Senate votes to ban loans from companies to top execs

Saturday, July 13, 2002

WASHINGTON -- Scrambling to restore confidence in American business, the Senate adopted a ban Friday on personal loans from companies to their top officials, a practice that benefited executives from Enron to WorldCom -- and President Bush as a Texas oilman.

The Senate move, on a voice vote, would prohibit such loans as a way to prevent conflicts of interest. The measure was approved as Bush met at the White House with his new financial crimes "SWAT team."

Deputy attorney general Larry Thompson, the chairman of that panel, pledged to go after corporate criminals "with vigor and an aggressive manner." He said hundreds of prosecutors have already opened an unspecified number of investigations across the country.

With Republicans and Democrats vying to outdo each in the crackdown on corporate crime, Thompson emphasized that his was no witchhunt.

"I also want to assure everyone that in doing our work, we're going to be professional, we're going to be fair," he said.

On Capitol Hill, a voice vote by senators was all it took to approve an amendment by Sen. Charles Schumer, D-N.Y., prohibiting companies from making personal loans to their top officials and directors. The ban was first proposed by Bush on Tuesday and cast as a means of preventing conflicts of interest.

'A tough bill'

Other Senate votes on Friday cleared the way for passage early next week of legislation to impose new sanctions on corporate wrongdoing and tighten oversight of the accounting industry. Initially resistant to the Senate bill and favoring House legislation instead, the White House has sounded increasingly eager to see Bush's signature on whatever emerges from Congress.

"The House bill is a tough bill. The Senate bill is a tough bill and he's looking forward to signing a tough bill into law," White House press secretary Ari Fleischer said Friday.

Senate approval of the Schumer amendment followed suggestions of hypocrisy that had the White House on the defensive about Bush himself benefiting from $180,000 in low-interest loans when he was a director of Harken Energy Corp. more than a decade ago.

Bush, dogged in recent days by scrutiny of many of his transactions while at Harken, ignored reporters' questions as he toured a disabled children's retreat near Camp David. All he would say was that his inaugural task force meeting went well.

Thompson, Securities and Exchange Commission Chairman Harvey Pitt, Attorney General John Ashcroft and FBI Director Robert Mueller briefed Bush for 30 minutes at the White House after the task force convened its first meeting at the Justice Department.

Asked how widespread prosecutions might be, Pitt said officials won't know until after the nation's 1,000 biggest corporations respond to an SEC order to have chief executives and chief financial officers certify the validity of financial statements already on file.

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