Democrat Fact Sheet – Enron, Haliburton And Harken

• On February 1, 1990, Mikel D. Faulkner, President of Harken Energy, wrote to the Board of Directors: "It appears that our 1989 profitability will be in the range of $1.2 million. Although disappointing, this is consistent with the last projection which was made and provided to the Board… Although several accounting issues remain unresolved, it is anticipated that none of them should cause major changes either up or down in that projection.”

• On April 20, 1990, just two months before your stock sale, Harken President Mikel Fauklner wrote to the Board of Directors that “two events have occurred which drastically affect Harken's current strategic plan with regard to seeking public funds to reduce our debt and provide equity for current capital opportunities," and that the development "greatly intensifies our current liquidity problem.”

• On June 7, 1990, just two weeks before your stock sale, another memo from Faulkner warned of a "Harken International shutdown effective June 30, unless third party funding [is] obtained," and discussed plans to lay off 40 employees. The memo said the company had lost $28.5 million in trade credit since Jan. 1, and another $11.8 million was "in jeopardy," and said "most companies that have seen [the company's annual report] are nervous.”

Some have alleged that you were acutely aware of this information. According to a June 15, 1989 letter from Harken President Mikel Faulkner you frequently advised Harken management on "organizational and strategic matters." In the letter, Faulkner praised you for "the positive image you have helped create regarding Harken Energy Corporation, the intuitive analysis you have provided on our various acquisitions, operating decisions at the board level and the personal suggestions and ideas you have shared with me over the past two years on a CEO to CEO basis" and said, "I consider the role which you play at Harken Energy Corporation to be a very meaningful and significant role and look forward to a continuing relationship.”

Additionally, there are concerns that, as the son of the President of the United States at a time when the White House, but not the general public, was well aware of the aggressive intentions of Saddam Hussein in the lead up to the Persian Gulf conflict, you may have been privy to this information. It was also well known that such a conflict would cause substantial disruptions in the oil industry.

There are concerns that you knew that any stock sale based upon insider information was a serious offense because you were so informed in a June 15, 1990 memorandum, one week before your stock sale, by Harken’s attorneys at the firm of Haynes and Boone, with the subject line "Liability for Insider Trading and Short-Swing Profits." The memo states the following: "If the insiders presently possess any material non-public information, a sale of any of their shares could be viewed critically.”

Defending against these allegations, your representatives have asserted that you always intended to sell the Harken stock, an assertion which is also contradicted by documentary evidence. In fact, you signed a letter of intent, a so-called “lockup letter,” promising not to sell any Harken stock for at least six months, but then sold it two and a half months later.

b) Alleged Efforts to Conceal Insider Trading Violations

There are concerns that you may have attempted to conceal your alleged insider trading acts which, if true, would violate 15 U.S.C. § 78j(b) (securities fraud), the general antifraud provision of the Securities Exchange Act, which prohibits the use of “any manipulative or deceptive device or contrivance” in connection with the purchase or sale of securities. Violations include filing false or misleading statements with the Securities and Exchange Commission.

Penalties for violating the general antifraud provision are found at 15 U.S.C. section 78ff(a) and permit fines up to $1,000,000 (up to $2,500,000 if other than a natural person) and/or imprisonment up to ten years.

As has been widely reported, you failed to file the required Form 4, a required notice for an insider’s stock trade, until eight months after the sale. You have given conflicting explanations for this failure. In 1992, you blamed your Commission, asserting that the SEC lost the Form 4.

However, on July 3 of this year, you, speaking through your Press Secretary said there was a “mixup with the attorneys dealing with the Form 4, and it was filed later.”

There are concerns that you knew that filing this form was an urgent matter but nonetheless did not file it:

• A January 19, 1990 memo from Harken counsel Larry Cummings to you emphasized the importance of the filing: "[p]robably the most outstanding feature of changes in this rule will be the requirement that a disclosure be made by the company in its proxy or 10K concerning late Form 3 or 4 filings ... Please examine your records and files to be certain that this information is current concerning your beneficial ownership of Harken stock and there have been no other transactions since such date which have not been disclosed.”

• On March 14, 1990 a Public Common Stock Offering was presented to the Board of Directors, which stated, "In working and planning toward the public offering which will be priced based on the market price for the Company's common stock established on or about Closing, it is appropriate for the Company to take reasonable steps and measures to avoid fluctuations in the market price," the document notes. Among those steps: "Exercise caution regarding insider and related party transactions.”

• An October 5, 1989 memo from Harken counsel Larry Cummings to you urged you to rectify the situation: "I could not find where Form 4 had been filed covering the 25,000 shares you purchased this year ... If you have no record of filing one, please sign the enclosed 5 copies of a Form 4 and return them to me”.

c) Allegations Concerning False Statements Made Under Oath

Moreover, there are concerns that the Form 4 itself contains indicia of a possible attempt to conceal its late filing which may constitute a violation of 18 U.S.C. § 1001 (false statements)–among other things, this covers in any matter within the jurisdiction of the federal Executive, Legislative or Judicial Branches, knowingly and willfully falsifying, concealing, or covering up by any trick, scheme, or device a material fact; making any materially false, fictitious, or fraudulent statement or representation; or making or using any false writing or document, knowing that it contains a materially false, fictitious, or fraudulent statement or entry. Maximum penalties include imprisonment of not more than 5 years, a fine under Title 18, U.S.C.5 or both.

The fact is that the only form that has come to light that you failed to inscribe with the appropriate date, was this belated Form 4. Other forms submitted to the SEC by you on June 22, 1990; April 13, 1987; April 12, 1987 and October 6, 1989 were all dated. In context, such an omission appears to be an intentional effort to conceal the trade.

2. Lack of Investigation of Harken

Contrary to your assertion that “[t]his was fully looked into by the SEC, and there’s nothing there,” there are concerns that the SEC investigation of Harken can be characterized as cursory, charitably speaking. You were never interviewed, nor were other prominent Harken officers and the Chairman of the SEC was appointed by your father and the General Counsel, James A. Doty, was your attorney in your purchase of the Texas Rangers baseball team. It is, therefore, alleged that a clear that a fair, impartial and complete investigation has yet to occur.

3. Need for Full Disclosure

On July 8, you invited the media to “look back on the director's minutes” and SEC documents concerning your Harken dealings. However, since then, you have refused to ask Harken or the SEC to disclose those documents.