Questions about Obama and campaign Donors
Less than two months after ascending to the United States Senate, Barack Obama bought more than $50,000 worth of stock in two speculative companies whose major investors included some of his biggest political donors, according to a report in The New York Times on 7 March.
One of the companies was a biotech concern that was starting to develop a drug to treat avian flu. In March 2005, two weeks after buying about $5,000 of its shares, Mr. Obama took the lead in a legislative push for more federal spending to battle the disease.
The most recent financial disclosure form for Mr. Obama also shows that he bought more than $50,000 in stock in a satellite communications business whose principal backers include four friends and donors who had raised more than $150,000 for his political committees.
A spokesman for Mr. Obama, who is seeking his party's presidential nomination in 2008, said yesterday that the senator did not know that he had invested in either company until fall 2005, when he learned of it and decided to sell the stocks. He sold them at a net loss of $13,000.
The spokesman, Bill Burton, said Mr. Obama's broker bought the stocks without consulting the senator, under the terms of a blind trust that was being set up for the senator at that time but was not finalized until several months after the investments were made.
Mr. Obama has made ethics a signature issue, and his quest for the presidency has benefited from the perception that he is unlike politicians who blend public and private interests. There is no evidence that any of his actions ended up benefiting either company during the roughly eight months that he owned the stocks.
Even so, the stock purchases raise questions about how he could unwittingly come to invest in two relatively obscure companies, whose backers happen to include generous contributors to his political committees. Among those donors was Jared Abbruzzese, a New York businessman now at the center of an F.B.I. inquiry into public corruption in Albany, who had also contributed to Swift Boat Veterans for Truth, a group that sought to undermine John Kerry's Democratic presidential campaign in 2004.
Mr. Obama, who declined to be interviewed about the stock deals, has already had to contend with a controversy that arose out of his reliance on a major campaign contributor in Chicago to help him in a personal financial transaction. In that earlier case, he acknowledged last year that it had been a mistake to involve the contributor, a developer who has since been indicted in an unrelated political scandal, in deals related to the Obamas' purchase of a home.
The investments came at a time when Mr. Obama was enjoying sudden financial success, following his victory at the polls in November 2004. He had signed a $1.9 million book deal, and his ethics disclosure reports show that he received $1.2 million of book money in 2005.
His wife, Michelle, a hospital vice president in Chicago, received a promotion that March, nearly tripling her salary to $317,000, and they bought a $1.6 million house in June. The house sat on a large property that was subdivided to make it more affordable, and one of Mr. Obama's political donors bought the adjacent lot.
The disclosure forms show that the Obamas also 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 he put $50,000 to $100,000 into an account at UBS, which his aides say was recommended to him by a wealthy friend, George W. Haywood, who was also a major investor in both Skyterra and AVI BioPharma, public securities filings show.
Mr. Haywood and his wife, Cheryl, have contributed close to $50,000 to Mr. Obama's campaigns and to his political action committee, the Hopefund. Mr. Haywood declined to comment.
Within two weeks of his purchase of the biotech stock that Feb. 22, Mr. Obama initiated what he has called “one of my top priorities since arriving in the Senate,” a push to increase federal financing to fight avian flu.