by Kitty Kelley
Howard Means, who taught Neil English at St. Albans, did not make that assumption, especially after meeting Neil’s parents. “It was probably thirty years after I had taught Neil that I met Barbara and George Bush. He had been out of office for several months, and they were at a party standing all by themselves. No one was paying any attention to them, so I walked over and introduced myself.
“‘Mr. President,’ I said, ‘I taught Neil at St. Albans. How is his grammar these days?’
“‘Well, he’s fine but he still ends a sentence with a proposition.’”
Means waited for Bush to laugh at his gaffe, but the President apparently did not realize he had made one.
Following graduation from Tulane’s business school, Neil campaigned as a full-time volunteer for his father in 1980, working in New Hampshire with former Governor Hugh Gregg. There he met Sharon Lee Smith, a schoolteacher. They were married in the summer of 1980 at Kennebunkport and moved to Denver so that Neil, like his father and his brother George, could get into the oil and gas business. Neil started his apprenticeship with Amoco as a lease negotiator for thirty thousand dollars a year. He planned to follow his father’s trajectory—make a fortune and go into politics. He had his heart set on becoming governor of Colorado.
“They’d talk about how G.W. was going to run for governor of Texas and Jeb would run for governor of Florida and Neil would run for governor of Colorado,” said Douglas Wead, a Bush family friend who served as a special assistant in the first Bush White House. “The family would have bet on Jeb. But if you just observed their personalities, you’d say Neil . . . He’s relaxed, he’s funny, he’s a better speaker than anybody in the family . . . He could easily have been a congressman.”
Being the son of the Vice President swung open doors that would have been closed to any other young man without social entrée. Neil and Sharon quickly became part of Denver’s social scene. Neil played squash at the exclusive Denver Club, and Sharon did volunteer work at the Children’s Hospital, the city’s most socially prestigious charity. Both were invited to the very best parties.
Within two years Neil decided to start his own oil business, although the oil boom had peaked in 1981. With James Judd and Evans Nash, he formed JNB Exploration in 1983. Neil and his partners only put up $100 apiece and bankrolled their company with $1 million from two Denver developers, Kenneth Good and Bill Walters. As president of JNB Exploration, Neil paid himself sixty thousand dollars a year. He hung a framed picture of his father on the wall of his office, and on his desk he displayed a nameplate that read “Mr. Bush.” Neil told visitors the nameplate had come from the U.S. Senate seat that once belonged to his grandfather Prescott Bush.
Impressed by Neil’s lineage, Kenneth Good wanted to further ingratiate himself with the Vice President’s son, so he lent Neil $100,000 to invest in commodities. Neil lost the investment, but Good forgave the loan. Walters also lent Neil $100,000, but he held on to the paper. In the spring of 1985 both men introduced Neil to their banker, Michael Wise, the president of Silverado Savings and Loan. Wise asked Neil if he’d like to join Silverado’s board of directors.
“I didn’t pretend to be an expert on the savings and loan business, but Wise said that was O.K.,” Neil recalled. His director’s fee was eight thousand dollars a year. “I guess it would be naive to think that the Bush name didn’t have something to do with it,” he added. Neil said he accepted Wise’s offer because he was eager to be respected as a businessman. “I was looking to further establish my roots in this town. I was under the impression then that joining the board of a financial institution is a way to establish one’s reputation in the community and to give you exposure to the people who are the players in a community, the people who make a difference.”
Ronald Reagan had deregulated the savings-and-loan industry in 1982, which allowed S&Ls to make riskier investments with less government oversight. Neil’s only banking experience had been a summer job filling out forms in the trust office of a Dallas bank. He was hardly qualified to provide adequate oversight of Silverado’s business practices or to see the questionable deals intended to cover up losses caused by bad loans.
Over the next three years, Neil encouraged Silverado to approve $200 million in loans to Bill Walters and Kenneth Good without fully disclosing to the other directors that both men were part owners of Neil’s company, JNB Exploration. Nor did Neil mention that he owed Walters $100,000 for a personal loan and that he had been forgiven another $100,000 loan by Good. When Kenneth Good offered to buy 80 percent of JNB and promised to put $3.1 million into the company by September 1987, Neil leaped. “It was a sweet deal,” he said.
Too sweet, thought Evans Nash, who was concerned about Neil’s relationship with the high-flying developer. Good lived lavishly, even by big-spending standards, and Neil seemed too dazzled by Good’s $10 million home that covered thirty-three thousand square feet and featured an indoor handball court and indoor and outdoor tennis courts. Good sped around Denver in a Maserati and flew to Monte Carlo on a private jet. “He was kind of free with his money,” Neil said. “He went for high-risk ventures, which is probably why he was interested in my oil business.”
Neil was not at all concerned that Good had persuaded Silverado to forgive $8 million in loans that he could not pay, but Nash was; he wanted out. He sold his interest in JNB Exploration to Neil, who immediately increased his salary to $120,000 a year, plus tax-free bonuses. He also joined the Petroleum Club and refinanced his house with a $300,000 mortgage from Silverado, which gave him a 2 percent break on the interest rate.
Neil, financially dependent on Good, persuaded Silverado to extend a $900,000 line of credit to the developer so that Good could participate in a business deal that JNB Exploration had in Argentina. Neil and his JNB business partner, James Judd, used the money to purchase a 50 percent interest in an oil concession in northern Argentina, but they ran out of money before the drilling started.
“In most circles, people might have sued us because there was a contractual obligation,” said James Judd. “To be quite frank, the fact that Neil was involved in this particular deal—I can’t help but think there was some preferential consideration.”
Rather than sue the son of the Vice President, the Argentine industrialist Santiago Soldati, who owned the other 50 percent interest, took on the full cost of the project. Two years later Soldati was invited as a special guest to George Herbert Walker Bush’s inaugural.
Silverado hemorrhaged money throughout 1986 and 1987, because Neil and the other directors approved $200 million in loans to Neil’s two partners in JNB, his abysmally unsuccessful oil company. Silverado’s failure was due in large part to those two partners, who defaulted on $132 million in loans. This default, plus other Silverado defaults, cost taxpayers almost $1 billion. The order to shut down Silverado did not come until the day after George Bush was elected President in November 1988, suggesting political interference to hold the news until after the election. Had the report been issued earlier, it might have influenced the election because of the involvement of Bush’s son. Regulators seized the savings and loan on December 9, 1988, and the Bush family’s “Mr. Perfect” became the poster child for bunco banking.
The Office of Thrift Supervision filed three conflict-of-interest charges against Neil and subpoenaed him for a hearing. The Federal Deposit Insurance Corporation filed a $200 million civil suit in Denver against Neil and the other Silverado directors. The House Banking Committee subpoenaed Neil to testify about his role as a director of Silverado Savings and Loan Association.
His mother was irate. “Neilsie is being persecuted,” Barbara fumed to the press.
“If it wasn’t for me he would not be getting this heat,” said his father. The avalanche of negative publicity that hit Neil upset his family.
“The focus would not be on Neil Bush today,” said his brother Marvin, “if my dad were not President.”
The President became emotionally distraught over the scandal en
veloping his son. “I remember being in a luncheon meeting with him and all of his advertising guys for the 1992 campaign,” said Bob Gardner of Gardner Communications. “Right in the middle of everything President Bush broke down and started crying over Neil. He said the kid was being unfairly attacked because of who his father is.”
After nine months the $200 million civil suit against Neil and the other Silverado directors was settled for $49.5 million, with $26.5 million to come from the pockets of the directors who had allowed Silverado to bleed to death. The directors were all insured, so in the end each one, including Neil, was charged only $50,000 as his share of the penalty. Neil didn’t even have to pay that himself or any of his legal fees, which amounted to $200,000. The entire amount—$250,000—was paid by a legal defense fund set up by his father’s good friend Lud Ashley, who turned to the Bushes’ friends to bail out the Bushes’ son. Some wondered why President Bush, with a declared net worth of $4 million at the time, did not pay his son’s legal fees himself. Because Neil had named his last child Ashley, in honor of his father’s good friend, the honored friend now came to Neil’s rescue.
“I did it because I was a friend of the family,” said Ashley, the former congressman from Ohio who was head of the Association of Bank Holding Companies when he passed the hat for Neil. At that time Ashley was supporting legislation submitted by George Bush’s White House to deregulate the banking industry. Some bankers in Ashley’s association felt uncomfortable with his actions on behalf of his friend’s son, because it created the wrong impression.
By then the savings-and-loan scandal had coiled around Neil’s neck like a noose, but the President’s son managed to escape a criminal indictment. In the OTS hearing, he was cited for “an ethical disability, a lack of skill in seeing ethical issues, he naively violated moral standards. Because he didn’t see, he didn’t engage in moral weighing . . . [T]he handicap does not absolve [him] of responsibility to depositors, shareholders, insurers and American taxpayers.”
Citing Neil Bush for “an ethical disability” was a public rebuke of George and Barbara Bush as parents: they had raised a son who either did not know the difference between right and wrong or was so avaricious that he deliberately ignored basic moral principles.
“The fact that man knows right from wrong proves his intellectual superiority to other creatures,” Mark Twain said. “But the fact that he can do wrong proves his moral inferiority to any creature that cannot.” The judge in the OTS hearing found Neil lower than a worm. He said Neil had violated “the worst kinds of conflict of interest” and recommended the OTS issue a cease-and-desist order restraining him from engaging in similar banking transactions in the future. Neil had to testify before the OTS for three hours on his own behalf. He was argumentative, uncooperative, and arrogant. At a later press conference he was even more defiant.
He approached the microphones, adjusted his tie, jammed his hands in his pockets, and denounced the “inaccurate” media, the “self-serving” regulators, and the “government bullies.” He denounced everything but his own actions. When a reporter asked him to concede that there was at least the appearance of a conflict of interest, he erupted.
“I’ll say it again,” he snapped. “I’m innocent of all charges.” Then he spoke as if the reporters were mutes with a limited understanding of English. Pausing after every word, he glared reprovingly.
“There. Was. No. Conflict. Of. Interest.”
The reporters were astounded that in the face of irrefutable evidence, Neil continued to maintain he was legally and morally in the right. “He seemed to believe it was his birthright,” wrote Steven Wilmsen in Playboy, “to profit at the nation’s expense.”
A cease-and-desist order was issued in April 1991, restraining Neil Bush from engaging in bank transactions for the rest of his life. Such an order from the OTS was unprecedented against someone no longer affiliated with a financial institution. For a businessman, the order was the shameful equivalent of a military man’s dishonorable discharge. Even so, Neil recovered faster than most from such a wallop.
Months before the hearing he had formed another company, Apex Energy, to prospect for methane gas in Wyoming. He invested $3,000 of his own money and received $2.7 million in capitalization from Louis Marx, a New York financier who had contributed $100,000 to George Bush’s campaign. Marx bought 49 percent of Neil’s company by using funds he had obtained from a Small Business Administration program designed to help “high risk start-up companies.” Neil paid himself $320,000 in salary over two years, plus $150,000 for an oil lease. In the company’s first year, it lost $708,000. By the second year, its stock was worthless. When the company defaulted on its SBA loan, Denver’s congresswoman Pat Schroeder called for an investigation, but the SBA declined to press the case. In April 1991, Neil resigned as president of the company.
He said the negative publicity had become unbearable. He unlisted his phone and stayed inside his five-bedroom house on the fourth tee of Glenmoor Country Club. “It just exploded into a public nightmare for me,” he said later. “I read all the newspaper stories. I worried about what the next leak was going to be. I worried about the impact on Dad and my role in this thing. I gained a little weight. I didn’t eat well.”
The fancy invitations soon fell off as Denver society jettisoned the young Bushes from the A-list. Barbara Bush flew in to co-host a fund-raising luncheon with Sharon Bush at the home of Bill Daniels, president of TransMedia, a cable-television conglomerate. More than $300,000 was raised for George H.W.’s 1988 campaign, but even the First Lady’s cachet did not help her son and daughter-in-law.
The final indignity came when Neil was unceremoniously dumped from the Colorado Tennis Association’s Clyde Rogers Memorial Day Open. After Neil and his tennis partner had trounced their opponents in a doubles match, an official protest was lodged, accusing Neil of playing in a bracket below his ability in order to win. Neil said he had not realized he was registered to play a team rated a full point below his U.S. Tennis Association rating of 5.5 (on a 10-point scale). “The bottom line is that it’s the player’s responsibility,” said the organizer, Harold Aarons. “He blew it as far as that goes.”
Neil and Sharon decided they had to leave town. Later Neil said, “We were evicted.” They put their house, which had been registered in Sharon’s name to protect their one and only asset, on the market and made plans to move to Houston, where the Bush name was still socially acceptable. At a going-away party hosted by the Republican National Committeeman Jim Nicholson, Neil apologized for any embarrassment he might have caused the party. He said he realized he’d been in the eye of the storm, and he regretted it. But, he added, he did not feel he had done anything wrong. Nicholson, who would be appointed Ambassador to the Vatican by Neil’s brother, agreed.
Democrats, of course, disagreed. At their 2000 national convention Colorado’s party chairman introduced his state on national television by announcing, “Colorado is the former home of Neil Bush, the brother of George W. Bush, who fled our state after plundering the hard-earned savings of working families in the Savings and Loan scandal.”
Despite his “ethical disability” and the cease-and-desist order, Neil found work through his father’s friend Bill Daniels. In 1990 Daniels wrote to the President, asking him to oppose regulation in the cable industry, which the White House subsequently did. A few months later Daniels hired Neil as the director of finance for TransMedia in Houston at sixty thousand dollars a year. Neil had no experience in communications, but Daniels said he “thought Neil deserved a second chance.”
Like Fredo in The Godfather, Neil is the Bushes’ bungling son—weak, superficially sweet, and forever dependent on the family’s connections. Those connections paid huge dividends in Houston as his father’s friends hired Neil for various “consulting” contracts. After he traveled to Argentina in June 1989 and played tennis with President-elect Carlos Menem, Neil was hired as a consultant by Plains Resources to prepare a bid to buy oil reserves
in Argentina. In Beijing in December 2001, Neil dined with Chinese President Jiang Zemin and was hired in the mid-1990s by Thailand’s Charoen Pokphand Group to find a U.S. partner for a shopping mall in Shanghai. When the Chinese President’s son, Jiang Mianheng, founded a company with Winston Wong, the two men gave Neil a consulting contract in 2002 with Grace Semiconductor that paid him $2 million worth of Grace preferred stock over five years in $400,000 increments. In addition, Neil was put on the board of directors of Grace Semiconductor and paid $10,000 per meeting. Wong told the Financial Times that for these munificent fees “Mr. Bush supplied . . . useful guidance about the U.S. economy.” Crest Investment Corporation in Houston hired Neil as a $60,000-a-year consultant and made him co-chairman. Neil said he worked only three to four hours a week and described his services as “answering phone calls when Jamail Daniel, the other co-chairman, called and asked for advice.”
By this time Neil’s father was traveling in a stratosphere of wealth where the air was so thin that only billionaires could breathe. The elder Bush counted among his friends some of the wealthiest men in the world, like Prince Bandar of the Saudi royal family, so close to the Bushes they call him “Bandar Bush”; the Hinduja brothers, who own Gulf Oil, and are among the ten wealthiest people in Britain; the Bass brothers of Texas, whose combined net worth is $8.8 billion; Ali al-Sabah of the ruling family of Kuwait; and Paul Desmarais, the ninth-richest person in Canada.