Obama Helped Supporters Get Millions in Illinois State Business
John Rogers whose business Obama helped is now one of Obama's chief fundraisers.
May 15, 2008— -- In a speech to the Urban League last July, Sen. Barack Obama, D-Ill., boasted of his efforts in 2001 to help a handful of African American-owned investment firms in Chicago get a larger share of business with Illinois state pension funds. "And in six months, they got about a half-billion dollars' worth of business simply on their excellence," Obama said.
What he did not say in his speech was that the owner of one of the investment firms, John Rogers of Ariel Capital, is a principal campaign fundraiser. Nor did he reveal that employees of the firms he helped have since contributed to or helped to raise more than $765,000 for his campaigns, according to campaign documents. Nor did he mention that two of the firms have allowed him to use their private jets. Nor did he mention that two of the firms have since been dismissed by the state pension fund for "underperformance."
An Obama spokesperson, Ben Labolt, said it was "preposterous" to suggest Obama's efforts for the firms were linked to campaign donations. "It should come as no surprise that as a prominent Illinois state senator who had a history of civic activity in the city, Obama had long-standing relationships with a number of Chicago's African American business leaders or that those business leaders would have found common cause to support his campaigns over the years," said LaBolt.
Following Obama's efforts, the Illinois Teachers' Retirement System gave Ariel Capital $112.5 million to manage, and added hundreds of millions more over the next few years.
In 2006, the teachers' fund took its money back out, citing Ariel's "underperformance." Ariel said the hot stock market of 2006 made its funds' growth look modest, guided as it was by the firm's conservative buy-and-hold philosophy. Ariel is positively rated by several investment experts.
Now, Rogers is an Illinois finance co-chairman for Obama's presidential campaign, having raised more than $200,000 for the campaign. Ariel employees have given nearly $70,000 to Obama's White House effort -- for a total of more than $130,000 to Obama's political career since 2001, when the politician went to bat for the company. The total includes $8,100 donated by Ariel Capital president Mellody Hobson, an ABC News financial contributor. Hobson is listed by the Obama campaign as a "bundler" who has raised between $50,000 and $100,000 for Obama's presidential campaign.
In addition to fundraising, Rogers provided Obama with Ariel Capital's private jet in 2005, following his election as a U.S. senator. At the time, Obama took advantage of a loophole in the law that allowed for politicians to reimburse corporate jet owners at first-class ticket rates. He later signed on as a co-sponsor of a Senate measure that would require campaigns to pay full charter cost, and said he would no longer take corporate jets.
A spokesman for Ariel said the company's support of Obama predated the politician's efforts to win business for the firm. "John [Rogers] and all of us have known the senator from way before he was even a senator," said Matthew Yale of Ariel. Asked if Obama could take credit for Ariel's business with the state retirement fund, Yale said, "No, not at all."
Three other minority-run firms -- Holland Capital, Loop Capital and Capri Capital Partners -- also saw hundreds of millions of assets turned over to them to manage after meeting with Obama and the state pension boards.
The state teachers' fund also terminated Holland in 2006 for the poor performance of the assets it managed, according to the business publication Crain's. Holland did not respond to a request for comment.
Obama spokesman LaBolt said that Obama worked with leaders in the state legislature to push for the increased use of minority investment managers after the pension boards failed to meet their own diversity goals.
"We didn't have to implement a formal program," Obama recounted in his speech to the Urban League. "I simply said, 'Listen to what these folks have to say.'"
The executive director of an Illinois ethics watchdog group calls it politics as usual. "Did he get contributions from those companies down the line? Yeah. That story's been told a million times in American politics, and it will be told a million times more," said Jay Stewart of the Illinois-based Better Government Association. "I don't think Obama's any different."