Bush earned millions in juggling act as corporate adviser

By RONNIE GREENE

Associated Press

WASHINGTON (AP) - During his transition from Florida governor to likely presidential candidate,Jeb Bush served on the boards of or as an adviser to at least 15 companies and nonprofits, a dizzyingarray of corporate connections that earned him millions of dollars and occasional headaches.

Bush returned to corporate America after leaving the governor's mansion in early 2007, and hisindustry portfolio expanded steadily until he began shedding ties late last year to prepare a run forpresident.

Executives who worked alongside Bush describe him as an engaged adviser with an eye for detail.

Yet experts question how anyone could serve so many boards at once effectively.

"Board of directors and advisory boards are in charge of high-level oversight," said law professorElizabeth Nowicki, a former Securities and Exchange Commission lawyer. "You cannot possibly dothat simultaneously for 10 or 15 entities."

There is no formal rule limiting the number of boards one person can serve. But in the wake of theEnron scandal, where flimsy board oversight contributed to the company's infamous meltdown, anda federal law that increased liability for a public company's director, common sense dictates a smallnumber, Nowicki said.

"If somebody starts serving on more than three or four boards that's a problem," she said.

Three boards should be the maximum, agreed Zabihollah Rezaee, a University of Memphisaccounting professor who has authored books about corporate governance.

"Board members are representing shareholders, and they are responsible to shareholders forfinancial integrity," said Rezaee. "Best practices" dictate a small number, he said, "because of theamount of time it requires to be effective."

Bush served on the boards of or as an adviser to 11 companies or nonprofits at a time each year

from 2010 to 2013, The Associated Press found. Those ties were in addition to his own businesses,such as Jeb Bush Associates, and the educational foundations he created.

In 2010 Bush served on the board of directors of eight different entities, as adviser to a ninthcompany and advisory board member for two others. In 2013, he served on six boards, as an adviserto another company and on the advisory board of four more entities.

Bush answered curtly Thursday when asked about the positions after visiting a lab in Lansing,Michigan, that makes antidotes and vaccinations for poisons such as anthrax.

"I had two public boards," he said. "And I did my fiduciary duty quite well, I think. You'll have to askthem."

Bush was apparently referring to his standing only in 2014, when he shed his corporate ties. At thattime he was on the board of two publicly held companies, Tenet Healthcare and Rayonier Inc. In2013, he was on the board of four public companies, including the international advisory board ofBarrick Gold Corp.

Bush spokeswoman Kristy Campbell said not all the corporate entities were the same - some wereboard slots, some advisory positions and others nonprofits - and suggested it was unfair to put themall in the same basket. AP's review found that Bush served on the board of directors of as many asseven for-profit companies at a time - while also serving as an adviser to other companies andnonprofits.

Bush's experience on corporate boardrooms could evolve into a theme during the 2016 race for thepresidency. Among the issues the Florida Republican could be asked to explain:

-One company that paid Bush $15,000 a month as a board member and consultant, InnoVidaHoldings, collapsed in fraud and bankruptcy, with the company's CEO, Claudio Osorio, now serving12½ years in prison. Bush joined InnoVida despite warning signs that Osorio's prior companydissolved amid bankruptcy and allegations of fraud.

-At least five companies where Bush served on the board or as adviser faced class-action lawsuitsfrom shareholders or legal action by the government. Some of the most sweeping cases, involvingallegations of fraud or environmental damage, remain active. The Securities and ExchangeCommission subpoenaed one of the companies, Rayonier Inc., in November, shortly before Bush'sexit.

-Bush earned $3.9 million from four companies alone since 2007, the AP found, plus $25,000 a yearmore from a medical company in Georgia, $9,600 annually from Bloomberg Philanthropies and zeropay from a drug addiction nonprofit. His earnings from eight other companies are unknown, andBush has declined AP's requests to disclose his compensation - raising questions about how open hewould be as a presidential candidate.

Bush was a board member or adviser to publicly traded health care, timber, gold mining andsanitation companies; for private firms involved in housing, finance, medicine, higher education anddecontamination; and for nonprofits focused on drug addiction and philanthropy. He served on theboard of directors for nine of the 15, and as an adviser or advisory board member for the others.Two of the 15 are nonprofits.

Once Bush officially declares for president, he will have 45 days to file a public disclosure form

listing his sources of income for the prior year. Those forms include broad ranges for the values ofassets or salaries that can be used to estimate a politician's net worth, but they will not be precisetotals and will capture just the prior year.

"Until you say the magic words 'I am running for president,' there are a whole lot of restrictions thatdon't apply to you. I think this is an advantage he is taking," said Bill Allison, a senior fellow with theSunlight Foundation, a nonprofit that advocates for open government. "There just should be anexpectation of transparency around anything that a presidential candidate is involved with, whetherit's a nonprofit foundation or their past employers."

Spokeswoman Campbell said, "If he becomes a candidate, he'll comply with all necessary financialdisclosures. That is an approach consistent with what he did in all three of his campaigns forgovernor."

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Re-joining the corporate world

Bush returned to corporate America less wealthy than when he took office. Bush's net worth, $2million when he was elected Florida governor in 1998, dipped to less than $1.3 million by the timehe left office in the first days of 2007, his financial disclosure forms show. The decline came largelyfrom a diminished investment portfolio. He also earned less as governor - $129,000 his last year inoffice - than in the private sector, where he had been paid $755,000 annually by the Codina Group, adevelopment company in Coral Gables, Florida, before taking office.

Out of office, Bush began quickly making up time, becoming an adviser or board member for at leastfive companies in 2007.

One was Tenet Healthcare Corp., a publicly held company where Bush served on the board ofdirectors from 2007 to 2014, earning $2,375,870 in pay and stock, the company's SEC filings show.

Tenet declined to make a board member available for an interview, but spokesman Donn Walker saidBush challenged management to deliver for patients and consumers. Bush attended 94 percent ofboard meetings and 99 percent of committee meetings, Walker said.

In a statement, Trevor Fetter, the company's president and CEO, said his fellow board member"made innumerable contributions to Tenet's transformation into a national diversified health careservices provider."

That year Bush also became an adviser for Lehman Brothers, which, after its collapse, was absorbedby Barclays Capital. Bush worked for Barclays through 2014, advising clients on the regulatorylandscape in the U.S. The New York Times reported last year that Barclays paid Bush $1 million ayear. The company declined comment on Bush's pay and tenure.

Later in 2007, Bush took on what became his most troublesome board position, joining MiamiBeach's InnoVida Holdings. Founder Osorio is now serving a prison sentence for orchestrating aglobal fraud that cost investors millions.

Bush conducted a thorough review before joining InnoVida's board, Campbell said. That includedcommissioning a background check of Osorio, conducted by a former federal agent whom shedeclined to identify.

"Based on the report that was shared with the governor by the company that was hired to do thebackground check, there were not red flags to indicate financial or criminal wrongdoing," Campbellsaid. The campaign declined to share the report.

But financial red flags did exist, public court records show.

Thirteen years before creating InnoVida in 2006, Osorio had founded another South Floridabusiness, CHS Electronics, which sold computer products in Latin America and Europe from itsheadquarters west of the Miami International Airport.

In 1999, just as Bush was beginning his first term as Florida governor, scores of CHS investors filedsuit in federal court in Miami accusing Osorio and CHS of inflating the company's income andprofits. In all, 36 separate actions were consolidated into one class-action lawsuit that said CHSoverstated its profits in 1998 by 50 percent.

After CHS admitted in 1999 that it overstated vendor rebates, a financial chess move that led thecompany to issue a misleadingly rosy financial picture, the price of its common stock plummeted 35percent in one day.

The lawsuit cited analyst Robert Damron who urged investors not to buy. "There was fraud, andwhen I see fraud I walk away," he said.

CHS filed for bankruptcy protection in 2000, and, a year later, entered into an $11.5 millionsettlement with shareholders, federal court records show.

In September 2007, the SEC revoked CHS' securities registration.

Three months later, Bush joined Osorio's InnoVida, a South Florida manufacturer that said its uniquefiber composite panel construction could withstand fires and hurricanes. But instead of buildinghomes, including a U.S. government-financed project in earthquake-stricken Haiti, Osorio usedinvestors' money to bankroll a Miami Beach mansion, Colorado mountain retreat home, Maseratiand country club dues, the SEC said.

Bush's role on InnoVida's board helped build the company's image and attract business.

One businessman who hired InnoVida as a contractor said that, when he visited Osorio at thecompany's Miami Beach offices, Bush's pictures were all over the wall.

"He drops his name repeatedly. 'Jeb Bush this, Jeb Bush that.' And you just say, OK, there'scredibility there," said Troy Von Otnott, founder of Massive Technologies, a CleanTech consultingfirm in Atlanta.

InnoVida never delivered on its promises to build housing in Africa, despite receiving $3 million forthe job from Von Otnott's partners. "They delivered false promises and hot air and lies," he said.

Now Von Otnott is among creditors trying to collect pennies on the dollar - and questioning howBush could have put his name behind the company.

"We bought into their whole sales push because Jeb Bush was on their board of directors and had his

picture all over their office," said Von Otnott, a onetime volunteer with Citizens Climate Lobby whodescribes himself as a political independent.

"At the very least, it just demonstrates poor judgment. If you are running for the president of theUnited States of America, you need to show that you have judgment."

A major InnoVida investor, Miami lawyer Chris Korge, said Bush "showed true concern" about thelosses investors suffered.

Bush left InnoVida in September 2010. In 2013, as part of the company's bankruptcy proceedings,Bush agreed to repay $270,000 of the $468,902 InnoVida paid Jeb Bush Associates LLC over the 33months he worked for InnoVida. From his Miami prison, Osorio declined an AP interview request.

"As soon as concerns regarding InnoVida were brought to Gov. Bush's attention, he took action toaddress them immediately," Campbell said.

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Shedding one corporate tie, expanding others

Though Bush shed that corporate role, he continued taking positions on company boards, affixing hisname to 11 entities each year from 2010-13.

One is CorMatrix Cardiovascular Inc., a Georgia-based medical device company where Bush servedon the board from 2009-2014, and took part on the company's compensation and audit committees.

"He was an active member," said John Thomas, the company's chief financial officer. "He really camebetter prepared than most board members. I've served on the board of seven different publiccompanies. He was one of the most prepared board members that I have had the privilege ofworking with."

Thomas said CorMatrix paid Bush $25,000 annually, plus fees for attending meetings in person or bytelephone. Board members were not required to attend the company's annual shareholdersmeetings. Bush did, "to the delight of our shareholders," he said.

"They obviously took pictures with him and did that the entire time. And he was very congenial,"Thomas said. "We would love to have him come back to our board at some point."

In January 2010, Bush joined the advisory board of Zimek Technologies, an upstart Florida companywith a patented system to kill antibiotic-resistant bacteria and prevent infectious diseases fromspreading.

Bush's stay was brief, about six months. His role was to "help get introductions of the product topotential users," said Michael Silva, a spokesman for Zimek. "He was enthusiastic about it because itwas Florida-based and a very unusual product."

Silva said Bush's pay was "minor" but the company could not disclose it.

Zimek has no staff, Silva said, beyond its founder and an administrative assistant. But the companyhas recently hired lobbyists in Washington in a bid to put its disinfecting system to use fightingEbola and other public health outbreaks.

From 2009-2014, Bush was an advisory board member for Miami's Whitney University System,which services higher education institutions in Latin America. Spokesman Nuno Fernandes declinedto disclose Bush's pay but called him "a highly valued 'go to' resource for our top senior executives."

Another Florida link is Rayonier Inc., a publicly traded timber company headquartered inJacksonville. Bush served on the board from 2008 to December 2014, earning $977,320 in totalcompensation.

"He was an excellent board member, he was always prepared," said V. Larkin Martin, a fellowRayonier board member.

She said Bush actively responded when the company had to restate its financial statements inNovember 2014.

That month, investors began filing a series of lawsuits alleging Rayonier made false and misleadingstatements that caused them losses. The suits have been consolidated into a class-action lawsuit thatwas recently amended to nearly 100 pages. It alleged Rayonier overharvested its Pacific Northwesttimber for over a decade and will be forced to reduce dividends significantly.

The SEC subpoenaed Rayonier over its amended reports that November; the company said it iscooperating with the SEC. While another 2014 lawsuit, alleging Rayonier caused environmentaldamage to Georgia's Altamaha River, was dismissed by a judge, the investor case remains active.

When the trouble came to light, Bush urged the company to "do the right thing" and self-report theproblem, Martin said. "We were all of one accord in that."

Another Bush-connected company facing a class-action complaint is Barrick Gold Corp., the world'slargest gold mining company, which has come under shareholder scrutiny after paying its chairmana $12.9 million compensation package last year and $9.5 million the year before.

The class-action suit, filed in 2013, focuses on the company's Pascua-Lama open pit gold and silvermine planned for the high desert border between Argentina and Chile - and pitched as thecompany's "crown jewel." Instead, the lawsuit said, the project collapsed amid environmentalproblems, costing investors millions as Barrick's stock fell 65 percent from its high.

Bush served on Barrick's international advisory board in 2011, 2012 and 2013. The advisorymembers, spokesman Andy Lloyd said, "are essentially there to provide strategic advice." He saidthe members meet once a year and provide counsel at other times. He declined to discuss Bush'srole in depth and said his pay was confidential.

Bush served on the board of directors for Swisher Hygiene Inc., a publicly traded sanitation

company, from 2010 to 2013, earning $313,825. It, too, faced legal challenges during his tenure.

Investors accused Swisher of making false statements that plunged the company's market value, andBush was named as a defendant in some cases. In February 2014, Swisher Hygiene agreed to pay$5.5 million to a settlement fund.

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Associated Press writers Steve Peoples in Washington, Thomas Beaumont in Lansing, Michigan, andTony Winton in Miami contributed to this story.

Copyright 2015 The Associated Press. All rights reserved. This material may not be published,broadcast, rewritten or redistributed.

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