MARKET SCAMS

[thepennyking]

Do fish rot from the head down?

Description of scandal.

(1) In 1989, Harken Energy sold off an 80% stake in Aloha Petroleum (a small chain of gas stations in Hawaii that Harken had acquired with its 1986 purchase of E-Z Serve Inc.) to Intercontinental Mining and Resources Ltd, which was owned by a group of investors who included Harken�s chairman, Alan Quasha and another Harken board member. In a deal of obvious advantage to the buyer, Harken financed $11 million of the $12 million purchase. The buyer wasn�t required to make the first $1 million installment on the loan until mid-1992, three years after the purchase. Harken�s accountants however, recorded an immediate $7.9 million profit on the sale. This was in spite of the fact that according to the terms of the sale, Harken Energy remained liable for any environmental problems stemming from the operation of Aloha under Harken�s past management. The $7.9 million profit, inappropriately entered into the books by Harkens accountants, reduced the companies 1989 loss to only $3.3 million. Harken's hired independent auditors, the now infamous Arthur Andersen LLP, approved the company's annual report to the SEC as an accurate portrayal of Harken's finances. (Vieth 7-12-2002; Allen and Lardner 7-14-2002; Krugman 7-2-2002; Milbank 7-4-2002; Scheer 7-9-2002)

(a) Interesting aside on Alan Quasha, the former chairman of Harken Energy. He was the son of attorney William Quasha, who defended figures in the Nugan Hand Bank scandal in Australia. Closed in 1980, Nugan Hand was not only tied to drug-money laundering and U.S. intelligence and military circles, but also to the CIA's covert backing for a �constitutional coup in Australia that caused the fall of Prime Minister Gough Whitlam. (Colhoun 1992)

http://www.cooperativeresearch.org/eliteprofile/bush/bushandharken.html