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On several occasions Quasha's deals have been marked by apparent conflicts of interest. Last year he tried in vain to get Harken to buy a privately held refinery, Frontier Oil, in which he owned a sizable stake. In another instance Quasha sold Harken's Hawaiian retail unit to a company controlled by both his own family and the South African Ruperts. Harken booked an $8 million gain on the deal, only to write it all off later as a loss.
One of Harken's few profitable ventures was its high-flying commodities trading arm. But suddenly in 1989 the division racked up a $17 million loss, prompting Quasha to shut down the operation. Insiders say the oil traders never had careful supervision, systematic controls or enough money in the bank to ride out a downturn.
By the end of the 1980s, Harken was bloated and indebted, but it won a windfall. Bahrain, which produces a mere 42,000 bbl. of oil a day (Saudi Arabia's output: more than 8 million), decided to hunt for more crude. In 1989 Bahrain officials suddenly and mysteriously broke off promising talks with Amoco. One minister then telephoned an old friend, Michael Ameen, the respected former head of Mobil's Middle East operations. "They wanted a small American company," claims Ameen, who says he drew a blank. But 10 minutes later, Ameen got a call from an investment banking friend in Arkansas, who recommended Harken.
Yet Harken had almost no cash to carry out the job, so it brought in the billionaire Bass brothers to finance the drilling, which could ultimately cost $50 million. What remains inexplicable is why Ameen or the Bahrainis didn't go to the Basses or other experienced wildcatters in the first place.
With the Bahrain deal in hand, Quasha decided to dump almost everything else. The company owned 1,000 wells and 600 gas-station pumps, all of which helped produce more than $40 million in losses in 1990. Earlier this year, Quasha spun off Harken's debt-laden businesses into separate public companies and then retired as chairman. "I've yet to find a business that's had nothing but successes," says he. "We've obviously had disappointments."
George Bush Jr. was probably never a prime mover behind the Bahrain deal. In fact, board members say he voiced doubts about whether Harken had the means and expertise for such a distant oil play. Even so, he has already earned a handsome profit from it. In late June 1990, five months after the deal was ( sealed and about a month before Iraq invaded Kuwait, young Bush sold 66% of his Harken stake (or 212,140 shares) at the top of the market for nearly $850,000, which represented a 200% profit on his original stake. Yet he failed to report the transaction until last March, in apparent violation of Securities and Exchange Commission rules. Bush contended at the time that the SEC had misplaced the report. Responds SEC spokesman John Heine: "As far as I know, nobody ever found the 'lost' filing." Bush declined to comment on either the incident or his involvement with Harken.