One day I informed my bosses at the New Hampshire utility company that I could no longer testify on their behalf. I gave up this very lucrative career and decided to create a company that would move some of the new technologies off the drawing boards and put the theories into practice. Winifred supported me one hundred percent, despite the uncertainties of the venture and the fact that, for the first time in her life, she was now starting a family.
Several months after Jessica’s birth in 1982, I founded Independent Power Systems (IPS), a company whose mission included developing environmentally beneficial power plants and establishing models to inspire others to do likewise. It was a high-risk business, and most of our competitors eventually failed. However, “coincidences” came to our rescue. In fact, I was certain that many times someone stepped in to help, that I was being rewarded for my past service and for my commitment to silence.
Bruno Zambotti had accepted a high-level position at the Inter-American Development Bank. He agreed to serve on the IPS board and to help finance the fledgling company. We received backing from Bankers Trust; ESI Energy; Prudential Insurance Company; Chad-bourne and Parke (a major Wall Street law firm, in which former U.S. senator, presidential candidate, and secretary of state Ed Muskie, was a partner); and Riley Stoker Corporation (an engineering firm, owned by Ashland Oil Company, which designed and built highly sophisticated and innovative power plant boilers). We even had backing from the U.S. Congress, which singled out IPS for exemption from a specific tax, and in the process gave us a distinct advantage over our competitors.
In 1986, IPS and Bechtel simultaneously — but independently of each other — began construction of power plants that used highly innovative, state-of-the-art technologies for burning waste coal without producing acid rain. By the end of the decade these two plants had revolutionized the utility industry, directly contributing to new national antipollution laws by proving once and for all that many so-called waste products actually can be converted into electricity, and that coal can be burned without creating acid rain, thereby dispelling long-standing utility company claims to the contrary. Our plant also established that such unproven, state-of-the-art technologies could be financed by a small independent company, through Wall Street and other conventional means.1 As an added benefit, the IPS power plant sent vented heat to a three and one-half — acre hydroponic greenhouse, rather than into cooling ponds or cooling towers.
My role as IPS president gave me an inside track on the energy industry. I dealt with some of the most influential people in the business: lawyers, lobbyists, investment bankers, and high-level executives at the major firms. I also had the advantage of a father-in-law who had spent over thirty years at Bechtel, had risen to the position of chief architect, and now was in charge of building a city in Saudi Arabia — a direct result of the work I had done in the early 1970s, during the Saudi Arabian Money-laundering Affair. Winifred grew up near Bechtel’s San Francisco world headquarters and was also a member of the corporate family; her first job after graduating from UC Berkeley was at Bechtel.
The energy industry was undergoing major restructuring. The big engineering firms were jockeying to take over — or at least to compete with — the utility companies that previously had enjoyed the privileges of local monopolies. Deregulation was the watchword of the day, and rules changed overnight. Opportunities abounded for ambitious people to take advantage of a situation that baffled the courts and Congress. Industry pundits dubbed it the “Wild West of Energy” era.
One casualty of this process was MAIN. As Bruno predicted, Mac Hall had lost touch with reality and no one dared tell him so. Paul Priddy never asserted control, and MAIN’s management not only failed to take advantage of the changes sweeping the industry but also made a series of fatal mistakes. Only a few years after Bruno delivered record profits, MAIN dropped its EHM role and was in dire financial straits. The partners sold MAIN to one of the large engineering and construction firms that had played its cards right.
While I had received almost thirty dollars a share for my stock in 1980, the remaining partners settled for less than half that amount, approximately four years later. Thus did one hundred years of proud service end in humiliation. I was sad to see the company fold, but I felt vindicated that I had gotten out when I did. The MAIN name continued under the new ownership for a while, but then it was dropped. The logo that had once carried such weight in countries around the globe fell into oblivion.
MAIN was one example of a company that did not cope well in the changing atmosphere of the energy industry. At the opposite end of the spectrum was a company we insiders found fascinating: Enron. One of the fastest-growing organizations in the business, it seemed to come out of nowhere and immediately began putting together mammoth deals. Most business meetings open with a few moments of idle chatter while the participants settle into their seats, pour themselves cups of coffee, and arrange their papers; in those days the idle chatter often centered on Enron. No one outside the company could fathom how Enron was able to accomplish such miracles. Those on the inside simply smiled at the rest of us, and kept quiet. Occasionally, when pressed, they talked about new approaches to management, about “creative financing,” and about their commitment to hiring executives who knew their way through the corridors of power in capitals across the globe.
To me, this all sounded like a new version of old EHM techniques. The global empire was marching forward at a rapid pace.
For those of us interested in oil and the international scene, there was another frequently discussed topic: the vice president’s son, George W. Bush. His first energy company, Arbusto (Spanish for bush) was a failure that ultimately was rescued through a 1984 merger with Spectrum 7. Then Spectrum 7 found itself poised at the brink of bankruptcy, and was purchased, in 1986, by Harken Energy Corporation; G. W. Bush was retained as a board member and consultant with an annual salary of $120,000.2
We all assumed that having a father who was the U.S. vice president factored into this hiring decision, since the younger Bush’s record of accomplishment as an oil executive certainly did not warrant it. It also seemed no coincidence that Harken took this opportunity to branch out into the international field for the first time in its corporate history, and to begin actively searching for oil investments in the Middle East. Vanity Fair magazine reported, “Once Bush took his seat on the board, wonderful things started to happen to Harken — new investments, unexpected sources of financing, serendipitous drilling rights.”3
In 1989, Amoco was negotiating with the government of Bahrain for offshore drilling rights. Then Vice President Bush was elected president. Shortly thereafter, Michael Ameen — a State Department consultant assigned to brief the newly confirmed U.S. ambassador to Bahrain, Charles Hostler — arranged for meetings between the Bahraini government and Harken Energy. Suddenly, Amoco was replaced by Harken. Although Harken had not previously drilled outside the southeastern United States, and never offshore, it won exclusive drilling rights in Bahrain, something previously unheard of in the Arab world. Within a few weeks, the price of Harken Energy stock increased by over twenty percent, from $4.50 to $5.50 per share.4
Even seasoned energy people were shocked by what had happened in Bahrain. “I hope G. W. isn’t up to something his father will pay for,” said a lawyer friend of mine who specialized in the energy industry and also was a major supporter of the Republican Party. We were enjoying cocktails at a bar around the corner from Wall Street, high atop the World Trade Center. He expressed dismay. “I wonder if it’s really worth it,” he continued, shaking his head sadly. “Is the son’s career worth risking the presidency?”