The Family (56 page)

As his father’s son, Neil received red-carpet treatment throughout the Arab world, first in the United Arab Emirates, where he visited the Dubai crown prince, and then in Egypt, where he and his family were entertained by Hamza El Khouli, a close associate of Egyptian President Hosni Mubarak and chairman of the First Arabian Development and Investment Company. Neil returned home with lucrative commitments for Ignite! from Saudi Arabia, Egypt, and the UAE.

Oil was always the family’s first priority in the Middle East, not the Arab-Israeli conflict. As George W. Bush said when he was running for Congress: “There’s no such thing as being too closely aligned to the oil business in West Texas.”

After losing that congressional race in 1978, George W. settled in Midland and with the rest of his college trust fund (fifteen thousand dollars) started Arbusto (Spanish for “bush”). Pronounced “ar-boo-stow,” the company became the first of his failing oil ventures, soon to be pronounced “ar-BUST-oh.” George sold 5 percent of his company for fifty thousand dollars to James R. Bath, his buddy from the National Guard, who represented Sheik Khalid bin Mahfouz, the banker for the Saudi Arabian royal family. By always using other people’s money, Junior, as W. was called then, managed in ten years to become a millionaire. He started exactly as his father did—by turning to his rich uncle to find wealthy people who were willing to put money into his company and rely on his expertise to strike oil. When W. failed, his investors simply took their investments as tax write-offs, which, in all likelihood, is what they expected to do from the outset.

“I introduced him to clients,” said W.’s uncle Jonathan Bush. “I marketed his firm. I think I was probably pretty helpful. It didn’t hurt him in the fact that his father had been in the oil business, so he knew a lot of the players. At the time there were big tax advantages in drilling oil wells. In those days, it behooved you to drill. You didn’t have to do terribly well in order to do well because you got so many write-offs. So it was an attractive way to invest money and save taxes.”

With his list of wealthy clients, Jonathan became for his nephew what Uncle Herbie had been for George H.W.: a financial honeypot. Junior’s first investors included his grandmother Dorothy Bush, $25,000; Dorothy’s sister-in-law Grace (Mrs. Louis) Walker, $25,000; Dorothy’s brother James W. Walker, $25,000; Gerry Bemiss (childhood friend of the elder George and godfather to Marvin Bush), $80,000; George L. Ball (chairman of E. F. Hutton and the boss of Scott Pierce, Barbara’s brother), $300,000; financier Lewis Lehrman, $47,500; Celanese CEO John Macomber and William Draper III (both Yale 1950), $172,550.

George set up shop in a cramped three-room office in Midland with his business partner and a secretary. He paid himself a salary of seventy-five thousand dollars a year, and for the next five years he chased what he called “The Liberator,” the big oil-spurting gusher that would set him free for life—the dream of every oilman. It never came near him, but George never tired of the hustle. He thrived on chasing the money, meeting investors, and charming them. During that period his uncle corralled ninety-eight people who poured $2,525,000 into Arbusto. Most were eventually forced to write off their investments, and some took exception to the cavalier way the Bushes did business.

“My husband and I were two of the investors that got taken for a ride,” said Ina Schnell, a wealthy art patron from Sarasota, Florida. “We invested because Edward, my late husband, went to Yale with Johnny Bush. We lost our money and not happily . . . Edward almost sued Johnny over it . . . Johnny was a little too casual about the loss. The Bushes are . . . well . . . real hustlers is about the nicest way to put it.”

The Schnells did not know the joke around Midland: George Bush couldn’t find a quart of oil at the 7-Eleven store.

“The first well I ever drilled in which I had a participatory interest was dry,” George recalled. “And I’ll never forget the feeling. Kind of, ‘Oops. This is not quite as easy as we all thought it was going to be.’”

A hard worker, even during his hard-drinking days, George’s career is marked by a slash of carelessness. He was careless with other people’s money, careless about rules, careless about using the Bush name, and careless with the truth. He, like his brothers, was careless in the way that F. Scott Fitzgerald defined the term in
The Great Gatsby
: “They were careless people . . . they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made.”

After five years of dry holes and middling wells, George was in trouble. He decided to rename his company to showcase the family name so that he could attract more people to limited partnerships. He wanted to go public, expand his company, and raise $6 million. Hence, Arbusto became Bush Exploration Company, but George failed miserably. He raised only $1.3 million. Worse, he drilled dry holes, and his investors lost 75 percent of their money.

“I really realized that I had made somewhat of a strategic error,” he admitted later.

“I was called in to handle the name change,” recalled the Midland attorney Robert K. Whitt, “and I jumped at the chance. I wanted to get to know George better. That was in May 1982. He was already throwing around that vice presidential stuff. To really impress us, he’d say: ‘When Dad and the President . . .’ or ‘When the Vice President and Reagan get together . . .’ That was pretty heady stuff in a little Texas town of seventy thousand people.

“After I did the name change for George, he called and asked me to prepare an agreement to sell 10 percent of his company for $1 million to Philip A. Uzielli . . . ‘Keep it bland,’ he said. ‘Phil will bring in the money.’ I’ve never done a deal like that . . . The deal smelled; it really smelled, but it wasn’t illegal. Still, I couldn’t figure out why someone would spend $1 million to buy 10 percent of a company that was worth only $382,386. In other words, Uzielli paid $1 million for assets that were worth $38,237.

“I became even more suspicious when Uzielli walked in, slid a blank check across the table for $1 million, and said, ‘Where do I sign?’ He had no attorney. He asked no questions. He requested no information. So strange for a $1 million transaction, even in the high-flying oil and gas business.

“‘Don’t you want to read the agreement?’ I asked.

“‘It’s not my money,’ he said. ‘I’m not concerned.’

“The stock was issued in the name of a Panamanian corporation named Executive Resources, of which Uzielli was chairman and CEO . . . George didn’t want me to include the wording in the legal papers that stated the corporation was organized under the laws of Panama and the sale was consummated with a cash purchase price of $1 million, but I had to.”

George, who gave everyone a nickname, called his lawyer “Dim wit.” When Robert Whitt, then with the law firm of Cotton, Bledsoe, Tighe, and Dawson, asked George why he was doing business with a Panamanian corporation, he replied: “Dumb question, Dim wit.”

Philip A. Uzielli was Jim Baker’s best friend at Princeton. He went into business with George L. Ohrstrom of Middleburg, Virginia, who had known the Bush family in Connecticut and went to the Greenwich Country Day School with George Herbert Walker Bush. Earlier the Ohrstroms had invested fifty thousand dollars in Arbusto. Uzielli, who became one of three directors of Bush Exploration, told
The Dallas Morning News
that he had met George in 1979, “after his father was director of the C.I.A.” George claimed he did not meet Uzielli until he stepped forward in 1982 with his $1 million. He also claimed he knew nothing of Uzielli’s Princeton friendship with Jim Baker.

“Very hard to believe ole George on that,” said Whitt, “but I don’t know why he would lie. It’s as much a mystery to me as why Uzielli would invest a million dollars in a company with no earnings potential, no profit, and very little value. And why a Panamanian partner, I don’t know. Some people might use a Panamanian corporation as a way to cover drug money and drug dealers . . . The whole transaction was very odd. No one else in Midland had a Panamanian corporation, but then George was the only one whose father was a former CIA chief serving as Vice President of the United States. That made George such a big deal in Midland that everyone wanted to get close to him. Our law firm even halved his bills.” Whitt pointed to a large black leather-bound book. “That represents $50,000–$100,000 worth of work, but George was only billed for half the time. The firm wanted to do business with him, so they kept their bills lower for him than anyone else.”

During this time George and Laura had been trying mightily to get pregnant. When her doctor had said that it was unlikely she would be able to conceive, Laura plunged into depression. She became excessively worried because during her childhood her mother had miscarried several times and given birth to a baby who had died in infancy. Laura grew up as an only child and had absorbed her parents’ pain. She also spent her childhood always trying to please them to make up for their loss. Now, at the age of thirty-four, she was so unhappy about not being able to get pregnant that she avoided walking down the baby aisle of the supermarket. She also smoked two packs of cigarettes a day, as did George, who half-kiddingly offered his pregnant secretary, Kim Dyches, a hundred dollars if only she would name her son for him. She declined. Finally Laura consulted a fertility specialist in Dallas, and in 1981 she became pregnant with twins.

From the beginning her pregnancy was difficult; in her third trimester she developed toxemia, a malady that can lead to dangerously high blood pressure and edema, sometimes producing life-threatening seizures that require induced labor or a Caesarean delivery. In November 1981, Laura was moved from Midland to Dallas and admitted to Baylor Hospital seven weeks before her due date. She was kept in stirrups so as not to induce early labor, but within two weeks the doctors said they had no choice but to perform a Caesarean and take the babies. Baylor officials called George in Midland and told him to be in Dallas by the next morning: “Your children will be born tomorrow, or your wife’s kidneys will fail.”

The twin girls were born on November 25, 1981, and George was in the delivery room. “I witnessed it all,” he said. “It was beautiful.” Photographers and reporters arrived at the hospital to record the birth of the Vice President’s fourth and fifth grandchildren. They were named in honor of their grandmothers, Jenna Welch and Barbara Bush.

“A few months later I got into a big hassle with George over hiring an illegal alien, which everyone in Midland did then,” said Robert Whitt. “We both were looking for a housekeeper and interviewed a woman named Consuela. We ended up getting her, and George was furious. He called and demanded that we give him and Laura the housekeeper. I told him she did not want to work for him. He was so mad he called my wife back, cussed and swore and chewed her out . . . She got scared and said maybe we should give Consuela up . . . because you couldn’t afford to offend the Vice President’s son . . . We didn’t, because Consuela wouldn’t go to the Bushes, but it was not a casual decision.

“George and Laura ran in a much faster and fancier crowd than we did—their friends were all hard-drinking and -drugging. That was part of the oil-business scene then,” said Whitt. The lawyer acknowledged that the Bushes’ social circle had easy access to “all sorts of recreational enhancements,” drugs, which may have occasioned George’s frequent all-nighters. Laura, according to one of her friends, spent many nights worrying when or even whether her husband would come home. She had no idea where he was or what he was doing.

“Even though George’s business record was bad, and he never really struck oil,” continued the lawyer, “he was still considered a success because he was great at raising money from his father’s contacts. The Bush name was his gusher. Right after his dad became Vice President, George was made president of the United Way . . . He was put on the board of the United Bank of Midland . . . He ruled Midland.”

Taking advantage of his position on the bank board, George borrowed $372,000 for his company, plus $245,000 to buy a house. His equity was his failing oil company and his golden name. Within two years Bush Exploration was broke, but George found a big-money bailout in Spectrum 7, a Cincinnati-based oil company owned by William DeWitt and Mercer Reynolds III.

“The Bush name was definitely the drawing card on that one,” said the Midland geologist Paul Rea, who introduced the principals over lunch. “DeWitt had gone to Yale [1963] and Harvard Business School and I thought it would be a good fit with George. They had mutual friends from the Ivy League.”

DeWitt did not want Bush Exploration Company, but he needed a business manager for his Texas company, so he proposed a merger that would make Paul Rea president and George chairman and CEO of Spectrum 7. George was paid $75,000 a year in salary, plus $120,000 in consulting fees and 1.1 million shares of stock (worth $530,000), which constituted 16.3 percent of the company.

The merger was completed on February 29, 1984, just as the high prices of oil began to collapse. The next year the rallying cry within the industry was “Stay alive in ’85.” Spectrum 7 lost $1.6 million. George tried to recoup some of his losses by partnering with Enron Oil and Gas on two projects. Then the bottom dropped out—world oil prices fell from forty dollars a barrel in 1980 to ten dollars a barrel in 1986. Spectrum 7 fell $3.1 million into debt.

The Vice President of the United States was sputtering. “I think it is essential that we talk about stability [in oil prices] and that we not just have a continuing free fall,” he said. During a visit to Arab oil-producing nations, Bush asserted that low oil prices represented a threat to national security. Some editorial writers suggested the Vice President was more concerned about the threat to his big political contributors in Texas as well as his two sons in the gas and oil business.

“It’s very slow out here—times are tough,” Junior told
The New York Times
. “We are using cash to survive.” The paper reported there was nothing of the flashy Texas oilman in young George W. He dressed like a Yalie and lived in a modest one-story brick house worth about $200,000. “I’m all name and no money,” he said.