by Linda Minor © 2000

The tentacles of Brown Brothers Harriman (BBH) extended into the pharmaceutical industries, a favorite client of the Bush family.  The BBH 1818 Fund (owned and managed by Brown Brothers Harriman partners) is involved in investment partnerships with SmithKline Beecham, the big pharmaceuticals company, and a Nobel company. The 1818 Fund was also entangled in the private hospital Columbia/HCA, which was a defendant in some huge lawsuits alleging systemic fraudulent corporate wrongdoing. 

The BBH 1818 Fund is invested in Gulf Indonesia, a corporation in which Robert H. Allen, among others, is involved. Allen was caught in the center of the Watergate scandal in 1974 because of his donation of $100,000 to the Nixon campaign headed in Texas by George H.W. Bush's friends, the Liedtke brothers of Zapata Corporation. Allen was then chairman of Gulf Resources and Chemical Corporation in Houston. His company controlled half the world's supply of lithium, an essential component of hydrogen bombs.

Mazankowski's appearance on the same board brings in ties to The Power Corp and Great West Life Insurance, which are largely controlled by the Montreal attorneys of the Bronfmans, who were also instrumental in the workings of Permindex at the time of John Kennedy's assassination. Paul G. Desmarais, Sr., an attorney for the law firm of which Bloomfield was a partner.  Tory, Tory, DesLauriers & Binnington has long been a director of the Power Corp., which is the ultimate parent of Great-West Life Insurance. He was also a director of Barrick Gold, which has had as its advisors both George H.W. Bush after he left office, and Brian Mulroney, former prime minister of Canada.

From all appearances, it seems as though George Bush is connected to all these centers of power, not because of the small role he had in politics, but because of his family's connections with the real center of power--Brown Brothers, Harriman investment bank.

Note 1:  An investor group led by the former Chairman of SmithKline Beecham and BBH's 1818 Fund II, L.P., purchased Steri-Oss from Bausch & Lomb for $67.0 million. In 1998, after two years of rapid sales growth and rising profits, Steri-Oss merged with Nobel Biocare, a publicly traded Swedish company and the largest manufacturer of dental implants in Europe. The combination made Nobel Biocare the largest manufacturer of dental implants in the world. The 1818 Fund II rolled over its investment into Nobel Biocare and continues to hold a significant equity interest in Nobel Biocare. A BBH partner serves on Nobel Biocare's Board of Directors.

Note 2: One of the funds Gordon tracked, the original 1818 Fund, was established in 1989 with 13 limited partners and an average commitment of about $25 million. It seeks to be among the largest investors in each company in its portfolio by owning 10% to 30% of equity. The track record for its first round was a 34% compounded return on 11 investments in publicly traded companies. Pension funds were not among the limited partners, but Michael Long, a Brown Brothers Harriman & Co partner who co-manages the fund with Lawrence Tucker, says that they expect as much as a third of the new pool now being raised for the 1818 Fund II will be pension assets.

Not all funds Gordon studied have performed so well. Another firm that invests "patient" capital is Lazard Freres's Corporate Partners, a limited partnership managed by vice president Dale Lenzner. The fund was established in 1988, with $1.65 billion from 50 institutional investors including public and corporate pension funds, banks and insurance companies, foundations, and family groups. Corporate Partners does not make performance figures public, but the annual compounded return on the public company group Gordon studied was a good 50% higher than the S&P for the same period. But according to Gordon's study, the return on the portfolio's publicly-traded common stock-which shows the impact of corporate actions-was -22% relative to the S&P as of last September. Like the 1818 Fund, Corporate Partners "prefer to make minority investments and work in partnership with a company's management and board of directors."

Note 3: IN THE UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION H. CARL McCALL, etc. v. RICHARD L. SCOTT, et al. No. 3-97-0838 Judge Higgins/Haynes The following Institutional Plaintiffs currently own shares of Columbia/HCA Healthcare Corporation ("Columbia" or the "Company")...

Defendant T. Michael Long ("Long"), a citizen of Connecticut, has been a director since 1991. Long is co-manager of The 1818 Fund, L.P., which received substantial proceeds from its sale of Columbia common stock. Since 1995, Long has individually sold 11,250 Columbia shares for proceeds of approximately $490,000. Long was a member of Columbia's Audit Committee from at least 1992 through 1996, and is a member of the Company's Compensation Committee.

....In addition to insider trading, five of the Directors, Scott, Frist, McWhorter, Long and Averhoff, had disabling interests in the systemic alleged corporate wrongdoing, as follows: Scott, together with Columbia's other top managers, including Frist and McWhorter, was responsible for day-to-day operations, setting the overall corporate and business policies for the Company, and orchestrating the Company's reliance on a pervasive course of fraudulent and unlawful practices to generate inflated earnings and profits. Scott personally profited from the Company's financial gains through his substantial compensation. Scott also received from the Company a severance deal worth approximately $10 million in cash, plus other benefits, that he negotiated with the Board after the widespread wrongdoing at Columbia was made public. Frist, like Scott, played a direct and extensive role in the management of Columbia's day-to-day operations, including its reliance on fraudulent policies, and thus was also directly responsible for the pervasive corporate wrongdoing alleged herein. In addition to his substantial stock ownership, Frist, like Scott, profited handsomely from this wrongdoing, receiving a salary totaling more than $800,000 in 1995 and 1996. Frist, on behalf of Columbia, participated in the negotiation of, and signed, the Scott and Vandewater separation agreements.

McWhorter was also responsible for managing the day-to-day operations of the Company and for the systemic, unlawful and fraudulent corporate policies. McWhorter, too, personally benefited from the Company's purported financial success, receiving an annual salary of $600,000 plus additional benefits. Long is a co-manager of the 1818 Fund, L.P. (the "Fund"). In 1991, the Fund purchased a $40 million Columbia note, which, in 1994, was converted into Columbia stock. The Fund also holds a warrant for 600,000 Columbia shares, exercisable at any time prior to March 31, 1998, at a price of $13.33 per share. Since January 1995, the Fund sold 781,762 shares of Columbia stock for proceeds of $55,334,165. As a result, Long had a financial interest in the systemic wrongdoing that maintained the market price of Columbia stock. Averhoff also has a direct financial interest in this litigation. She is a physician-investor in Cedars, one of the Columbia hospitals riddled with Medicare billing abuses. Averhoff, through her ownership interest in Cedars, receives direct and substantial financial benefits from the systemic corporate fraud the Board authorized or permitted. Averhoff also benefits financially from her admitting privileges at Cedars.

Royal has admitting privileges at Henrico Doctors Hospital, a Columbia facility in Virginia. As described below, Royal also obtained significant profits from his investment in HCA.

Note 4: Gulf Indonesia T. Michael Long, 56, was elected to the Board of Directors in August 1997. Mr. Long is a General Partner of Brown Brothers Harriman & Co. and is the Co-Manager of the 1818 Fund L.P. and the 1818 Fund II L.P. He has been a director of Gulf Canada since January 1995 and also serves as a director on the Boards of Columbia/H.C.A. Health Care, Inc., Nobel Biocare, A.B., CMS Incorporated and Vaalco Energy Company.

(Other directors): Robert H. Allen, 72, was elected to the Board of Directors in August 1997 and has been Chairman of the Board since February 1998. Mr. Allen has been the Managing Partner of Challenge Investment Partners since 1993. Mr. Allen has been a director of Gulf Canada since January 1995 and also serves on the Board of Directors of Federal Express Corporation, University of Texas Investment Management Company, the Texas Growth Fund, GeoQuest International and Nuevo Energy Corporation.

Richard H. Auchinleck, 48, was President and Chief Executive Officer of Gulf Indonesia from August 1997 to May 1998. He has been President and Chief Executive Officer of Gulf Canada since February 1998. Prior to that, Mr. Auchinleck was Senior Vice President and Chief Operating Officer of Gulf Canada from 1997 and served as Gulf Canada's Senior Vice President, International and Marketing from 1995 to 1997.

Dr. Jack Birks, 80, was elected to the Board of Directors in August 1997. He is life president of British Maritime Technology Limited. Dr. Birks served as Chairman of the Board of British Maritime Technology Limited from 1985 to 1995, North American Gas Investment Trust Plc from 1989 to 1995 and Midland & Scottish Resources Plc from 1982 to 1995. Dr. Birks is a director of Bellwether Exploration Company.

Marcel R. Coutu, 46, was elected to the Board of Directors in November 1999. Mr. Coutu became the Chief Financial Officer of Gulf Canada in April 1999. From 1989 to 1999, Mr. Coutu was the Director, Finance and Vice President, Finance and most recently, Senior Vice President, International of TransCanada Pipelines Limited.

The Right Honourable Donald F. Mazankowski, 64, was elected to the Board of Directors in August 1997. Mr. Mazankowski is a Business Consultant. He has been a director of Gulf Canada since 1993 and serves as a director on the Boards of the Weyerhauser Company, the Power Group of Companies, Atco Ltd., Shaw Communications Incorporated, IMC Global Inc., Great West Life Assurance and Investors Group and Canada Brokerlink Inc.

Walter B. O'Donoghue, 67, was elected to the Board of Directors in May 1999. Mr. O'Donoghue has been a partner with Bennett Jones since 1980 and is the Chairman of the Board of Directors of Athabasca Oil Sands Investments Inc. Mr. O'Donoghue is a member of the Alberta Securities Commission. He has been a director of Gulf Canada since 1995 and is on the Board of Directors of Magin Energy Inc., BCT.TELUS Communications Inc., Wolcott Gas Processing Ltd., Gibson Petroleum Company Ltd., and TransCanada Gas Processing Services Ltd.

John R. Sanders, 57, was elected to the Board of Directors in May 1999. Mr. Sanders is a Business Consultant. From 1993 to 1998, Mr. Sanders was the Managing Director and Advisor to the Chief Executive Officer of Natwest Markets and the Deputy Chairman of BOE Natwest. Mr. Sanders is a Director and Deputy Chairman of Austin Reed Group Plc and serves as a director on the Boards of BOE Limited and Sabanci Bank Plc.

Dr. Subroto, 71, was elected to the Board of Directors in September 1997. Dr. Subroto was Secretary General of the Organization of Petroleum Exporting Countries (OPEC) from July 1988 through June 1994, Indonesian Minister of Mines and Energy from March 1978 through March 1988, and Indonesian Minister of Manpower, Resettlement and Co-operatives from September 1971 through March 1973. He is a member of the Indonesian Economics Association, the International Association of Energy Economists and the Board of the Montreux Energy Roundtable. Dr. Subroto also serves as a director on the Board of Duta Graha Indah, an Indonesian construction company in Jakarta.

Henry W. Sykes, 42, was elected to the board of directors in 1999. Mr. Sykes is Senior Vice-President, Business Development and General Counsel at Gulf Canada resources Limited. Prior to joining Gulf in 1998, Mr. Sykes practiced for 15 years with the Calgary-based law firm Bennett Jones as an associate and subsequently, a partner in the firm.

The End.