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CNN Live At Daybreak

Loan Woes for Bush and Cheney

Aired July 11, 2002 - 09:01   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: "Up Front" this morning, President Bush is now calling for an end to a type of loan that he once received from an oil company during the 1980s. It is a practice he happened to condemn this week in his plan to stem corporate abuse. The president's comments follow the announcement of a lawsuit involving Vice President Dick Cheney. The lawsuit seeks to force the administration to release records pertaining to Cheney's investments in Halliburton, the company he once ran. The suit was filed by Larry Klayman of Judicial Watch.

(BEGIN VIDEO CLIP)

LARRY KLAYMAN, CHAIRMAN & GENERAL COUNSEL, JUDICIAL WATCH: It's very unusual for a president to comment on an ongoing legal proceeding. In fact, it's considered to be improper.

What he was, in effect, doing was signaling his Securities and Exchange Commissioner Harvey Pitt not to look into Halliburton. He was signaling his Justice Department, under John Ashcroft, not to investigate, and he was talking to the court and the jury in our case. And frankly, it's improper and it shows that there's something there. Where there's smoke, there's fire.

(END VIDEO CLIP)

ZAHN: Well to put this all into perspective this morning, we are joined now by White House correspondent Kelly Wallace.

Good morning, what is the reaction from there to this lawsuit?

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well good morning, Paula.

The lawsuit, White House aides say, is without merit. So they are pretty much dismissing the lawsuit. At the same time, though, the Securities and Exchange Commission is conducting an investigation into Halliburton's accounting practices, including the time when Vice President Cheney served as CEO. So far, Mr. Cheney has not been interviewed by the SEC. And, Paula, there are some Democrats, including Congressman Nita Lowey, who are starting to talk about the possible need for a special prosecutor to go ahead and look into this.

Now also another issue coming out today of course, the president receiving loans when he served on the board of Harken Energy. And Democrats are saying it's another example of the president not practicing what he is preaching. At issue, the president really doing something that a lot of company board directors do, he received a loan, two loans in fact, totaling $180,375. These were loans from Harken Energy. The loans were to purchase shares of Harken stock. A few years later, the president went ahead and sold the stock valued at the same amount, pretty much putting an end to the loan.

White House aides say the president did nothing wrong. But on Tuesday, the president was on Wall Street and he was saying this practice must end. He said that in recent years directors have abused the practice. The case of WorldCom, someone getting loans of about $400 million from the company. Aides say it's a time for that practice to come to an end, and that's why this is what the president said on Tuesday.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And I challenge compensation committees to put an end to all company loans to corporate officers.

(END VIDEO CLIP)

WALLACE: But Democrats are saying this administration is engaged in hypocrisy. They're pointing to this. They're continuing to raise questions, Paula, about the president's own controversial stock sale back in 1990. And again, they're also pointing to accounting practices at Halliburton. They are basically saying this administration doesn't really have the moral standing to enforce and encourage corporate responsibility -- Paula.

ZAHN: Well, Kelly, help us understand the language here. It's one thing for the president to come out and talk about people abusing this loan process. Is there anything that you've seen so far that would suggest that the president did anything illegal here?

WALLACE: There is nothing that appears the president did anything illegal with these loans. Again, it is a practice that is fairly somewhat common. And even Democrats, Paula, are not saying that the president, before he was president, engaged in anything illegal with these loans.

What they are saying is Mr. Bush is not practicing, really, what he is preaching. That on Tuesday he said this practice must come to an end. They're saying, well in the 1980s, he did the same thing. So they're saying he has a credibility problem, but no one is saying he did anything illegal -- Paula.

ZAHN: Interesting to note that Senator Corzine, a Democrat, came on the air the other day, who ran Goldman Sachs at one time, and he said he thinks the democratic critics of the president are missing the point here. And he wished he'd -- they would sort of stay away from this whole Harken Energy mess and focus instead on calling for greater oversight of accounting firms. Is there anybody else there...

WALLACE: Well... ZAHN: ... who you think is saying that the Democrats are going the wrong way on this or is this indeed a vulnerability they're going to continue to exploit?

WALLACE: Well you're certainly hearing Republicans say that, Paula. They are saying there's no there there. The president himself saying that on Monday at his news conference, saying this is all politically motivated, that this has been looked at, his stock sale, looked at by the SEC and the SEC took no action.

So you're seeing Republicans say Democrats are engaged in politics on this one. The Democrats certainly could run the risk if the American people think they're simply playing politics and engaged in partisanship as usual as opposed to trying to fix the problem. So if the American people believe that, the Democrats could be in danger. But right now it appears Democrats will continue to raise questions about these and other issues -- Paula.

ZAHN: Kelly Wallace, thanks so much for that update.

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