Sep 25, 2013 by Russ Baker
Categories: Deep Politics
What possible connection could there have been between George H.W. Bush and the assassination of John F. Kennedy? Or between the C.I.A. and the assassination? Or between Bush and the C.I.A.? For some people, apparently, making such connections was as dangerous as letting one live wire touch another. Here, in anticipation of the 50th anniversary of the JFK assassination in November, is the second part of a ten-part series of excerpts from WhoWhatWhy editor Russ Baker’s bestseller, Family of Secrets: The Bush Dynasty, America’s Invisible Government and the Hidden History of the Last Fifty Years. The story is a real-life thriller.
Note: Although these excerpts do not contain footnotes, the book itself is heavily footnoted and exhaustively sourced. (The excerpts in Part 2 come from Chapter 3 of the book, and the titles and subtitles have been changed for this publication.) For Part 1, please go here.
Skull and Bones
In 1945, with the end of the war, George H. W. “Poppy” Bush entered Yale University. The CIA recruited heavily at all of the Ivy League schools in those days, with the New Haven campus the standout. “Yale has always been the agency’s biggest feeder,” recalled CIA officer Osborne Day (class of’43), “In my Yale class alone there were thirty-five guys in the agency.” Bush’s father, Prescott, was on the university’s board, and the school was crawling with faculty serving as recruiters for the intelligence services . . . Yale’s society’s boys were the cream of the crop, and could keep secrets to boot. And no secret society was more suited to the spy establishment than Skull and Bones, for which Poppy Bush, like his father, was tapped in his junior year. Established in 1832, Skull and Bones is the oldest secret society at Yale, and thus at least theoretically entrusted its membership with a more comprehensive body of secrets than any other campus group. Bones alumni would appear throughout the public and private history of both wartime and peacetime intelligence . . .
When Bush entered Yale, the university was welcoming back countless veterans of the OSS to its faculty. Bush, with naval intelligence work already under his belt by the time he arrived at Yale, would have been seen as a particularly prime candidate for recruitment.
Bonesmen Have All the Muscle
Out of Yale, Bush went directly into the employ of Dresser Industries, a peculiar, family-connected firm providing essential services to the oil industry. Dresser has never received the scrutiny it deserves. Between the lines of its official story can be discerned an alternate version that could suggest a corporate double life . . .
The S. R. Dresser Manufacturing Company had been a small, solid, unexceptional outfit, . . . [when it found] eager buyers in Prescott Bush’s Yale friends Roland and W. Averell Harriman – the sons of railroad tycoon E. H. Harriman – who had only recently set up a merchant bank to assist wealthy families in such endeavors. At the time, Dresser’s principal assets consisted of two very valuable patents in the rapidly expanding oil industry. One was for a packer that made it much easier to remove oil from the ground; the other was for a coupler that made long-range natural gas pipelines feasible. Instead of controlling the oil, Dresser’s strategy was to control the technology that made drilling possible. W.A. Harriman and Company, which had brought Prescott Bush aboard two years earlier, purchased Dresser in 1928.
Prescott Bush and his partners installed an old friend, H. Neil Mallon, at the helm. Mallon’s primary credential was that he was “one of them.” Like Prescott Bush, Mallon was from Ohio, and his family seems both to have known the Bushes and to have had its own set of powerful connections. He was Yale, and he was Skull and Bones, so he could be trusted . . .
Hiring decisions by the Bonesmen at the Harriman firm were presented as jolly and distinctly informal, with club and family being prime qualifications . . . Under Mallon, the company underwent an astonishing transformation. As World War II approached, Dresser began expanding, gobbling up one militarily strategic manufacturer after another. While Dresser was still engaged in the mundane manufacture of drill bits, drilling mud, and other products useful to the oil industry, it was also moving closer to the heart of the rapidly growing military-industrial sector as a defense contractor and subcontractor. It also assembled a board that would epitomize the cozy relationships between titans of industry, finance, media, government, military, and intelligence – and the revolving door between those sectors . . .
After graduating from Yale in 1948, Poppy headed out to visit “Uncle Neil” at Dresser headquarters, which were then in Cleveland. Mallon dispatched the inexperienced Yale grad and Navy vet, with his wife Barbara and firstborn George W. in tow, to Odessa, the remote West Texas boomtown that, with neighboring Midland, was rapidly becoming the center of the oil extraction business.
Oil was certainly a strategic business. A resource required in abundance to fuel the modern navy, army, and air force, oil had driven the engine of World War II. With the end of hostilities, America still had plenty of petroleum, but the demands of the war had exhausted many oil fields. As President Roosevelt’s secretary of the interior and later his petroleum administrator for war, Harold Ickes had warned in 1943, “If there should be a World War III it would have to be fought with someone else’s petroleum, because the United States wouldn’t have it.” . . . Ickes’s eye was then on Saudi Arabia.
If the young George H.W. Bush understood anything about the larger game and his expected role in it, he and his wife Barbara certainly did not let on to the neighbors in those early days in dusty West Texas . . . Poppy’s initial jobs included sweeping out warehouses and painting machinery used for oil drilling, but he was soon asked to handle more challenging tasks . . .
Dresser was well-known in the right circles as providing handy cover to CIA operatives . . . Continuing his whirlwind “training,” Dresser transferred Bush to California, where the company had begun acquiring subsidiaries in 1940. Poppy has never written or spoken publicly in any depth about the California period of his career. He has made only brief references to work on the assembly line at Dresser’s Pacific Pump Works in the Los Angeles suburb of Huntington Park and sales chores for other companies owned by Dresser. In later years, when criticized for his anti-union stands, he would pull out a union card which he claimed came from his membership in the United Steelworkers Union. Why Bush joined the Steelworkers (and attended their meetings) is something of a mystery, since that union was not operating inside Pacific Pump Works.
To be sure, the company was not just pumping water out of the ground anymore. During World War II, Pacific Pump became, like Dresser, an important cog in the war machine. The firm supplied hydraulic-actuating assemblies for airplane landing gear, wing flaps, and bomb doors, and even provided crucial parts for the top-secret process that produced the atomic bombs dropped on Hiroshima and Nagasaki.
While in California training for Dresser, Poppy, the pregnant Barbara, and little George W. were constantly on the go, with at least five residences in a period of nine months – Huntington Park, Bakersfield, Whittier, Ventura, and Compton. Poppy was often absent, according to Barbara, even from their brief-tenure outposts. Was he truly a Willy Loman, peddling drill bits, dragging a pregnant wife and a one-year-old child with him? Or was he doing something else? Although “ordinary” scions often toil briefly at the bottom, Bush was no ordinary scion.
Bush would so effectively obscure his life that even some of his best friends seemed to know little about what he was actually doing – though they may have intuited it. A longtime friend of Bush’s said that Bush probably would have been happiest as a career intelligence officer. Another longtime Bush associate told a reporter anonymously that Poppy’s own accounts of various periods in his life “are often off 10 to 30 percent … there is a certain reserve, even secretiveness.”
From Dallas, with Love
In 1950, during the time Poppy Bush squired a Yugoslav Communist around the oil fields for Dresser Industries, the cold war got hot in an unexpected quarter when North Korean Communist forces launched an invasion of the south. Their attack had not been even vaguely anticipated in the National Intelligence Estimate – from the fledgling CIA – which had arrived on the president’s desk just six days before. Heads rolled, and in the ensuing shake-up, Allen Dulles became deputy director in charge of clandestine operations, which included both spying and proactive covert operations. For the Bushes, who had a decades-long personal and business relationship to the Dulles family, this was certainly an interesting development.
The Dulles and Bush clans had long mixed over business, politics, and friendship, and the corollary to all three – intelligence. Even as far back as World War I, while Dulles’s uncle served as secretary of state, Prescott’s father, Samuel Bush, oversaw small arms manufacturing for the War Industries Board, and young Allen played a crucial role in the fledgling intelligence services operations in Europe. Later, the families interacted regularly as the Bush clan plied their trade in investment banking and the Dulleses in the law.
In 1950, Dresser was completing a corporate relocation to Dallas which, besides being an oil capital, was rapidly becoming a center of the defense industry and its military-industrial-energy elite. Though a virtual unknown on his arrival, Neil Mallon quickly set about bringing the conservative titans of Dallas society together in a new local chapter of the non-profit Council on World Affairs, in whose Cleveland branch he had been active. Started in 1918, the World Affairs Councils of America were a localized equivalent of the Rockefeller-backed Council on Foreign Relations, the presidency of which Allen Dulles had just resigned to take his post at the CIA.
A September 1951 organizing meeting at Mallon’s home featured a group with suggestive connections and affiliations. It included Fred Florence, the founder of the Republic National Bank, whose Dallas office tower was a covert repository for CIA-connected ventures; T. E. Braniff, a pioneer of the airline industry and member of the Knights of Malta, an exclusive, conservative, Vatican-connected order with longtime intelligence ties; Fred Wooten, an official of the First National Bank of Dallas, which would employ Poppy Bush in the years between his tenure as CIA director and vice president; and Colonel Robert G. Storey, later named as liaison between Texas law enforcement and the Warren Commission investigating the assassination of President Kennedy . . .
Soon the group moved even closer to the center of power. General Dwight Eisenhower . . . had responded to entreaties from a GOP group that included the Rockefellers and Prescott Bush, as well as Allen and John Foster Dulles….With Ike the Republican nominee, they all scrambled for seats on his train. The Dulleses were key advisers. Prescott Bush was backing Ike and mounting what would be a successful race for a Senate seat from Connecticut. Prescott’s son George H. W. Bush was not left out. He became the Midland County chairman of the Eisenhower-Nixon campaigns in both 1952 and 1956. With the West Texas city at the center of the oil boom, young George functioned as a crucial link between the Eastern Establishment, the next Republican administration, and Midland’s oil-based new wealth.
Following Ike’s decisive victory, the Dulles brothers obtained effective control of foreign policy: John Foster became Ike’s secretary of state, and Allen the director of the Central Intelligence Agency. The rest of the administration was filled with Bush allies, including national security adviser Gordon Gray, a close friend of Prescott’s, and Treasury Secretary Robert B. Anderson, a sometime member of the Dresser Industries board.
Eisenhower, with no track record in civilian government and little enthusiasm for the daily grind, was only too happy to leave many of the operational decisions to these others . . . Some of those businessmen taking it upon themselves to help chart the course were from the Dallas group. Shortly after Ike took office, Mallon’s Council of World Affairs announced its intention to send fifteen members on a three-month world tour, for meetings with what the group characterized as “responsible” political and business leaders. Shortly after the group returned, Dulles came to visit with the Dallas council chapter . . .
At the time, the CIA was in the process of creating plausible deniability as it began what would be a series of efforts to topple “unfriendly” regimes around the world, including those in Guatemala and Iran. Since the CIA’s charter severely constrained the domestic side of covert operations, agents created a host of entities to serve as middlemen to support rebels in countries targeted for regime change. During the early days of Dresser in Dallas – and of Zapata Petroleum – Dulles was just beginning to experiment with “off the books” operations. Eventually, by the seventies and eighties, when Poppy Bush ran the CIA and coordinated covert operations as vice president, hundreds, perhaps thousands, of such entities had been created . . .
The Bones of Zapata Petroleum
In 1953, as Dulles was building his global machine, Poppy Bush launched his own enterprise, with help from Dulles, Mallon, and Poppy’s maternal uncle Herbert Walker….
Bush got money from Uncle Herbie (George Herbert Walker Jr., Skull and Bones, 1927), an investment banker. Uncle Herbie also was instrumental in bringing in others, including Eugene Meyer, a Yale graduate and owner of the influential Washington Post. Meyer was one of many media titans, such as Prescott’s good friend and fellow Bonesman Henry Luce, founder of Time magazine, and William Paley of CBS (on whose board Prescott sat), who shared an interest in intelligence. In a 1977 Rolling Stone article, Carl Bernstein, famed for breaking the Watergate story in the Washington Post, states that both Luce and Paley cooperated regularly with the CIA, and even mentions his own paper’s history with the agency, though he does not fully probe the Post’s intelligence connections . . .
The news business, the policy business, and the intelligence business had a lot in common: they were all about whom you knew and what you knew. In fact, so was the oil business. The Bushes’ skill at cultivating connections was evident in 1953, when Poppy joined forces with a couple of brothers, Hugh and Bill Liedtke, to form Zapata Petroleum. Based on a “hunch” of Hugh Liedtke’s, the company drilled 127 consecutive “wet” holes, and the firm’s stock exploded from seven cents a share to twenty-three dollars a share . . .
Pirates of the Caribbean
. . . Mallon would play a crucial role for Dulles by introducing him to the powerful new-moneyed oil elites in Dallas that would, along with a separate group in Houston, become the leading funders of off-the-books covert operations in Latin America. They would commence with efforts to overthrow Latin American and Caribbean leaders in the 1950s. The efforts would continue, under Poppy Bush, with Iran-contra in the 1980s.
Zapata Offshore . . . [was] launched by Poppy in 1954, just as the U.S. government, under an administration dominated by the Dulles-Bush circles, began auctioning offshore mineral rights . . .
In 1958, Zapata Offshore’s drilling rig Scorpion was moved from the Gulf of Mexico to Cay Sal Bank, the most remote group of islands in the Bahamas and just fifty-four miles north of Isabela, Cuba. The [Cay Sal] island had been recently leased to oilman Howard Hughes, who had his own long-standing CIA ties, as well as his own “private CIA.”
By most appearances, a number of CIA-connected entities were involved in the operation. Zapata leased the Scorpion to Standard Oil of California and to Gulf Oil. CIA director Dulles had previously served as Gulf’s counsel for Latin America. The same year that Gulf leased Bush’s platform, CIA veteran Kermit “Kim” Roosevelt joined Gulf’s board. This was the same Kermit Roosevelt who had overseen the CIA’s successful 1953 coup against the democratically elected Iranian prime minister, Mohammad Mossadegh, after Mossadegh began nationalizing Anglo-American oil concessions. It looked like the Bush-CIA group was preparing for operations in the Caribbean basin.
The offshore platforms had a specific purpose. “George Bush would be given a list of names of Cuban oil workers we would want placed in jobs,” said one official connected to Operation Mongoose, the program to overthrow Castro. “The oil platforms he dealt in were perfect for training the Cubans in raids on their homeland.”
The importance of this early Bush connection with Cuba should not be ignored in assessing his connections to contemporaneous events. For example, it sheds light on the 1963 memo from J. Edgar Hoover discovered by reporter Joseph McBride. The memo, which mentioned a briefing about Cuban activity in the wake of the JFK assassination, had been given to “George Bush of the CIA.” Years later, many figures from the Bay of Pigs operation would resurface in key positions in administrations in which Poppy Bush held high posts, and during his presidency. Others would show up in off-the-books operations run by Poppy’s friends and associates.
George H. W. Bush did not, however, limit himself to the Caribbean. This period of his life was characterized by frenetic travel to all corners of the world, though Zapata had only a handful of rigs. The pattern would continue through his entire career. He set up operations for Zapata Offshore in the Gulf of Mexico, the Persian Gulf, Trinidad, Borneo, and Medellín, Colombia. Clients included the Kuwait Shell Petroleum Development Company, which began his close association with the Kuwaiti elite.
That a lot of what was labeled “national security” work was largely about money – making it, protecting it – was fairly transparent. Through the story of the Bushes and their circle runs a thread of entitlement to resources in other countries, and anger and disbelief when others challenged that claim.
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. 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 [American] 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. Meanwhile, back in Washington, after extensive planning, the Bay of Pigs project began with Eisenhower’s approval on March 17, 1960 . . .
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.”
Zapata filings “inadvertently destroyed”
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 . . .
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 . . . 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. The fate of the rig remains a mystery. 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 was going to be all right.” . . .
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.
What Was Zapata?
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 Yucatan, and met with Gow… 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…
Bob Gow and Ray Walker [cousin of George H.W. Bush] would room together again at Yale, and both would be inducted into the 1955 class of Skull and Bones…
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…
Gow portrays Bush as traveling constantly when he was Zapata chief, and far from connected when on premises . . . 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.” 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 county 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.”
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 . . .
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.”