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

by Russ Baker

  But there was much more to Robert Stone and to Harvard’s decision to invest in Harken Energy. For one thing, Stone played a significant role in Harvard University’s decision to move into private equity investing—which made it possible to get deeply involved in a company like Harken. For another, Stone’s own business activities suggest that Stonetex and Harken were not anomalies, but rather that he was cobbling together some kind of empire with strategic objectives beyond profits at their heart.

  Stone was a board member and sometime chairman of a whole range of companies involved with international shipping, the use of inland barges to move oil, and oil exploration. At one point he controlled one of the world’s largest cargo fleets. And he was intimately associated with a small circle of highly politicized oilmen whose names have appeared in previous chapters. He served as chairman of the board of the Houston-based Kirby Corporation, a shipping and oil concern substantially controlled by the family of the oil depletion allowance king, Clint Murchison.

  Stone kept building the requisite connections and power base contacts in East Coast establishment circles. He served as commodore of the exclusive New York Yacht Club—the ultimate gathering place of the upper class. He was an apt bridge between the worlds of Wall Street and oil, and the type of “master of the universe” who would have been useful in the management and financing of covert intelligence entities. As an obituary in the Boston Globe put it: “Robert G. Stone Jr., who served a record 27 years on Harvard University’s governing board, had unparalleled gusto and talent for fundraising, eagerly jetting off to woo potential donors wherever they could be found.”18

  In a 1985 interview with the Harvard Crimson, a decade after Stone had joined the university’s board, fellow board member Hugh D. Calkins called Stone “the world’s finest fundraiser,” noting that Stone “would hear about an Arabian sheik who had some remote connection to Harvard, and he would hop on the next plane there.” At the same time that Harvard was propping up Harken Energy, Stone was also executive committee chairman of Combustion Engineering, a large company that was deeply involved in Saudi Arabia.

  And there was more, as intimated by Michael Eisenson, the president of the Harvard Management Company. Eisenson, somewhat cryptically, told the Boston Globe, “There were not too many degrees of separation between Stone and Quasha.”19 The Globe’s reporters, pressed as daily newspaper reporters generally are, do not seem to have followed that intriguing revelation any further. But it is now possible to report the story of the relationship between the two men.

  A Golden Opportunity

  The importance of controlling natural resources is not something most of us discuss on a regular basis. But it is a principal motivation—and often the principal motivation—behind foreign policy decisions, wars, and coups.

  As a young man, Robert Stone’s marriage into the Rockefeller clan would result in his joining the board of Freeport Mining, a huge Rockefeller-dominated company with gold, silver, copper, and other mineral-extraction operations throughout the world, including major mines in Indonesia and the Philippines. The partners of Freeport Mining were a powerful bunch with an appreciation for the strategic value of minerals. Among the board members over the years was Prescott Bush’s business partner Robert A. Lovett, who served in various administrations as undersecretary of state, assistant secretary of war, and secretary of defense, and is widely regarded as one of the architects of America’s cold war strategy.20

  Freeport’s largest mine was and is in Indonesia—and Freeport is closely identified with the CIA-backed coup that brought the dictator Suharto to power in 1965. Efforts to topple his predecessor, the nationalist Sukarno, were the province of Alfred C. Ulmer, the Allen Dulles confidant who, as noted in chapter 4, visited Poppy Bush in Texas the week of the JFK assassination. Other Freeport board members have included Henry Kissinger and Admiral Arleigh Burke, chief of naval operations under Ike and JFK. Burke was an ardent advocate in National Security Council meetings for the assassination not just of Fidel Castro but also of others in the Cuban leadership as a “package deal.”21 JFK, just prior to his death, was taking policy stances on Indonesia inimical to the interests of Freeport.

  It is in this context—the control and extraction of precious resources— that we meet Robert G. Stone Jr. and William H. Quasha (Alan’s father), as young men doing their World War II service in the Philippine Islands.

  The Philippines had been a gem in the American colonial empire since it, like Cuba, came under U.S. control after the Spanish-American War in 1898. The Philippines, even more than Cuba, was rich in resources, including gold, copper, sugar, and other strategic commodities.

  And more than a few big names did their apprenticeship in the fertile islands. Before he became president of the United States, Bush family associate and Bonesman William Howard Taft was the civilian governor there. So was Henry L. Stimson, the Bonesman who would serve in five presidential administrations—and would address Poppy’s Andover graduating class.22 The family of future American general Douglas MacArthur was part of this same American cadre “managing” the Philippines. Douglas MacArthur’s father, Lieutenant General Arthur MacArthur Jr., was the military governor.

  Two other Americans spent time in the Philippines—both in the company of General Douglas MacArthur: Robert G. Stone Jr. and William Quasha.

  From a young age, even before marrying into the Rockefeller family, Stone was trusted at the highest levels. In World War II, he did intelligence work related to ports and oil in Iran for the acclaimed marine engineer Benjamin Casey Allin III.23 After working with Allin, Stone was then sent to the Pacific to serve General Douglas MacArthur, where, among other things, he took personal charge of the security of MacArthur’s yacht and oversaw the sensitive landing preparations for MacArthur’s retaking of the Philippines.

  William Quasha, hailing from New York, obtained his law degree from St. John’s University, graduating a year ahead of William Casey, the future CIA director. During the war, Quasha was also sent to the Philippines, where he worked in General MacArthur’s legal department.

  Allin, Stone, and Quasha all attained high status within the secrecy-prizing Freemasonry, with Allin and Stone becoming thirty-second-degree Masons and Quasha eventually attaining the coveted rank of Grand Master. One does not need to put too fine a point on this to recognize that such bonds of loyalty and discretion, seen elsewhere in Skull and Bones, do wonders for preserving secrecy over long periods of time, and are therefore enormously useful for maintaining discipline within vast covert operations networks.

  Manila Poppy

  Poppy Bush himself doesn’t talk much about the Philippines, but he too did service there. Among other things, he participated in numerous bombing runs over the islands when they were in Japanese hands—including Manila Harbor as part of MacArthur’s effort to retake the territory.24

  And of course there was his intelligence work. As noted in chapter 2, on his way to the Pacific, Poppy stopped off at Pearl Harbor for some face time with officers assigned to the Joint Intelligence Center for the Pacific Ocean Areas (JICPOA). The early incarnation of JICPOA was headed by Admiral Roscoe Hillenkoeter, who would after the war become the director of the CIA. JICPOA remains little known and little discussed, but it was a crucial development in wartime intelligence, and played a key role in Admiral Chester Nimitz’s successful island-hopping campaign, of which Bush was a part.

  Franklin Roosevelt created the Office of Strategic Services (OSS) in July 1942 to replace a previous intelligence system that was deemed ineffective. General MacArthur, however, barred the OSS from operating in the Philippines, so that battleground was pretty much his own show.

  Thus Bush became part of a joint intelligence effort coordinated with MacArthur’s command. The association with the Bush circle would date back to the days when Douglas MacArthur was a young man and his mother contacted E. H. Harriman, father of Prescott’s future business partners, to ask the railroad tycoon to give her son a job.25 Years la
ter, when Poppy Bush became U.N. ambassador, he took an apartment next to Mrs. Douglas MacArthur, and in 1978 the widow contributed to George W.’s Midland, Texas congressional campaign.26

  Gold Busters!

  Being in the Philippines at the close of World War II was a golden opportunity—literally as well as figuratively. The Philippines were chockfull of gold. There was gold in the mines, and rumor had it, there was gold being hoarded.

  Even before Douglas MacArthur commanded U.S. troops in the country, he had major holdings in the largest Philippine gold mine. MacArthur’s staff officer, Major General Courtney Whitney, had been an executive of several gold mining companies before the war.27

  Besides the indigenous gold, a great fortune in gold booty was rumored to be buried in the Philippines, seized by the Japanese as they plundered one East Asian country after another. Marcos’s widow, the famously extravagant Imelda, has claimed that her husband and his buddies got hold of this so-called Yamashita treasure. Several journalists, who have spent combined decades on the Philippines gold story, assert that the cache was actually seized by American forces under MacArthur and that its very existence is a sensitive secret. One reason is that knowledge of this gold could cause world gold prices to plunge and wreak havoc with currency markets. Estimates of the cache vary from forty-five billion dollars to hundreds of billions.

  This may help to explain why so many of the companies mentioned in this book seem able to function in apparent defiance of economic logic. Entities such as Zapata Offshore, Stratford, Arbusto, and Harken appear to persist without profits for great stretches. To the trained eye, they look like classic money-laundering ventures, raising the question of where all that money originates. And that leads in turn to another explanation proffered about the Philippine gold: that it has been used—and perhaps is still being used—to fund unauthorized covert operations. This would not preclude a variety of funding sources, ranging from oil concessions to profits generated by the “legitimate” side of airlines and other enterprises. But it is hard to top gold as a negotiable mineral.

  Rumors about MacArthur’s involvement with gold were so widespread that the general himself called a press conference to dispel such notions. In his statement, he sought to downplay his own gold investments, and did not mention the Japa nese gold at all.

  At the end of the war, MacArthur appointed William Quasha as alien property administrator.28 “Alien property” would have included anything of value captured from the Japanese. If in fact the Japanese possessed gold, this would have been by far the top priority.

  Authors Sterling Seagrave and Peggy Seagrave contend that former CIA deputy director Ray Cline told them that the United States did locate the Japanese gold and used it to fund anti-Communist operations the world over.29 Investigators in the Philippines have said that the gold was stashed in bank vaults in forty-two countries. Some of the money is believed to have been used in Japan, to quickly reestablish the ruling clique, and a pro-U.S. ruling party, the Liberal Democratic Party; MacArthur oversaw the postwar occupation of Japan. The administrator of the so-called M-2 slush fund that secretly channeled these monies to Tokyo was none other than Poppy Bush friend and CIA officer Alfred C. Ulmer.

  The Seagraves cast the Pacific gold operation as an offshoot of a secret program that began in Europe after the war. The key figures will be familiar to readers of this book:

  The idea for a global political action fund based on war loot actually originated during the Roosevelt administration, with Secretary of War Henry L. Stimson. During the war, Stimson had a brain trust thinking hard about Axis plunder and how it should be handled after the war. As the tide turned against the Axis, it was only a matter of time before treasure began to be recovered. Much of this war prize was in the form of gold looted by the Nazis from conquered countries and civilian victims . . . Stimson’s special assistants on this topic were his deputies John J. McCloy and Robert Lovett, and consultant Robert B. Anderson . . . (This was confirmed, in documents we obtained, by a number of high-level sources, including a CIA officer based in Manila, and former CIA Deputy Director Ray Cline . . . ) [The next target was Japanese gold.] After briefing President Truman and others in Washington including McCloy, Lovett and Stimson, [intelligence officer] Captain [Edward] Lansdale returned to Tokyo in November 1945 with Robert B. Anderson. General MacArthur then accompanied Anderson and Lansdale on a covert flight to Manila where they set out for a tour of the vaults [that] already had [been] opened.30

  Probably the key figure in all this was Edward Lansdale, who, according to the Seagraves, was the point man for the gold operation. Lansdale was almost larger than life, a figure deeply involved with high-stakes covert operations for many presidents. He was said to be an inspiration for the popular novel The Ugly American. New York Times Pulitzer Prize–winner Tim Weiner writes of Lansdale: “His specialty was counterinsurgency, and his trademark was winning third-world hearts and minds with American ingenuity, greenback dollars, and snake oil.”31

  This much is clear: Lansdale helped direct counterinsurgency operations in the Philippines in the 1950s. He was prominent in counterinsurgency meetings in the Kennedy White House, in which Averell Harriman, Prescott Bush’s friend and business partner, was an ardent advocate of such activities.32 Lansdale was also the titular head of Operation Mongoose, the part-CIA, part-Pentagon project to assassinate Cuban leaders, as well as a top figure in counterinsurgency operations in Vietnam.33 If indeed Lansdale was involved with gold operations in the Philippines, then the gold operations were of paramount importance in the larger cold war battle.

  IN THE POSTWAR period, and especially the 1950s and ’60s, the United States was desperate for allies in East Asia. The deal, at least as U.S. officials saw it, was that Marcos would hold the fort against Communist incursions in the region as well as allow the continued operation of giant U.S. military bases, notably Clark Air Force Base and Subic Bay Naval Station, that would serve specific cold war strategic objectives.

  In return, he would receive protection from the U.S. embassy and intelligence operations emanating from it, as well as from prominent local Americans acting as surrogates.

  As part of the deal, Marcos would play a role in the international money machine through which vast undocumented sums sloshed, ostensibly to pay for covert operations. Implicit in this was a wink when he looted his own country—and maybe even an assist.34 Whether the wealth he amassed included the Yamashita gold is uncertain. After his death, his wife, Imelda, would claim that Marcos had indeed found some of the stash—which at least was justification for the couple’s ability to amass such a fortune.35 But even without the Japanese treasure, the Philippines certainly had a domestic supply—which had been mined steadily, including during the war years, when the Japanese occupiers oversaw continued production.36

  In 1978, Marcos issued a decree mandating that all gold mined in the islands had to be sold directly to the government. As the Seagraves note: “This made it possible for him to sell some of his own gold to the Central Bank through a variety of intermediaries, and the bank could then send the gold to financial centers without attracting attention.” In effect, Marcos seems to have turned the Philippine government into a laundry for his own stash. From there, according to this analysis, the gold, its origins obscured, made its way into bank vaults abroad and into international markets.37

  Poppy Bush and Ferdinand Marcos cultivated a relationship of mutual appreciation. “We love your adherence to democratic principles,” Poppy gushed during a visit to Manila in 1981.38 Marcos knew how to play the anti-Communist card, and like nearly all U.S. leaders, Poppy avidly helped prop up the dictator. A number of Poppy’s lieutenants, including Lee Atwater, Paul Manafort, and the notorious “dirty trickster” Roger Stone (no relation to Robert G. Stone Jr.) did political consulting for Marcos.39 Ed Rollins, the manager of the Reagan-Bush 1984 reelection campaign, admitted that a top Filipino politician illegally delivered ten million dollars in cash from Marcos to Reagan’s 198
4 campaign, though he declined to name him.40

  Poppy also is known to have personally urged Ferdinand Marcos to invest money in the United States.41 Imelda has claimed that Poppy urged her husband to put “his” funds into something that Imelda knew only as the Communist Takeover Fund. That suggests that gold in the Philippines has long been seen as a funding vehicle for off-the-books intelligence, covert operations, weapons trafficking, and even coups—plus protection money that Marcos felt he had to pay.42

  To be sure, there was something of a Communist threat to the Marcos regime, albeit an exaggerated threat, and one Marcos himself used to good advantage. But the real threat to the dictator was a democratic takeover. By 1983 he was on rocky ground. His health was failing, and his regime’s corruption was increasingly apparent—and embarrassing for his allies, including the United States, which soon began distancing itself. When Benigno Aquino, Marcos’s political rival, returned in August 1983 from a self-imposed three-year exile in the United States, he was gunned down on the tarmac of the Manila airport. In 1986 Aquino’s widow, Corazon, challenged Marcos in an election; when Marcos-regime officials announced that Corazon had lost what was likely a rigged count, a military rebellion finally forced the Marcoses to flee the country.