HRG Group, Inc., (NYSE: HRG) formerly Harbinger Group Inc. and
Zapata Corporation, is a holding company based in Rochester, New York,
and originating from an oil company started by a group including the
former United States president George H. W. Bush. In 2009, it was
renamed the Harbinger Group Inc.
1 Early business history
3 Glazer era and the birth of Harbinger Group Inc.
4.1 Public records
4.3 George Bush
5 External links
Early business history
The company traces its origins to Zapata
founded in 1953 by future-U.S. President George H. W. Bush, along with
his business partners John Overbey, Hugh Liedtke, Bill Liedtke, and
Thomas J. Devine. Overbey was a ‘landman’, skilled in scouting oil
fields and obtaining drilling rights cheaply. Bush and Thomas J.
Devine were oil-wildcatting
associates.[better source needed] Their joint activities
culminated in the establishment of Zapata Oil. The initial $1
million investment for Zapata was provided by the Liedtke brothers and
their circle of investors, by Bush's father
Prescott Bush and his
maternal grandfather George Herbert Walker, and their family's circle
Hugh Liedtke was named president, Bush was vice president;
Overbey soon left.
According to a CIA internal memo dated November 29, 1975, Zapata
Petroleum began in 1953 through Bush's joint efforts with Thomas J.
Devine, a CIA staffer who had resigned his agency position that same
year to go into private business, but who continued to work for the
CIA under commercial cover. Devine would later accompany Bush to
Vietnam in late 1967 as a "cleared and witting commercial asset" of
the agency, acted as his informal foreign affairs advisor, and had a
close relationship with him through 1975.
In 1954, Zapata Off-Shore Company was formed as a subsidiary of Zapata
Oil, with Bush as president of the new company. He raised some startup
money from Eugene Meyer, publisher of the Washington Post, and his
son-in-law, Phillip Graham.
Zapata Off-Shore accepted an offer from an inventor, R. G. LeTourneau,
for the development of a mobile but secure drilling rig. Zapata
advanced him $400,000, which was to be refundable if the completed rig
did not function, followed by an additional $550,000 together with
38,000 shares of Zapata Off-Shore common stock when it did.
The U.S. government began to auction off mineral rights to the
Caribbean, the Gulf of Mexico, and the Central American coast in 1954,
and in the late 1950s and early 1960, Zapata Off-Shore concentrated
its business in these areas. In 1958, drilling contracts with the
seven largest U.S. oil producers included wells 40 miles (64 km)
north of Isabela, Cuba, near the island Cay Sal.
In 1959 Bush bought control of Zapata Off-Shore, funded with
$800,000, splitting Zapata Corporation into two independent
companies with the Liedtkes still in control of Zapata Petroleum. Bush
moved his offices and family that year from
Midland, Texas to Houston
for access to the Caribbean through the
Channel.[better source needed] But although Zapata
Offshore had only a few drilling rigs, Bush set up operations also in
the Gulf of Mexico, the Persian Gulf, Trinidad, Borneo, and Medellín,
Colombia, and the Kuwait Shell
Petroleum Development Company was among
the company's clients.[better source needed]
In 1960, Jorge Díaz Serrano (es) of Mexico was put in touch with
Bush by Dresser Industries. Dresser was owned by Prescott Bush's Yale
friends Roland and W. Averell Harriman, and had been George H.W.
Bush's first employer upon his graduation from Yale, giving him his
start in both the oil business and the defense contractor
business.[better source needed] Serrano and Bush created
a new company, Perforaciones Marinas del Golfo, aka Permargo, in
Edwin Pauley of Pan American Petroleum, with whom
Zapata had a previous offshore contract. The deal with Permargo is not
mentioned in Zapata's annual reports, and SEC records are missing. In
1988, a Bush spokesman claimed that the deal lasted only from March to
September 1960. However, Zapata sold the oil-drilling rig Nola I to
Pemargo in 1964.
Zapata's filing records with the U.S.Securities and Exchange
Commission are intact for the years 1955–1959, and again from 1967
onwards. However, records for the years 1960–1966 are missing. The
commission's records officer stated that the records were
inadvertently placed in a session file to be destroyed by a federal
warehouse, and that a total of 1,000 boxes were pulped in this
procedure. The destruction of records occurred either in October 1983
(according to the records officer), or in 1981 shortly after Bush
became Vice President of the United States (according to, Wison
Carpenter, a record analyst with the commission).
Bay of Pigs invasion
Bay of Pigs invasion and the Cuban Missile Crisis, Zapata
allowed its oil rigs to be used as listening posts. In 1988,
Barron's said Zapata was "a part time purchasing front for the
[Central Intelligence Agency]."
In 1962, Bush was joined in Zapata Off-Shore by Robert Gow. By
1963, Zapata Off-Shore had four operational oil-drilling
rigs—Scorpion (from 1956, the first oil-drilling jackup rig ever
built), Vinegaroon (from 1957), Sidewinder, and (in the Persian Gulf)
In 1963, Zapata
Petroleum merged with South Penn Oil to become
By 1964, Zapata Off-Shore had a number of subsidiaries, including:
Seacat-Zapata Offshore Company (Persian Gulf), Zapata de Mexico,
Zapata International Corporation, Zapata Mining Corporation, Zavala
Oil Company, Zapata Overseas Corporation, and a 41% share of Amata Gas
In 1964, Bush ran for the United States Senate, and lost; he continued
as president of Zapata Off-Shore until 1966, when he sold his interest
to Doyle Mize and ran for the U.S. House of Representatives.
On September 9, 1965,
Hurricane Betsy struck the coast of Louisiana
sinking the oil rig Maverick. No lives were lost, however, $8
million in Zapata assets were lost. A helicopter flew Bush over
the area for several days until debris was located. After evidence
was submitted to
Lloyd's of London
Lloyd's of London for the loss, they paid Zapata for
In 1966, William Stamps Farish III, age 28, joined the board of
Zapata sought to acquire a controlling interest in the United Fruit
Company in 1969, but was outbid by AMK Corp. Robert Gow's father,
Ralph Gow, was on United Fruit's board of directors.
In the 1970s, under chairman and CEO William Flynn, Zapata expanded
its business to include subsidiaries in dredging, construction, coal
mining, copper mining and fishing.
By the late 1970s, saddled with weak operations, high debt and low
return on investment, the company again began undergoing changes in
management and direction. Led by John Mackin, who succeeded William
Flynn, the company began selling off some of those businesses and
refocused on offshore oil and gas exploration and production.
In 1982, chief operating officer Ronald Lassiter assumed the role of
CEO, and presided over a decade of loss-making brought on by the
collapse of oil prices. In 1982, Zapata Off-shore became Zapata
Corporation. Its stock performed poorly. By 1986, Zapata was one of
the bad loans that shook the foundations of San Francisco-based Bank
of America, with a debt of more than $500 million and a fiscal year
loss of $250 million. The company announced several restructurings
during those years and managed to stave off bankruptcy, but continued
to incur major losses. In 1990 the oil drilling company proposed
selling its entire fleet of offshore drilling rigs to focus solely on
fishing. The company had not had a profitable quarter in more than
In 1990, Zapata Offshore sold 12 of its drilling rigs to Arethusa
Offshore, which a few years later merged with Diamond Offshore. Still
struggling with debt by 1993, Zapata signed a deal with Norex America
to raise more than $100 million through a loan and stock sale. But
financier Malcolm Glazer, owner of the
Tampa Bay Buccaneers
Tampa Bay Buccaneers NFL
franchise and at the time owner of 40 percent of Zapata, did not want
his holdings diluted and filed a lawsuit to block the deal.
Glazer era and the birth of Harbinger Group Inc.
By 1994, the company had come under Glazer's control, after a proxy
fight. Glazer became chairman of Zapata, replacing Ronald Lassiter,
and in 1995
Avram Glazer was named CEO and president of Zapata. De
facto headquarters moved from
Houston to Rochester, New York. It no
longer engaged in exploration, but owned several natural gas service
companies. It also produced protein products from the menhaden fish.
In subsequent years Zapata sold its energy-related businesses and
focused on marine protein.
Between 1998 and 2000, Zapata tried to position itself as an internet
media company under the "zap.com" name. In July 1998, Zapata announced
its plans to acquire several web sites, including ChatPlanet,
TravelPage and DailyStocks.com. The company's stock boomed and
crashed along with other dot-coms, and in 2001 the company conducted a
1 for 10 reverse stock split. The venture was cited by many investment
journalists as an example of a company jumping on the internet
bandwagon without any relevant experience. This period is probably
best remembered for Zapata's unsolicited (and unsuccessful) takeover
bid of the
Excite internet portal.
During this period, Zapata also built up a controlling stake in Safety
Components International, a manufacturer of air bag fabrics and
On December 2, 2005, Zapata Corporation Chairman, Avram ("Avi")
Glazer, announced the sale of 4,162,394 shares, 77.3%, of Safety
Components International to
Wilbur L. Ross, Jr.
Wilbur L. Ross, Jr. for $51.2 million. The
company sold its remaining stock in Omega Proteine on December 1,
2006, leaving it with no active subsidiary. The Glazer family sold its
controlling stock of the Zapata Corporation to Philip Falcone's
Harbinger Capital in 2009, and the company's name was changed to
Harbinger Group Inc. with the ticker symbol HRG on the NYSE.
Harbinger Capital Partners LLC transferred its 54.4%
Spectrum Brands to Harbinger Group Inc. giving the company
controlling interest in that company. Also in 2011 Harbinger
Group Inc. acquired the insurance company Old Mutual U.S. Life
In 2013, Salus Capital (a unit of Harbinger Group) and Cerberus
Capital Management issued a quarter-billion dollars in financing to
RadioShack Corporation. Among the terms of
this deal were restrictions which prevented
RadioShack from closing
more than 200 of its 4275 company-owned retail stores a year and
limited its ability to refinance, which proved to be a key obstacle
leading to that firm's February 2015
Chapter 11 bankruptcy as the
chain was forced to keep more than a thousand unprofitable stores
open. Fidelity & Guaranty Life, the insurer backed by
Harbinger Group, also has a $50 million stake in the RadioShack
^ Baker, Russ,
Family of Secrets (New York: Bloomsbury Press, 2009)
^ a b Withheld (sanitized, unclassified document), Central
Intelligence Agency (November 29, 1975). "Memorandum: To: Deputy
Director of Operations; Subject: Messrs. George Bush and Thomas J".
NARA Record Number: 104-10310-10271. CS1 maint: Multiple names:
authors list (link)
^ "MEMORANDUM:MESSRS. GEORGE BUSH AND THOMAS J. DEVINE", 3 pp.
^ Hasty, Michael (February 5, 2004). "Secret admirers: The Bushes and
the Washington Post". Online Journal. Archived from the original on
April 5, 2004.
^ Perin, Monica (April 23, 1999). "Adios, Zapata! Colorful company
founded by Bush relocates to N.Y."
Houston Business Journal.
^ King, Nicholas (1980). George Bush: A Biography. Dodd Mead.
^ "Zapata Oil Files, 1943–1983". George Bush Personal Papers. George
Bush Presidential Library. Archived from the original on August 20,
^ Russ Baker,
Family of Secrets (New York: Bloomsbury Press, 2009)
^ Russ Baker,
Family of Secrets (New York: Bloomsbury Press, 2009) p.
^ Russ Baker,
Family of Secrets (New York: Bloomsbury Press, 2009)
^ Jonathan Kwitny, "The Mexican Connection: A look at an old George
Bush business venture", Barron's September 19, 1988. Cited with
further discussion by Russ Baker,
Family of Secrets (New York:
Bloomsbury Press, 2009) pp. 37 and 503.
^ a b Bardach,
Ann Louise Bardach (2009). "The Island and the Empire".
Without Fidel: A Death Foretold in Miami, Havana and Washington. New
York: Simon & Schuster. p. 60. ISBN 9781416580072.
Retrieved August 22, 2015.
^ a b c d Schweizer, Peter; Schweizer, Rochelle (2005) .
"Chapter 14: Mainstream". The Bushes. New York: Anchor Books
(published January 2005). p. 174. ISBN 0-385-49864-0.
^ "Prettying Up Chiquita", Time (magazine). September 3, 1973
^ July 1998. Zapata's next shot at the Net.
^ Suzanne Galante (May 21, 1998). "
Excite rejects Zapata's bid". CNET
^ Bloomberg, Manchester United Owner Glazer Turns to Falcone (Update1)
^ Harbinger Group, Inc., Zapata Corporation Announces Third Quarter
Results and Reincorporation Merger.
^ Harbinger Group, Inc., Harbinger Group Inc. and Harbinger Capital
Partners Enter into Definitive Agreement on Transfer of Spectrum
Brands Majority Interest
^ Harbinger Group, Inc., Harbinger Group Inc. Completes Spectrum
Brands Share Exchange with
Harbinger Capital Partners
^ Harbinger Group, Inc., "Harbinger Group Inc. Completes Acquisition
of Old Mutual U.S. Life Holdings, Inc.: $350 million purchase price
represents approximately 39% of Statutory Capital and 22% of IFRS Net
^ Harbinger Group, Inc., "Harbinger Group Inc. Signs Definitive
Agreement for Acquisition of Old Mutual U.S. Life Holdings, Inc.: $350
million purchase price represents approximately 39% of Statutory
Capital and 22% of IFRS Net Book Value. Further value secured through
comprehensive life reinsurance commitment provided by Wilton Re to
address life insurance redundant reserves requirements. New management
team to be led by Lee Launer, CEO and Chairman."
^ "Behind RadioShack's Collapse Is a Tiny Distressed Lender".
Bloomberg. February 8, 2015.
^ "Archived copy". Archived from the original on February 11, 2015.
Retrieved February 11, 2015.
^ Tracer, Zachary (February 10, 2015). "
RadioShack Creditors Said to
Include Harbinger's Insurer F&G". Bloomberg.
SEC filings of Zapata Corporation
Zapata Offshore Annual Reports, Microform Reading Room, Library of
National Security Archives documentation of GHW Bush's CIA involvement
in the early 1960s.[dead link]
United States District Court for the District of Columbia, Civil
Action 88–2600 GHR, Archives and Research Center v. Central
Intelligence Agency, Affidavit of George William Bush, September 21,
Franklin, H. Bruce, "Net Losses", Mother Jones, March 2006 –
extensive article on role of Menhaded in ecosystem and possible
results of overfishing. Retrieved February 21, 2006
Kevin Philips, American Dynasty: Aristocracy, Fortune and the Politics
of Deceit in the House of Bush, Penguin (2004), esp.
Joseph McBride, "The Man Who Wasn't There: 'George Bush,' CIA
Operative", The Nation, July 16/23, 1988, p. 42.
Joseph McBride, "Where Was George?", The Nation, August 13/20, 1988,
on the whereabouts of GHW Bush on November 22, 1963.
Nicolas King, George Bush: A Biography.
Anthony L. Kimery, "George Bush and the CIA: In the Company of
Friends", Covert Action Quarterly, Summer, 1992.
The Mafia, CIA & George [HW] Bush, Pete Brewton, S.P.I. Books,
Beschloss, Michael R. 1991. The Crisis Years: Kennedy and Khrushchev,
1960–63 Edward Burlingame Books, p. 89 refers to "Operation
Zapata" as the codename for the Bay of Pigs operation.
Bissell, Richard M. Jr., with Jonathan E. Lewis and Frances T. Pudlo.
1996. Reflections of a Cold Warrior: From Yalta to the Bay of Pigs
Yale University Press ISBN 978-0-300-06430-8
Daniel Yergin, The Prize, (1991).