Paul Krugman picks up on the Bush-Harken-Harvard story, originally broken a couple of days ago, when the entire press was scooped by Harvard undergrads.

Note that Yahoo's (and thus Reuters') headline reads

Bush oil firm did Enron-style deal

Wait a minute, you're probably saying, are they recycling this headline? Cuz dern it, I sure seem to remember reports from the pre-Iraq-fervor days about Harken selling Aloha Petroleum to itself to inflate their company's value. Dubya, a member of Harken's board at the time, somehow tried to get away with pleading ignorance at the time (against the claims of others who were on the board with him at the time), and the stonewall seemed to have worked up to this point.

This time? According to Krugman:

Wednesday's Wall Street Journal reported another piece of the Harken Energy story, one that provides even more evidence of how family connections smoothed Mr. Bush's business career. The key defense against charges that his sale of his Harken stock amounted to insider trading has always been the fact that while that stock's price plunged soon after he sold his shares, it then recovered, albeit temporarily.

Now we know why it recovered. It wasn't just the mysterious invitation to drill for oil off Bahrain. Harken also pulled a trick that would be emulated on a larger scale by Enron: In effect it borrowed money to pay its bills, while using loopholes in accounting rules to conceal the resulting debt.

What made the trick possible was Harken's guardian angel, a powerful institution controlled by an oil man, Robert Stone, who was a strong political supporter of Mr. Bush's father. This institution acquired a large stake in Harken as soon as Mr. Bush became a board member, and subsequently showed itself willing to do whatever it took to keep the hapless company afloat. This included taking much of the company's debt off its books in return for assets of doubtful value, and giving Harken a share in their partnership almost twice as large as its contribution to the partnership's capital.

The name of the guardian angel? The Harvard University endowment. Don't be surprised; professors don't run the university's money.

In short, Harvard loaned money to Harken in order to keep Harken afloat. Harken, in turn, didn't report the debt resulting from the loan on their ol' ledger, thus misleading investors in another Enron prototype deal to be filed next to the Aloha scam.

Like I said before, Dubya pled ignorance on the Aloha deal, but this time? According to Reuters:

BOSTON (Reuters) - President Bush's former oil firm formed a partnership with Harvard University that concealed the company's financial woes and may have misled investors, a student and alumni group said in a report on Wednesday.

The partnership between Harken Energy Corp. and Harvard, created with Bush's approval, bore strong resemblance to the partnerships that helped disguise Enron's problems, the report's authors said. (emphasis added)

It'll be fun to see how Ari handles this one.

Now we know what two years and a Harvard MBA will get you...