U.S. fraud suit targets ex-partner of Jeb Bush

The Justice Department says a water pump company fraudulently helped Nigeria obtain $74-million in taxpayer-backed loans.

By ADAM C. SMITH, Times Political Editor
© St. Petersburg Times
published March 15, 2002

Gov. Jeb Bush's former business partner in a venture to sell water pumps abroad defrauded the U.S. government of more than $74-million, federal authorities contend in a lawsuit.

The Justice Department alleges that MWI Corp. of Deerfield Beach, a water pump company whose equipment Bush marketed to foreign countries, fraudulently helped Nigeria obtain U.S. taxpayer-backed loans during his father's administration.

Much of the loan money went for secret payoffs to Nigerian officials and equipment that was vastly overpriced and unneeded, the lawsuit says.

The company denies the allegations, many of which surfaced four years ago when a former MWI employee sued the company.

Bush, campaigning for governor at the time, shrugged off questions about the deal as little more than complaints from a disgruntled former staffer.

Now the Justice Department is making many of the same charges.

The pump deals occurred years before Bush became governor, and the lawsuit neither mentions him by name nor accuses him of wrongdoing.

But it suggests MWI used its political influence in the Republican Party to win the U.S. loans, and notes that MWI president J. David Eller went into business with "a member of a prominent national political family in an attempt to bolster MWI's sales abroad."

That's a reference to Jeb Bush.

In 1989, Eller, a major Republican contributor, formed a company with Bush, Bush-El, to market MWI's industrial water pumps abroad. Bush has described Eller as a "person of integrity."

Twice while his father was in the White House, Bush visited Nigeria as a water pump representative. He visited Nigerian dignitaries and was showered with attention, including a parade for him in 1989 with 1,300 horses.

Jeb Bush sold his share in Bush-El in 1994, and has said he earned about $648,000 from the company.

He has insisted that he received no money on the Nigerian deals, saying he took no commissions on sales backed by U.S. loans to avoid a potential conflict of interest. He said his earnings came from his work in other countries, including Mexico, Indonesia and Malaysia, but in 1998 declined to detail that work.

"You either trust me or you don't," he told the Miami Herald in 1998.

Katie Baur, spokeswoman for the governor, said the governor was unaware of the lawsuit and had not spoken to federal authorities about the case.

"The governor had nothing to do with the ... loans that are the subject of this," Baur said.

The federal lawsuit accuses MWI of guiding the buyer and the Export-Import Bank of the United States into a deal loaded with falsehoods. It went like this, the suit said:

MWI found a well-connected Nigerian agent. By paying various Nigerian authorities in currency and goods, the agent convinced assorted Nigerian officials that they "needed" MWI's pumps. Then MWI helped Nigeria get U.S. loans for projects with vastly inflated prices. Much of the hidden markups went for illegal payments to Nigerian officials, for huge commissions for MWI's Nigerian agent, and for equipment overpriced as much as 500 percent.

Nigerian authorities would not have sought the loans for the pumps had they not received generous payments courtesy of MWI, the lawsuit contends.

Nigeria lacks the infrastructure and need for much of the equipment, and today, hundreds of pieces of equipment sold by MWI sit rusting and unused in Nigerian fields, the lawsuit says.

"That's nonsense," said MWI attorney William Scherer.

Scherer said that Nigeria continues to buy products from MWI and that the country has paid back the $74-million loaned by the Export-Import Bank, plus some $33-million interest.

"We have done nothing wrong, and the country paid back the money with interest," Scherer said.

Officials with the Export-Import Bank could not be reached for comment Thursday, but weeks ago confirmed to the St. Petersburg Times that the loans had been paid off.

The Nigerian pump deals became a campaign issue in 1998, after former MWI vice president Robert Purcell named Bush in a lawsuit against MWI and others. Purcell said he was cheated out of more than $1-million in profits that were diverted to Bush-El and other companies affiliated with Eller. The company denied the allegations, and Purcell's lawsuit was settled under confidential terms.

Federal court records show that in August 1998 Purcell also filed a federal "whistleblower" lawsuit against MWI, accusing it of defrauding the federal government. That lawsuit remained sealed until recently while federal authorities investigated the charges.

At one point, FBI investigators in the Clinton administration were pursuing a criminal investigation into MWI, but Scherer said that apparently ended because the statute of limitations for criminal prosecution expired.

Still, the investigation continued into the George W. Bush administration.

In January, the U.S. Justice Department decided to intervene in the civil case on Purcell's behalf. Under the whistleblower law, Purcell could receive from 15 percent to 25 percent of anything the government recovers.

Federal authorities involved in the case could not be reached for comment Thursday, but Scherer insisted that the loan was paid off and that the government has no lost money to recover.

"We're going to vigorously (fight) the case, and we're going to be completely exonerated if it doesn't go away," Scherer said.

-- Times staff writer Bill Adair contributed to this report.

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