O, Brother! Where Art Thou?
Like Hugh Rodham, the Bush Bros. Have Capitalized on Family Ties
Unless you've been reading the Houston Chronicle society page, it's unlikely you've seen any current news about Neil Bush. The third Bush sibling has been almost as invisible as his apolitical brother Marvin, a venture capitalist living in northern Virginia, and his sister Dorothy "Doro" Koch, the youngest of the five Bush siblings, who quietly raises funds for charities in a Maryland suburb near Washington. While Jeb was governor of Florida and George W. was twice elected governor of Texas, Neil was either part of the late Maxine Mesinger's "crème de la crème crowd" at a Houston social event, or a stale S&L footnote: "the director of Silverado Banking, Savings and Loan when it crashed in 1988 at a cost of $1 billion to taxpayers."
In 1990, Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which actually cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million. And the fine wasn't exactly paid by Neil Bush. A Republican fundraiser set up a fund to help defer costs Neil incurred in his S&L dealings. Friends and relatives contributed -- but not then-President and Barbara Bush, which would have been unseemly. Since then, the Bush political combine has done such a remarkable job keeping Neil in the background that what seemed like a 10-year news blackout didn't end until mid-February, when the Austin Business Journal reported that Bush "quietly is heading a local start-up that's raising at least $10 million in second-round funding." According to the business newsweekly, Bush has already raised $7.1 million from 53 investors underwriting Ignite! Inc., an educational software company. After being banned from banking and all but airbrushed out of the family portrait -- or at least the family news profile -- Neil Bush is back.
Bush wasn't just an average S&L exec drawing a big salary and recklessly pushing a federally insured institution beyond its lending limits. As a director of a failing thrift in Denver, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners. Federal banking regulators later followed the trail of defaulted loans to Neil Bush oil ventures, in particular JNB International, an oil and gas exploration company awarded drilling concessions in Argentina -- despite its complete lack of experience in international oil and gas drilling. It probably helped that the Bush family had cultivated close ties with the fabulously corrupt Carlos Menem, former president of Argentina.
When JNB's rights and obligations were assumed by other investors, Neil tried to persuade another American oil and gas exploration company, Plains Resources, to invest in Argentina. Plains wasn't buying. But it was hiring, and picked up Neil as a consultant for its Argentine market -- because, as Plains executive Carlos Garibaldi told The New York Times' Jeff Gerth in 1992, Neil had "traveled [in Argentina] and played tennis with President Menem." Plains President J. Patrick Collins told Gerth at the time that Neil Bush "bent over backwards not to trade on his name."
That claim was hard to make in 1993, when Neil, Marvin, James Baker III, John Sununu, and Thomas Kelly (who had served as director of operations for the Joint Chiefs of Staff during the Gulf War) joined President Bush on a trip to Kuwait. Three months out of office, the elder Bush was traveling on a Kuwait Airlines flight to accept an honorary degree from the country's university and its highest honor from its leader: Emir Sheikh Jabir al-Ahmad al-Sabah. The rest of the Bush entourage was following along to exploit the market in a country that considered the ex-president its savior. Former Secretary of State Baker was doing deals for Enron (the Houston-based energy-related company and contributor to Bush the Elder and later a $525,000 donor to George W. Bush's two gubernatorial races in Texas). Marvin was representing U.S. defense firms selling electronic fences to the Kuwaiti Defense Ministry. And Neil was selling anti-pollution equipment to Kuwaiti oil contractors.
There is "no conflict of interest. ... We're just capitalizing on whatever good feelings exist," an executive from the company Neil Bush represented later told Seymour Hersh, who laid out the embarrassing story on the pages of The New Yorker in September 1993. Neil, according to Hersh, later returned to Kuwait and set up shop in the International Hotel in Kuwait City, where he tried to secure a management contract with Kuwait's Ministry of Electricity and Water. Neil's deal included foreign and Kuwaiti members of the Enron consortium, and would have had the Kuwaiti government paying a management fee to a Kuwaiti company that was owned in part by a private company set up in the Caribbean or some other tax haven. "The offshore firm would have various owners, in Europe and elsewhere, one of which would be a company in which Neil Bush had an interest," The New Yorker reported. The scheme was ingenious, a financial analyst told Hersh."If you looked at one of the contracts, how in the hell would you know that Bush was in it?" The whole deal was as unsavory and unpardonable as a round of golf with Hillary Clinton sibling Huey Rodham.
Jeb missed that junket, but the current governor of Florida isn't above taking the family name abroad to make a buck. In 1989, Bush and his wife traveled to Nigeria with a executives of M&W Pump, a Florida-based company that had been selling agricultural pumps to Nigeria. Jeb and Columba Bush were received by Nigerian President Ibrahim Babangida and celebrated by tens of thousands of Nigerians who turned out to see the son of the U.S. president. President Babangida expressed his interest in visiting the White House -- a request Jeb promised to pass along to his father -- and by 1992 the Florida pump company had secured $74 million in financing from the Export-Import Bank of the United States. It was by far the largest Ex-Im deal M&W had ever done in Nigeria -- a country Ex-Im loan officers considered a bad risk. "I didn't get paid for the Nigeria business," Bush told The Palm Beach Post in 1994. "I have not made a dime on business with Nigeria." Yet the Post found tax records that revealed Bush and earned at least $300,000 through his association with the owner of the same company for which he had done a pro-bono sales trip to Nigeria. Bush-El, a 50-50 partnership with the owner of M&W, paid Bush at least $300,000 for his participation in a separate venture, marketing agricultural hand pumps. Why would Bush suddenly find himself involved with a company selling agricultural hand pumps around the world? the Post asked. "I know how to sell things," responded Bush. "I know international sales. I know how to get people to put together tenders because I financed a lot of them when I was working at Texas Commerce Bank."
Here in Austin, it's a safe bet that Neil will raise the additional $10 million in start-up money Ignite! needs to get its software to market. In six years at Interlink Management, a venture capital firm he ran out of his father's Houston office from 1994 to 1999, he raised $60 million for high tech and biotech start-ups. Ignite! is a new company and a new market niche, but there's nothing new in what Neil Bush is about this year: leveraging the family name and other people's money into a business that will turn a profit -- if for no one else, at the very least for him.