Did Obama Engage In Shady Dealings With Donors?

Is this ‘different kind of lawmaker’ becoming just another bought-and-sold politician?Did Sen. Obama Engage in Shady Dealings With Donors?By Cliff Montgomery – Mar. 9th, 2007Less than two months after earning a seat in the United States Senate, Barack Obama (D-IL) bought more than $50,000 worth of stock in two speculative companies whose principal investors included some of his top political donors, according to a recent article in the New York Times.Financial disclosure forms also show that Obama bought more than $50,000 in stock in a satellite communications business whose main backers include four friends and donors who had raised more than $150,000 for his political committees.A spokesman for Obama, who is seeking the Democratic presidential nomination in 2008, told the Times that the senator did not know he had invested in either company until the fall of 2005; when Obama learned of it, he sold the stocks at a net loss of $13,000, according to spokesman  Bill Burton.Burton told the Times that Obama’s broker bought the stocks without consulting the senator, under the terms of a blind trust that was being set up for Obama. The trust was not finalized until several months after the investments were made, according to Burton.“He went about this process to avoid an actual or apparent conflict of interest, and he had no knowledge of the stocks he owned,” Burton said.“And when he realized that he didn’t have the level of blindness that he expected, he moved to terminate the trust.”Obama has made ethics a principal issue, and his quest for the presidency is in many ways based on his image of being a different kind of politician–and especially unlike those who blend public and private interests.We must point out here that there is no evidence that any of Obama’s actions ended up benefiting either company during the eight months or so that he owned the stocks. Still, such stock ownership raises questions about how the Illinois senator could unwittingly come to invest in two rather obscure companies, whose backers are in many cases also generous contributors to his political committees.Obama, who declined to be interviewed by the Times on the stock deals, has already had to contend with a previous contributor controversy, when it was revealed that a major Chicago contributor helped him in a personal financial transaction.In that earlier case, the senator acknowledged last year that he was wrong to involve the contributor–a developer who has since been indicted in an unrelated political scandal–in deals related to the purchase of a new home.But don’t think we are “after” the popular Illinois senator–far from it. Such embarrassing situations may simply be the natural outcome of federal politics based on privilege.Senate ethics rules do not prohibit lawmakers from owning stocks in companies which do business with the federal government, or firms which may even benefit from legislation advanced by the lawmakers. Members of Congress eagerly invest in government contractors. The rules only keep lawmakers from taking legislative actions for the primary purpose of benefitting themselves. That’s a fine line which rarely holds.A review of Obama’s Senate disclosure statements shows he earned $2,000 on the biotech company, AVI BioPharma, and lost $15,000 on the satellite communications business, Skyterra, according to Burton.The investments came as the senator was enjoying sudden financial success, following his victory at the polls in November 2004. Having just signed a $1.9 million book deal, his ethics disclosure reports reveal that deal alone netted him $1.2 million in 2005.Obama’s wife, Michelle, a hospital vice president in Chicago, received a promotion in March 2005, which nearly tripled her salary to $317,000. In June, the Obamas bought a $1.6 million  house sitting on a large property that was subdivided to make it more affordable; one of Obama’s political donors bought the adjacent lot.The disclosure forms also show that the Obamas placed several hundred thousand dollars in a new private-client account at JPMorgan Chase, a bond fund and a checking account at a Chicago bank.But the senator also put $50,000 to $100,000 into a separate account at UBS, which his aides say was recommended to him by a wealthy friend, George Haywood–also a major investor in both Skyterra and AVI BioPharma, according to public securities filings.The Haywoods have contributed close to $50,000 to Obama’s campaigns and to his political action committee, the Hopefund. George Haywood declined to comment to the Times on the contributions.But such questions may prove important. According to a Feb. 8th article in the Washington Post:”Sen. Barack Obama signaled yesterday that he will begin raising money for a potential general election candidacy, joining Sen. Hillary Rodham Clinton and former senator John Edwards in rejecting the public financing system that has governed presidential elections for better than three decades.”Such campaigns are sure to be bound to their investors, rather than to all the American people.