Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years

by Russ Baker

  White recalled that Bath was animated on the way back from the luncheon and kept pressing his partner to say what he thought of Bath’s friend. There was a long silence. Bath could see that White was not impressed. Finally White spoke up. “Jim, I’ve known a lot of fighter pilots and this guy didn’t have any of the fighter pilot’s attributes . . . that I admire and respect.”

  Bath was annoyed, according to White, who recalled Bath saying, “ ‘God-dammit, that guy is going to be President of the United States one day. He’s going to be President of the United States.’ ”

  The reason Bath could imagine such a thing in those early days was that he had personally experienced the power of the Bush family connections. Bath was already trustee for Salem bin Laden, and a millionaire. And he had seen the skill with which the Bush family repeatedly made W.’s problems— girlfriends, military service, and other matters—simply go away.

  Yet Bath’s prescient assertion that W. would one day be president seemed astonishing, so White merely bit his tongue. But at the time, he mused upon how bizarre it was: “And I just thought, no way in hell . . . Famous last words.”

  And He Shall Have a Wife

  Back in Midland, there was other matchmaking going on.

  By their own accounts, George and Laura Bush first met at a Midland barbecue in the summer of 1977. According to the official story, W.’s good friend Joe O’Neill and his wife, Jan Donnelly O’Neill, a close friend and former roommate of Laura’s, thought W. was a bit lonely and in need of a good woman. And they thought they had the perfect one: Laura Welch, who had grown up in Midland and then gone away to college and become a librarian. The whole purpose of the barbecue, we are told, was to introduce George and Laura.

  That made sense. Even today, but especially in those days, and especially in a place like West Texas, there was something fishy about a candidate who did not have a wife. Though most in his circle were already married, it seemed to his friends as if finding a mate was the furthest thing from W.’s mind when he announced his candidacy for Congress in July 1977. But when he met Laura at the O’Neills’ just two weeks later, he quickly reversed himself. They would wed in three months’ time.

  In a family where many things don’t add up, the claim that George and Laura hadn’t met before was certainly one of them. Laura and W. had both spent childhood years in Midland, if only minimally overlapping. Even if they did not meet then, or did not notice each other, by 1970, Laura and W. were both living in the same wild-and-crazy Houston apartment complex known for its eligible bachelors on the make and women looking to get made. Moreover, Laura’s Houston roommate was Jan Donnelly, who was dating Joe O’Neill, already one of W.’s pals from Midland.10 It’s hard to believe that when Joe O’Neill came to visit his girlfriend at Chateaux Dijon, his old friend W. and his girlfriend’s roommate Laura never encountered each other.

  But a connection to those Chateaux days would not have fit the need in 1978 to clean up W.’s party-boy past—and indeed present.

  At the barbecue, according to Bush biographer Bill Minutaglio, “Bush talked nonstop, and Laura Welch seemed to listen to every word.”11 In any case, the result was that W. the bachelor candidate instantly became a “family man”—and Laura a highly visible part of the campaign team. Laura would become W.’s best asset, even years later when his own popularity plunged.

  Back to Business

  Bush lost the 1978 election but collected a respectable 47 percent of the vote. The victor was the Democratic conservative Kent Hance, a thirty-five-year-old good old boy and state senator. The Bushes were reported to be utterly disconsolate about the loss.

  But there were some lessons to take away from this. W. had been tarred as a carpetbagger, and leaflets warned that his father was a member of the ominous-sounding Trilateral Commission. Also, some things that bordered on dirty tricks were used against Bush. A Texas Tech student or ganized a “Bush bash” to recruit new voters, promising free beer to all attendees. Though the event was essentially harmless, a Hance surrogate drafted a public letter condemning Bush’s campaign, and sent four thousand copies to the Church of Christ in Lubbock. “Maybe it’s a cool thing to do at Harvard or Yale,” Hance told local newspapers.12 Hance also accused W. of trying to buy the election with out-of-state money.13 That was the last time W. would allow an opponent to define him.

  The lost election also served as the first indication of what the extended Bush operation could, and would, do on W.’s behalf. Younger brother Neil had moved temporarily to the district to help manage the operation. Other clan members were constantly in and out. Poppy’s involvement as always was quiet and arm’s length. But most significant was that one of Poppy’s lieutenants, a young man named Karl Rove, was frequently on the phone offering advice to W.

  That 1978 campaign was also an indication of the remarkable willingness of people who knew the Bushes to step up and put their own (or someone else’s) money on the table. And it hardly mattered whether it was nominally for a political campaign or a business venture. That became evident after the election, when W. turned back to business and began aggressively working the same circles that had backed his campaign.

  Monopoly Money

  In 1982, Ronald Reagan instituted a huge tax cut. This boon to the wealthy had an unintended though inevitable by-product: it eliminated the attractiveness of oil and gas investments as tax shelters, and the oil business began to experience a drastic slide in prices and an exodus of capital.

  Arbusto was hitting one dry hole after another, and running out of ready sources of cash. In the same year, Arbusto was renamed Bush Exploration. Perhaps this was an acknowledgment that a less subtle approach to the game was now required, a slight reminder that the supplicant was the son of the man a heartbeat away from the presidency.

  Soon people were again salivating at the prospect of betting a fortune on businessman George W. Bush. One such investor was Philip Uzielli, an associate and sometime trustee of the New York–based Toqueville Asset Management, who flew into Midland with a check for a million dollars. When Robert K. Whitt, the attorney handling the paperwork, began reciting boilerplate about the inherent risks of such a deal, Uzielli brushed it off. “Not my money,” he said.14 Uzielli had never met W., but he did know James Baker, Uzielli’s best friend at Princeton. Uzielli later explained that he had been asked to invest the money by George L. Ohrstrom Jr., a friend of Poppy Bush’s from Greenwich Country Day School. When I questioned the late Ohrstrom’s son, Wright, about this, he volunteered that his father was very secretive and that he heard rumors about his being in the intelligence services.15

  For his million dollars, Uzielli received a 10 percent stake in Bush’s venture. But given that the company’s entire valuation at the time was under four hundred thousand dollars, Uzielli had paid about twenty-five times more than book value.16

  Uzielli’s cash infusion came in January 1982, about the time of another large and equally carefree cash injection—this one never previously reported. It came from a small Houston-based independent oil company called Moran Exploration, which had done some business with Dresser Industries, the company that had long been run by W.’s “favorite uncle” Neil Mallon, with Prescott Bush a longtime board member. At Moran’s Midland, Texas, office, the geologist James Lee Brown got an odd request from the company’s then-headquarters in Houston: put about $1.4 million into some wells Bush’s company was hoping to drill, despite geological data showing they would be a bust. When he and a colleague objected, the word came back from the main office: just do it.

  “I didn’t even know George W. Bush, the son, existed, until he came in,” Brown explained to me in a 2006 interview at his home in Midland. At the time of the early-eighties meeting, Brown knew about Poppy, of course, because he was vice president. But the son had never registered significantly on his radar up to that time, notwithstanding his losing 1978 congressional bid.

  As for the investment W. was now touting, Brown said, “Dick Kramer Sr., my immedia
te boss, he and I didn’t think it was a good deal, so we recommended they not do it. [Later] he popped his head in my door, told me it didn’t matter what we thought—we’re doing it anyway.”

  Brown, who was well paid at Moran, shrugged and went to work. If he was unenthusiastic about the prospects, meeting Bush did nothing to persuade him otherwise. “At the two or three meetings I sat in with him . . . he was usually the guy in the corner sound asleep,” said Brown. “Trying to work over a hangover.

  “Years later, I thought, ‘Mr. Moran must have pissed away that million bucks because he’s trying to grease the skids for something,’ ” Brown added.17

  In 2006, I met with Dick Moran, head of the company, at his office in Wichita Falls, Texas. Moran was by then an octogenarian who still reported to work every day. He recalled making donations to various Bush campaigns but couldn’t remember his company putting more than a million dollars into Bush’s company. However, he didn’t register surprise when I raised the issue.

  The next time W. crossed James Lee Brown’s radar was when he was running for governor. “I was hearing a completely different story than the story that I knew about him,” he said. “All of a sudden he was this big-time oil man, doing quite well. He was a mover and shaker in the Midland oil business. And of course Midland was in love with him.”

  Saudis in Early

  Another investor was W.’s old Guard buddy Jim Bath. Or at least he appeared to be. His deal with the Saudis and his own circumstances suggest that he may have been simply a middleman for the fifty thousand dollars he plunked down for stakes in two oil exploration partnerships that George W. had put together. “I know that it was Saudi money because Bath had no money of his own,” said Bath’s former partner Bill White. “We were in business together. I saw his personal financial statements. I knew the amount of cash he had available at any given time. And he also confided in me that the money invested both in our real estate business and in Dubya’s energy business was Saudi money . . . One hundred percent of it was Saudi money.”18

  Given Bath’s customary deal with the Saudis—a 5 percent management fee for any Saudi dollars he invested—this fifty thousand dollars from Bath raises the possibility of a corresponding one million dollars of Saudi money invested directly in W.’s drilling ventures. It’s not possible to know for sure. But recall the million from Uzielli, who admitted the money was not his.

  Remarkably, when Time reporters asked W. about his post-Guard relationship with Bath—for an article on Bush Sr.—he denied having one. The reporters were visiting Bill White in Houston at the time. When White told them that he had retained old financial statements showing that Bath had invested in Bush’s firm, the reporters called Bush and asked him about it. In their subsequent article, they noted:

  The President’s son has denied that he ever had business dealings with Bath, but early 1980s tax records reviewed by TIME show that Bath invested $50,000 in Bush’s energy ventures and remained a stockholder until Bush sold his company to Harken in 1986.19

  In the light of this information, those widely published pictures of Bushes shaking hands with Saudi royals come into clearer focus. That some of the money invested in W.’s first business ventures may have come from the bin Laden family shows how prudent the Bushes were to stonewall inquiries into anything Bath-related. As noted in chapter 14, Bath confirmed in a legal proceeding his compensation arrangement with the Saudis—in which his small piece of the action was his compensation for arranging a larger Saudi piece. From that, and from Bath’s own limited resources, it appears that Bath’s involvement in any Bush enterprises may have translated into secret Saudi involvement as well.

  A Broad Spectrum

  When, despite this outside funding, W.’s company continued to slide into the red, yet more investors stepped in. The next chunk of capital came from Spectrum 7 Energy, an oil fund with Midland operations run by two Cincinnati money managers, William O. DeWitt Jr. and Mercer Reynolds III. Spectrum was just one of their ventures, started in better times, largely for tax shelter purposes. In September 1984, as Bush Exploration neared financial collapse, Spectrum 7 merged with it. George W. became chairman and CEO of the parent company, still called Spectrum 7, for which he was paid $75,000 a year.20 He also was given 1.1 million shares of Spectrum stock, worth about $150,000 in 2008 dollars.

  The official version put forth during W.’s first presidential campaign is that in late 1983, DeWitt was too busy with other affairs and wanted someone to take over his oil enterprise. “He asked me to find someone in Midland who would be able to run the business down in Texas,” said Paul Rea, a DeWitt relative who had been in oil in Midland for years. Rea was an old friend of oil attorney Martin Allday, a longtime friend of Poppy Bush’s. The DeWitt family had owned the Cincinnati Reds baseball team and were major figures in Cincinnati.21

  According to the official account, Rea arranged a meeting with W., and DeWitt quickly decided that Bush was the ideal candidate. Since that explanation is so unlikely on its face, given W.’s track record as a businessman, other factors must be considered.

  What those might be is suggested by DeWitt and Reynolds’s subsequent activities. These were of a complexion with which the reader is now familiar. In 1986, two years after the duo rescued W., DeWitt and Reynolds were on the ground floor of a new player in the lucrative and often tax-free offshore reinsurance business, a way for insurance companies to protect themselves against unnecessary risk.22

  The firm, Midwest Employers Casualty Company (MECC), had an all-star cast, with names that figured in other Bush-related enterprises flavored with a hint of intelligence activity.23 The largest shareholders included Stephens Inc., the Little Rock–based investment bank whose owner had been involved in bringing Jimmy Carter’s aide Bert Lance into the fold of the criminal bank BCCI. There was also Schroder Venture Trust of New York, an affiliate of a London-based bank on whose board Allen Dulles once sat.

  W.’s oil enterprises do not seem to have made his partners any money. Still, Reynolds in particular has collected large amounts for his political campaigns. He served as chief fund-raiser of W.’s presidential race in the crucial state of Ohio in 2000 and 2004. People in Reynolds’s zip code in the exclusive Indian Hills section of Cincinnati gave more to Bush’s reelection effort than did those in any other zip code except Manhattan’s Upper East Side. Ohio, of course, was the key to Bush’s close reelection victory over John Kerry.

  There is a neat conclusion to this pas de deux: President George W. Bush named Reynolds as his ambassador to the banking havens Switzerland and Liechtenstein. As for William DeWitt, Bush appointed him to his Foreign Intelligence Advisory Board. Unless multimillionaire baseball team owners have special gifts for intelligence beyond scouting prospects and stealing signals, there could be something else going on.

  W.’s Lucky Chance

  During the 1980s, George W. Bush kept busy with other undertakings, most of them scrutinized little if at all in the years before he was elected president. In 1984, while his father was vice president, Bush was invited onto the board of a company called Lucky Chance Mining—whose name somehow evoked W.’s charmed life but which itself suffered a different fate. Lucky Chance was a penny stock—the category of investments in which individual shares usually can be bought for fractions of a dollar.

  The main thing one concludes from a close look at Lucky Chance is that it

  • was far more complicated than your average investment.

  • involved figures connected with intelligence and with foreign money associated with regimes closely tied to the U.S. government.

  • was not a venture of which W. was inordinately proud.

  Lucky Chance was a small Arizona-based company that had cobbled together inactive gold and silver mines before Houston stock promoter David Klausmeyer took it over in the early ’80s. Klausmeyer was an old friend of Bob Gow’s. Gow had been both Poppy Bush’s lieutenant at Zapata Offshore and the employer of George W., in 1971 at Gow’s agricul
tural company, Stratford of Texas. Klausmeyer himself had worked as an in-house consultant at Stratford when George W. was there and also recalled meeting the elder Bush on numerous occasions. W. apparently asked him for career advice.

  In a 2006 interview at his Houston home, Klausmeyer reconstructed for me his memories of those days. He recalled that he was looking for penny stocks from which he might be able to make some money. He was not particularly choosy; indeed he assigned his teenage son to scrutinize the so-called pink sheets that list these small-time companies. His son liked the name of the company, and that was that, he said.

  The funding was arranged through Marion Gilliam, a pedigreed New York investment banker. In a telephone interview, Gilliam told me he vaguely recalled being approached by Klausmeyer to get involved with Lucky Chance. “It may very well have been that he once came on a totally unrelated matter, he mentioned that he had a client or a person interested in gold mining, and asked, did we have any people interested in investing in mining?”24 Gilliam worked in New York at Schroder Bank and Trust, a firm represented decades earlier by Allen Dulles that repeatedly shows up in connection with Bush-related ventures.25