Gingrich bailed out by Dole in $300,000 loan deal

The Republican Speaker of the US House of Representatives, Newt Gingrich, astonished his supporters and opponents alike yesterday with the announcement that he would pay a controversial $300,000 fine with a loan from the Republicans' failed presidential candidate, Bob Dole.

In an unscheduled address to the House yesterday morning, shortly after the payment arrangements had been made public, Mr Gingrich said he had a "moral obligation" to pay the money from personal - as opposed to campaign or other - funds and had "therefore arranged to borrow the money and pay it back".

Whether and how the fine would be paid had grown into an issue that appeared increasingly to threaten Mr Gingrich's position as Speaker and his whole political future.

Reports that Mr Gingrich was finalising the terms of a personal loan had been buzzing for several days, but the announcement that the loan was to come from Mr Dole came out of the blue.

Under the arrangement made public yesterday, the loan is for eight years and granted directly to Mr Gingrich, who will take personal responsibility for its repayment. Interest will be calculated at 10 per cent, 1.5 per cent above the base rate, but no payments will be required until the year 2002, the year by which Mr Gingrich has pledged to surrender the post of Speaker.

Mr Gingrich is also required to take out life insurance sufficient to cover repayment and interest.

He made his statement to a packed House of Representatives, with his wife, Marianne - to whom he paid generous tribute - sitting in the gallery.

It had been reported that most of the couple's assets were registered in Mrs Gingrich's name and that she had strongly opposed paying the fine from personal funds. Acknowledging the difficulty, Mr Gingrich said his family's lives had been "torn apart" by the decision.

The $300,000 fine, described as a "penalty", was imposed on Mr Gingrich after he admitted misinforming - unwittingly, he insists - the House of Representatives ethics committee about payments he had received, tax-free, for a book advance and lectures.

The imposition of the fine was controversial.

Many Republicans saw it as politically motivated; others questioned how far a politician should be forced to use his own money to pay a penalty not imposed by a court of law.

There was general agreement, however, that Mr Gingrich's continued failure to pay, by whatever means, had become a liability to his position as speaker, and his career.

The fine was levied in January, after Mr Gingrich admitted breaching House rules by sending to the ethics committee two lawyers' letters "in my name and over my signature" that were inaccurate.

In a statement explaining his offer to Mr Gingrich, Mr Dole said yesterday that he considered the loan "not only an opportunity to support a friend, but a long-term investment in the future of our party".

Mr Dole is a wealthy man compared to Mr Gingrich. He has recently returned to legal practice, and earned half a million dollars just from appearing in one credit card advertisement.

Mr Dole's action was seen as sealing a reconciliation between the two men, who have not always been on good terms.

Mr Dole had made no secret of his belief that the high profile taken by Mr Gingrich during the early stages of Mr Dole's challenge for the presidency, and his intransigence over the budget - which led to the shutdown of government in 1995 - contributed to the Republicans losing last year's election.

While the deal was welcomed by many Republicans as potentially laying to rest the ethics problems that have plagued Mr Gingrich since he became Speaker two years ago, criticisms came thick and fast from both sides of the House.

Some Republicans persisted in their belief that Mr Gingrich should not have agreed to pay the fine from personal funds.

They continued to argue that the charges against the Speaker had been essentially political, and saw his agreement to foot the bill personally as setting a dangerous precedent.