Another Day, Another Democratic Governor’s Pay-to-Play Scandal
Anyone who thinks that the only thing better than one Democratic governor embroiled in a pay-to-play scandal is two Democratic governors embroiled in pay-to-play scandals received a big treat Sunday when another federal investigation that had been flying under the national radar suddenly came to light.
The twist? This scandal involves New Mexico Gov. Bill Richardson, whom President-elect Barack Obama tapped as his choice for commerce secretary. Richardson withdrew his nomination for the post Sunday, citing an ongoing federal probe examining the state’s dealings with a California financial company that made large donations to a pair of political action committees founded by Richardson.
From The Washington Post:
A grand jury in Albuquerque is looking into whether CDR Financial Products received a contract with the New Mexico Finance Authority because of pressure from Richardson or other state employees. CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds, state officials confirmed.
The Beverly Hills-based firm and its president, David Rubin, together gave $100,000 to Sí Se Puede and Moving America Forward, both PACs started by Richardson, shortly before winning the lucrative state contract, records show. [...]
CDR’s selection drew FBI interest because the firm did not make an initial list of the most qualified bidders. The bidding was reopened for review, and a state committee headed by one of Richardson’s former top aides later helped select CDR.
A legal source familiar with the investigation said yesterday that FBI agents, working on the Senate’s behalf and conducting a background check of Richardson for the Commerce job, conveyed to Obama’s transition team the seriousness and significance of the Albuquerque grand jury probe.
The agents are said to have communicated that the governor’s top aides — and even Richardson’s actions — were under scrutiny. At least two sources familiar with the investigation said some evidence raises concern about the propriety of the Richardson administration’s interactions with a donor.
[I]n 2003 and 2004 CDR Financial gave $75,000 to Richardson’s political action committee Si Se Puede!, and the company’s head, David Rubin, gave $25,000 to Moving America Forward, another Richardson PAC.
Richardson formed Si Se Puede! to pay travel expenses for him and staffers who were attending the 2004 Democratic National Convention, which he chaired. Moving America Forward was a voter-registration group.
Si Se Puede!, according to a 2004 Associated Press article, raised $191,000. Of that, $130,000 — including the $75,000 from CDR Financial — came from companies working on the GRIP bonds.
According to The New Mexico Independent, Richardson and his staff have largely remained mum about the investigation, until yesterday.
As The Washington Post points out, Richardson’s withdrawal from consideration for a cabinet post raises questions about the thoroughness of the Obama transition team’s vetting process.
The New Mexico investigation had been publicized since the summer, yet aides to the president-elect said yesterday that they were not aware of the matter when Richardson was nominated. Richardson advisers insisted that the governor had relayed information about the investigation to transition officials before his name was announced.
The episode provides another early embarrassment for the incoming administration — it now has the dubious distinction of being touched by two Democratic pay-to-play investigations — but it doesn’t appear to pose any lasting harm to Obama.
Richardson, on the other hand, may have more to worry about. According to The Post, his spokesman said Richardson “was hopeful that his name would be cleared and it would be wrapped up before his confirmation hearing,” and Richardson decided to withdraw when it became clear it would not.
Perhaps this is the case, but even if Obama’s team didn’t know about the investigation before Obama made the nomination, Richardson certainly did. Cynics can be forgiven for speculating that Richardson’s decision might be indicative that the tenor of the probe has become more serious and Richardson could be withdrawing now to spare the new administration a larger headache in the future. Whatever the truth, it appears likely that we haven’t heard the end of this story.