Hillary's Bush Connection - Bush's mystery money man becomesHillary's

Hillary's Bush Connection

Bush's mystery money man becomes Hillary's

The Bushes and the Clintons

The Clintons meet with the Bushes at the White House.

by RUSS BAKER and ADAM FEDERMAN

http://www.realnews.org/stories/2007-10-16_hillary.html

Research support for this story was provided by the Investigative Fund

of The Nation Institute. Published in conjunction with The Nation.

In the Clintons' pursuit of power, there is no such thing as a strange

bedfellow. One recently exposed inamorata was Norman Hsu, the

mysterious businessman from Hong Kong who brought in $850,000 to

Hillary Clinton's campaign before being unmasked as a fugitive. Her

campaign dismissed Hsu as someone who'd slipped through the cracks of

an otherwise unimpeachable system for vetting donors, and perhaps he

was. The same cannot be said for the notorious financier Alan Quasha,

whose involvement with Clinton is at least as substantial--and still

under wraps.

Political junkies will recall Quasha as the controversial figure who

bailed out George W. Bush's failing oil company in 1986, folding Bush

into his company, Harken Energy, thus setting him on the path to a

lucrative and high-profile position as an owner of the Texas Rangers

baseball team, and the presidency. The persistently unprofitable

Harken--many of whose board members, connected to powerful foreign

interests and the intelligence community, nevertheless profited

enormously--faced intense scrutiny in the early 1990s and again during

Bush's first term.

Now Quasha is back--on the other side of the aisle. Operating below

the radar, he entered Hillary Clinton's circle even before she

declared her candidacy by quietly arranging for the hire of Clinton

confidant and longtime Democratic Party money man Terry McAuliffe at

one of his companies. During the interregnum between McAuliffe's

chairmanship of the Democratic Party and the time he officially joined

Clinton's campaign, Quasha's firm set McAuliffe up with a salary and

opened a Washington office for him.

Just a few years earlier, McAuliffe had publicly criticized Bush for

his financial dealings with Harken, disparaging the company's Enron-

like accounting. Yet in 2005 McAuliffe accepted this cushy perch with

Quasha's newly acquired investment firm, Carret Asset Management, and

even brought along former Clinton White House business liaison Peter

O'Keefe, who had been his senior aide at the Democratic National

Committee. McAuliffe remained with the company until he became

national chair of Hillary's presidential bid, and O'Keefe never left.

McAuliffe's connection to Quasha has, until now, never been noted.

Another strong link between Quasha and Clinton is Quasha's business

partner, Hassan Nemazee, a top Hillary fundraiser who was trotted out

to defend her during the Hsu episode--in which the clothing

manufacturer was unmasked as a swindler who seemingly funneled illegal

contributions through "donors" of modest means.

In June, by liquidating a blind trust, the Clintons sought to distance

themselves from any financial entanglements that might embarrass the

campaign. Clinton spokesman Howard Wolfson argued that the couple had

gone "above and beyond" what was legally required "in order to avoid

even the hint of a conflict of interest." But throughout their

political careers, Bill and Hillary Clinton have repeatedly associated

with people whose objectives seemed a million miles from "a place

called Hope." Among these Alan Quasha and his menagerie--including

Saudi frontmen, a foreign dictator, figures with intelligence ties and

a maze of companies and offshore funds--stand out.

"That Hillary Clinton's campaign is involved with this particular cast

of characters should give people pause," says John Moscow, a former

Manhattan prosecutor. In the late 1980s and early '90s he led the

investigation of the corrupt Bank of Credit and Commerce International

(BCCI) global financial empire--a bank whose prominent shareholders

included members of the Harken board. "Too many of the same names from

earlier troubling circumstances suggests a lack of control over who

she is dealing with," says Moscow, "or a policy of dealing with anyone

who can pay."

Ideology does not seem to be the principal issue driving either Quasha

or Nemazee. Nemazee backed the likes of archconservative Republican

senators Jesse Helms, Sam Brownback and Al D'Amato before moving

aggressively into the Democratic camp. Quasha, frequently identified

as a Republican fundraiser, gave to both Bush and Al Gore in 2000 and

so far in the 2008 race has given to Republicans Mitt Romney and Rudy

Giuliani as well as Democrats Barack Obama and Chris Dodd, in addition

to Hillary Clinton. But Quasha's concerted efforts to get into

Clinton's inner circle are reminiscent of his relationship with a pre-

Governor Bush.

A student at Harvard's business school at the same time as Bush,

Quasha was a little-known New York lawyer when he took over the small

Abilene-based Harken Oil in 1983, using millions from offshore

accounts held in the name of family members. Quasha's now-deceased

father, Manila-based attorney William Quasha, was known for his close

friendship with Philippine dictator Ferdinand Marcos and his ties to

US intelligence; he was also a member of the "Eagles Club" of major

GOP contributors.

In 1986 Alan Quasha embraced a struggling George W. Bush, rescuing his

failing Spectrum 7 oil company, folding it into Harken Energy and

providing Bush with a directorship, more than $600,000 in stock and

options and a consulting contract initially valued at $80,000 a year

(which was raised in 1989 to $120,000). The financial setup allowed

Bush to devote most of his time to the presidential campaign of his

father, a former CIA director who as Vice President was the Reagan

Administration's overseer of a massive outsourcing of covert

intelligence operations, and who had his own warm relationship with

Marcos.

Harken's financials were famously complicated. Reporters from top

publications like the Wall Street Journal, Time and Fortune went at

Harken with zest, but they ultimately failed to unravel all its

labyrinthine activities. In 2003 Harken was described in the trade

publication Platts Energy Economist as "a toxic waste dump for bad

deals, with a strong odor of US intelligence spookery and chicanery

about it." Indeed, the company was kept afloat by an all-star cast of

financiers with ties to BCCI, Saudi intelligence, the South African

apartheid regime, Marcos and the Shah of Iran. The company perennially

lost money for ordinary investors while benefiting insiders like Bush,

Quasha and Nemazee. Indeed, Harken has lost money nearly every year

since Bush's days there, piling up cumulative losses in the hundreds

of millions.

Nevertheless, in 1990, when the Dallas Times Herald ranked Harken

fifth on its list of worst-performing local firms, the tiny oil

refiner beat out the giant exploration company Amoco for an offshore

drilling contract in Bahrain that was potentially worth billions. As

George W. Bush biographer Bill Minutaglio wrote, "Oil analysts were

stunned that bottom-feeding Harken...could hook such a meaty

international contract...not only hadn't Harken drilled overseas, it

had never drilled in water. Speculation immediately surged that it was

because Bahrain wanted to do business with the son of the U.S.

president."

Bush appeared to benefit from insider trading when he sold two-thirds

of his stock in Harken at a peak price after the Bahrain deal--and

just before news emerged that the company had failed to find oil and

its share price plummeted. He also failed to report his sale of

company stock on time, leading many to believe that he had something

to hide. Immediately after a 1991 Wall Street Journal article

detailing Bush's involvement with Harken, the SEC launched an

investigation, but unsurprisingly, with George H.W. Bush in the White

House, it came to nothing. The Journal article speculated that there

was more to the picture:

What does emerge is a complex pattern of personal and financial

relationships behind Harken's sudden good fortune in the Middle East,

raising the question of whether Bahrainis or others in the Middle East

may have hoped to ingratiate themselves with the White House. Even

more intriguing, there are numerous links among Harken, Bahrain and

individuals close to the discredited Bank of Credit & Commerce

International, a banking empire that used Mideast oil money to seek

ties to political leaders in several countries.

Thanks to his income from Harken, Bush was able to become managing

partner of the Texas Rangers--a glamorous and highly visible sinecure

that would eventually earn him nearly $15 million and make him a

credible front-runner for the Texas governorship. This rescue and

makeover of a ne'er-do-well son was a key step in W.'s path to

political power.

Quasha's Clinton play began in 2003, when he bought Carret Asset

Management, a once-revered private equity investment firm that manages

nearly $2 billion in assets. Its founder, Philip Carret, a Wall Street

legend and hero of Warren Buffett, died in 1998; the firm was sold

twice before Quasha bought it for a song. Some were troubled when they

learned the identity of the new owner. "I was horrified that he was

going to hide behind my family's name," says Renee Carret, a longtime

executive at the firm whose grandfather started the company in 1963.

When Quasha took over, she resigned. "I just personally didn't want to

be affiliated with him. There were too many questions that were left

unanswered."

As his co-chair in the private firm, Quasha chose his old friend

Nemazee, a fellow Harken investor. By the time of the Carret

acquisition, Nemazee, a founding member of the Iranian-American

Political Action Committee whose family was close with the late Shah

of Iran, had become a significant fundraiser for the Clintons and the

Democratic Party. In 1995 he raised money for the DNC. In 1998, in the

midst of the Lewinsky affair, Nemazee collected $60,000 for Bill

Clinton's legal defense fund in $10,000 increments from relatives and

friends. Clinton subsequently nominated Nemazee as ambassador to

Argentina but withdrew the nomination after an article in Forbes

raised questions about Nemazee's business dealings in the 1980s and

'90s--which noted that the American-born Nemazee magically became

"Hispanic" by acquiring Venezuelan citizenship because of a

requirement that certain California public pension funds be run by

minorities.

Failure to be named ambassador did not, however, hamper Nemazee's rise

within the Democratic Party. By 2004 he was New York finance chair for

John Kerry's campaign, and in 2006 he served under Senator Chuck

Schumer as the national finance chair of the Democratic Senatorial

Campaign Committee (DSCC)--a period during which the committee raised

about $25 million more than its Republican counterpart. This past

March Nemazee, at the behest of McAuliffe, threw a dinner for Hillary

at Manhattan's swank Cipriani restaurant, which featured Bill Clinton

and raised more than $500,000.

The exact nature of McAuliffe's duties at Carret is unclear, and

Quasha, Carret and McAuliffe all declined to answer The Nation's

questions on this matter. But McAuliffe seems to have served, at least

occasionally, as a good will ambassador for Quasha's business

operations. He brought Wang Tianyi, head of a formerly state-owned

Chinese firm and a business associate of Quasha's, to meet with Bill

Clinton. And Quasha has visited the ex-President at his Harlem office

over the past several years, according to Joe Wozny, former president

of a Carret affiliate. Wozny recalls that Quasha "was up there quite a

few times, meeting with Bill Clinton." As for that Washington office,

the Carret website says only that it specialized in providing

"information regarding products and services for institutions."

But the office seems to have benefited McAuliffe--and Hillary Clinton.

When McAuliffe stepped down as DNC chair in February 2005, he said he

planned to hit the lecture circuit and spend more time with his

family. He may have done both, but he did so as vice chair of Carret

from the new company office on the seventh floor of the venerable

McPherson Building, once the home of the John Kerry campaign and just

off K Street's lobbyist gulch. Simon Rosenberg's New Democrat Network,

where Mark Penn, chief pollster and strategist for Hillary's campaign,

has served as a fellow, was housed next door to McAuliffe and O'Keefe.

While there, McAuliffe found time to pen his memoir, What a Party!,

his paean to the Clintons and his role in raising record amounts of

money for them and the party. Yet the memoir itself, for which he

earned a seven-figure advance, makes no mention of Carret or his role

as its vice chair.

Three people working in nearby suites said they remembered McAuliffe

and O'Keefe working out of the office, but none of them remembered the

Carret name. Nor did any of them have any idea what McAuliffe was

doing as Quasha's vice chair. One person who visited McAuliffe in the

suite recalled that he was working on his book but said he was unaware

of the official function of the office. "Terry holds his cards pretty

close on his business activities," he said.

According to another visitor, McAuliffe was using his time to lay the

groundwork for Hillary's long-anticipated presidential bid. With

McAuliffe leading Clinton's ravenous fundraising operation, the

possibility that Carret's Washington office was opened up, at least in

part, to serve just such a function is bolstered by the fact that

Carret opened the office only after hiring McAuliffe--and closed it

down once he left. During that period, though no Clinton campaign

committee yet existed, there were signs that he was already operating

on her behalf. In 2005 he appeared on CNN's Crossfire, where the

former Democratic chief did not bother to feign neutrality in the

primaries: "Personally, I hope she runs," he said. "We would be lucky

if she did run, I'll tell you that." In 2006 he kept one foot in

Clintondom as a member of the Clinton Global Initiative, an

organization whose membership is primarily by invitation to elite

business leaders. Wang, whose China International Industry and

Commerce partnered with Carret soon after McAuliffe joined the

company, was also named to the initiative in 2006.

Meanwhile, during McAuliffe's employment at Carret, Quasha himself

donated large sums to the DSCC. He gave $26,700 in June 2006 and

$25,000 that October and also personally contributed $4,600, the

maximum allowed, to the Hillary Clinton presidential exploratory

committee.

Since his start as a young fundraiser on Carter's 1980 re-election

campaign, McAuliffe has consistently melded politics, policy and

private enterprise. By the time he was 30, he had launched a dozen

companies, his own law firm and numerous venture capital companies.

Perhaps his most controversial association was with the

telecommunications company Global Crossing, where McAuliffe managed to

turn a $100,000 personal investment into an $18 million windfall.

After McAuliffe sold his shares and got out, the company collapsed;

nearly 10,000 employees lost their jobs, and investors lost $54

billion. McAuliffe defended the firm's top executives, who were close

with both the Bushes and Clintons, but went on to attack President

Bush for similar patterns at Harken.

At a DNC meeting in Las Vegas in 2002, McAuliffe spoke about the

recent collapse of Enron and questioned whether Bush could "restore

confidence to Wall Street when he has engaged in the same practices he

condemns today," a reference to Bush's Harken profiteering. That same

year, associates of McAuliffe, fronted by a fake grassroots

organization, released an aggressive ad campaign seeking to highlight

the Harken-Bush connection.

It is not surprising, then, to learn that neither McAuliffe's

connection to Carret nor Quasha's role in the firm have been widely

publicized. Carret employees said they were surprised that when Quasha

acquired the prestigious firm he did not choose to publicize his coup,

instead keeping it quiet. In fact, the company's website does not

reveal his role as chair--or much of anything about the firm. The

company's chief financial officer, Marco Vega, said he was unable to

provide details on Quasha's role in the company, or even to confirm

his current title.

The silence is deafening. Repeated requests for interviews on this

topic were ignored or rebuffed by the offices of Hillary Clinton's

campaign, Bill Clinton, Alan Quasha, Hassan Nemazee, Terry McAuliffe

and Peter O'Keefe. McAuliffe's spokeswoman, Tracy Sefl, who works for

the Clinton-connected communications firm the Glover Park Group but

represents McAuliffe informally, said that McAuliffe would not grant

an interview or respond to detailed e-mailed questions on these

matters. Sefl minimized McAuliffe's involvement with the company,

claiming he was only "an adviser to Carret--as he was to many other

companies."

But a vice chair is much more than just an adviser, and Carret's

opening an office off K Street was not a casual gesture. Notably,

though the DC office was closed after McAuliffe left for Hillary's

campaign, McAuliffe prot