New claims about President Bush's involvement in the Texas oil company Harken Energy in the late 1980s are fuelling increasingly damaging Democratic Partycharges of hypocrisy against the Administration.
Both the Washington Post and the New York Times yesterday ran front-page reports highlighting low-interest loans on special terms received by Mr Bush as a board member - just two days after Mr Bush called on corporate directors to "put an end to all company loans to corporate officers".
"Corporate officers should not be able to treat a public company like their own personal bank," a senior Administration official told journalists on Tuesday in a briefing on the President's speech.
Mr Bush has so far been able to distance himself from the furore surrounding his improper delay of notification of share sales as a director of the company because the Securities and Exchange Commission (SEC) in 1991 decided not to act on it.
But the revelation of the loans, at the same time as SEC inquiries into accounting practices at Vice-President Dick Cheney's Halliburton, will contribute to Democratic claims that the Administration is imbued with a culture of boardroom impunity.
Mr Bush accepted loans from Harken totalling $180,375 (€181,775) in 1986 and 1988, which he used to redeem stock options available to executives.
The loans were charged at a rate of 5 per cent, two-and-a-half points below the prevailing market rate. In 1989 he benefited from a decision by the company to lift his personal liability for the loans.
Corporate loans to directors have been the subject of much comment since the WorldCom collapse because of loans to its former chief executive, Mr Bernard Ebbers, of some $400 million to buy company stock.
On Wednesday, White House communications director Mr Dan Bartlett said Harken offered the loans to directors to buy shares in the company as part of an incentive for board members "to have a long-term commitment with the company".
Mr Bartlett said the loans to Bush were "totally appropriate - there was no wrongdoing there"."This is a common practice in small, medium and large companies," Mr Bartlett said.
"These recent abuses of certain types of loan led the President to believe that the government should draw a bright line; the best way to handle these loans going forward is through a bank."
Mr Bush didn't profit from the loans, Mr Bartlett said. He 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.
Mr Bush's involvement in Harken goes back to 1986, when it acquired an oil company he controlled, Spectrum 7 Energy.
