Harvard University helped Harken Energy, the small company where President Bush served as a director, take debts off its balance sheet with an off-the-books partnership, according to a report released Wednesday by a watchdog group.

Unlike some off-the-book partnerships by bankrupt energy company Enron Corp., the 1990 Harken-Harvard partnership was disclosed in Securities and Exchange Commission filings.

But the arrangement apparently helped struggling Harken ride out a difficult financial stretch. With a cleaner balance sheet, Harken stock more than tripled in the early 1990s to about $8 per share, and Harvard, which had invested $30 million in the then little-known energy company, sold 1.6 million shares.

“It’s legal, but God, it smells rotten,” said Bill Coyle, an accounting expert at Babson College in Wellesley. “You can argue that Harvard along with Harken established the partnership to improve Harken’s financial position, which enhances the stock price, which enhances the dollar value of the holdings of Harvard.”

Coyle said Harken’s only legal obligation was to disclose the existence of the partnership and any debts Harken had guaranteed for it.

Details of the arrangement were described in a report released Wednesday by HarvardWatch, a student and alumni group.

–Associated Press