HKN, Inc. is a company engaged in

hydrocarbon exploration Hydrocarbon exploration (or oil and gas exploration) is the search by petroleum geologists and geophysicists for hydrocarbon deposits, particularly petroleum and natural gas, in the Earth's crust using petroleum geology. Exploration methods ...

headquartered in

Southlake, Texas Southlake is a city located predominantly in Tarrant County with minor areas extending into Denton County in the U.S. state of Texas. Southlake is a suburb of Dallas/Fort Worth. As of the 2020 census, it had a population of 31,265. History ...

. It is notable for the Harken Energy scandal, which involved allegations of

insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informati ...

George W. Bush George Walker Bush (born July 6, 1946) is an American politician and businessman who was the 43rd president of the United States from 2001 to 2009. A member of the Bush family and the Republican Party (United States), Republican Party, he i ...

in 1990. The company was known as Harken Energy Corporation until 2007.

History

In 1973, the company was founded as an unprofitable collection of Texas

oil well An oil well is a drillhole boring in Earth that is designed to bring petroleum oil hydrocarbons to the surface. Usually some natural gas is released as associated petroleum gas along with the oil. A well that is designed to produce only gas m ...

s for investors seeking tax write-offs. In 1986, the company acquired Spectrum 7 for 200,000 shares from George W. Bush. After the sale of his company, Bush served on the

board of directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...

of the company and received $80,000-$100,000 per year in consulting fees. Bush remained on the board through 1993. In 1987, Talat Othman joined the board of the company and served as the chair of the Audit Committee. In 1987, Bush obtained a critical $25 million loan from a BCCI joint venture. In 1989, the company's subsidiary Aloha Petroleum was sold to company insiders for $12 million, most of which was borrowed from Harken. The sale of the subsidiary for an exorbitant price helped the company show a profit that year and disguise losses, a similar technique used by

Enron Enron Corporation was an American Energy development, energy, Commodity, commodities, and services company based in Houston, Texas. It was led by Kenneth Lay and developed in 1985 via a merger between Houston Natural Gas and InterNorth, both re ...

that led to the

Enron scandal The Enron scandal was an accounting scandal sparked by American energy company Enron, Enron Corporation filing for bankruptcy after news of widespread internal fraud became public in October 2001, which led to the dissolution of its accounting ...

. In September 1989, the company made an offer to acquire Tesoro Petroleum. The offer was withdrawn in February 1990. In 2007, the company changed its name to HKN, Inc.

Controversies

Insider trading allegations

Harken attracted attention because of the role played in its affairs during the 1980s by George W. Bush, later the

President of the United States The president of the United States (POTUS) is the head of state and head of government of the United States. The president directs the Federal government of the United States#Executive branch, executive branch of the Federal government of t ...

. On June 22, 1990, while he was a member of the company's board of directors, Bush sold stock in Harken shortly before the company announced substantial losses. This transaction resulted in a U.S. Securities and Exchange Commission investigation of probable

. A transaction associated with the

financial endowment A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of Financial instrument, financial, real estate, or other investments for a specific purpose according to Donor intent, the will of its fo ...

Harvard University Harvard University is a Private university, private Ivy League research university in Cambridge, Massachusetts, United States. Founded in 1636 and named for its first benefactor, the History of the Puritans in North America, Puritan clergyma ...

was also investigated.

Exploration offshore Costa Rica

In 2000, a subsidiary of the company received a 20-year concession to exploit resources offshore

Costa Rica Costa Rica, officially the Republic of Costa Rica, is a country in Central America. It borders Nicaragua to the north, the Caribbean Sea to the northeast, Panama to the southeast, and the Pacific Ocean to the southwest, as well as Maritime bo ...

. After pressure from indigenous tribes and environmentalists, operating as Acción de Lucha Anti-Petrola, the government instituted a moratorium on exploration. In September 2003, the company filed a dispute seeking $57 billion from the government of Costa Rica for lost earnings. The lawsuit was thrown out of court and the concession was revoked.

References

{{DEFAULTSORT:Hkn, Inc. Oil companies of the United States Petroleum in Texas Companies based in the Dallas–Fort Worth metroplex Tarrant County, Texas Non-renewable resource companies established in 1973 Energy companies established in 1973 1973 establishments in Texas