by Ali Meyer | Tufts’ alum embroiled in controversy.
Bill Richardson is one of Tufts’ most well-known alumni, for better or worse. Tufts students were excited to see a fellow Jumbo nominated for President Obama’s cabinet but excited quickly became disappointment when Richardson was forced to refuse the appointment due to an ongoing federal investigation.
Richardson (AS ’70, Fletcher ’71) is no stranger to scandal. As the US Ambassador to the United Nations, Richardson offered the controversy-wrought Monica Lewinsky a job at the UN in order to get her out of the White House and keep her quiet about her affair with Clinton. She declined.
As Secretary of Energy in 1998, Richardson publicly named an employee at the Los Alamos National Laboratory as a suspect who may have given nuclear secrets to the Chinese government. The man was acquitted and received a sizeable settlement from the federal government because of Richardson’s accusation. Republican senators called unsuccessfully for Richardson’s resignation because of the way the situation was handled, and Richardson’s name-calling also prevented any hope of becoming Al Gore’s running mate in 2000.
After his tenure at the Department of Energy, Richardson was elected governor of New Mexico. During this time, Richardson was caught up in the Peregrine Systems scandal, which involved spurious accounting and other financial indecencies, as an “outside director.” Richardson denied all wrongdoing, and was left unscathed.
Richardson’s lackluster presidential run also set him up for a few minor controversies. In stump speeches, he was caught embellishing a story about his touching relationship with a wounded soldier and his mother. He has also distorted facts about health insurance.
None of these events, though, have generated the kind of controversy his alleged “pay-to-play” scandal has. On January 4, Richardson publicly emailed his decision to not pursue the nomination for the secretary of commerce position, explaining that, “the ongoing investigation…would have forced an untenable delay in the confirmation process.”
The federal grand jury investigation is in the midst of determining the potential wrongdoing of both the governor and his aides in accepting large campaign contributions which may have affected policy. A California company called CDR Financial Inc. donated about $100,000 to two of Richardson’s political action committees. Later, CDR was awarded work contracts worth about fifteen times the amount of their contribution from the New Mexico Finance Authority, advising them on “interest-rate swaps and restructuring escrow funds.” Federal investigators are seeking to prove that these two events are linked. Richardson has often stated that he and his staff did nothing wrong, and that his sole reason for refusing the commerce secretary position was that it would have interfered with the investigation.
It is possible that Richardson is not at fault, but rather unwittingly developed a relationship with a scheming company. In addition to potential “pay-to-play” controversies, federal investigators have also been looking into the complex bond market that CDR has potentially taken advantage of. Many believe that CDR may have manipulated the bidding process for banks that want to provide investment services for government bond issues. That way, banks bid lower than they would have in a competitive environment, and know ahead of time which bank will win. The New York Times has coined the low, uncompetitive bids “sloppy bids.” These lower bids allow increased profits for the banks, which in turn provide monetary awards to the financial advisory firm that arranged the situation. The only ones who are swindled in this situation are the taxpayers. It is possible that Richardson was complicit in these dealings, in addition to possibly having a role in the New Mexico Finance Authority, but the investigation is still ongoing.
If Richardson’s past is tainted with scandal, CDR’s history is poisoned with it. Since the Richardson probe began, twenty cities, counties, and school districts have sued CDR, as well as some large banks, accusing the firm of receiving kickbacks from the banks in exchange for lucrative public bond deals—the same situation that may have occurred in New Mexico.
CDR and its owner, David Rubin, are currently under continuing investigation by the Securities and Exchange Commission, the Internal Revenue Service and the U.S. Department of Justice for unlawful behaviors and illegal dealings with other financial institutions. The Justice Department has acquired an email in which a Bank of America employee explains that the bank paid more than $45,000 in fees to CDR, despite the fact that CDR “was not involved in some way in the transaction.” The fees were instead “part of the ongoing attempt to develop a better relationship with our major brokers,” according to the email.
In 2006, a team of Bloomberg reporters investigated the inner workings of the municipal bond market by comparing numbers from New Mexico and New York City. In New York City, the government paid its advisory firm $400,000 to counsel them on $900 million worth of contracts. In contrast, New Mexico paid its advisory firm, CDR, $951,566 to counsel them on $420 million worth of contracts.
Richardson’s “pay-to-play” scandal, though not entirely separate, has tarnished the Commerce Secretary position. After he refused the nomination, Obama had a difficult time filling the job. Many individuals, including Sen. John Kerry, Kansas Gov. Kathleen Sebelius, Citigroup director Richard Parsons, and former Iowa Gov. Tom Vilsack all publicly stated that they were not interested in holding the position. Tufts seniors can only hope that Richardson does not taint the value of a Tufts degree as much as he already has damaged the reputation of the cabinet-level position.
Miss Meyer is a sophomore majoring in Philosophy.
Impressive blog! -Arron
Posted by: rc helicopter | December 21, 2011 at 08:06 AM