Family of Secrets: The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years

by Russ Baker

  Upon coming to power in 1959, Fidel Castro began to expropriate the massive properties of large foreign (chiefly American) companies. The impact fell heavily on American corporations that had massive agricultural and mineral operations on the fertile island, including Brown Brothers Harriman, whose extensive holdings included the two-hundred-thousand-acre Punta Alegre beet sugar plantation.44 After Castro took power, the Eisenhower administration began a boycott of Cuban sugar, which is a crucial component of the island’s economy. The Cubans in turn became increasingly dependent on the USSR as supplier of goods and protector.

  Poppy swung into gear the same year that Castro began nationalizing those properties. He severed his ties to the Liedtkes by buying out their stake in Zapata Offshore, and then moved its operations to Houston—which, unlike the remote Midland-Odessa area, had access to the Caribbean through the Houston Ship Channel.45 Meanwhile, back in Washington, after extensive planning, the Bay of Pigs project began with Eisenhower’s approval on March 17, 1960.

  For anyone who asked about the origins of Zapata Petroleum’s name, Bush had a good story. A theater in downtown Midland happened to be showing the Marlon Brando film, Viva Zapata!, a biography of Emiliano Zapata, the Mexican revolutionary. Bush would claim that the partners had a flash that Zapata represented the image of independence their oil company was seeking. Ironically enough, General Zapata had fought for land redistribution on behalf of peasants, with resulting losses for precisely the kinds of people who staked Bush’s companies.

  Moreover, Bush and his friends were hardly “independents.” To the contrary, they were connected to some of the wealthiest and most powerful people in the country, who owned enormous expanses of land throughout Latin America and elsewhere—exactly the kind of people Zapata loathed. The key thing—and possibly Bush’s telegraphed message—was that Emiliano Zapata gained international repute for one thing: overthrowing a government.

  Beyond providing a staging area for Cuban rebels, Zapata Offshore appears to have served as a paymaster. “We had to pay off politicians in Mexico, Guatemala, Costa Rica, and elsewhere,” said John Sherwood, chief of CIA anti-Castro operations in the early 1960s. “Bush’s company was used as a conduit for these funds under the guise of oil business contracts . . . The major breakthrough was when we were able, through Bush, to place people in PEMEX—the big Mexican national oil operation.”46

  Bush’s Mexican Connection

  The complicated PEMEX affair began in 1960, when Zapata Offshore offered a lucrative secret partnership to a competing Mexican drilling equipment company, Perforaciones Marinas del Golfe, or Permargo. George H. W. Bush did not want this relationship exposed, even decades later. When investigative reporter Jonathan Kwitny tried to document Bush’s precise involvement with Permargo for a 1988 article, he was told by an SEC spokeswoman that Zapata filings from 1960 to 1966 had been “inadvertently destroyed” several months after Bush became vice president.47

  Bush’s Mexican counterpart in this arm’s-length relationship, Jorge Diaz Serrano, was ultimately sentenced to ten years’ imprisonment for defrauding the Mexican people of fifty-eight million dollars. Diaz Serrano later admitted to remaining a personal friend of Bush and visiting the vice president in Washington shortly before his fraud conviction in Mexico.48 He told Kwitny that Poppy Bush’s interest in the oil business seemed limited: “In those days, I remember very clearly, he was a very young chap and when we were talking business with him at his office, he spent more time on the telephone talking about politics than paying attention to the drilling affairs.” As in other respects, father would be mirrored by son, as George W. Bush, too, would become well-known in the oil business for his preference for anything but the task at hand.

  Evidence that Zapata Offshore was more than just Poppy Bush’s oil company surfaced in the years that followed. Bush increasingly spent his time on politics, and others were brought in to transform the company into a larger entity that could more credibly run global operations. According to former Zapata executive Bob Gow:

  After George lost his first bid for public office . . . we had a number of discussions with a man named Bill Clements, who was president of a company named Sedco . . . I was very surprised to become aware during some of those discussions that George did not really care if Bill Clements was to be head of a combined company of Zapata and Sedco. I believe he would have been happy to have Bill Clements assume that role . . . George’s real interest was in politics.49

  (Clements did not take over Zapata, but the two companies did enter into a joint venture in the Persian Gulf. Clements became deputy defense secretary under Nixon, and then governor of Texas, where he gave a job to an eager new arrival to the state named Karl Rove.)

  Bush’s reward for all his troubles may have come in 1965, when one of the company’s rigs was ostensibly lost in Hurricane Betsy. For the first time in its history, the insurance giant Lloyds of London paid out an oil-platform disaster claim without physical evidence. Zapata received eight million dollars for a rig that had cost only three million.50

  The fate of the rig remains a mystery. “The platform was stable at the time,” recalled Vincent “Buddy” Bounds, the last man evacuated from it. “I remember we were taken off just before dark . . . I was surprised to hear it disappeared without a trace; it was awfully big.”51 Poppy’s brother Bucky recalled the fears expressed by Zapata Offshore staff that it would be impossible for an insurance claim to be paid because of the absence of any wreckage. But Poppy himself was calm, reassuring his people that “everything is going to be all right.”52

  In February 1966, Poppy left Zapata to run for Congress. Members of his circle stepped in at the offshore company to ensure continuity. One of them was Poppy’s former aide William Stamps Farish III, who also began managing Poppy’s assets in a blind trust. Farish fit in nicely. He was heir to an oil fortune, and his family went way back with the Bushes. In 2001, he was named ambassador to Britain by George W. Bush.53

  The financials of Zapata, like those of latter-day Enron, were almost impossible to understand. This appears to have been by design. A bit of this can be gleaned from the words of the company’s former executive Bob Gow, another in a small army of Bush loyalists who show up repeatedly in the family story—and by extension the nation’s.

  Resetting the Sales

  Bob Gow may be the only person in American history to be employed by one future president (Poppy Bush—at Zapata) and to later employ another (George W.—at Gow’s post-Zapata agricultural mini-conglomerate Stratford of Texas).

  In 2006, I traveled to Mexico, to the western Yucatán, and met with Gow on his bamboo plantation not far from the Mayan ruins at Uxmal. I also obtained Gow’s self-published memoirs, the five hundred pages of which include much about Zapata, bamboo, beeswax, and catfish, but manage to say little about the Bushes and their doings. Gow did, however, admit that he did some spying for the CIA.

  Gow was a member of the country’s mostly invisible elites. The family was certainly well connected. His grandfather’s company played a role in the building of the Boston subway. His father was called to Washington in World War II and rose rapidly in the war-mobilization hierarchy. (His role was similar role to that of Samuel Bush in the First World War.) After the war, the Gows returned to Massachusetts, where Bob attended Groton. His roommate was Ray Walker, a cousin of George H. W. Bush.

  Bob Gow and Ray Walker would room together again at Yale, and both would be inducted into the 1955 class of Skull and Bones (along with David McCullough, the noted biographer of Harry Truman and John Adams). Ray Walker eventually became a psychotherapist in Vermont and a quiet critic of Bush-Walker politics and values. Gow, however, was captivated, and served increasingly as a soldier for the Bush clan.

  Gow’s recruitment by the Bushes illustrates the kind of opportunities that come to those of the “right sort” and possessed of the appropriate discretion. By his own account, Gow was plodding along in an unremarkable career at the Norton Company, a gr
inding-wheel firm run by his father. Then, out of the blue, he received a call from Ray Walker’s father, George Herbert Walker Jr., a.k.a. Poppy’s “Uncle Herbie.” Uncle Herbie, as a key figure behind Zapata, believed that Gow was exactly the person for a new venture, Champlain-Zapata, a partnership to manufacture machines for molding expandable polystyrene.

  Gow possessed no apparent qualifications for the job, but Herbie insisted he was just right for it. Gow’s memoir recounts the company’s efforts to produce four different products, all without success. These included a plastic box for packaging berries that was canceled when Gow realized the box caused the berries to rot faster. This, Gow would drolly note, taught him to “think outside the box.”

  By investing in a risky polystyrene enterprise at a time when the parent company was not doing well, and entrusting it to the inexperienced Gow, Poppy Bush and his uncle revealed a fundamental illogic that seems to have run through the entire venture. In reality, not much could be said about Gow’s business abilities besides the fact that he was an amiable fellow and a “good man”—Scottish roots, Yale, Skull and Bones, old-line WASPy family, longtime Bush ties. He could be trusted to put the best spin on things and keep his mouth shut. (Even his former roommate Ray Walker laughed when asked whether Gow could have been seen as formidable.)

  In 1961, Gow, still struggling at Champlain-Zapata, got another call from Uncle Herbie Walker. This time the latter proposed a promotion: Gow would go to Texas to work as an executive for Poppy at Zapata Offshore, with attractive stock options. “Even though I was perhaps less qualified to be a Financial Vice President than I was to do any of the other jobs, Herbie, particularly, convinced me I could do it . . . George [was] very persuasive that I should come to Houston,” he writes.

  An embodiment of the Peter principle, in which individuals rise to the limits of their competence and then go higher, Gow continued to be promoted. “When I first arrived at Zapata Offshore, the man who had been the controller of the company quit . . . George suggested that I might be able to run all the accounting, controllership and financial functions with the assistance of two ladies who made the entries in the accounting department. Neither of these ladies had a great understanding of why they were making their entries. I had only taken one accounting course at Yale . . . I really did not know what a financial vice president of a company was supposed to do.”54

  Even when Poppy Bush ran things, there was something fishy going on— literally. “When George Bush was head of Zapata,” Gow says in his memoir, “I had proposed to him that it would be useful for us to diversify into other profitable areas in the ocean. One of these might be the raising of fish. George made an arrangement with Texas A&M University to give us the use of a biological facility that A&M had on Galveston Bay. I was given the additional duty of Director of Marine Biological Research.”

  The tone of the venture is suggested in this anecdote from Gow:

  One day, George came into my office and asked me to make a presentation for a bank loan where Zapata Offshore would borrow $5,200,000, more than its entire net worth at the time . . . I went to the bank, made the presentation, and was told that we could have the loan. I then went back . . . and told George that the loan had been approved. He was very surprised. What he had meant for me to do was to prepare the presentation and then he and I would go to the bank together . . . This rig, which was eventually christened “The Maverick,” was lost in a storm some years later.

  And this:

  Many people have asked me what it was like to work for George [H. W.] Bush. George was a good boss to work for . . . He always wanted us officers of the company to be going to lunch with important people.

  Gow portrays Bush as traveling constantly when he was Zapata chief, and far from connected when on premises. “George had an opportunistic style of management,” writes Gow. “He kept his options open much longer than other bosses I had worked for . . . I would ask George where, as a company, we were trying to get. He would often answer something to the effect that we would have to see what opportunities turned up.”

  Though Gow has little to say in his book about the company’s underlying operations or Poppy’s role in them, he proudly notes Zapata’s complex web of foreign ventures. In all probability, the foreign operations had dual functions. Since Zapata was set up with guidance from Neil Mallon, it is likely that the overseas undertakings were modeled in part on Dresser’s. According to the in-house history of Dresser, one of the company’s bolder moves was a then-innovative tax strategy that involved a separate company in the tiny European principality of Liechtenstein. “A considerable [benefit] was the fact that no American taxes had to be paid on international earnings until the money was returned to the United States.”55 That is, if the money was ever returned to the United States. And there was another characteristic of funds that were not repatriated: they were out of sight of federal authorities. There was no effective way to know where they went ultimately, or for what purposes.

  That was Dresser. Now, Zapata, according to Gow: “Zapata, at that time, consisted of a number of foreign corporations incorporated in each country where our rigs operated . . . It was largely the brainchild of the tax department at Arthur Andersen and the tax lawyers at Baker and Botts . . . Until the profits were brought back to the United States, it was not necessary at that time to pay U.S. taxes on them. Because of the way Zapata operated around the world, it seemed as though it never would be necessary to pay taxes . . . As time passed and Zapata worked in many other countries, Zapata’s cash . . . was in the accounts of a large number (dozens and dozens) of companies located in almost all the countries around the world where Zapata had ever drilled.”56

  Whether Zapata was partially designed for laundering money for covert or clandestine operations may never be known. But one thing is certain: spy work depends, as much as anything, on a large flow of funds for keeping foreign palms greased. It is an enormously expensive business, and it requires layers and layers of ostensibly unconnected cutouts for the millions to flow properly and without detection.

  SO WHAT, EXACTLY, was Zapata? Was it CIA? Gow won’t say. Although in his memoirs he freely admits that he served the CIA later on, he strives mightily to avoid extensive discussion of the Bush clan.

  Shortly before my visit with him concluded, and as we finished a delicious lunch of the tilapia Gow was raising nearby, I asked him about the mention in his memoirs (which Gow said he had assumed only his family and friends would read) about doing work for the Central Intelligence Agency in Guatemala, in the early seventies. This was the time frame in which George W. Bush worked for Gow as a trainee and traveled on business to Guatemala.

  RUSS BAKER: You tell the story about when you were in Guatemala . . .

  BOB GOW: Yeah.

  RB: . . . and you did some work for the agency.

  BG: Yeah. Well, I did all the things that I said I did there—I guess I said I did, in there.

  RB: You did?

  BG: Uh-huh. I went off and investigated regions of the country.

  RB: For them?

  BG: Yeah.

  RB: Did you find anything interesting?

  BG: No.

  Then I asked Gow about allegations that Zapata Offshore had played a role in the Bay of Pigs invasion: “Any comments on those?”

  Gow hesitated a moment, smiled just a bit, and then replied, “No.”

  CHAPTER 4

  Where Was Poppy?

  GEORGE H. W. BUSH MAY BE ONE OF the few Americans of his generation who cannot recall exactly where he was when John F. Kennedy was shot in Dallas on November 22, 1963.

  At times he has said that he was “somewhere in Texas.”1 Bush was indeed “somewhere” in Texas. And he had every reason to remember. At the time, Bush was the thirty-nine-year-old chairman of the Harris County (Houston) Republican Party and an outspoken critic of the president. He was also actively campaigning for a seat in the U.S. Senate at exactly the time Kennedy was assassinated right in Bush’s own state.
The story behind Bush’s apparent evasiveness is complicated. Yet it is crucial to an understanding not just of the Bush family, but also of a tragic chapter in the nation’s history.

  A Reasonable Question

  The two and a half years leading up to November 22, 1963, had been tumultuous ones. The Bay of Pigs invasion of 1961, designed to dislodge Fidel Castro and his Cuban revolution from its headquarters ninety miles off the Florida Keys, was an embarrassing foreign policy failure. Certainly in terms of lives lost and men captured, it was also a human disaster. But within the ruling American elite it was seen primarily as a jolt to the old boys’ network—a humiliating debacle, and a rebuke of the supposedly infallible CIA. For John Kennedy it also represented an opportunity. He had been impressed with the CIA at first, and depended on its counterinsurgency against Communists and nationalists in the third world. But the Bay of Pigs disaster gave him pause. Whatever Kennedy’s own role in the invasion fiasco, it had been planned on Dwight Eisenhower’s watch. Kennedy had been asked to green-light it shortly after taking office, and in retrospect he felt the agency had deceived him in several key respects.