WASHINGTON - After George W. Bush earned his degree from Harvard Business School, an accomplishment that would one day earn him the distinction of being the only US president to have an MBA, his fondest wish was to become successful in the oil business, as his father had been.

It turned out his extensive family and social connections were as important as what he learned at Harvard, helping him stay afloat at crucial moments and eventually become a multimillionaire.

But now the way that George W. Bush used those connections is causing him political problems that could affect his credibility. His critics say that Bush's business dealings before he became president form a pattern of questionable transactions that should be subject to new scrutiny in light of his calls for corporate responsibility.

In recent days, questions have resurfaced about the way Bush sold $848,000 worth of shares in Harken Energy Corp. just before the stock price slumped, and about Bush's delay in filing the required insider-trading report. The Harken deal helped Bush pay off the loan on his $606,000 investment in the Texas Rangers baseball team, for which he walked away with $14.9 million.

In his defense, Bush has repeatedly noted that the Securities and Exchange Commission investigated possible insider trading but took no action against him. The investigation occurred during his father's administration.

Bush's critics have sometimes joked - as they did of his father - that he was ''born on third base and thought he hit a triple.'' In fact, the full context of Bush's business dealings provides a somewhat different metaphor: This is the story of a man who struck out numerous times before being bailed out by big hitters who often were family members, friends, or supporters of his father.

It was in 1975 that Bush, flush with a $20,000 family gift to get his start in business, left Cambridge and drove his Oldsmobile straight to Midland, Texas, where he hoped to emulate his father's success in the oil business. By 1979, after a failed bid for a US House seat representing Midland, Bush had focused his efforts on an oil company he had formed named Arbusto, the Spanish word for Bush.

The company's drilling strategy seemed flawed, and the firm seemed destined for bankruptcy until Bush got help from his uncle, Jonathan Bush, and reestablished Arbusto as an investment company that specialized in oilfield tax write-offs. Many of the investors were members of the Bush family and friends. Still, Arbusto was never prosperous, and a subsequent company, called Bush Exploration Co., did not attract enough investors to succeed financially. Bush Exploration was acquired by a company called Spectrum 7, which kept Bush on board as an executive. But that company too ran into difficulties in the mid-1980s when oil prices plunged.

At a time when Bush's father was vice president, Bush was down in dusty Midland, facing the prospect of having spent much of his career associated with failed or failing oil companies. But then Bush got one in what would become a series of breaks. A company called Harken Energy, which bought troubled oil firms, was interested in acquiring Spectrum 7.

Harken investors included the famed investor George Soros, a wealthy Saudi, and Harvard Management Co., the investment arm of Harvard University. It is one of the ironies of Bush's career that he has so often pilloried the Harvard establishment but attended Harvard Business School and was helped financially by Harvard Management. Bush was given $600,000 in stock and paid $120,000 per year.

On its face, Harken's acquisition was surprising. Harken bought Spectrum 7 for $2 million in stock from Bush and two other partners - even though it had losses of $400,000 in the prior six months and had $3 million in debt. A report by the Center for Public Integrity, a nonpartisan group that investigates the finances of politicians, attributes Harken's interest in Spectrum 7 to the lure of Bush's name.

Bush's name soon helped him become a player in another deal: the purchase of the Texas Rangers baseball club in March 1989. Bush's great-uncle, Herbert Walker, was a founder of the New York Mets, and Bush was a big baseball fan. Major League Baseball officials were looking for a group of Texas investors to buy the Rangers, and Bush's name came up.

Bush was hardly a big financial player. He needed $606,000 to become a co-owner - a small sum by baseball standards. But he could come up with only $106,000, so he borrowed another $500,000 from a bank at which he was a director. That gave him a 1.8 percent ownership in the club. The other owners did Bush an enormous favor, deciding to up his stake to nearly 12 percent. This was bonanza for Bush, giving him his first real test of Texas-sized financial success. Overnight, Bush was in a position to become a very wealthy man. The purchase took place at a time when Bush's father was president, and some of the other co-owners of the Rangers were major backers of then-President Bush, including Fred Malek and billionaire investor Richard Rainwater.

The success of the Rangers deal was assured by a tax increase. Bush, who would later emulate his father's ''no new taxes'' mantra in politics, pushed hard for a sales tax hike to help pay for the construction of the new ballpark at Arlington. To increase pressure for the tax hike, Bush and his fellow investors became one in a long line of baseball ownership teams to threaten to move the club out of town unless the public paid for a new stadium. The strategy worked, the sales tax was increased, and owners profited substantially.

All of that enabled the Rangers ownership team to sell the club later for three times the original price. But for Bush, the deal was even sweeter because his ownership stake had been increased from 1.8 percent to nearly 12 percent. Having invested $606,000, Bush received shares worth $14.9 million.

In order to pay off the loan for the Rangers purchase, Bush sold some of his Harken stock - a transaction that continues to cause headlines 12 years later because of questions about whether Bush profited from inside information. In April 1990, SEC records show, Bush and other members of the firm's board of directors were notified by its president that the company faced a ''liquidity crisis'' due to market declines in oil prices. Frantic steps were taken to restructure debt and the firm's finances. For the quarter ending June 30, 1990, Harken lost $23.2 million, the company announced on Aug. 20 of that year.

Bush, however, had sold 212,140 of the 317,152 shares he owned on June 22, 1990, at $4 a share. His proceeds from the sale totaled $848,560. Bush was required to file an insider trading form by the 10th day of the following month. But Bush waited about eight months to report the sale on SEC ''Form 4.''

Asked at his press conference Monday why it took so long to report, he said ''I still haven't figured it out completely.'' Bush noted that he did fill out another SEC form, announcing his intention to sell the stock, before he sold. But the Form 4 was not filed until March 4, 1991, and the SEC staff, now alerted to the sale, began to investigate Bush for insider trading.

The investigators discovered that the June 22 sale was the largest, but not the only, stock transaction that Bush failed to report on time. In a memo to the SEC files, they noted that ''Bush has filed ... four late Forms 4 reporting four separate transactions totaling $1,028,935.'' Yet on Aug. 21, 1991, according to SEC documents, the investigative staff concluded ''that there is insufficient evidence to recommend an enforcement action against Bush in connection with his June 22, 1990, stock sale.'' The staff said that the evidence indicated that Bush did not have advance notice of most of the losses revealed in the Aug. 20 announcement because they were in the form of write-downs and expenses associated with corporate restructuring that did not take place until after the sale.

The Harken firm's attorneys told the SEC that Bush had checked with them to make sure there would be no legal problems in the sale, and that he had sold the Harken stock - and other investments in the same period - to pay off the bank loan of about $600,000 that he obtained to invest in the Rangers baseball team, a tax bill of some $200,000, and because ''his financial adviser/accountant ... was bugging him to get liquid.''

Joan Claybrook, president of the advocacy group Public Citizen, said, ''The report by the SEC staff was pretty conclusive that while they [Bush and Harken's lawyers] had violated the law on failure to file the Form 4, the issue on the insider trading they felt very clearly was not there.''

William McLucas, who was the SEC's enforcement director at the time, said that it was common for reports to be late and that he stood by the SEC's finding. Asked whether the agency was intimidated by the fact that it was investigating the president's son, McLucas responded: ''The fact is that it wasn't lost on the staff who it was and the fact is it really didn't make a difference. The matter was treated the same way if it was John Doe or George Bush.''

Harken was helped out of its financial troubles by another unusual suitor: the Persian Gulf nation of Bahrain, which in 1990 granted the firm an exclusive contract to drill for oil, again making the company attractive to investors. Bush's father was still in the White House, and the family's critics have long insinuated that Bahrain cut the deal to ingratiate itself with the first Bush administration.

Two other corporate transactions, each of which was also made public by the media at the time, have also come under scrutiny in light of Bush's speech this week on corporate responsibility. Bush as a Harken director was the recipient of the same kind of corporate loans that he has decried in recent days. On Tuesday he said the law should ''put an end to all company loans to corporate officers.'' According to the SEC, however, Bush got $180,000 in loans from Harken to buy stock from the company.

And when trying to wriggle out of its financial fix in the summer of 1989, Harken sold an asset - Aloha Petroleum Ltd. - to a corporate entity made up of a group of Harken insiders. The sale polished Harken's balance sheet for a short period of time until the SEC, after reviewing the transaction, forced Harken to restate its earnings in 1991.

''The transaction - a phony transaction to hide losses involving a partnership - is eerily reminiscent of Enron,'' charged Charles Lewis, the executive director of the Center for Public Integrity. ''It is a little bit inconvenient at the moment [for Bush] to be the corporate reformer he is trying to convey when he himself was associated with a company which was kind of on the edge of accepted conduct.''

While Bush has sought to play down his involvement in accounting details at some of his companies, he was more qualified than most people to deal with such issues. In an interview in 1999 about his days at Harvard Business School, Bush recalled his most memorable course. ''I can remember taking an accounting course that was really interesting,'' Bush said. ''I began to see the tools of capitalism.''

© Copyright 2002 Globe Newspaper Company

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