HKN, Inc. is a company engaged in hydrocarbon exploration headquartered in Southlake, Texas. It is notable for the Harken Energy scandal, which involved allegations of insider trading by George W. Bush in 1990.[2] The company was known as Harken Energy Corporation until 2007.
History
In 1973, the company was founded as an unprofitable collection of Texas oil wells for investors seeking tax write-offs.[3]
In 1986, the company acquired Spectrum 7 for 200,000 shares from George W. Bush.[3] After the sale of his company, Bush served on the board of directors of the company and received $80,000-$100,000 per year in consulting fees. Bush remained on the board through 1993.[3]
In 1987, Talat Othman joined the board of the company and served as the chair of the Audit Committee.[4]
In 1987, Bush obtained a critical $25 million loan from a BCCI joint venture.[5]
In 1989, the company's subsidiary Aloha Petroleum was sold to company insiders for $12 million, most of which was borrowed from Harken. The sale of the subsidiary for an exorbitant price helped the company show a profit that year and disguise losses, a similar technique used by Enron that led to the Enron scandal.[3]
In September 1989, the company made an offer to acquire Tesoro Petroleum.[6] The offer was withdrawn in February 1990.[7]
In 2007, the company changed its name to HKN, Inc.[8]
Controversies
Insider trading allegations
Harken attracted attention because of the role played in its affairs during the 1980s by George W. Bush, later the President of the United States. On June 22, 1990, while he was a member of the company's board of directors, Bush sold stock in Harken shortly before the company announced substantial losses.[9] This transaction resulted in a U.S. Securities and Exchange Commission investigation of probable insider trading.
A transaction associated with the financial endowment of Harvard University was also investigated.[10]
Exploration offshore Costa Rica
In 2000, a subsidiary of the company received a 20-year concession to exploit resources offshore Costa Rica. After pressure from indigenous tribes and environmentalists, operating as Acción de Lucha Anti-Petrola, the government instituted a moratorium on exploration. In September 2003, the company filed a dispute seeking $57 billion from the government of Costa Rica for lost earnings. The lawsuit was thrown out of court and the concession was revoked.[11]
References
- ^ "Report of Independent Registered Public Accounting Firm and Financial Statements and Accompanying Notes for the Years Ended December 31, 2016 and 2015".
- ^ "UQ Wire: Harken Energy - George W's Perfect Storm". Scoop. July 15, 2002.
- ^ a b c d "Harken Energy Chronology". Scoop. October 25, 2002.
- ^ Petzinger Jr., Thomas; Truell, Peter; Abramson, Jill (December 6, 1991). "How Oil Firm Linked to a Son Of Bush Won Big Drilling Pact". The Wall Street Journal.
- ^ Sirota, David; Baskin, Jonathan (September 2004). "Follow the Money: How John Kerry busted the terrorists' favorite bank". Washington Monthly. Archived from the original on 22 August 2004. Retrieved 1 April 2022.
- ^ "Tesoro Studying Offer from Harken". The New York Times. September 8, 1989.
- ^ "Harken Withdraws Offer for Tesoro". The New York Times. February 28, 1990.
- ^ "HKN, Inc. Reports Change of Name From Harken Energy Corporation and Approval of Reverse Stock Split" (Press release). Marketwired. June 6, 2007.
- ^ Tran, Mark (July 10, 2002). "Bush and Harken Energy". The Guardian.
- ^ Simpson, Glenn R. (October 9, 2002). "Harvard Was Unlikely Savior Of Bush Energy Firm Harken". The Wall Street Journal.
- ^ Barry, Steven J. (October 15, 2004). "High Court Rejects Oil Company Case". The Tico Times.