Rep. Henry A. Waxman, D-Calif., called upon Bush in a letter to the president to turn over part or all of the profits he made at Harken Engineering Co. where he received low interest loans to buy stock he later sold at a significant profit.
"As you know serious questions concerns have been raised about the enormous sums you, Vice President Cheney and Secretary of the Army Thomas White received from corporations that the three of previously ran," Waxman wrote. White was chief of a division of Enron Corp., another Texas energy company that collapsed last year costing employees and investors millions of dollars.
"Our country desperately needs a corporate role model," Waxman said, "who individually demonstrates the difference between right and wrong and the difference between accepting gains that are deserved and those that are undeserved."
He said that this gave Bush and Cheney a "rare opportunity to exemplify the standards our nation needs" by giving up profits from Harken and in Cheney's case from Halliburton Co., a firm that supplies technology to the oil business.
Both Bush and Cheney have been accused of profiting from practices that Bush deplored in a speech to Wall Street Tuesday and which in Cheney's case may found to be illegal.
Since Enron Corp.'s bankruptcy last November, a succession of major corporations have declared that they have cooked their books to hide debt or disguise losses in sales. Often these firms have disclosed that top management received bonuses and stock opportunities based upon these falsified earnings statements.
President Bush first tried to restore public confidence in March by proposing a 10-point plan to tighten corporate integrity. But in the following three months there have been more business scandals unearthed. Last month, WorldCom, the giant communications conglomerate, disclosed that it hid some $3.8 billion in debt from investors to keep its stock up all through the year 200l and the first quarter of 2002.
In the wake of the WorldCom fiasco, Bush started a new campaign last Monday, first in a news conference at the White House and later in a major address to business leaders at the Regent Wall Street Hotel in New York's financial district to restore confidence in U.S. business and calm roiling markets.
The president called for a new standard of ethics for business executives, longer jail sentences for those who would defraud investors and ordered the creation of a new "financial crimes SWAT team" that would go after corporate wrongdoers.
But by the end of the week, the Dow Jones average was down seven percent, a significant drop, and both Democrats and Republicans were criticizing Bush's proposals as ineffective. Republicans in the House voted Thursday to have tougher business rules than Bush proposed and his main Republican nemesis, Sen. John McCain, R., Ariz., called for the ouster of Securities and Exchange Chairman Harvey Pitt after Bush presented a stirring defense of the stocky former Wall Street lawyer.
But Bush has also been dogged by his own business past as evidenced by Waxman's harshly worded letter, and persistent questions from reporters.
In the Tuesday speech, Bush said that "corporate officers who benefit from false accounting statements should forfeit all money gained by their fraud" and challenged "compensation committees to put an end to all company loans to corporate officers."
Both the president and Cheney have been accused of those practices in their private business lives before entering office.
Waxman laid out one of the Harken Energy criticisms in his letter:
"On June 22, 1990, you sold 212,140 shares of Harken stock, about two-thirds of your Harken portfolio, at a price of $4.125 per share for a total sale of $848,560." Bush has never denied the sale, which he used to finance participation in a syndicate that bought the Texas Rangers and opened the way for him to make $15 million and the base for his personal wealth.
Less than two months after Bush sold his stock, Harken reported a large loss in quarterly earnings, $23 million, due to problems in a Hawaii subsidiary, and the value of the stock dropped. Bush has said that he did not know about the anticipated loss when he made the sale, but he was a member of Harken's board of directors and served on the company's audit and fairness committee. Another board member later claimed that they were informed about the oncoming loss before Bush sold the stock.
Bush was required under law to report that sale promptly, but did not complete all the required paperwork until eight months after the sale. He was investigated by the SEC and received a letter saying it could find no wrongdoing. The investigation was opened while his father was president.
Bush borrowed $180,375 from Harken, according to Harken's SEC filings at an annual interest rate of 5 percent, which was below market interest rates at that time. Dan Bartlett, the White House communications director, called the loans "totally appropriate -- there was no wrongdoing here."
But he acknowledged that the recent abuses of certain types of loans had led Bush to conclude that "the government should draw bright line concerning loans going forward."
It is the profit from these transactions that Waxman feels Bush should donate in a gesture of good will.
Between 1995 and 2000, Vice President Cheney was the chief executive officer of Halliburton -- a major oil equipment company in Dallas, Texas. This spring the SEC opened an investigation of Halliburton to examine charges that like Enron, WorldCom and a score of other companies, it had purposefully altered its accounting rules to hide lower income and keep its stock value to high during the years Cheney was at the helm. The investigation is not complete.
Several stockholders of Halliburton filed a civil suit Tuesday claiming that Cheney knew about the misleading accounting techniques and approved of them. The accounting procedures under scrutiny, involving how the company recorded disputed sales, were approved by Arthur Andersen, the firm which audited WorldCom and which last month was convicted of obstruction of justice in the Enron matter.
Cheney has said he did nothing wrong and Ari Fleischer, the White House press secretary, dismissed the suit as being without merit. Nevertheless, the SEC investigation increases the pressure on the administration and on Cheney who has also been accused of assisting Halliburton get lucrative contracts in government.