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Obama and Chicago Mores By JOHN FUND March 3, 2008; Page A17
On Tuesday, Barack Obama may well wrap up the Democratic nomination. Yet how he rose so quickly in Chicago's famously suspect politics -- and who his
associates were there -- has received little scrutiny.
That may change today as the trial of Antoin "Tony" Rezko, Mr. Obama's friend of two decades and his campaign fund-raiser, gets under way in federal court in
Chicago. Mr. Rezko, a master fixer in Illinois politics, is charged with money laundering, attempted extortion, fraud and aiding bribery in an alleged multimillion dollar
scheme shaking down companies seeking state contracts.
John McCain's dealings with lobbyists have properly come under a microscope; why not Mr. Obama's? Partly, says Chicago Tribune columnist John Kass, because
the national media establishment has decided that Chicago's grubby politics interferes with the story line of hope they've set out for Mr. Obama. Former Washington
Post reporter Tom Edsall, who now teaches journalism at Columbia University, told Canada's Globe & Mail that "reporters have sometimes allowed themselves to get
too much caught up in excitement." Then there are Chicago Republicans, loath to encourage the national party to pounce because some of their own leaders
are caught in the Rezko mess.
For its part, the Democratic Party may once again nominate a first-time candidate they haven't fully vetted politically. Democrats flocked to Michael Dukakis in 1988,
ignoring Al Gore's warnings about Willie Horton; later they were blindsided by revelations about Bill Clinton after he was elected president.
This year, Hillary Clinton made a clumsy attack on Mr. Rezko as a "slum landlord" during one debate. But her campaign has otherwise steered clear -- at least until
last Friday, when Howard Wolfson, a top Clinton aide, suggested to reporters on a conference call that "the number of questions that we don't know the answers to
about the relationship between Mr. Rezko and Mr. Obama is staggering." Mr. Obama's campaign told me they have answered all questions about Mr. Rezko and have
no plans to release any further records.
Mr. Obama has admitted that the 2005 land deal that he and Mr. Rezko were involved in was a "boneheaded" mistake, in part because his friend was already rumored
to be under federal investigation. The newly elected Mr. Obama bought his $1.65 million home on the same day, June 15, that Mr. Rezko's wife bought the plot of land
next to it from the same seller for $625,000. Seven months later she sold a slice of the land to the trust that Mr. Obama had put the house into, so the senator could
expand his garden.
Mr. Obama has strenuously denied suggestions that the same-day sale enabled him to pay $300,000 under the house's asking price because Mrs. Rezko paid full
price for the adjoining lot, or that he asked the Rezkos for help in the matter. Both actions would be clear violations of Senate ethics rules barring the granting or
asking of favors.
Still, there are anomalies. Mr. Obama admits that he and Mr. Rezko took a tour of the house before it and the adjoining plot were sold. Financial records given to
federal prosecutors a year later show Mrs. Rezko had a salary of only $37,000 and assets of $35,000. In court proceedings at that time, to explain how much his bail
should be, Mr. Rezko declared that he had "no income, negative cash flow, no liquid assets."
So where did the money for Mrs. Rezko's $125,000 down payment -- and the collateral for her $500,000 loan from a local bank controlled by Amrish Mahajan, like Mr.
Rezko a Chicago political fixer -- come from?
The London Times reports that, three weeks before the land transactions, Nadhmi Auchi, an Iraqi billionaire living in London, loaned $3.5 million to Mr. Rezko, who was
his Chicago business partner. Mr. Auchi's office says he had "no involvement in or knowledge of" the property purchase. Mr. Auchi is a press-shy property developer
(estimated worth: $4 billion) who was convicted of corruption in France in 2003 for his involvement in the Elf affair, the biggest political and corporate fraud inquiry in
Europe since World War II. He was fined $3 million and given a 15-month prison term that was suspended provided he committed no further crimes.
Mr. Auchi was also a top official in the Iraqi oil ministry in the 1970s. He has for years vigorously denied charges he had dealings with Saddam Hussein after the first
Gulf War. However, an official report to the Pentagon inspector general in 2004 obtained by the Washington Times cited "significant and credible evidence" of
involvement by Mr. Auchi's companies in the Oil for Food scandal and illicit smuggling of weapons to the Hussein regime.
In 2003, Mr. Auchi began investing in Chicago real estate with Mr. Rezko. In April 2007, after his indictment, Mr. Auchi loaned another $3.5 million to Mr. Rezko, a
loan that Mr. Rezko hid from U.S. Attorney Patrick Fitzgerald's office. When Mr. Fitzgerald learned that the money was being parceled out to Mr. Rezko's lawyers,
family and friends, he got Mr. Rezko's bond revoked in January and had him put in jail as a potential flight risk.
In court papers, the prosecutor noted that Mr. Rezko had traveled 26 times to the Middle East between 2002 and 2006, mostly to his native Syria and other countries
that lack extradition treaties with the U.S. Curiously, Mr. Auchi has also lent an unknown sum of money to Chris Kelly, who, like Mr. Rezko, was a significant fund-
raiser for Illinois Gov. Rod Blagojevich (himself under investigation by a federal grand jury as an alleged beneficiary of the Rezko shakedowns). Mr. Kelly is himself
under indictment for obstructing an IRS probe into his activities.
Mr. Obama says he has "no recollection" of meeting Mr. Auchi during a 2004 trip the billionaire made to Chicago, and no one believes he knew of his background.
While his name will come up in the trial as a beneficiary of Rezko donations (since donated to charity), Mr. Obama will not be called to testify.
There may be nothing more in Mr. Obama's dealings with Mr. Rezko beyond an "appearance of impropriety." Still, Mr. Obama does have an obligation to explain how
he fits into Chicago politics. David Axelrod, Mr. Obama's Karl Rove, is a longtime spoke in the Daley machine that's dominated Chicago for a half century. Gov.
Blagojevich, also part of the machine, shared key fund raisers with Mr. Obama.
"We have a sick political culture, and that's the environment Barack Obama came from," Jay Stewart, the executive director of the Chicago Better Government
Association, told ABC News. He notes that, while Mr. Obama supported ethics reforms as a state senator, he has "been noticeably silent on the issue of corruption
here in his home state, including at this point, mostly Democratic politicians."
Mr. Obama will eventually have to talk about Illinois, if only to clear the air. After John McCain last month was attacked for cozy ties to lobbyists, he held a news
conference and answered every question. Hillary Clinton held a White House news conference on Whitewater and her cattle futures. Mr. Obama must do the same for
questions about Mr. Rezko and "the Chicago way" of politics. If he doesn't, they may increasingly haunt his candidacy.
Mr. Fund is a columnist for WSJ.com.
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