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 TIME on politics Congressional Quarterly CNN/AllPolitics CNN/AllPolitics - Storypage, with TIME and Congressional Quarterly

Bush as businessman

How the Texas governor made his millions

Brooks Jackson/CNN

May 13, 1999
Web posted at: 6:00 p.m. EDT (2200 GMT)

ARLINGTON, Texas (May 13) -- In Austin, Texas, not everyone admires Gov. George W. Bush.

Radio host Jim Hightower is one such Bush critic. "He says he's a compassionate conservative," Hightower said. "I say he's a crony capitalist."

"Crony capitalist?" Maybe. Multi-millionaire? Certainly.

Bush started in the Texas oil business, after Yale University and Harvard Business School. Wealthy family friends and others invested millions with him, but with poor results. A 1985 disclosure shows Bush's track record: Investors got back only 45 cents on the dollar, but few complained.

Investors also got tax deductions averaging more than 80 cents on every dollar invested. Those early Bush ventures were mainly tax shelters.

When his father was president, there were suspicions that the Persian Gulf nation of Bahrain tried to enrich the younger Bush. Bahrain granted an exclusive drilling contract to Harken Energy Corporation, in which the younger Bush held stock. But he says he opposed the deal.

Bush spokesperson Karen Hughes says, "He felt the company just was not large enough, that it was outside the scope of their experience." And the deal turned out to be a loser, abandoned after two expensive dry holes.

In 1990 Bush unloaded most of his Harken shares for $835,000 about two months before Harken announced a big loss. That triggered an investigation by the Securities and Exchange Commission into possible insider trading by Bush, but the SEC took no action.

A look at Harken's stock price may show why: Bush sold for $4 a share. Harken stock did dip to $2.38 the day after the bad earnings were released, but four days later bounced right back to $4 a share, exactly what Bush had been paid.

And the stock kept rising: Bush attorney Robert Jordan said, "A year later, in fact, the value had doubled to $8 a share."

So Bush could have done much better if he had waited.

Bush did not make his fortune in the oil fields. He made it at a major-league ball park heavily subsidized by taxpayers.

Bush takes credit for conceiving The Ballpark at Arlington, home of the Texas Rangers baseball team, which he bought in 1989 with a wealthy group of investors. Among them: billionaire Richard Rainwater of Fort Worth.

Bush invested just over $600,000, but Arlington taxpayers invested a lot more.

"It was $135 million worth of sales tax money," said attorney Glenn Sodd. "The city donated a good bit of land to the project. They got a sales tax exemption on all the items that were purchased for the stadium. We have a property tax in Texas and they were given as part of the deal a property tax exemption." A total of at least $200 million, according to Sodd.

And there's more: Sodd sued the Rangers on behalf of two families whose property was seized for stadium parking. A jury found they were paid about one-seventh of what the land was worth.

But the Rangers defend the deal.

"Basically, what we think we did was to create a model public-private partnership in which both sides came out ahead," said Bush partner and Rangers President Tom Schieffer.

Bush declined to be interviewed, but Schieffer says taxpayers got their money's worth.

"That's what we have always said in this process: 'If this wasn't good for Arlington, don't do it.' And that's the way we took it to the voters," Schieffer said. "We said, 'This is going to be good for the Rangers, no question about it. This is going to be good for us. But if it's not going to be good for you, don't do it.'"

The team threatened to move, and Arlington taxpayers voted in a half-cent increase in the sales tax. The vote was 2-to-1.

The new, subsidized stadium turned out to be a great deal for Bush. He was the most visible partner, and the publicity helped launch him into the governorship in 1994. And when the team was sold last year Bush's share came to at least $14.9 million with perhaps another $1 million or $2 million still to come.

Jim Runzheimer is one Arlington resident who opposed the deal.

"He put $600,000 into this project and he did a little bit better than Hillary Clinton," Runzheimer said. "She only made ... $100,000 or $200,000, from her dealing in commodities. Gov. Bush has made $15 million."

Fans love the stadium. And the team has flourished financially.

"Looking at it from the perspective of a businessman, this was an awfully sweet deal for the business," said Sodd. "Looking at it as a public official, we think it's lousy policy to use government money to subsidize billionaires in the pursuit of their business interests."

So Bush the businessman did prosper. But not by his bootstraps -- with help from wealthy friends and taxpayer subsidies.


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Thursday, May 13, 1999

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