Money Talks (2)
By WALTER F. ROCHE JR. ,
Los Angeles Times
WASHINGTON — As President Bush embarks on a new effort to shore up public support for the war in Iraq, an uncle of the chief executive is collecting $2.7 million in cash and stock from the recent sale of a company that profited from the war.
A report filed with the U.S. Securities and Exchange Commission shows that William H.T. Bush collected a little less than $1.9 million in cash plus stock valued at more than $800,000 as a result of the sale of Engineered Support Systems Inc. to DRS Technologies of New Jersey.
The $1.7 billion deal closed Jan. 31. Both businesses have extensive military contracts.
The elder Bush was a director of Engineered Support Systems. Recent SEC filings show he was paid cash and DRS stock in exchange for shares and options he obtained as a director.
Missouri-based ESSI experienced record growth prior to its purchase by DRS through expanded U.S. military contracts — many to supply current U.S. efforts in Iraq and Afghanistan — and an aggressive buyout strategy targeted at other defense contractors. The military contracts, some awarded on a sole-source basis, include a $77 million pact to refit military vehicles used in Iraq with armor.
Other ESSI products used in the war include radar and detection services, field medical stations and field electrical generator units.
SEC filings show there are two ongoing federal investigations of ESSI — one involving a stop order issued by the federal government on the ESSI contract to supply field generators. The order was issued because of operational problems with the units.
The field-generator contract was a major source of revenue, but SEC files show ESSI did not inform stockholders of the stop order until last June, about seven months after it was issued.
During the interim, several ESSI executives, including Bush's uncle, cashed in stock and stock options worth millions of dollars, SEC filings show.
According to one recent filing, both the SEC and the U.S. attorney in St. Louis are investigating the delayed disclosure and other matters. Unnamed members of the ESSI board and corporate officers have been subpoenaed, according to documents filed with the SEC.
William Bush, 67, SEC filings show, exercised options on 8,348 shares of ESSI stock Jan. 18, 2005, about two months after the stop order was issued. He collected about $450,000 in cash.
Bush, known in the president's family as "Uncle Bucky," joined ESSI's board in 2000, several months before his nephew became president. The Bush uncle heads a St. Louis investment firm and is a younger brother of former President Bush.
William Bush declined to comment yesterday. However, in an interview last year, he said he played no role in ESSI getting federal contracts.
"I don't make any calls to the 202 (Washington, D.C.) area code," he said.
Patricia Williamson, a spokeswoman for DRS, would not comment on the status of the federal investigations. The company has disclosed that it is cooperating in the investigations, which also involve an inquiry into an ESSI insurance contract.
Date of Publication: March 22, 2006 on Page