Only a phone call from the new Bush White House might spare him. But the phones aren't ringing.

Related Gully Coverage

Dirty Money, Big Banks and the Mafia State
Argentina's widening money-laundering scandal. Includes the Bush connection.

JUNE 7, 2001. A long-time friend of former U.S. President George H. Bush was arrested today on charges of illegal arms trafficking. If found guilty, he could face a jail term of up to ten years. Only a phone call from the new Bush White House might spare him the indignity, he thinks. But the phones aren't ringing.

The friend in trouble is the former President of Argentina, Carlos Menem, a golfing partner and business benefactor of the elder Bush. He is suspected of having illegally sold 6,500 tons of arms to Croatia and Ecuador between 1991 and 1995, in violation of international arms embargoes. Menem, who was put under house arrest today by a Buenos Aires federal judge, said in his defense last weekend that the U.S. knew all about the arms sales.

State Department spokesman Richard Boucher gave Menem the cold shoulder on Monday. He was unaware, he said, of any action by the U.S. government entailing approval or encouragement of Argentinean arms sales to Croatia. Given how profitable the Menem connection has been for the Bushes, one might imagine Boucher was frostily putting interests of state ahead of the Bush family, until you realize that, with a Bush in the White House, they are essentially one and the same.

In 1988, a few months before Menem was elected for his first term, George W. Bush, the then oilman son of a sitting U.S. President, had tried to pressure the administration of outgoing President Raúl Alfonsín to favor Enron, the Houston-based company, over other, more qualified bidders to build a gas pipeline in Argentina. He was unsuccessful, but the Bushes hit it off with the high-rolling, big-spending Menem from the start. One of Menem's first acts as President was to give Enron a $300-million sweetheart deal on the pipeline project.

The Enron deal triggered a public outcry in Argentina. A congressional inquiry was demanded, and a special prosecutor launched a probe. But after Menem fired him, the probe fizzled. Enron and its founder and CEO, Kenneth Lay, another close friend of the elder Bush, were among the biggest contributors to George W. Bush's presidential campaign, as well as to his two gubernatorial campaigns.

George W. Bush's brother, Neil Bush, also had his fingers in the Argentina pie. He jetted to Buenos Aires for a tennis match with Menem the day after the latter was first elected, in 1989. Earlier, Neil had been involved in a failed plan to drill oil in Argentina, to be financed in part with a $900,000 loan from the Silverado Savings and Loan Bank in Denver, of which he was a director. The S&L collapsed in 1988 amidst a financial scandal, costing U.S. taxpayers more than $1 billion.

The elder Bush soon became an assiduous guest of the flamboyant Menem. He was the first U.S. President since Eisenhower to visit Argentina. Over the years, he clocked eight visits to Menem, for what the Buenos Aires daily Página 12 described as "lavish golf parties." Money and politics were discussed, particularly the three Bush investment areas of choice, according to the newspaper Clarín: oil, gas, and casinos.

In 1998, former President Bush asked Menem to grant a gambling license to the Mirage Casino Corporation, triggering yet another public outcry in Argentina. Mirage later contributed $449,000 to the Republican Party.

Ten days before the end of Menem's second presidential term, in November 1999, former President Bush dined with him, Argentina's president-elect Fernando de la Rúa, Uruguay's President Jorge Batlle, and several international bankers at the home of Carlos Rhom, owner of Banco General de Negocios. Rhom's bank has been linked to the laundering of kickback money connected to illegal arms trafficking, gold smuggling, and the 1994 IBM-Banco Nacional scandal in which IBM paid a $37 million bribe to government officials to win a contract.

Some of the dinner guests told Clarín and Página 12 that the dinner party had been engineered by Bush to find out what the new De la Rúa administration was going to do about CEI, the Argentine media company headed by Menem crony Raúl Moneta, who had fled the country while under investigation for fraud.

One of CEI's main partners was Texas Rangers owner Tom Hicks, a major funder of George W. Bush's presidential campaign, and a close friend of Moneta. Before fleeing the country, Moneta had turned over his CEI shares to Hick's investment fund, Hicks, Muse, Tate and Furst. Since then, Moneta has returned to Argentina and has been indicted as the center of a widening money laundering scandal.

Over the years, Menem was also a frequent guest of the Bushes. In 1995, for example, he received an honorary degree from the University of Houston, a Bush family fiefdom. Former President Bush introduced him as "a visionary" and told the audience that he had enjoyed working with him from the first time they met. In December 1999, Menem met with George W. Bush in Austin, shortly before Bush launched his presidential campaign; the elder Bush joined them at an Austin country club for a round of golf.

When George W. Bush was inaugurated, Menem was the only Latin American politician in attendance. The elder Bush had hand-delivered the special inaugural invitation to him during lunch at a fancy Las Vegas restaurant a few days earlier. (Both men were in town to attend the Safari Club International hunters convention.)

Menem and his girlfriend, the former Chilean Miss Universe, Cecilia Bolocco, were also special guests at a private pre-inaugural party thrown in Washington, D.C. by James P. Baker in honor of former President Bush. Gente, the Buenos Aires version of People magazine, breathlessly reported that the party was attended by "1,800 members of the Republican elite." Menem and Bolocco were married two weeks ago in Argentina.

During Menem's presidency his close personal ties with former President Bush and his clan were mirrored by Argentina's close alignment with the United States, which Menem's foreign affairs minister felicitously described as "carnal relations."

Menem, who wants to run again for President in 2003, and his Peronista party supporters, were banking on the Bush-Republican connection, among other things, to bulldoze over De la Rúa's shaky center-left coalition. But all that is beginning to look like a gauzy dream. The State Department's distancing act earlier this week may well signal that the Bushes are as adept at dropping old friends who have outlived their usefulness, as they are at cultivating them.

Related link:

For Menem arrested. Financial Times (London)

For the bare facts: "Third Ex-Menem Aide Held in Argentine Arms Probe" (Reuters)

Bush Plus
All about the morass of U.S. politics, George W. Bush, Dems, Greens, GOPs, activists, silently irritated masses and global impact.