|
Dishonesty rampant Harken = Enron Bush = Lay
When you look at the details of what Bush did at Harken, and what The folks at Enron did, the similarities are eerie. There is an excellent article in the LA Times that explains what Harken did:
Harken acquired Aloha in 1986 when it bought a multi-state gas retailer called E-Z Serve. When it announced its plan to sell 80% of Aloha in 1989, it said Hawaii was too far away from its other gasoline markets and required too much management attention.
But the new owners looked an awful lot like the old owners. The buyers were an investor group controlled by the family of Harken Chairman Alan G. Quasha. The sales price was $12 million, of which $11 million would come in the form of a loan from Harken, with no payments due for several years. Although the company received only $1 million, it recorded a $7.9-million profit on the sale.
Harken reported a net loss of $3.3 million for that year. It was bad news for shareholders, but it could have been much worse. Harken's commodity trading losses had reached $16.6 million by year's end. Without the Aloha profit, the 1989 shortfall would have been a real shocker.
Bush, a member of the board's audit committee, signed off on the deal, according to Harken documents. So did the company's outside auditor, Arthur Andersen & Co.
"The people at Enron could have gone to school on this thing," said Alfred King, former managing director of the Institute of Management Accountants, vice chairman of Milwaukee-based Valuation Research Corp. and former advisor to the Financial Accounting Standards Board.
"They sold to themselves and recorded a profit," King said. "That's exactly what Enron did on a number of those off-balance-sheet transactions. On this one transaction at least, it's almost identical."
Any wonder that Bush doesn't get it? Makes you realize how important integrity is, and how often it is lacking today in our "leaders".
|
|
