U.S. News: Bush's "hands-off" management style "worked for him as an oilman"

An article in the April 3 edition of U.S. News & World Report examined how "George Bush wants to run his presidency like a business," noting that Bush, according to White House insiders, "is applying the hands-off style he learned at Harvard Business School, where he earned a master's degree in business administration in 1975, and also the methods that worked for him as an oilman, as managing partner of the Texas Rangers baseball team, and, later, as governor of Texas." U.S. News never explained what exactly the "methods that worked" for Bush in the oil industry were; according to news reports, they appear to have involved using his family's connections and influence to keep his failing oil venture afloat.

From the article, "Falling Stock" by Kenneth T. Walsh, in the April 3 edition of U.S. News:

More than 60 percent of Americans now say the country is headed in the wrong direction, according to the latest NBC News/Wall Street Journal poll, and 58 percent disapprove of Bush's job performance. He has begun an aggressive PR campaign to boost support for the war, which is the biggest drag on his presidency, and is considering adding a veteran Washington insider to bolster his staff.

Despite the problems, Bush is hanging tough. "I have not seen a change in the president's leadership style and the management tools he uses," [White House chief of staff Andrew] Card told U.S. News. Card and other Bush confidants say the chief executive is applying the hands-off style he learned at Harvard Business School, where he earned a master's degree in business administration in 1975, and also the methods that worked for him as an oilman, as managing partner of the Texas Rangers baseball team, and, later, as governor of Texas.

A May 8, 1999, New York Times profile of Bush's business ventures prior to his election as governor of Texas in 1994 noted: "Ultimately, oil made Mr. Bush a millionaire, and he used his profits to build an even larger fortune in baseball. But his success in oil had far more to do with mergers than with gushers." According to the Times, Arbusto Energy Inc., the oil company Bush founded in 1977 in Midland, Texas, had "wealthy and prominent friends of the Bush family" on its list of original investors, and such a "list was remarkable for a young company owned by a man of 32 with scant experience and virtually no track record." One of the original investors, a "corporate headhunter" named Russell S. Reynolds Jr., was quoted in the Times as saying: "The bottom line is it didn't work out very well with Arbusto. ... In fact, George Bush called it 'I busted.' I think we ended up getting 20 cents on the dollar."

The Times went on to report:

In each of the first three years, Mr. Bush managed to increase the amount invested in his oil funds, from $565,000 in 1979 to $1.7 million in 1981. But eager to grow faster, he switched strategies in 1982.

First he shored up his company's cash flow by selling 10 percent of its stock to a New York investor, Philip A. Uzielli, for the highly speculative price of $1 million. Mr. Uzielli, who declined to be interviewed, was a Princeton classmate and longtime friend of James A. Baker 3d, who was serving at the time as chief of staff in the Reagan-Bush White House. George W. Bush said he met Mr. Uzielli through another Arbusto investor, George L. Ohrstrom, and only later learned of Mr. Uzielli's relationship with Mr. Baker. Mr. Baker and Mr. Ohrstrom did not return calls.

Next, with his company regularly mocked as "Ar-bust-o" and his father serving as Vice President, Mr. Bush changed the firm's name to Bush Exploration. Then, in the biggest miscalculation of his business career, he decided to sell public shares in his 1982 oil-drilling fund rather than rely solely on private investments. The offering failed dismally, with Mr. Bush securing only $1.14 million of the $6 million he had sought to raise.

[...]

Over the years, the company had average luck in its drilling ventures, but never made a major discovery.

"We went about it the right way," said K. Michael Conaway, the company's treasurer, "made very cautious decisions. But we just didn't find enough oil and gas in the ground to be rousingly successful."

The Times went on to note that after Bush Exploration merged with Harken Energy Corp., Bush sold off his company stock for nearly $850,000 just eight days before the company announced a quarterly loss of over $23 million and its stock lost nearly 50 percent of its value. According to the Times:

Mr. Bush realized quickly that the stock's slide would raise concerns that he had sold with insider knowledge of the yet-to-be-reported loss. Although an outside director, he sat on an audit committee that regularly reviewed the company's financial practices. The suspicions were compounded when the Securities and Exchange Commission discovered it did not have a form from Mr. Bush that insiders must file when they sell stock, although Mr. Bush previously filed a different form that had disclosed his intent to sell.

Mr. Bush maintained that he had filed the missing disclosure form. But the commission investigated the transaction anyway. Mr. Bush's lawyer, Robert W. Jordan, defended him by arguing that he had not known about the impending loss when he sold his stock and that he had thought he was selling into the anticipated good news that the Basses [a prominent Texas family] were underwriting the Bahrain project [an oil-drilling venture Harken was involved with].

His ethical intent, Mr. Jordan said, was demonstrated by his decision to seek the clearance of a Harken lawyer before making the sale. Furthermore, the lawyer said, Mr. Bush did not seek a buyer for his stock but was solicited by a Los Angeles broker. The broker, Ralph D. Smith, now retired from Sutro & Company, confirmed that account.

"Listen, I was the son of a President," Mr. Bush said. "I was very sensitive to the scrutiny. I felt like liquidating the stock for personal reasons but I was also fully aware that any deal I did was going to be fully scrutinized."

The commission investigators were apparently convinced by Mr. Bush's explanation, particularly his consultation with counsel, said officials familiar with the investigation. In 1993, as Mr. Bush prepared to run for governor, the agency sent a letter at Mr. Jordan's request advising that "the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated."

Mr. Bush's opponent in the campaign, the incumbent, Gov. Ann W. Richards, suggested that the investigation had been a political whitewash overseen by commission officials appointed by Mr. Bush's father. But commission officials have denied any political pressure, and noted that commission leaders with direct ties to the Bushes had been screened out of the investigation.