could explore Down
Under, however, there was one major obstacle to be overcome--the
Australian government. In 1972, the citizens of Australia
elected a progressive Labour Party government for the first time
in 23 years. Under the leadership of Prime Minister Gough
Whitlam, the new government launched an ambitious program of
reforms unlike any the country had ever seen. As Mother Jones
reported in 1984, "In its first 100 days in office, the new
Labour government recognized the People's Republic of China;
abolished racial criteria from immigration policy; ... banned
all-white South African sporting teams; conceded land to the
Aboriginals; promoted equal pay for women; added contraceptives
to the list of federally subsidized drugs; outlawed the killing
of endangered species; announced plans for a free national health
service; posted a government reward for the best national anthem
to replace 'God Save the Queen'; and withdrew all Australian
forces from Vietnam."
While these policies raised hackles in Washington, DC,
business leaders were livid over Australia's new energy program.
Whitlam's minister for minerals and energy was Reginald Francis
Xavier Connor, nicknamed "The Strangler" for the time he'd
grabbed a nosy reporter in a headlock. In his new post, Connor
oversaw the management of Australia's bounteous natural re-
sources: iron ore, bauxite, lead, coal, nickel, copper, manga-
nese, silver, tin, uranium, and, of course, oil. Connor's vision
was of a self-sufficient Australia, richer and stronger than the
United States, applying modern technology to the country's
untapped resources. More importantly, he advocated 100 percent
Australian ownership of his nation's fuels and minerals, includ-
ing oil and gas, a proposal that curried no favor in the board-
rooms of multinational corporations. "The Labour government,"
Kendrick said, "made it impossible for anyone other than Austra-
lians to explore for oil and gas. And so all of the American
companies pulled out and even the Australian companies dropped
their leases. They just made it impossible. With the taxation
and rules and regulations, etc., no one could possibly operate
under the political climate at that time."
As the Labour government's term in office wore on, invest-
ment from the United States, Europe, and Japan evaporated. While
this was in part due to the worldwide recession of the period,
Connor rightly assumed he was the target of an economic boycott.
In 1975, faced with mounting inflation, unemployment, and popular
discontent, Connor turned to his fellow cabinet ministers for the
authority to raise the $4 billion he needed to regain control of
Australia's economy and natural resources, or as he put it, "buy
back the farm." Connor's plan was approved, and within weeks he
was introduced to a middle-aged Pakistani commodities dealer who
claimed he could obtain the loans for Connor at extremely attrac-
tive rates. What Connor didn't know, but should have, was that
the commodities trader, Tirath Khemlani, was a well-known hustler
with a long history of shady associations. As details of the
loan arrangements and Khemlani's ties to international arms
traffickers dribbled out, Connor was forced from office.
With the Labour government still reeling from the scandal, a
coalition of conservative parties huddled with their lawyers to
discuss plans for ridding themselves of Whitlam and his policies
once and for all. Upon close scrutiny of the Australian consti-
tution, the conservatives reasoned that the governor general, a
representative to the queen of England, could, at least in
theory, dismiss and entire government with the stroke of a pen.
All that was needed, they argued, was the appropriate crisis.
The "Loans Affair," as it became known, was made to order.
The office of governor general is a formal relic from
Australia's colonial past. The post was entirely nominal,
appointed by the prime minister and traditionally filled by an
elder statesman, whose primary responsibilities included atten-
dance at the funerals of foreign dignitaries and state balls.
But the governor general is also tasked with "advising" the queen
to commission the leader of the ruling party as prime minister.
The queen, of course, never declines. But what, the conserva-
tives wondered, would happen if the governing party were unable
to pass its annual budget? Could the governor general then
declare them unable to rule and install the opposition party as a
caretaker government in their place? The conservatives believed
he could, and set about putting their plan in motion. Citing the
Loans Affair as evidence of mismanagement, the conservatives
blocked the Labour budget proposal. Before the Labour government
could act, Governor General Sir John Kerr canceled Whitlam's
commission. Thus for the first time in modern Australian histo-
ry, a "queen's representative" had dismissed a constitutionally
elected national government in what has become known as "the
Constitutional Coup." Although an election was held several
weeks later, Whitlam's supporters were apparently not prepared to
wage a constitutional revolution, as the conservatives were swept
into office.
MEANWHILE, BACK IN THE STATES
Labour's defeat was good news indeed for Phil Kendrick.
"When the conservative government won the election," he said,
"they then changed all the rules and regulations and laws and
made it attractive to acquired acreage [for exploration]. If
that hadn't happened, nobody ever could have gone back in there.
that was crucial."
In this newly attractive business climate, Kendrick began
looking for Australian investments. He eventually discovered a
small Canadian firm known as Coral Reef Petroleum, Inc., which,
through its subsidiary Earth Energy, Inc., owned the prospecting
rights to approximately 35 million acres of Australian oil and
gas lands. Kendrick jumped at the opportunity and Harken pur-
chased the companies in exchange for stock, along with their
Australian assets. By the time the deal was completed a year
later, Harken, in conjunction with a consortium of companies
headed by Esso Exploration and Production Australia, Inc., a
subsidiary of Exxon Corporation, controlled the exploration
rights to nearly 50 million acres of prime oil and gas drilling
territory in Queensland, Australia.
By 1983, there were 13 discoveries made on Harken's Austra-
lian properties. Before production began and the money started
rolling in, however, Kendrick and Mulligan sold their interest in
Harken to a group of East Coast investors with virtually no
experience in the oil business. Uncomfortable with the notion of
a wildcat prospect half a world away, Harken's new owners sold
the company's Australian holdings for the security of a sure
thing. "As I recall," Kendrick said, "they sold our Australian
subsidiary for $4 million cash. So that turned out to be profit-
able, but not nearly as profitable as it would have been if
they'd kept the property. There's now a tremendous amount of
production on those properties."
Harken and its investors, no doubt, believed they had simply
capitalized on an attractive business venture. Whether they
realized it or not, however, they had been the beneficiaries of
an intelligence operation perpetrated against the Australian
government.
DIRTY DEEDS DOWN UNDER
It was not just politicians and oil company executives who
were incensed by Gough Whitlam's progressive policies. Whitlam
and his government also incurred the wrath of both the American
and Australian intelligence services. In his memoirs, Honorable
Men, former CIA director William Colby lists "a left-wing and
possibly antagonistic government in Australia" as among the major
"crises" of his term as America's top intelligence officer--
right alongside the Soviet threat to intervene in the 1973
Israeli-Egyptian war. Of particular concern to Colby and others
of his ilk was Whitlam's threatened exposure of CIA "assets" in
Australia.
The agency's most treasured Australian asset was a huge,
heavily fortified military installation known as Pine Gap.
Situated in the red moonscape desert of the Australian outback,
flanked by American cruise missiles, Pine Gap is a super-secret
satellite tracking station considered the most strategically
valuable base outside of North America. It is from Pine Gap, for
example, that the United States monitors Soviet spy satellites
and intercepted enemy communiques during the Vietnam war. It is
also the point from which the CIA eavesdropped on loan negotia-
tions between Rex Connor and Tirath Khemlani.
Pine Gap was ostensibly built as a space research station
during the 1960s as part of a treaty between the American and
Australian governments. Under the terms of the pact, the United
States agreed to provide the Australian Defense Department with
information gathered through the facility. In reality, the most
sensitive operations at Pine Gap are tightly controlled by the
CIA which, naturally, shares the collected intelligence with the
Australian Security Intelligence Organization. the only one left
in the dark in this arrangement was the Australian government.
>From the day it was built, no prime minister, not Whitlam nor any
of his predecessors, was ever told exactly what went on at Pine
Gap.
It was ultimately the loans scandal that gave Whitlam his
first glimpse into the activities at Pine Gap. At the height of
the crisis, Whitlam heard rumors that the facility was a clandes-
tine American intelligence operation and that CIA personnel
stationed there were providing campaign funds to the opposition
conservative parties. Whitlam also discovered that former Pine
Gap chief Richard Stallings was a CIA officer operating under
cover of the Defense Department. Stallings had even rented a
house from then Deputy Prime Minister J. Douglas Anthony, a
leading member of the opposition.
During a campaign speech in November 1975, Whitlam publicly
accused the opposition of being "subsidized by CIA money." He
also identified Anthony as the man having the primary "associa-
tion with CIA money." Although Whitlam did not name Stallings as
the conduit for these funds, The Australian Financial Review the
next day reported that Stallings had lived in Anthony's house and
that both Pine Gap and Stallings were CIA.
These revelations were greeted with considerable alarm at
the White House. The agreement with the Australians governing
Pine Gap was up for renewal on December 9, 1975, just weeks away.
Moreover, the U.S. House Intelligence Committee investigating
covert operations between 1962 and 1972 had issued subpoenas
demanding that Secretary of State Henry Kissinger release intel-
ligence reports on Soviet compliance with the 1972 Strategic Arms
Limitation Treaty (SALT). Pine Gap was, of course, central to
monitoring Soviet missile tests. Any hint of a scandal could
jeopardize the entire Pine Gap agreement.
Whitlam, however, kept up his attack, announcing that he
knew of at least two specific instances in which the CIA had
funded the opposition. The CIA issued a perfunctory denial,
insisting it had no involvement in Australian politics. The
State Department followed suit, categorically denying that
Richard Stallings was with the CIA. In the Australian House of
Representatives, opposition leaders demanded that Whitlam sub-
stantiate his charges. Whitlam agreed, saying he would produce
his evidence in a live radio broadcast scheduled for November 11.
That was the CIA's cue to act. On November 8, the CIA's
chief of clandestine operations for the Far East, Theodore
Shackley, who would later resurface as a key figure in the Iran-
contra scandal, issued an ultimatum to the director general of
the ASIO. In a remarkable cable that was eventually leaked to
the Australian press, Shackley first admitted that Richard
Stallings was, in fact, "a retired CIA employee." He then went
on to complain of other CIA personnel being exposed by Whitlam
and in the press. "Is there a change in the prime minister's
attitude in Australian policy in this field?" Shackley asked.
Finally, Shackley played his trump card. Invoking the third-
person voice typical of CIA communications, Shackley wrote: "CIA
feels everything possible has been done on a diplomatic basis,
and now on an intelligence liaison link they feel that if this
problem cannot be solved they do not see how our mutually benefi-
cial relationships are going to continue." This was the ultimate
sanction: Shackley was threatening to cut off relations with a
sister intelligence agency.
Shackley's cable arrived on the desk of defense secretary
Sir Arthur Tange on November 10. Tange, whose responsibilities
included oversight of Australia's intelligence services, phoned
Whitlam's aides, warning that the prime minister's insistence on
exposing Stallings and his CIA colleagues the following day posed
"the gravest risk to the nation's security there has even been,"
according to Mother Jones. "What Tange did not tell the prime
minister was that his department's intelligence unit had been
host that weekend to a visit by none other than Governor General
Kerr," Mother Jones reported. "Although neither Tange nor Kerr
has ever acknowledged the meeting, Kerr was briefed at an instal-
lation ten miles outside of Melbourne about American fears that
Pine Gap was about to be exposed and that Whitlam might refuse to
sign the renewal agreement for the base." It is now known,
moreover, that Kerr had close ties to the CIA. "The CIA paid for
Kerr's travel, built his prestige, and even published his writ-
ings through a subsidized magazine," according to The Crimes of
Patriots, a book by former Wall Street Journal reporter Jonathan
Kwitny.
Whatever Tange and his colleagues said to Kerr over that
weekend in Melbourne, it worked. On November 11, 1975, the day
Gough Whitlam was to expose Richard Stallings in Parliament,
Governor General Kerr revoked the prime minister's commission.
The CIA's secrets were protected, and the Pine Gap treaty went
through.
Whitlam was not the only casualty of this period, however.
On the very day Whitlam first revealed Richard Stallings's CIA
ties, President Gerald Ford fired CIA Director Colby. Kissinger
had decided Colby was a little too forthcoming with congressional
investigators. Ford replaced Colby with Republican Party stal-
wart George Herbert Walker Bush, who, he knew, would stall
Congress for as long as Kissinger wanted. It is deeply ironic
that George Bush should have risen to the head of the intelli-
gence community in this manner, given his own oil company's
activities in Australia during the 1960s and his son's later
involvement with Harken, a company that directly benefited from
the Constitutional Coup.
CHANGING THE GUARD
When Harry Mulligan and Phil Kendrick sold their stake in
Harken in 1983, they were bought out by a group of investors
headed by New York attorney Alan G. Quasha. Quasha, a partner in
the firm of Quasha Wessely & Schneider, shelled out $250,000 for
100,000 shares of the company. The remaining 10 investors,
including Quasha's brother, Wayne, a member of their father's
Philippines law firm, paid $775,000 for 310,000 shares.
Kendrick, however, recalls being perplexed by the deal. "I never
could understand why Alan Quasha wanted to buy an oil and gas
company at a time when he knew nothing about oil and gas and
especially at a time when everything was beginning to go downhill
and fall apart," Kendrick said. It was not the last time
Kendrick would be surprised.
One of the group that bought into Harken with Quasha was
Herbert Theodore Brunn, a retired vice president of international
operations for RCA. Brunn says he was drawn to the company by
its Australian assets. "I thought that was the most attractive
thing about it," Brunn said, "[but] they sold those out to
somebody to raise money. That was the first deal, I think, that
Quasha made, was to sell those holdings off. There really wasn't
much to the company except for those holdings at the time. ...
When they sold those out, I more or less got out of the thing."
Curious as Quasha's activities may have been, individuals
whom he brought to Harken have also raised eyebrows. Quasha, who
now sits on Harken's board, is also a director of North American
Resources, Ltd. (NAR), a British Virgin Islands company and
Harken's second-largest stockholder. According to Harken's proxy
statement, NAR is a partnership between the Quasha family and the
Richemont Group Limited, a publicly traded Swiss company con-
trolled by South African billionaire Anthony E. "Anton" Rupert.
Rupert, through his companies, Richemont and the South African-
based Rembrandt Group, controls such well-known enterprises as
Rothmans International, manufacturers of Dunhill cigarettes,
luxury-jewelry retailer Cartier International, and MontBlanc
pens.
NAR is also the parent company of Intercontinental Mining
and Resources Limited (IMR), another major Harken stockholder.
IMR "and its affiliates" also own large stakes in two Harken
subsidiaries, according to Harken's proxy.
LAWYERS, GUNS AND MONEY
Quasha's most interesting affiliation, however, is not
financial but familial. Quasha's father, William Howard Quasha,
is a powerful Philippines attorney with some interesting associa-
tions of his own. The senior Quasha, the only U.S. attorney
licensed to practice in the Philippines, has numerous ties to
individuals involved in Australia's infamous Nugan Hand Bank, an
institution utilized by CIA officers Theodore Shackley and Thomas
Clines of Iran-contra fame, along with their subordinate Edwin
Wilson (who is currently imprisoned for selling plastic explo-
sives to Libya), to fund a variety of covert operations, includ-
ing the destabilization of Gough Whitlam's Labour government in
1975. Australian government investigations during the late 1970s
and early 1980s also revealed Nugan Hand's involvement in gun
running, drug-money laundering, and close ties to the U.S.
military and intelligence communities. The scandal-ridden bank
collapsed in June 1980, six months after its co-founder, Frank
Nugan, was found shot to death in his Mercedes Benz 90 miles
outside of Sydney. Found on Nugan's body was the calling card of
his attorney--former CIA director William Colby.
In April 1980, as Australian government investigators closed
in on Nugan Hand, the co-administrators of the bank's Manila
offices, U.S. Gen. LeRoy J. Manor and British subject Wilfred
Gregory, turned to their lawyer, William Quasha, for advice. In
addition to his duties with Nugan Hand, Manor was chief of staff
for the U.S. Pacific Command and the U.S. government liaison with
Philippine dictator Ferdinand Marcos. Gregory was Nugan Hand's
original representative in the Philippines and a personal friend
of Marcos's brother-in-law, Ludwig Peter Rocka, whose family
deposited $3.5 million in the bank. Gregory has stated that
Manor's decision to flee to the Philippines to avoid imprisonment
was inspired by a conversation with Quasha. Gregory says Quasha
"arranged for Manor to leave the country," according to The
Crimes of Patriots. "He told me to go too. He said, 'You could
wind up in jail.'"
Manor, however, denies every receiving legal counsel from
Quasha. He says he knew Quasha only through their work with the
Boy Scouts of America. "I didn't deal with him in that regard,
professionally," Manor told the Texas Observer. "I knew him in
the Scouts and I knew him somewhat socially." Quasha, however,
acknowledges counseling both Manor AND Gregory, but says that
attorney-client privilege prevents him from saying whether he
told them they faced possible imprisonment, or whether he advised
Manor to leave the Philippines. "[Gen. Manor] had a problem here
and I handled his work," Quasha said. "I don't discuss clients'
business."
What Quasha WILL discuss is that he had additional dealings
with Gregory. "I did a little emigration work for [him]," Quasha
said. "Now that may have been paid for by the firm [Nugan Hand],
but I billed him."
William Quasha's ties to Nugan Hand do not end there,
however. The bank's president, retired Adm. Earl "Bud" Yates,
says he met Quasha on "maybe two occasions" during social func-
tions in the Philippines. Although Yates cannot recall who
introduced them, Quasha says it was Gen. Manor. Quasha also says
he was introduced to Nugan Hand cofounder Frank Nugan. "I met
him at a social affair as well," Quasha said. Asked whether
Frank Nugan had been involved in his meeting with Yates, Quasha
replied, "I'm not prepared to say."
Even more intriguingly, the Thailand offices of William
Quasha's law firm, Quasha Asperilla Ancheta Pena & Nolasco, are
in the same Bangkok building that Nugan Hand occupied. In fact,
when the bank held a gathering of its newly expanded staff in
January 1978, the chosen venue for the three-day affair was this
same Dusit Thani Building. Quasha says he was unaware of the
bank's presence in the building. "We have had an office in
Bangkok since that building was erected," Quasha said. "That was
23 years ago and there are many, many tenants in that building.
I never even knew that that company that you mentioned [Nugan
Hand] had an office in that building."
Quasha insists that he never had any dealings with Nugan
Hand directly. "I'm not at liberty to tell you why, but it would
have represented a conflict of interest," he said. "I represent
an insurance company that had a claim against them [Nugan Hand].
I'm not prepared to give details, but it would have precluded, in
any event, my ever representing them." Asked why this conflict
did not prevent him from counseling either Manor or Gregory,
Quasha replied: "My counselling of Gen. Manor and Mr. Gregory
were regarded as personal. I did not see this [as] a conflict of
interest. Besides, I had started advising them before I learned
about this conflict between our client and Nugan."
"VERY, VERY COINCIDENTAL"
In a 1982 interview with the Wall Street Journal, William
Quasha's client, Wilf Gregory, called Philippine dictator
Ferdinand Marcos "the best thing that ever happened to the
Philippines since it was discovered by the Spanish. ... The
Marcoses are bringing the simple things to people that you and I
take for granted." Although not quite as blunt about it, Quasha
has also expressed his admiration and support for Marcos.
At the height of the "People's Power" revolution that
eventually toppled Marcos and his bloody regime in early 1986,
Quasha and his American business associates in the Philippines
were getting edgy. "What we worried about, and it has come to
pass, were two things," Quasha said. "Number one was the loss of
American bases. We knew that as long as Marcos was there the
bases were safe. And the second thing we worried about was the
growth of communism in the Philippines." Quasha feared that if
presidential candidate Corazon Aquino took power, "we'd have
trouble with the communists." "It was the opinion of all respon-
sible Americans in the American Chamber of Commerce," Quasha
said.
When Marcos was openly accused of stealing the election,
Quasha fired off a telegram to Republican Congressperson Dan
Burton of Indiana, urging the United States not to intervene on
Aquino's behalf. Calling the election "the least dishonest and
least bloody" since the independence of the Philippines, Quasha
warned Congress against prejudging the situation based on the
"spate of distorted reports" in the media. Quasha also indicated
that at least 40 U.S. businesspeople in Manila, including the
Philippine head of Proctor & Gamble, shared his view. Burton
later read the cable on the floor of the House, stating that in
two days time, Quasha and his U.S. business associates would
produce evidence of as many as 50 cases of alleged vote fraud
perpetrated by the Aquino forces.
When new of Quasha's telegram reached the Philippines, it
sparked a rash of angry denials. The Philippines branch of the
American Chamber of Commerce issued a public disavowal of Quasha
and his views. "The American Chamber of Commerce of the Philip-
pines, representing some 500 members, unequivocally disassociates
the chamber from the statements of attorney William H. Quasha, as
reported in the press, regarding the recent elections," the
Chamber wrote in a public statement that appeared in the Manila
press. "The AMCHAM board deplores the partisan approach taken by
attorney Quasha, which is contrary to AMCHAM policy. The AMCHAM
board has no knowledge of 40 chamber members supporting Quasha's
views."
Quasha, however, insists that the chamber sanctioned the
cable from the beginning. "I had signed the thing, but it was
not anything to do with trying to influence public opinion in the
Philippines," Quasha said. "It was sent at the request of the
American Chamber of Commerce." According to Quasha, the chamber
only backed away from the statements when the negative conse-
quences of their pro-Marcos stand became apparent. "These guys
got all excited because their names were in the paper," Quasha
said. "The head of Proctor & Gamble had a hemorrhage because he
thought that Cory [Aquino] would boycott his company."
"We had information that there was funny business on both
sides of [the election]," Quasha said. "They [Aquino's support-
ers] had agents out buying votes.... What we wanted was for
America to keep her hands off this election, which she had no
business involving herself in."
The controversy eventually became serious enough that it
caught the attention of the U.S. government. On the day the
chamber's denouncement of Quasha appeared in the press, an
unidentified U.S. embassy official contacted Washington, DC. In
a now-declassified State Department memorandum, the unidentified
embassy official stated, "The Quasha letter is a wildcard thrown
out on the table by men whose lives and fortunes revolve on
relationships with the Marcos government."
That view was substantiated a few days later when the debate
spilled over into Congress. During a session of the House
Subcommittee on Asian and Pacific Affairs, Rep. Burton reiterated
Quasha's remarks. That, according to Stanley Roth, staff direc-
tor of the subcommittee, sparked a lively exchange between Burton
and the subcommittee's chair, New York Democrat Stephen Solarz.
"He [Quasha] was one of the only pro-Marcos voices heard during
the People's Power revolution," Roth said. "It got into a little
flap at our hearing because we found out that this guy worked at
a law firm that included [the] Marcos [family]. So we pointed
out that this guy wasn't exactly a neutral person."
In fact, listed as a member of Quasha's firm is one "Mariano
P. Marcos (1937-1985)," exactly the same name as Ferdinand
Marcos's father, a lawyer, who was stoned to death during World
War II for collaborating with the Japanese. Quasha says the
Mariano P. Marcos in his firm died in 1985 and "was no relation
to President Marcos," although he lived on Mariano P. Marcos
Street in metro Manila. Quasha calls this "very, very coinciden-
tal."
Although Quasha contends that he "was not benefited in any
way during Marcos's time," he openly admits his admiration for
the Philippine dictator. "In all, Marcos was never unkind to me
personally," Quasha said. "Whenever I went to see him on behalf
of a client...he was quite friendly. And I liked his man-to-man
approach.... We had respect for each other."
Even Quasha, however, grudgingly acknowledges Marcos's
transgressions. "Now, of course, we see what a crook he was,"
Quasha said, "but it was not evident to the public eye [at the
time]. Even after all this time, five years, they still have not
proven it. But certainly there's a lot of evidence that he was
robbing the country."
THE SWISS CONNECTION
Further evidence of Marcos's malfeasance surfaced recently
when a Philippine official announced that the former dictator's
body could be allowed into the country for burial in exchange for
$5 billion in gold allegedly stolen from the nation and hidden in
a Swiss bank. David Castro, chair of a presidential commission
charged with recovering funds Marcos allegedly stole from the
Filipino people, said the gold could be used as evidence of
Marcos wrongdoing during his 20-year-old rule, according to the
Los Angeles Times. Castro said Marcos deposited the gold, 325
tons, at the Union Bank of Switzerland. The bank denies the
claim, according to the Times.
Union Bank is an institution with which Harken is well
acquainted. In 1987, Harken unveiled a $25-million stock offer-
ing through the securities firm of Stephens, Inc. of Little Rock,
Arkansas. Stephens placed the stock with a Union Bank subsidiary
in London. In October 1988, Business Week reported that Union
Bank held a 5.5 percent stake in Harken. The bank later sold its
Harken shares to a wealthy Saudi Arabian businessperson, Abdullah
Taha Bakhsh, who is now the company's third largest stockholder.
But Union Bank's name also turned up in Australia's Consti-
tutional Coup in 1975. The Loans Affair that brought down the
Whitlam government first erupted when a package of fake documents
used to start the scandal was sent off with a cover letter on
Union Bank letterhead. "By the time the opposition parliamentar-
ians who received the package had turned its contents over to the
press, the signature had been torn off the letter," according to
The Crimes of Patriots. "Even though the documents wee later
exposed as bogus, their publication helped weaken and ultimately
destroy the Whitlam government."
Union Bank's connection to Nugan Hand is not limited to the
1987 stock purchase. Bernie Houghton, a secretive Texan de-
scribed in The Crimes of Patriots as "the mystery man of Nugan
Hand [and] perhaps its most important figure," was well
acquainted with a traveling Union Bank official. Houghton, who
may actually have introduced Nugan Hand cofounder Frank Nugan to
his future partner, Green Beret war hero and CIA operative
Michael Jon Hand, introduced the Union Bank official to Nugan
Hand representatives in Asia, according to The Crimes of Patri-
ots.
Frank Nugan himself also had dealings with Union Bank.
After Nugan was found shot to death in his car in January 1980,
it was discovered that he had forged the signature of New South
Wales attorney general Frank Walker on a letter to Union Bank,
opening an account in Walker's name. At the time, Walker was
directing criminal fraud proceedings against Nugan and his
brother Ken (who was also charged with obstruction of justice and
embezzlement) for their role in a stock scandal involving the
family fruit business. "The only reason for writing such a
letter," according to The Crimes of Patriots, "would be to try to
frame Walker, to embarrass or blackmail him. But Walker says he
never heard about it until the letter was found after Nugan's
death."
Union Bank was also identified in congressional testimony as
one of several institutions that deliberately skirted Panamanian
guidelines aimed at curbing drug-money laundering. In an effort
to reduce this illegal laundering activity, the Panamanian
Bankers' Association in 1984 proposed a voluntary $5 million
limit on the amount of U.S. currency that any one bank could
return to Panama. But in a deposition before the House Subcom-
mittee on Terrorism, Narcotics and International Operations in
1988, Amjad Awan, the former manager of the infamous Bank of
Credit and Commerce International (BCCI) and deposed Panamanian
dictator Gen. Manuel Noriega's personal banker, stated Union Bank
and other Swiss banks deliberately avoided compliance with the
restrictions by chartering aircraft to fly currency out of the
country.
Several key Harken figures also have ties to Union Bank.
William Quasha's son, Alan, who sits on Harken's board, is also
the chair of Frontier Oil and Refining Co. of Denver, Colorado,
where Harken President Mikel Faulkner is a director. Frontier is
controlled by Anton Rupert, the Quasha family's partner in
Harken. When Rupert acquired Frontier in a leveraged buyout in
1988, he announced an $85 million "revolving credit facility"
with Union Bank of Switzerland, replacing all of the refiner's
previous "working capital facilities," according to National
Petroleum News.
Faulkner told the Texas Observer he was unaware of Union
Bank's connections to Nugan Hand. "No, I didn't know that,"
Faulkner said. Alan Quasha did not return repeated phone calls.
Anton Rupert did not respond to the Observer's request for an
interview.
SLICK DEAL
When Harken's $25 million stock offering was placed with
Union Bank in 1987, the transaction was handled by brothers David
and Mike Edwards, account managers with Stephens, Inc. (David
Edwards had made headlines in the late 1970s, when he blew the
whistle on irregular foreign currency transactions at Citibank in
New York.) After leaving Stephens and starting an investment
firm with his brother, David Edwards played a key role in landing
the Bahrain deal for Harken.
In April 1989, Bahrain was looking for a company to explore
its offshore acreage. They employed the services of Michael
Ameen, the American-born son of Arab immigrants, who spent 22
years with the Arab American Oil Co. (Aramco), the world's
largest petroleum outfit, and 13 years running Mobil Oil's Middle
East operations. Edwards, an old friend of Ameen's, put him in
touch with Harken. After months of negotiations, Harken signed a
production-sharing agreement with Bahrain in January 1990. The
deal gives Harken the exclusive exploration, development, produc-
tion, transportation, and marketing rights to most of Bahrain's
offshore oil and gas reserves. The territories covered by the
pact lie sandwiched between the world's largest oil field, off
the shore of Saudi Arabia, and one of the biggest natural gas
fields, off the shore of Qatar. Bass Enterprises Production Co.,
the oil and gas exploration and development arm of the Fort
Worth's billionaire Bass family, will finance Harken's Bahrain
venture in exchange for a cut of the profits.
At the time the deal was announced, oil industry analysts
marveled at how this virtually anonymous company had landed such
a potentially valuable concession. "This is an incredible deal,
unbelievable for this small company," Charles Strain, a Houston
energy analyst told Forbes magazine last September. Forbes,
however, failed to point out Harken's powerful political connec-
tions. Notably absent from the article was any reference to
President Bush's eldest son, George W. Bush Jr., who sits on
Harken's board of directors and is a $50,000-a-year "consultant"
to the company's chief executive officer. Bush, who is the
managing general partner of the Texas Rangers baseball club and
frequently mentioned as a future candidate for statewide office,
also holds roughly $400,000 in Harken stock.
BEATING AROUND THE BUSH
George W. Bush Jr.'s involvement in Harken first came under
scrutiny last October when Houston Post investigative reporter
Pete Brewton discovered that the President's son had sold off
much of his Harken stock just weeks before Iraq's invasion of
Kuwait on August 2, 1990. Within days of the invasion, the value
of Harken shares dropped dramatically, primarily due to fears
that a war would jeopardize the company's agreement with Bahrain.
Even armed with the knowledge of the Bush's transaction, however,
Brewton could find no record of it on file with the Securities
and Exchange Commission (SEC).
The mystery of the missing documents was finally resolved on
April 4, 1991, when the Wall Street Journal reported that Bush
had failed to report the "insider" stock sale until March of this
year, nearly eight months after the federal deadline for disclos-
ing such transactions. According to the Journal, documents filed
with the SEC indicate that on June 22, 1990, Bush sold 212,140
shares of his Harken stock for $4 per share. The sale repre-
sented 66 percent of Bush's holdings in the company and raised
$848,560.
Bush sold his Harken shares at near top market value. Just
one week after Iraqi troops marched into Kuwait, for example,
Harken traded for just $3.03 per share, down nearly 25 percent
from the price Bush received for his shares seven weeks earlier.
Until recently, Harken had been trading for around $4 per share
and had dropped as low a $1.12 during the past year. Over the
past several weeks, Harken's stock has fluctuated wildly, hitting
an all-time high of $8.75 on July 28, before settling back to a
more realistic $6.63 the following day. Analysts attribute the
sudden price surge to Harken's plans to begin drilling its first
well in Bahrain in October.
Under SEC regulations, Bush should have reported the sale of
his Harken holdings by July 10, 1990. According to the Journal,
however, Bush did not disclose the transaction until the first
week of March 1991. In the past, the SEC has mounted civil suits
against flagrant violators of insider-trading rules, but such
actions are uncommon. "The commission can take a variety of
actions in cases in which SEC filing rules are not complied
with," said Mary McCue, director of the SEC's Office of Public
Affairs. "I don't want to speculate on actions because each case
is analyzed individually.... In fact, we neither confirm nor deny
that investigations are underway."
President Bush did not return the Observer's phone calls.
The White House press office said it had "nothing to share" on
the matter.
OIL'S WELL THAT ENDS WELL
On a visit to Australia in 1982, former CIA director and
then vice president George Bush gave Labour Party leaders his
personal assurance that the CIA was not involved in either the
Nugan Hand Bank scandal or the destabilization of Gough Whitlam's
government. But this was purely subterfuge, for the CIA clearly
DID engage in operations designed to alter the course of
Australia's domestic affairs, as it has so many times, in so many
countries, to the benefit of so many multinationals--including
Harken.
But this should come as no surprise, really, for U.S.
foreign policy is driven by the interests of these multi-
nationals. The fact that Harken and its high-powered associates,
for example, profited from the CIA's activities in Australia,
American support for Marcos in the Philippines, and George Bush's
recent war in the Middle East, is not exceptional. It is merely
a crystalline example of the interrelation between U.S. corporate
and political interests. For Harken, unfortunately, is not the
exception, but the rule.
Texas Observer intern Tracy Shuford provided research assistance
for this story.
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