Boston, Oct. 9 (Reuters): President George W. Bush’s former oil firm entered into a partnership with Harvard University that concealed the company’s financial woes and may have misled investors, a student and alumni group said in a report today.
The report said the partnership between Harken Energy Corp. and Harvard, created with Bush’s approval, bore strong resemblance to the partnerships that helped disguise Enron’s problems. The White House disputed that comparison.
HarvardWatch, an independent group of students and alumni that monitors the school’s investments, said the partnership raised troubling questions about the university’s involvement in Harken when Bush was a board member.
The deal, which HarvardWatch said improved Harken’s financial position, also gave further evidence of improper corporate practices at Harken while Bush was a director, the group said.
A spokesman at the White House brushed aside the group’s suggestions of malfeasance and its comparing of aspects of the Harken-Harvard partnership to Enron’s so-called off balance sheet transactions. “Harvard proposed and set the terms of the partnership,” White House spokesman Scott McClellan said. “Independent reports note that it was fully disclosed and complied with accounting rules, so there really is no comparison.”
“In addition, Harvard’s relationship with Harken began before the President joined the board,” McClellan said.
Harvard Management Co., which oversees the school’s endowment, was the biggest shareholder in Harken in 1990 when the two sides agreed to the Harken Anadarko Partnership. Harken is an oil and gas exploration and production firm with operations in the Texan oil belt and internationally, in Colombia.
Over the next two years, the partnership allowed Harvard to bail out Harken’s business by removing from its books a large percentage of the company’s loss-generating assets and debts in the Anadarko region of Texas and Oklahoma. The manoeuvre improved Harken’s official financial position, leading to a gradual recovery in the oil firm’s share price. Harvard profited from the upswing to unload some 1.6 million shares of the company.
Bush — who held three high-level positions at Harken, according to HarvardWatch — gave the deal his personal approval according to minutes of the August 29, 1990 board meeting.
HarvardWatch said key parts of the report, including the minutes, were obtained by the Center for Public Integrity under the Freedom of Information Act.
Officials at both Harken and Harvard were not immediately available for comment.