Bush Took Sweetheart Loans
When President Bush urged corporations this week to stop making loans to their own executives, he didn't mention that he received just those kinds of loans himself while serving on the board of directors of Harken Energy Corp. in the late 1980s.
The loans totaled over $180,000. Mr. Bush used the money to buy Harken stock.
The White House defended Mr. Bush's actions Thursday, saying the loans were "entirely appropriate and fully disclosed" to the Securities and Exchange Commission. "What has happened in recent years is that there have been abuses and there is a need to reform, and that's what the president is doing," White House spokeswoman Claire Buchan said.
In his speech Tuesday, Mr.Bush told a Wall Street audience he wanted an end to such loans. "I challenge compensation committees to put an end to all company loans to corporate officers," he said.
Democrats were quick to jump on the issue, which could bolster their efforts to tar the Bush administration with the public dismay over company accounting scandals that have shaken investor confidence.
"It puts him (Bush) in a difficult position to criticize others," said Senate Majority Leader Tom Daschle, a South Dakota Democrat who urged the administration and the SEC to fully disclose Bush's business dealings with Harken Energy.
House Minority Leader Dick Gephardt, D-Mo., chimed in, too, demanding the Mr. Bush "lay out all the facts on the table."
Mr. Bush received the loans from Harken, where he was a director in the 1980s. White House communications director Dan Bartlett told the Post the loans were for $96,000 in 1986 for 80,000 shares, and $84,375 in 1988 for 25,000 shares.
Harken didn't require Mr. Bush to repay the principal for eight years and charged 5 percent annual interest, The New York Times reported.
Mr. Bush retired the debt by trading 105,000 shares being held as collateral, Bartlett said. He received 42,503 options that he never exercised, he said.
His business dealings as a Harken director have dogged Mr. Bush for years and generated fresh interest as corporate scandals mount. He has talked about creating a new climate of ethical behavior as stock prices plunge.
Mr. Bush was a member of Harken's board when the company reported the sale of a subsidiary to a group of insiders as a profit. The SEC forced the company to amend its books to reflect millions of dollars in losses that had been hidden by the accounting practice.
Mr. Bush was the subject of a separate insider-stock trade investigation. The SEC took no action against him in that inquiry, which also found he had disclosed his sales of Harken stock later than the law requires on four occasions.
The White House and the company have refused to release records of Mr. Bush's activities on Harken's board. Bartlett also said the White House would not ask the SEC to release records of its probe of Bush's stock sale.
Financial markets were in turmoil on Thursday after the deepening crisis of confidence in corporate accounting sent U.S. stocks tumbling to five-year lows.