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Barely a month after his father’s inauguration as president in 1989, Jeb Bush and his new business partners landed in Nigeria.
They had gone to promote their flood and irrigation equipment, but the reception they got was worthy of a state visit. For five days, Bush and his associates were chauffeured through major cities. A crowd of 100,000 locals cheered them at one stop. Governors sprung for lavish receptions in their honor. The Nigerian president invited them to his office.
"They came back singing the praises of your country and were grateful to you," President George Bush wrote Gen. Ibrahim Babangida, the Nigerian president at the time, thanking him for the hospitality afforded to his son.
As a businessman and a son of the president, Jeb Bush became a sought-after partner for South Florida entrepreneurs in the 1980s and ’90s. His name, it seemed, could open doors and provide access, whether in Lagos, Nigeria’s largest city, or in Washington. But not all the ventures were successful and some of them proved controversial, enmeshing him in lawsuits and bad publicity.
Bush’s association with the MWI Corp., a Florida company that makes water pumps, was emblematic of that period. The company eventually closed a deal with several state governments in Nigeria in a purchase financed ultimately with $74 million in loans from the Export-Import Bank of the United States. But the Justice Department would later sue, claiming that Bush’s partners hid commissions of roughly $25 million to a Nigerian middleman. Though Bush denied making money on the deal, his association with MWI resulted in questions that have endured for over two decades, with Bush once telling a reporter the association brought "unmitigated grief."
Except for two terms as governor of Florida, Bush, 62, has spent his career as a businessman and entrepreneur who made a string of successful real estate investments. That experience is a point of pride as well as a major selling point as he considers becoming a candidate for president. But it has also resulted in scrutiny of some of his recent dealings, such as his membership, starting in 2007, on the board of InnoVida, a bankrupt manufacturer of building materials, whose founder went to jail after defrauding investors.
But it was years earlier, as a young man managing a real estate company while scoping out an assortment of other deals, that Bush tried to fulfill his entrepreneurial ambitions and tested his willingness to take risks. Miami was emerging as a fast-paced international financial center, the perfect place to find the right opportunity, and he made no secret of his goal. "I want to be very wealthy," he once told a reporter.
By the time he was elected Florida’s governor in 1998, Bush had amassed a net worth of $2 million, according to the financial disclosures he made at the time, a figure that is believed to have grown substantially since 2007, when he left the governor’s office. Yet a number of his ventures before he entered politics have invited criticism that Bush traded on his family’s name and crossed ethical lines. And as the son of the president, his business involvement was inevitably vetted in public view, subjecting Bush to so many questions that he angrily accused the media of treating him unfairly.
"By definition, every single business transaction I am involved with may give the appearance that I am trading on my name," Bush wrote in The Wall Street Journal during the final days of his father’s re-election campaign in 1992, responding specifically to stories about his involvement with the sale of MWI’s water pumps. "I cannot change who I am."
Months earlier, he had written a 1,400-word defense of his business dealings in The Miami Herald in which he condemned reporters for having "gone too far in delving into the private lives of the families of public figures."
"Being part of America’s ‘First Family’ is both wondrous and challenging," he wrote in the newspaper, adding that he desired to have his successes or failures "measured by his own performance and behavior, not those of his parents."
Bush’s current spokeswoman, Kristy Campbell, echoed those sentiments when asked to comment on Bush’s business dealings during that period. In a statement, she added that Bush was "very proud of his career in business and his investment work to grow companies."
Investment Scrutiny
Friends and associates of Bush say his experience in the business world, which included working as a banker in Venezuela in his first job after college and serving as Florida’s commerce secretary, made him an especially effective public official. And they say that whatever setbacks he has experienced were hardly unusual.
"What successful business person hasn’t had a series of experiences that him or her isn’t better coming out of it?" asked Jorge Arrizurieta, a longtime friend and Republican fundraiser.
"We were all risk-takers," said Hank Klein, one of Bush’s former real estate partners. "Everybody was, and that was exciting."
But in Washington, those successes or failures at times resulted in enough questions for his father’s vice-presidential staff that his aides maintained folders of news clippings on Jeb Bush with instructions on handling certain queries, according to presidential archival records.
"Per Jeb — Don’t refer any more calls to Jeb on H.M.O.," an aide wrote, in reference to questions about Bush’s work for Miguel Recarey Jr., who became a fugitive after he was indicted in 1987 on charges that his health maintenance organization defrauded the Medicare system. The aide’s notation was contained in a copy of a file obtained from the George Bush Presidential Library.
Two years before then, Bush had called federal officials to request a fair hearing for the health organization on a regulatory concern. Bush has maintained that Recarey, a political contributor, did not pay him for lobbying, but for scouting real estate. Recarey, who lives in Spain, declined to comment through his brother, Jorge Recarey Sr., who was also an executive with the company.
"We did have a lot of lobbying, really heavyweight lobbying — much heavier than Jeb," Jorge Recarey Sr. said in a phone interview. "It’s a political issue in my opinion. The poor guy was a kid trying to make a living in real estate."
Bush’s real estate investments also brought scrutiny.
In one case, Bush and a longtime associate, Armando Codina, purchased a Miami building in 1985, and another partner in the investment obtained a $4.6 million loan from a local savings and loan. The loan went into default and the bank collapsed, prompting the federal government to absorb more than $4 million of the debt, with Bush and Codina assuming the rest.
News reports during his father’s presidency tied Bush to the bailout of the savings and loan industry. But Bush rejected the notion that he had benefited, calling it "sheer lunacy" at the time. And Codina said in a recent statement that he had never turned over a property to a bank, while praising Bush’s work in real estate. "He is a workaholic and his greatest strength is that he has a very strategic mind," Codina said.
The criticism did not slow Bush. After his father’s re-election defeat in 1992 and his own unsuccessful entry into politics as a candidate for governor of Florida two years later, Bush refocused on his business endeavors.
One of them was the Ideon Group, a credit-card registration company based in Jacksonville, Florida, whose board he joined in January 1995. But by that summer, Ideon had suffered enormous losses and its stock price collapsed, prompting directors to push out the chairman and to later sell the company. Board members were sued for inadequate oversight and stock manipulation.
Bush denied wrongdoing, and when the case was settled, he did not pay damages, court records show. And again, Bush defended himself from what he saw as unfair coverage.
Problem Partnership
But of all of Bush’s enterprises, none brought him as much trouble as his time promoting MWI’s pumps.
His involvement began just after his father became president in 1989 when he entered a partnership with David Eller, a Republican contributor and president of MWI (previously known as the M & W Pump Corp.). They called the company Bush-El and its purpose was to market MWI products.
That March, Bush, his wife, Columba, and his associates made their trip to Nigeria for the dedication of an MWI assembly plant. MWI’s local partner, Alhaji Mohammed Indimi, served as their host. At the time, MWI was arranging loans from Nigerian banks for equipment sales to several states. "Jeb Bush used his commercial banking expertise to help evaluate and to analyze that possibility," MWI said in a statement for this article.
But the loans did not come through, prompting MWI to seek financing from the Export-Import Bank. The involvement of a government agency, Bush has said, meant that he no longer worked on the sales because he was restricted from dealing with the U.S. government under his own self-imposed rules.
MWI, which had previously worked with the bank, was not deterred. "M.W.I. had done business in Nigeria for nearly a decade before Jeb Bush became involved," MWI said in its statement, adding: "M.W.I. neither needed nor utilized Jeb Bush to gain access to Nigerian decision makers."
But as the sales progressed, Bush stayed involved, records show.
In March 1990, Bush faxed the White House counsel’s office about a Nigerian export program, enclosing a two-page memo from an MWI executive, presidential archive records show. The memo itself has not been released.
Later that year, MWI rewarded Bush-El for its efforts "to secure contracts in Nigeria," offering 3 percent commissions on any new business there, according to a meeting agenda. In 1991, an MWI memo concluded that a visit by Bush to Nigeria "may help unlock AAA" — a reference to Alhaji Alhaji Alhaji, a finance official. Bush returned to Nigeria, but MWI said there was no record of his meeting with Finance Ministry officials.
In 1992, the sales were completed. But both MWI and Bush were immediately forced to defend them when the sales became an issue — critics accused Jeb Bush of trading on his family connections — in his father’s re-election campaign. In 1994, when Jeb Bush ran for governor, the Nigeria transaction was also an issue, and Bush sold his shares in Bush-El to Eller, his partner.
Bush-El’s work for MWI included trips abroad to Mexico and Taiwan, among other places. He disclosed income of $648,250 from the venture, according to media reports at the time. None of the commissions came from the deal with Nigeria, said Campbell, the spokeswoman, emphasizing "as Gov. Bush has stated multiple times over more than two decades, and his tax returns confirm."
Still, Bush found it difficult to fully distance himself from his association with MWI.
When he was governor, Bush’s staff rejected a request from an MWI associate that he meet with a Nigerian delegation. "One of the worst situations in the world," an adviser wrote in a 2001 email, referring to corruption in Nigeria’s government.
Then, in 2002, the Justice Department joined a lawsuit by a former MWI employee claiming that MWI did not disclose excessive commissions of more than $25 million to Indimi, which they claimed he used to pay bribes. By this time, Indimi’s wealth had grown substantially after he was awarded an oil field by the Nigerian government.
Two years ago, fresh questions arose when Bush appeared on a witness list before the case finally went to trial. But the judge ruled Bush’s testimony would be irrelevant to the case.
At the trial, Elizabeth Young, a government lawyer, argued that the Export-Import Bank "unknowingly funded a $25 million payment to Mr. Indimi," backing "a transaction that was tainted by bribery" (the government suspected bribery, but did not prove it). MWI argued that the bank was ambiguous about defining commissions.
The jury found MWI guilty of submitting false claims to the Export-Import Bank. But the judge ruled the company would not be liable for punitive damages because the loans were repaid. Both sides are appealing the verdict.
Steve Eder, New York Times
