The wreck of Bill Richardson, who withdrew earlier today as President-elect Obama’s nominee for Commerce Secretary, surely should have been anticipated by the Obama vetters. As previously reported by Mother Jones, the New Mexico governor has, over the last decade, left behind a wide trail of questionable business dealings, many of them involving the energy industry.
Obama’s transition team apparently chose to ignore these past whiffs of scandal. They also seem to have been unfazed by the current federal investigation into a possible pay-to-play scandal, which was already well underway when Richardson’s nomination was announced on December 3. Within two weeks of the nomination, the media was widely reportingthat Richardson was the subject of a grand jury probe in a “highly active stage.”
Richardson insists that he and his administration “have acted properly in all matters” and that he is withdrawing his name from consideration only because “the ongoing investigation also would have forced an untenable delay in the confirmation process.” But the accusations are pretty damning. The Washington Post reports:
The probe in New Mexico involves questions about a California firm, CDR Financial Products, and its president, David Rubin. The grand jury in Albuquerque is looking into whether the firm was given a contract with the New Mexico Finance Authority because of pressure from Richardson. CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds issued by the agency, state officials confirmed.The firm and Rubin together gave $100,000 to two Richardson organizations shortly before winning those contracts.
Back in July 2007, when Richardson was a contender for the Democratic nomination, and was also being discussed as a possible vice-presidential pick for Hillary Clinton, I reported here on the considerable baggage Richardson carried when it came to his relationships in the private sector:
At the close of the Clinton administration, Richardson signed on as a senior managing director with Kissinger McLarty Associates, the advisory firm formed by Henry Kissinger and former Clinton chief of staff Mack McLarty, and promptly joined the boards of three large oil companies: Houston-based Diamond Offshore Drilling, a company once run by George Herbert Walker Bush; Denver-based Venoco; and Valero, North America’s largest independent refinery. Until recently, Richardson held Valero stock worth between $100,001 and $250,000 and options valued between $250,001 and $500,000, according to disclosures filed with the Federal Election Commission. He divested himself of his stake in Valero in May, saying his financial ties to the company had become a “distraction” to his presidential campaign.
Though on the campaign trail he has come off as a staunch advocate of green energy, even proposing “a man-on-the-moon program” to address global warming and curb the nation’s dependence on oil, his close ties to the oil industry would seem no small contradiction. Currently, he is one of the leading recipients of campaign contributions from oil and gas companies among the presidential contenders.
Professional pols might pass all this off as business as usual. But there were other questionable deals as well:
Beyond his coziness with the oil industry, Richardson was also caught up on the fringes of the Peregrine Systems scandal, a financial scam in the Enron style. Between February 2001 and June 2002 he served as on outside director on the board of Peregrine, a San Diego-based software company whose CEO, Stephen Gardner, was the brother-in-law of Richardson’s wife. During this period of time the company’s directors were engaged in various acts of financial impropriety, including masking the severity of Peregrine’s losses with phony accounting. The company eventually went bankrupt and Gardner was later charged with obstruction of justice and securities fraud. When Richardson was asked about the Peregrine scandal during his gubernatorial campaign in 2002, he claimed to have had no involvement “because I was what was called an ‘outside director” and “didn’t have time” to read the company’s corporate reports. But according to the San Diego Reader, “Records show that Richardson attended, in person or by phone, 15 board meetings. In those meetings, directors were hearing that the company might get caught cooking the books.”
It may be premature to say that Obama and his team have too high a tolerance for corruption. But this first self-destruct among his cabinet picks could well prove all the more damaging because it’s something they should have seen coming from miles away.