Editor's Note: Originally published Dec. 20, 1993.
Jeb Bush says he may be the most scrutinized candidate for governor that Florida has ever seen.
During the years his father was president, Jeb was checked out thoroughly by the national press, and dozens of stories were published about him. Although the stories were careful to say that Jeb had not broken the law, many of them suggested he had traded on his family name or won special favors in his business dealings.
Jeb, 40, denies this. Now that he is a Republican candidate for governor, he says he is eager for the voters of Florida to know about his past.
"When it's all said and done, with all the articles, all the comments . . . I've come out clean," he said.
In a four-hour interview this month at his home in Miami, the Times asked Jeb for details about his business dealings and his brushes with BCCI and the Nicaraguan Contras. Florida voters will decide for themselves, of course, whether he comes out clean.
Jeb and the S&L
Of all the stories that have surfaced about Jeb Bush over the years, this is the one that seems to worry him most.
He fears that news reports have left the impression he defaulted on a loan, maybe caused a Broward County savings and loan to fail, then was bailed out at taxpayer expense.
That description is not accurate and not fair. He never borrowed money from an S&L and never defaulted.
The real story is so long and complicated that it can only be sketched here. It begins in the frenzied Miami real estate market of the mid 1980s and ends in a tangle of lawsuits and government actions. Jeb has described himself as a "victim of circumstance" in it all.
"This was not a great deal," he said, "which is the way real estate works. There are ups and downs."
In 1985, he and business partner Armando Codina bought a gray, five-story office building at 1390 Brickell in downtown Miami. Codina had 80 percent, Jeb 20 percent.
They got a $7 million mortgage. A third man, J. Edward Houston, the former chairman of Barnett Bank of South Florida, added $4.56 million.
The building cost $9 million. The extra money went into major renovations and a reserve fund that became important later.
Miami's office market was booming, and they had no problem leasing all the office space in the building, Jeb said. But they didn't want the whole building financed with debt.
They had expected Houston to be an equity partner, contributing about $3 million in cash. But according to Jeb, Houston later told them he needed an income-earning investment, not an equity investment, and, a few days before closing, said he would be borrowing his share of the money.
Jeb said he and Codina weren't happy, but they felt trapped. They had $2 million on deposit, their mortgage was secured, the renovations had been done and the building was fully occupied.
"There was nothing we could do at that time other than continue on with the venture," he said.
And there was no way to foretell the future. Miami's downtown real estate market in 1985 looked like a gold mine, Jeb said.
Houston borrowed $4.56 million from Broward Federal Savings & Loan in Sunrise and, the same day, lent the same amount to Bush and Codina. They gave him a second mortgage on 1390 Brickell and agreed to make payments on the loan as long as the building was making a profit.
"So if cash flow stopped, there was no obligation to pay anyone," Jeb said.
Houston assigned their note and his second mortgage on the building to Broward Federal as collateral. Jeb said they expected Houston to convert his investment into equity shortly, but Houston later told the New York Times that was never his understanding.
"Both sides were unsatisfied, which is a sign of an arm's-length deal," Houston said in the 1990 article.
Jeb said Houston was highly respected. He left Barnett to become president of his own S&L, South Florida Savings, and put its offices in 1390 Brickell.
"He had an excellent board of community leaders, and he was a well-regarded guy," Jeb said. "And I don't know anything to think otherwise even today. We had a depression in our business."
Things were fine for a year or two until the bottom dropped out of the commercial real estate market.
The building at 1390 Brickell stopped making money, so Bush and Codina didn't have to pay Houston.
Houston's S&L foundered, he was in financial trouble, and he defaulted in 1987 on his loan from Broward Federal. Broward Federal sued Houston as well as Bush and Codina to determine who should pay back the $4.56 million.
Broward Federal went belly up in 1988, and the government took over.
The government wound up repaying most of the $4.56 million loan from Broward Federal. But whether it was "bailing out" Houston or Bush and Codina or just making the best deal possible, as federal officials say, may always be a matter of opinion.
"It is real easy in hindsight to pass judgment on these things," Jeb said, "but there is no one on the planet that would have done anything differently than we did."
Jeb had faded from the picture by this point because he was serving two years in Tallahassee as commerce secretary under Gov. Bob Martinez. And because Jeb consistently removed himself from any dealings with the federal government, he was not involved in settlement talks when he returned to Miami in 1988.
There is no evidence that the Federal Deposit Insurance Corp. was improperly influenced in the settlement, and the FDIC says Jeb got no special favors.
Just the opposite, said Alfred Camner, the Miami attorney who represented Bush and Codina throughout this deal. With the building tied up by the federal government, he said, every transaction became a nightmare, and the bureaucrats walked on eggshells because the president's son was involved.
"Given the circumstances, it was always very difficult to find anybody willing to ultimately make a decision," Camner said.
Bush and Codina first agreed to turn the building over to the government. But the government didn't want the $7-million first mortgage that went with it, Dan Griffin of the FDIC told the New York Times.
The value of the building had dropped from $9.5 million to $6.5 million by 1989, so regulators decided to let Bush and Codina keep it.
And because Houston was basically broke, the FDIC figured it would be lucky to recover 10 cents on the dollar for the loan, FDIC lawyer Charles Fulton said.
Bush and Codina finally paid $505,000 from their reserve fund to the FDIC. The second mortgage was extinguished. They still had the $7 million first mortgage and had to pay $1.3 million in taxes for the forgiven debt. And they had the building.
Jeb does not feel he was bailed out.
"Hellllll, no. Absolutely not," he said. "And this one really troubles me because it is so far removed from the truth."
He and Codina sold 1390 Brickell to a bank in 1991 for $8 million, $1 million more than their mortgage. Closing costs cut the extra money in half, Jeb said, and they had to absorb losses on the building while the wheels of government ground to a conclusion.
"Not only was he clearly not bailed out by anybody," lawyer Camner said, "but I think if you took the total here, they would clearly have had a net loss. There were my attorney's fees!"
Jeb and Nigeria
The story of the water pumps that Jeb Bush helped sell to Nigeria stems from two articles last year in the Wall Street Journal, which concluded that Jeb traded on his daddy's name to do business overseas. Jeb denies this.
Before his trip to Nigeria in 1989, Jeb cabled the State Department to say he didn't want any special treatment. But the people in Nigeria knew who he was.
His visit made the evening news every day, and the emir of Gombe, a sort of local king, staged for Jeb a rare and wildly colorful durbar, a traditional pageant of war horses. A crowd of 100,000 turned out.
"It was a show of appreciation and love for the United States," he said. "There were American flags and Nigerian flags. It wasn't for me, so much, as the fact that I was the son of George Bush."
But that had nothing to do with selling water pumps, Jeb said.
When Jeb left his job as Florida secretary of commerce in 1988, he formed a partnership with David Eller, a close friend and fellow Republican. Eller ran his family business, M&W Pump Corp., in Deerfield Beach.
Their partnership was called Bush-El Corp. and its only client was M&W Pump.
"Basically, the idea was that I would help enhance his international sales that already existed," Jeb said.
Jeb said he was qualified because he had lived overseas for two years (working for a Texas bank in Venezuela), was involved in international business and had been secretary of commerce.
They agreed that when Jeb helped M&W sell pumps, he would get a flat percentage of the proceeds through Bush-El. He won't say what the percentage was.
But he and Eller made some rules for themselves, Jeb said. Jeb could not have any dealings with the federal government, they would not do business in areas they deemed politically sensitive, and Jeb would not be paid if a deal was financed by the U.S. government.
The two men went to Nigeria in early 1989 for the dedication of a new M&W plant in Maiduguri. That's when Jeb toured part of the country and was entertained with a durbar. He also met Nigerian President Ibrahim Babangida and gave him a souvenir of George Bush's recent inauguration.
At the time, M&W had a pump deal pending in Nigeria; the company had done business there for years. When he met Babangida, Jeb put in a plug for M&W "as an outstanding example of American private sector cooperation with Nigeria" and "a contributor to Nigeria's development," according to a report filed by the U.S. ambassador in Nigeria.
Nigeria soon agreed to purchase $74.3 million of the pumps, which are used largely for irrigation and flood control, and got financing for them through the Export-Import Bank. It was a loan from the United States to Nigeria, the sort of financing that M&W had used before in deals with Nigeria.
Jeb said he played no role in getting the financing; Ex-Im officials concur. And because the deal was financed by the U.S. government, it meant Jeb would not get his cut through Bush-El.
"Let me make it clear, an intention was to have been compensated," he said with a smile. "But because the Ex-Im Bank became the financing entity, I could not."
Jeb used to say that, like his father, he wanted to become financially comfortable before he entered politics. Part of the reason for going into business with Eller, to be sure, was to make money.
But Jeb said it trivializes their relationship to describe it as mutual back-scratching, as a deal in which Jeb made money while Eller got a celebrity sales rep.
"I helped them get into places, suggested that they go to places that they had not considered going before, based on my knowledge of emerging markets for their products," he said.
In a letter of complaint to the Wall Street Journal about its articles, Jeb wrote, "By definition, every single business transaction I am involved with may give the appearance that I am trading on my name. I cannot change who I am."
He protested that he did not help arrange a visit to the White House for the Nigerian president, as had been reported.
Nor does he own part of the pump plant in Nigeria, which has been called a sweatshop by one of his Republican opponents. It is a joint venture between a Nigerian businessman and Eller alone, Jeb said.
Jeb and BCCI
One thing should be made clear right away: There is no evidence that Jeb Bush had anything to do with the Bank of Credit and Commerce International, the corrupt global banking enterprise, beyond his casual acquaintance with the manager of the BCCI branch in Miami.
It is worth mentioning because Jeb says it is exactly the kind of guilt-by-association that has been used to smear his integrity, one of the many drawbacks he saw to being a president's son.
Jeb says he met Abdur Sakhia, the branch manager, because BCCI was across the street from Jeb's office at 1390 Brickell in Miami. Jeb was leasing parts of that building, and Sakhia was looking for more office space.
Until then, Jeb said, he hadn't known BCCI existed. Jeb said he was in the BCCI building two or three times. He remembers visiting Sakhia's home once. He and Sakhia talked but never did business.
Sakhia went on to become BCCI's senior man in the United States and later gave federal prosecutors some of their best information about BCCI's activities, according to False Profits, a book about the BCCI scandal.
The book, by two business reporters who helped break the BCCI story, says Sakhia had "a penchant for collecting prominent people" and mentions his acquaintance with Jeb Bush several times.
"Well, strike me down, Lord, if I've done something wrong here!" Jeb said when he heard it. "Help me out. What have I — I'm defenseless about being a breathing, living human being. I stand accused. What have I done wrong? See, this is the hyperventilative part of this stuff."
Sitting beside the pool at his home in Miami, he began to rifle through file folders he had brought from the house. He has collected stories that were written about him over the years and has a keen memory for those he thought were especially outrageous.
"Here, here's one. This is from a Wall Street Journal staff reporter. It says, 'Lawyers in a class action suit against BCCI identified presidential sons George Bush and Jeb Bush as potential witnesses in their case.' "
The story said Jeb had invested in real estate with a company that was controlled by a second company that borrowed money from BCCI.
"I don't even know who it is. It may not even be true. They haven't called me up, by the way, as a witness. This had to do with — this was March 10, 1992 — this had to do with the fact that my dad was running for re-election."
He said he resents having his name used by lawyers who want publicity for their cases. He said he resents having his actions twisted by free-lance writers to sell their stories to magazines.
But isn't it fair to talk about BCCI, the Times asked, when there have been public mentions of Jeb's association with Sakhia?
Jeb's answer sounds angry on paper, but at the time his tone was partly annoyed, partly amused.
"There have been public mentions of the fact that I'm a drug dealer. It's been in books. There's public mention of a lot of bullshit that's not even close to being true. What's fair is the truth. And where there is a definitional dispute of the truth, that's fine, that's what I'm here to try to explain. But when it is just bizarre, conspiracy-theory, weird, five-steps-removed, guilt-by-association stuff, I think clearly we can discard that one. . . .
"Abdur Sakhia — frankly, a lot of this has to do with the fact that we're in Miami and these are foreign names and of course, there's something there. People with Z's at the end of their names or vowels, you gotta be careful with."
Q: BCCI laundered drug money —
A: They're bad people!
Q: — and funneled money to the Contras.
A: That's right. And I had nothing to do with them. Never did. So next case.
Jeb and the contras
Jeb Bush says he never knew that Oliver North and others illegally were arming the Contras in Nicaragua. He says he never knew that profits from arms sales to Iran were being diverted to pay for the Contra war.
"I have no fingerprints on that one, thank goodness," he said.
But Jeb was a staunch supporter of the Contras. He thought Congress was wrong to cut off funding for the war against the communist Sandinistas. He considers himself close to the Hispanic community in Miami, which is heavily Nicaraguan.
And when Nicaragua had a chance to elect a democratic government in 1990, Jeb agreed to help.
Congress sent $9 million to Nicaragua for the election, but it was to be used only for the multiparty electoral process, such as voter registration verification and poll watchers. It was not to support any candidate.
So a group of Americans decided to raise money specifically for the National Opposition Union (UNO), whose candidate was Violeta Chamorro, the owner of the anti-Sandinista newspaper La Prensa.
This was never a secret. The group had a news conference on Capitol Hill. Twenty-two members of Congress were on the steering committee, a bipartisan effort that included Florida Sens. Connie Mack and Bob Graham; Reps. Dante Fascell, Clay Shaw and Ileana Ros-Lehtinen; then-Gov. Bob Martinez; and Jeb Bush.
The group, called the Committee for Freedom and Democracy in Nicaragua, had offices in Jeb Bush's building at 1390 Brickell.
It's unclear how much the group raised. Maybe $500,000. Possibly $1 million.
Everybody was a little touchy, of course, after Ollie North and Iran-Contra, so the Justice Department gave its official blessing to the fundraising.
Concerns were voiced in a separate memo by Abraham Sofaer, the State Department counsel, who noted that Congress only wanted its money used for generic election expenses. "Raising such (private) funds involves government officials in pursuing as U.S. policy an objective Congress did not adopt and which it may have deemed undesirable for the USG (U.S. government) to pursue."
But Sofaer, too, acknowledged the private fundraising was legal.
"I checked it out to make sure it was legal," Jeb said.
In January 1990, Jeb lent his name to a fundraising letter for UNO along with Lee Atwater, the late Republican chairman; Ed Koch, the former New York mayor; Donald Trump and others. Jeane Kirkpatrick, the former U.N. ambassador, was also involved in the effort, and Jeb said he admires her very much.
"We are asking you to give a minimum contribution of $1,000, but you can give MORE!" the letter said. ". . . You can be sure that your donation will go to help bring democracy to Nicaragua."
The letter invited contributors to meet Chamorro at a private reception in Boston, but trouble with her leg prevented much campaigning in the United States. Instead, Jeb went to Houston to visit Chamorro when she had surgery on the leg.
"My dad asked me to go," he said. "It really wasn't related to anything other than he just wanted to make sure that she knew that he cared about her."
Chamorro won the election in February 1990. Jeb said she has been a disappointment. She has allowed too many Sandinistas to remain in the government, in his opinion, and did not move to reinstate private property that had been confiscated.
"But would I have done it again? You bet."
The alternative was for Nicaragua to become another Cuba, he said.
Jeb said his name certainly does not appear in the still-secret final report from Lawrence Walsh, the Iran-Contra prosecutor. Nor does he think it will hurt his campaign if Walsh concludes that George Bush was not "out of the loop" on Iran-Contra and lied about his role.
"People know that Lawrence Walsh is a vindictive old man who failed," Jeb said. "He spent millions of dollars of taxpayers' money."
If Walsh had the goods on George Bush, or for that matter his family, he would have unloaded them long ago, Jeb said.
Staff writer Robert Trigaux and researchers Debbie Wolfe and Kitty Bennett contributed to this story.