Bush received loans he now wants banned

President Bush's credibility as leader of the clean-up-business drive suffered a new blow yesterday when it was disclosed that he had received low-interest loans from a company of which he was a director – a practice he now insists must be outlawed.

White House officials have acknowledged that Mr Bush was lent a total of $180,000 by Harken Energy in 1986 and 1989 at rates below the then prime rate. He used the money to buy shares in Harken, which were then held as collateral for the loans.

The transactions are at odds with the stricture Mr Bush delivered in his speech on Tuesday: "I challenge compensation committees to put an end to all company loans to corporate officers."

A White House spokesman insisted yesterday that the deals were "totally appropriate", but the loans are the latest skeleton to emerge from Mr Bush's Harken cupboard.

Earlier this week he was forced to acknowledge once more that he had made a late filing of a 1990 transaction in which he sold over $800,000 worth of Harken stock just before the share price fell.

As the President pointed out, he was cleared of insider trading, but Mr Bush also said that accounting procedures were by their nature "not black and white", a remark already being used against him by his Democratic foes.

While the White House tried to play down the Harken affair, the Democrat-controlled Senate was racing to put tougher measures in place. On Wednesday it voted through by 97-0 an amendment to its proposed accounting reform Bill that would double maximum sentences on corporate officers who commit fraud and provide legal protection for corporate whistle-blowers.

But both Mr Bush and his Treasury Secretary, Paul O'Neill, a former chief executive of the Alcoa group, favour a more self-regulatory approach -- despite intense public demand for new laws to curb corporate excesses.