As the White House fights to restore confidence in corporate America, its credibility is being undermined by the business records of President George W Bush and Vice-President Dick Cheney, and by charges from both Democrats and Republicans in Congress that Mr Bush has not gone far enough.

A Washington-based legal watchdog yesterday sued Mr Cheney, along with Halliburton, the Texas oil services company he ran for five years, and its auditor Arthur Andersen, alleging fraudulent accounting practices.

Judicial Watch claims a change in accounting methods led to Halliburton overstating revenues by $445 million (€450.1 million) from 1999 to 2001, leading to over-valued shares and eventual shareholder losses.

"Halliburton overstated profits that many American citizens relied upon. That's fraudulent security practices and it resulted in those Americans suffering huge losses," said Mr Larry Klayman, chairman of Judicial Watch, after the suit was filed in a US District Court in Dallas.

The White House dismissed the claim yesterday. Spokesman Mr Ari Fleischer said he talked to Mr Cheney's staff and "they believe the suit is without merit and that's where it stands".

Mr Cheney was chairman and chief executive of Halliburton from 1995 to 2000, when he resigned to campaign as vice-presidential nominee with Mr Bush.

The company announced on May 28th this year that its accounting methods from 1998 were being investigated by the Securities and Exchange Commission (SEC). In 1998, the company began booking revenue from cost overruns in big construction projects before customers agreed to pay the excess costs.

Before 1998, Halliburton reported this revenue only after settling with clients.

SEC chairman Mr Harvey Pitt said at the weekend that Mr Cheney was not immune to the inquiries but, so far, the vice-president has not been contacted by the regulatory body.

Halliburton is the latest energy company to be investigated by the SEC since the collapse of energy trader Enron in December.

Questions to the White House about whether Mr Cheney knew of the changes in accounting methods were referred to Halliburton. A company spokeswoman said she did not know if Mr Cheney knew of the change.

The suit against Mr Cheney comes the day after President Bush, in a major Wall Street speech harshly critical of corporate executives, vowed to end the days of "cooking the books, shading the truth and breaking our laws", and to restore integrity in business.

However, as the New York Times put it yesterday, "the president is still struggling to prove that his past business dealings have not made him a product of the very system he now denounces".

The the Wall Street Journal said Mr Bush's business track record made his credibility a hurdle in his campaign.

Hours before his speech, Mr Bush held an impromptu press conference to deflect criticisms of his share dealings in the early 1990s when he was a director of Harken Energy in Texas.

Mr Bush was 34 weeks late in reporting his June 22nd, 1990, sale of two-thirds of his holdings in Harken. He sold 212,140 shares at $4 a share. The SEC found Mr Bush knew at the time that Harken was in trouble. Shortly after he sold his shares, the company reported a larger net loss than previously declared. Harken stock fell to $1 a share by the end of the year.

In his speech on Tuesday, Mr Bush called for executives to report sales of company stock within two days. In April 1991, the SEC found Mr Bush was late on three other occasions in filing required forms about his Harken stock transactions.

In 1989, when Mr Bush was a director and member of the audit committee of Harken, the company did a deal that also resulted in an SEC review.

Harken sold 80 per cent of a subsidiary to a group of Harken insiders who borrowed most of the money from the firm. This allowed Harken to hide millions of dollars in debt and it was forced to increase its declared losses by $12.6 million in its amended 1989 annual report.

The SEC did not take any action on these issues, which arose when Mr Bush's father was president.

Nevertheless, it is a huge political embarrassment at a time when the White House is trying to identify with voters outraged at crooked accounting, which has wiped out billions in savings, pensions and shareholdings, and cost tens of thousands of jobs.

Mr Bush's speech has received a mixed reception.

His calls for a $100 million increase in the SEC's budget is much lower than the House and Senate have proposed and critics point out that the president did not advance any plans for tough reform of the accountancy industry, the subject of a Senate Bill by Senator Paul Sarbanes.