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Another suspect deal, another Bush brother in the mix

By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times, published January 3, 2003


The new year begs for a fresh start. But business accusations of international bribery, nefarious investors and a Bush brother awkwardly involved in a troubled company all have a too-familiar ring.

Here's the latest Robert Ludlum-style financial spat.

Former investors in South Florida's Fresh Del Monte Produce Inc. recently filed a $60-million lawsuit accusing majority shareholders IAT Group and Palestinian chairman Mohammad Abu-Ghazaleh of paying bribes to buy the banana and pineapple produce company in 1996 at a "ridiculously low price." The company denies wrongdoing.

Marvin Bush, the brother of President Bush and Florida Gov. Jeb Bush, joined the board of directors of Fresh Del Monte in 1998, after the alleged events took place. Marvin Bush was re-elected to the company's board this year for a term ending in 2005, and served on the board's critically important audit and compensation committees.

In October, Bush decided to resign from the board at the end of 2002. Without any public notice of Bush's planned departure by Fresh Del Monte, news of his pending resignation was not reported until last month.

Marvin Bush resigned for "personal reasons," according to Fresh Del Monte. In fact, he has resigned most of his board memberships, including Houston's HCC Insurance Holdings.

Fresh Del Monte, controlled by Abu-Ghazaleh's IAT Group, is based in the Cayman Islands but operates from headquarters in Coral Gables. It was a spinoff from the food giant Del Monte. Though the two companies bear similar names, they are no longer affiliated.

Why should we care about such corporate intrigue? Because Fresh Del Monte is a major Florida company employing thousands. Because the allegations of corruption in this investor lawsuit span national borders and are particularly slimy. Because Fresh Del Monte happens to be one of the largest tenants at Port Manatee, annually importing millions of boxes of fruit, just south of the Sunshine Skyway bridge.

Because after such a year as 2002, questionable corporate conduct is under a harsher-than-ever spotlight. And because the Bush brothers' track record as directors of troubled companies is gaining legendary status. As brief reminders:

-- At Harken Energy in Texas in the mid 1980s, director George W. Bush sold shares of company stock just ahead of Harken reporting bad financial news to the public. Bush also failed as an insider to report his sales to federal stock regulators on a timely basis. That controversy hindered Bush's leadership last year when he urged corporate America to show more ethical leadership.

-- At Jacksonville's Ideon Group, a credit-card marketer, real estate developer Jeb Bush joined a board in 1995 that paid directors $50,000-plus a year, a record sum at the time in Florida. Ideon CEO and Bush fan Paul Kahn earlier had held a fundraiser for Bush's 1994 campaign for governor (Bush lost that one). Kahn even wrote to Jeb's father, former President George Bush, to tell him "how happy we are to have your son, Jeb, on our board of directors." By 1996, Kahn was out, Ideon was a financial disaster and Ideon directors faced multiple shareholder lawsuits. The company was later sold.

-- At Colorado's Silverado Savings & Loan, Neil Bush served as a director of an S&L whose chief would be sentenced to 31/2 years in federal prison after pleading guilty to stealing $8.7-million from investors. Though Bush never was charged with criminal wrongdoing, he agreed to pay $50,000 in 1992 to settle a civil lawsuit by the Federal Deposit Insurance Corp. As for Silverado, its collapse cost U.S. taxpayers a whopping $1-billion.

Which brings us back to current allegations that the acquisition of Fresh Del Monte six years ago was rigged, and the timing of the recent exit by director Marvin Bush and fellow outside director Stephen Way.

BB&T Capital Markets analyst Heather Jones, who tracks Fresh Del Monte, finds it curious Bush seems to have bowed out at the first whiff of investor trouble. "It's not in Bush's interest to be on the board with this high profile litigation, given his relationship to the president, so I would think it played some role," Jones told the Miami Daily Business Review.

Maybe Marvin Bush, who is financially savvy enough to manage hedge funds in Virginia just outside the nation's capital, finally learned from history. Unlike his brothers, he chose to get out while the getting was good.

In the Fresh Del Monte lawsuit, Miami lawyer Andres Rivero represents seven Mexican investors who held about 8 percent of Fresh Del Monte's shares. Rivero says IAT Group bought Fresh Del Monte for $120-million even after adviser Lehman Brothers had final bids of up to $275-million, and an initial public offering of 35 percent of the company drew $312-million a year after the sale. Rivero is asking for a jury trial in Florida.

Why? Because the lawsuit claims IAT and Abu-Ghazaleh in 1997 bribed Eduardo Bours, who chaired a Mexican government-affiliated investment group that controlled Fresh Del Monte, to accept the lowball offer by giving him $321,000 after the sale. A deposit of $321,000 was made to a Bank One account controlled by Bours in Tucson, Ariz.

Fresh Del Monte is fighting the lawsuit. Bours, who is Mexico's Institutional Revolutionary Party, or PRI, candidate for governor in the state of Sonora, denies any wrongdoing and says the payment was a legitimate bonus paid for his work as a CEO of the Mexican investment group.

The lawsuit calls the buyout "one of the great corporate swindles of all time."

Now that's a stretch, even if the lawsuit proves true. After the business shenanigans of 2002, any antics involving the sale of a South Florida banana grower will have to be underhanded indeed to top today's corporate swindles list.

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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