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9486 in the collection
Houston Wary in Deal with Bush Brother
Ohanian Comment: Following this article is a list of investors in Neil Bush's sotware company. And following that is a 2-year-old article providing fascinating background on the other brother and his crimes.
As Neil Bush's soap-operatic life took another twist in France last week with his engagement over chocolates and champagne, he hoped that a business deal back in Houston would help him move forward with his new calling.
On Thursday, the Houston Independent School District board was scheduled to seal a deal that could have given Bush's fledgling educational software company, Ignite, an important edge over competitors in the $7 billion-a-year industry.
The board in June already had approved spending $115,000 this academic year to use the company's eighth-grade U.S. history curriculum in 23 schools, on the condition that Bush and the HISD Foundation come up with an additional $115,000 to fully fund the program. Bush and the foundation, a philanthropic organization, lived up to their end of the bargain, persuading several wealthy Houstonians and major corporations to pony up the funds.
But the board voted 5-3 to delay accepting the donations, with some board members saying they worried they might be accused of helping Bush cash in on his family name. SOFTWARE USERS IN HISD
Houston public schools are already using Neil Bush's Ignite educational software on the following campuses:
Middle schools: Burbank, Clifton, Deady, Dowling, Edison, Energized for Excellence, Fleming, Fonville, Hartman, Holland, Jackson, Long, McReynolds, Patrick Henry, The Rice School, Stevenson, Woodson.
High schools: Austin, Chavez, Furr, Sam Houston, Sterling, Worthing.
Bush's business dealings have recently come under scrutiny with his contentious divorce from his wife, Sharon. In a deposition, Bush admitted that Ignite investor Winston Wong, a Taiwanese semiconductor tycoon, paid him $2 million in stock for consulting in the semiconductor industry, even though he has no experience in the field.
"I'm not, as a trustee, going to engage in another debacle; we've had enough of those on our hands," said board member Larry Marshall, referring to the dropout reporting scandal that has recently rocked HISD.
Even though Ignite has been implemented in 17 HISD middle schools and six high schools since August, board members asked for more information about the program's performance and how HISD entered into the agreement before approving the outside funding.
Ken Leonard, president of Ignite, said he understands why HISD trustees would want to keep a "low profile" because of recent negative coverage, but he expects the matter to be quickly resolved.
The Austin-based company has been frequently examined in the media since Bush founded it in 1999, primarily because of its unusual funding sources and his family ties. Some of the $23 million the company has raised in four rounds of financing has come from foreign oil and computer magnates, and other funds have come from GOP donors who are close to the Bush family. Commentators and watchdog groups have suggested that these contributions were made in the hopes of gaining access to the White House.
They also note that Bush's two brothers are strong advocates of educational policies that could greatly benefit his company. President Bush made educational accountability one of his top priorities as Texas governor, and he is now pushing similar policies nationally through the No Child Left Behind initiative. Jeb Bush has taken similar positions as governor of Florida.
School administrators and teachers, increasingly judged by how many of their students pass state-mandated accountability tests, are often turning to educational software to try to motivate bored or troubled students.
"Sales in Texas are usually driven by mathematics and reading, but we expect social studies will be emerging as a more important subject area in the next few years, largely as a result of TAKS (Texas Assessment of Knowledge and Skills, the new state-mandated test)," said Tom Deliganis of Houston, regional vice president for Plato Learning, the largest provider of educational software in the state.
Deliganis said Neil Bush tried to hire him in 2000.
"He's a competitor, and I don't necessarily want to see him do well, but I don't get the impression he's a sleazy guy," Deliganis said. "I get the impression he's trying to improve education."
But few can forget Bush's checkered business history. In the late 1980s, he served as director of Silverado Savings and Loan, which collapsed during the S&L scandal and cost taxpayers about $1 billion. A civil lawsuit against Bush and other Silverado officers was settled for $49.5 million.
Bush, 47, last week denied that he is trying to capitalize on his brothers' substantial influence.
"I've had zero conversation (with my brothers) regarding policy, and effectively none about my business," he said.
He called his new business a "definite lifelong focus of mine."
A dyslexic student who often fell behind in middle school, Bush said he endured an oppressive school environment but persevered to earn a bachelor's degree and an MBA from Tulane University in New Orleans.
"I worked harder than the average student and survived grade school, but have scarred memories of a stifling learning environment," Bush wrote in an e-mail exchange with the Houston Chronicle from France, where he proposed to his Houston girlfriend, Maria Andrews.
Bush said he developed an interest in educational reform after seeing his son Pierce go through a similar painful experience. After researching "multiple intelligences" and other educational theories, Bush said, "I developed the core beliefs that drive our business."
Developed by a Harvard cognition expert, multiple intelligence theory posits that students have different types of "intelligences" -- visual, auditory or interpersonal, for example -- and that traditional schooling does not work for all types.
"The one-size-fits-all method of instruction fails most students," Bush wrote. "We believe learning is best accomplished by doing. Learning is an active process that involves thinking. Learning is only partly about memorization, memorizing leads to forgetting. And finally we believe there is an unrealized potential for harnessing the power of technology to allow teachers to make individual and unique connections with each student."
Sam Wineburg, a Stanford University education professor and a leading expert on the teaching of history, said that while he is not familiar with Ignite software, he doubts the underlying theory.
"Multiple-intelligence theory has absolutely no data to support it," he said.
Ignite develops products for middle-school students. It offers an eighth-grade U.S. history curriculum, and it plans to develop software for math, science and language arts. It is available in some high schools for remedial programs and students with limited English proficiency.
Ignite president Leonard said this is the first full year the company has sold its product. Previously, it provided software free to schools around the country to generate a track record. Most of the 40,000 students who use the software are in Texas, Leonard said, but others are in Florida, California, Ohio, Georgia, New Jersey, Nevada, Arizona and Oklahoma.
HISD is by far the largest user of Ignite products, Leonard said.
The company approached HISD in 2002, and the district agreed to pay $45,000 to use the software in six middle schools in 2002-2003. HISD Superintendent Kaye Stripling said the district initially balked at expanding the program because of the annual $10,000-per-school price. Eager to enlist a large number of schools into the program, Bush agreed to let them pay half and raise the rest of the money with the foundation's help.
"We wouldn't be able to do that," said Arnold Kleinstein, vice president of WorldView Software, the nation's largest maker of social studies and history educational software, about Bush's ability to quickly persuade movers and shakers to contribute funds.
Karen Billings, vice president of a Washington, D.C., educational software trade association, said she finds Bush's fund-raising prowess "very unusual."
Former Iranian Ambassador Hushang Ansary, a Houston businessman who is one of the donors to the HISD effort and is an investor in the company, said the suspicion is unfair.
"Every time someone succeeds in public service, others look around to penalize people who are members of his family," Ansary said. "I'm not aware of any effort on the part of Neil Bush to benefit from the president's presence in the White House."
Principals, teachers and students in Houston, Austin and the Whitney High School in Cerritos, Calif., interviewed for this story, all raved about the software. The teachers and students were provided by administrators.
"My mom heard me sing a history song, and said, `Where'd you get that from?' " said Elibeth Matamoros, an eighth-grader in HISD's Edison Middle School in the East End. "I never sang about history before."
Edison history teacher Marc Chicoria said he uses Ignite to supplement the class textbook. Since the school started using the program, he said, students have performed better on critical-thinking tests related to social studies.
Connie Barr, principal at Mendez Middle School in Austin, said Ignite played a major role in increasing state test scores in social studies by 28 percent a couple of years ago.
But Wineburg, the Stanford professor, said such claims must be evaluated by independent third parties before they can be taken seriously.
Ignite and the HISD Foundation are negotiating with the University of Houston's College of Education to research the software.
UH Education Dean Robert Wimpelberg said the terms are being hammered out and that the foundation would pay for the project.
ON THE INTERNET-- IGNITE
www.ignitelearning.com
RESOURCES
Investors in Neil Bush's educational software company include:
·Bush's parents, former President George and Barbara Bush.
·Winston Wong, a Taiwanese semiconductor tycoon who founded Shanghai Grace Semiconductor Manufacturing Corp. with the son of former Chinese President Jiang Zemin.
·Former Iranian ambassador to the United States Hushang Ansary, now a Houston businessman and large GOP donor.
·Cairo businessman Hamza El Khouli, an associate of Egyptian President Hosni Mubarak and chairman of First Arabian Development and Investment Co.
·Les and Anne Csorba of Houston, who served in the first Bush administration and donated $2,000 to President Bush's 2000 election campaign.
·Sofidiv Inc., a division of the Moet Hennessy Louis Vuitton luxury goods company.
·Mohammed Al Saddah of the Ultra Horizon Co. in Kuwait.
Sources: Associated Press; Chronicle research
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O, BROTHER! WHERE ART THOU?
Like Hugh Rodham, the Bush Bros. Have Capitalized on Family Ties
Louis Debose
March 16, 2001:
Austin Chronicle
Unless you've been reading the Houston Chronicle society page, it's unlikely you've seen any current news about Neil Bush. The third Bush sibling has been almost as invisible as his apolitical brother Marvin, a venture capitalist living in northern Virginia, and his sister Dorothy "Doro" Koch, the youngest of the five Bush siblings, who quietly raises funds for charities in a Maryland suburb near Washington. While Jeb was governor of Florida and George W. was twice elected governor of Texas, Neil was either part of the late Maxine Mesinger's "crème de la crème crowd" at a Houston social event, or a stale S&L footnote: "the director of Silverado Banking, Savings and Loan when it crashed in 1988 at a cost of $1 billion to taxpayers."
In 1990, Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which actually cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million. And the fine wasn't exactly paid by Neil Bush. A Republican fundraiser set up a fund to help defer costs Neil incurred in his S&L dealings. Friends and relatives contributed -- but not then-President and Barbara Bush, which would have been unseemly. Since then, the Bush political combine has done such a remarkable job keeping Neil in the background that what seemed like a 10-year news blackout didn't end until mid-February, when the Austin Business Journal reported that Bush "quietly is heading a local start-up that's raising at least $10 million in second-round funding." According to the business newsweekly, Bush has already raised $7.1 million from 53 investors underwriting Ignite! Inc., an educational software company. After being banned from banking and all but airbrushed out of the family portrait -- or at least the family news profile -- Neil Bush is back.
Bush wasn't just an average S&L exec drawing a big salary and recklessly pushing a federally insured institution beyond its lending limits. As a director of a failing thrift in Denver, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners. Federal banking regulators later followed the trail of defaulted loans to Neil Bush oil ventures, in particular JNB International, an oil and gas exploration company awarded drilling concessions in Argentina -- despite its complete lack of experience in international oil and gas drilling. It probably helped that the Bush family had cultivated close ties with the fabulously corrupt Carlos Menem, former president of Argentina.
When JNB's rights and obligations were assumed by other investors, Neil tried to persuade another American oil and gas exploration company, Plains Resources, to invest in Argentina. Plains wasn't buying. But it was hiring, and picked up Neil as a consultant for its Argentine market -- because, as Plains executive Carlos Garibaldi told The New York Times' Jeff Gerth in 1992, Neil had "traveled [in Argentina] and played tennis with President Menem." Plains President J. Patrick Collins told Gerth at the time that Neil Bush "bent over backwards not to trade on his name."
That claim was hard to make in 1993, when Neil, Marvin, James Baker III, John Sununu, and Thomas Kelly (who had served as director of operations for the Joint Chiefs of Staff during the Gulf War) joined President Bush on a trip to Kuwait. Three months out of office, the elder Bush was traveling on a Kuwait Airlines flight to accept an honorary degree from the country's university and its highest honor from its leader: Emir Sheikh Jabir al-Ahmad al-Sabah. The rest of the Bush entourage was following along to exploit the market in a country that considered the ex-president its savior. Former Secretary of State Baker was doing deals for Enron (the Houston-based energy-related company and contributor to Bush the Elder and later a $525,000 donor to George W. Bush's two gubernatorial races in Texas). Marvin was representing U.S. defense firms selling electronic fences to the Kuwaiti Defense Ministry. And Neil was selling anti-pollution equipment to Kuwaiti oil contractors.
There is "no conflict of interest. ... We're just capitalizing on whatever good feelings exist," an executive from the company Neil Bush represented later told Seymour Hersh, who laid out the embarrassing story on the pages of The New Yorker in September 1993. Neil, according to Hersh, later returned to Kuwait and set up shop in the International Hotel in Kuwait City, where he tried to secure a management contract with Kuwait's Ministry of Electricity and Water. Neil's deal included foreign and Kuwaiti members of the Enron consortium, and would have had the Kuwaiti government paying a management fee to a Kuwaiti company that was owned in part by a private company set up in the Caribbean or some other tax haven. "The offshore firm would have various owners, in Europe and elsewhere, one of which would be a company in which Neil Bush had an interest," The New Yorker reported. The scheme was ingenious, a financial analyst told Hersh."If you looked at one of the contracts, how in the hell would you know that Bush was in it?" The whole deal was as unsavory and unpardonable as a round of golf with Hillary Clinton sibling Huey Rodham.
Jeb missed that junket, but the current governor of Florida isn't above taking the family name abroad to make a buck. In 1989, Bush and his wife traveled to Nigeria with a executives of M&W Pump, a Florida-based company that had been selling agricultural pumps to Nigeria. Jeb and Columba Bush were received by Nigerian President Ibrahim Babangida and celebrated by tens of thousands of Nigerians who turned out to see the son of the U.S. president. President Babangida expressed his interest in visiting the White House -- a request Jeb promised to pass along to his father -- and by 1992 the Florida pump company had secured $74 million in financing from the Export-Import Bank of the United States. It was by far the largest Ex-Im deal M&W had ever done in Nigeria -- a country Ex-Im loan officers considered a bad risk. "I didn't get paid for the Nigeria business," Bush told The Palm Beach Post in 1994. "I have not made a dime on business with Nigeria." Yet the Post found tax records that revealed Bush and earned at least $300,000 through his association with the owner of the same company for which he had done a pro-bono sales trip to Nigeria. Bush-El, a 50-50 partnership with the owner of M&W, paid Bush at least $300,000 for his participation in a separate venture, marketing agricultural hand pumps. Why would Bush suddenly find himself involved with a company selling agricultural hand pumps around the world? the Post asked. "I know how to sell things," responded Bush. "I know international sales. I know how to get people to put together tenders because I financed a lot of them when I was working at Texas Commerce Bank."
Here in Austin, it's a safe bet that Neil will raise the additional $10 million in start-up money Ignite! needs to get its software to market. In six years at Interlink Management, a venture capital firm he ran out of his father's Houston office from 1994 to 1999, he raised $60 million for high tech and biotech start-ups. Ignite! is a new company and a new market niche, but there's nothing new in what Neil Bush is about this year: leveraging the family name and other people's money into a business that will turn a profit -- if for no one else, at the very least for him.
http://www.austinchronicle.com/issues/dispatch/2001-03-16/pols_feature3.html
— Ron Nissimov
HISD wary in deal with Bush brother
Houston Chronicle
2003-12-14
http://www.chron.com/cs/CDA/story.hts/metropolitan/2292184
INDEX OF OUTRAGES
Pages: 380
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