The White House on Thursday defended US President Bush's low-interest loans of $180,000 from a Texas oil company where he was a director, a type of transaction that Bush now wants to ban as part of a crackdown on corporate wrongdoing.
White House spokesman Ari Fleischer said that such loan programs across corporate America began as an incentive for officers to work harder for their companies.
But now, amid various corporate scandals, "the president thinks the best way to prevent these abuses is to shut down" the programs, Fleischer said.
Bush's loans in the 1980s, with which he bought stock in Harken Energy Corp., carried a 5 percent annual interest rate. Harken didn't require Bush to repay the principal for eight years.
Senate Majority Leader Tom Daschle said it would "clear the air" if the president would urge federal regulators to release any documents they have pertaining to the loans. Releasing information "would allow everybody to feel that they know the facts and come to their own conclusions," Daschle, D-S.D., said on CNN.
Regulators gathered documents about Bush and Harken when they conducted an insider stock trading investigation of Bush's sale of stock in the company. The Securities and Exchange Commission took no action against Bush in that inquiry.
On Tuesday, Bush told a Wall Street audience he wanted to halt such deals, saying, "I challenge compensation committees to put an end to all company loans to corporate officers."
Bush didn't profit from the loans, White House spokesman Dan Bartlett said. Bush eventually retired the debt by trading 105,000 Harken shares being held as collateral, and in return, received options for 42,503 shares that he never exercised, Bartlett said.
The spokesman said the loans were appropriate, that such deals were a common practice to encourage investment but "recently have been abused by companies providing billions of dollars to their CEOs without much accountability at all."
The loans were for $96,000 in 1986 for 80,000 of the company's shares, and $84,375 in 1989 for 25,000 shares, according to Harken records filed with the Securities and Exchange Commission.
Bush's business dealings as a Harken director have generated fresh interest as corporate scandals mount. He has talked about creating a new climate of ethical behavior as worried investors sell and stock prices plunge.
Bush was a member of Harken's board when it reported a profit on the company-financed sale of a subsidiary to a group of Harken insiders. The SEC forced the company to amend its books to reflect millions of dollars in losses that had been hidden by the accounting practice.
The SEC has released some records on its insider trading probe of Bush, but has withheld others. The White House is declining to authorize the SEC to release all documents.
(China Daily July 12, 2002)
