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President’s Son Feisty, Insistent During Conflict-of-Interest Hearing

September 28, 1990

DENVER (AP) _ Neil Bush, the president’s son, combatively denied conflict-of-interest charges stemming from his role as a director of a failed savings and loan.

At the final day of an administrative hearing Thursday, Bush interrupted a government lawyer and drew admonitions several times from the judge.

Bush acknowledged he was a ″go-between″ for a line of credit that Silverado Banking, Savings and Loan Association of Denver extended to two developers he had business dealings with.

But Bush said he had no financial interest in the projects for which the credit was extended. The two developers eventually defaulted on more than $132 million in Silverado loans.

Bush, 35, was a director of the thrift, which failed in 1988, leaving taxpayers with a $1 billion tab for bailing out depositors.

On several occasions, Adminstrative Law Judge Daniel J. Davidson warned Bush to answer questions directly and not to interrupt the government lawyer, Stephen Hershkowitz.

″You’re doing it again,″ Davidson scolded Bush at one point. ″But you have to wait until the counsel finishes his question, because it’s very difficult for the (court) reporter to take down two people talking at once.″

Bush replied, ″My lawyers advised me I should listen. I’m sorry.″

He quickly resumed his combative tone, however, and drew new warnings from the judge.

In February, the federal Office of Thrift Supervision brought an administrative action against Bush that could lead to his being barred from the banking industry.

The regulators contend Bush failed to adequately inform fellow Silverado directors of his business ties with developers Kenneth Good and Bill Walters.

Bush insisted he ″had absolutely no doubt″ that his business dealings with Good and Walters did not conflict with his role as a Silverado director. Consequently, Bush said, he did not consult with Silverado’s management about the question of a potential conflict.

Aside from an appearance in May before a congressional committee investigating Silverado, Bush’s fight with regulators mainly had taken the form of briefs and counterbriefs submitted to Davidson.

At his long-awaited appearance at the three-day administrative hearing, Bush hadn’t lost any of the defiance of his testimony on Capitol Hill.

Bush insisted several times that, although Good and Walters invested in his oil company, JNB Exploration, he had no financial interest in the projects for which they got loans from Silverado.

Previous testimony showed Silverado extended a $900,000 line of credit to a partnership formed by Bush and Good to explore for oil and gas in Argentina. The line of credit, intended to persuade Argentine officials that the venture had strong financial resources, never was used.

Under questioning from Hershkowitz, Bush said lawyers for Good’s company suggested Bush present the credit line proposal to the Silverado board.

″I was a go-between,″ Bush said.

Bush insisted there was no conflict of interest in his role because he didn’t stand to gain any financial benefit from the credit line, which he described as a sort of ″letter of referral,″ and because he abstained from voting on the proposal.

Bush said he couldn’t remember if it was his own idea to abstain from voting on the line of credit or if someone suggested it to him.

Davidson will examine testimony from the hearing and in January recommend to Timothy Ryan, Office of Thrift Supervision director, what sanctions, if any, should be taken against Bush. Ryan is expected to make a decision in May.

Bush would have the right to appeal to a federal court.

Last week, the Federal Deposit Insurance Corp. sued Bush and other former Silverado directors for $200 million, alleging that gross negligence on their part contributed to the S&L’s collapse.

Bush was a director of Silverado from August 1985 to August 1988.

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