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Senate Scandal Snares Obama’s Chief Aide

By Sarah Baxter, Washington

December 16, 2008 "
The Times" -- -THE bullish, foul-mouthed but effective Chicago arm-twister Rahm Emanuel has come under pressure to resign as Barack Obama’s chief of staff after it was revealed that he had been captured on court-approved wire-taps discussing the names of candidates for Obama’s Senate seat.

Emanuel’s presence at the heart of the scandal threatens to roil the president-elect’s administration as a Chicago prosecutor builds his corruption case against Rod Blagojevich, the Illinois governor.

Blagojevich has been accused of plotting to sell Obama’s Senate seat - which is in the governor’s gift - in return for financial and political favours.

Republicans are salivating at the prospect of tying the president-elect to the notoriously corrupt Chicago machine in which he forged his career. Grover Norquist, an influential conservative tax reform lobbyist, said: “If Obama wants to be squeaky clean, he is going to have to cut all his Chicago friends loose. His chief of staff has fingerprints on the murder weapon.”

Emanuel ducked out of view last week, avoiding reporters’ questions and complaining of harassment and “death threats” as the news spread that he was the likely unnamed adviser cited by the FBI with whom the tainted Blagojevich hoped to bargain over the appointment.

For the “No Drama” Obama team, the spiralling controversy has been an alarming distraction in the midst of the US economic meltdown. Obama has yet to release a promised timeline of contacts between members of his transition team and the governor's office, while Emanuel is thought to be consulting lawyers.

Ed Rendell, the outspoken governor of Pennsylvania, said the Obama team was bungling its response. “The rule of thumb is: whatever you did, say it and get it over with and make it a one-day story as opposed to a three-day story,” he said.

Private telephone discussions between Emanuel and John Harris, Blagojevich’s chief of staff, began as early as the weekend before the November 4 election, the Chicago Tribune revealed yesterday. Emanuel let it be known that Valerie Jarrett, an Obama adviser, Tammy Duckworth, a wounded Iraq war veteran, and two other candidates would be “acceptable” to Obama.

Emanuel had further talks with the governor’s office after the election, during which he added another name to the list. It does not appear that Emanuel engaged in any illegal horse-trading - Blagojevich complained at one stage that all the president-elect’s team was offering was “appreciation”. “F*** them,” the governor said.

Jarrett, Obama’s first choice as senator, was swiftly named a senior White House adviser to Obama after Blagojevich complained, according to FBI transcripts, that he was not going to “give f******” Jarrett the f****** Senate seat and I don’t get anything”.

However, questions remain over what Emanuel said when and how much he know about the governor’s “pay to play” scheme. He may have been fully aware of what Blagojevich was attempting. At one stage the governor told an aide that he wanted an unnamed “president-elect adviser”, thought to be Emanuel, to help “raise 10, 15m” for a charitable group, which the governor could head.

Did Emanuel receive the news, and if so, how? Did he report his suspicion of illegal activity to the FBI or did he treat it just as a normal part of wheeler-dealing in the corrupt Windy City? And did he use the same four-letter language to discuss the succession in the same crude terms as Blagojevich?

Obama once joked at a charity “roast” that the notoriously crude Emanuel - who was elected to Congress in Blagojevich’s old seat - was rendered “practically mute” when he lost his middle finger in an accident.

“When you are Rahm Emanuel and you use the f-word all the time, it is supposed to be cute and amusing,” Norquist said. “When the governor of Illinois gets caught, people say, ‘Oh, he’s crazy’, and the proof that he is crazy is that he talks like Rahm Emanuel.”

Obama faces a stark choice. Emanuel was his first apppointment as his chief of staff after the election. If he were to throw him out of the inner circle now with his reputation under siege, it would be a singular act of disloyalty before the transition team has even had a chance to take office.

Emanuel has not yet resigned as a member of the House of Representatives for Illinois, although he has pledged to do so. Obama had to work hard to persuade Emanuel, who had his own independent power base in Congress and a semblance of normal family life with his young children, to join him in the most intensive, high-pressure job in the White House.

However, the scandal is lapping at Obama’s own ankles. Blagojevich is a product of the entrenched graft and corruption that have characterised Chicago’s style of government since the days of Al Capone, the prohibition-era gangster.

He is being investigated by Patrick Fitzgerald, 47, a fearless prosecutor who brought down Scooter Libby, Vice-President Dick Cheney’s neoconservative adviser, and Conrad Black, the media baron.

Fitzgerald is a much-resented figure among Obama’s advisers. David Axelrod, the Chicago mastermind behind Obama’s campaign, once complained: “He goes after fleas and elephants with the same bazooka. At some point there is a line . . . where you begin criminalising politics in its most innocent form.”

Obama is himself embroiled in a sub-plot of the scandal with uncomfortable connections to Blagojevich, even though the president-elect said last week that he was “appalled” by the governor’s actions.

As Fitzgerald widens his inquiry across Chicago, witnesses will be lining up to talk – if only to save their own necks. Harris, who has been accused with his boss of planning to sell the Senate seat, resigned last Friday, prompting speculation that he intends to cooperate with federal investigators.

Ominously for Obama, Antoin “Tony” Rezko, the property dealer and fixer who helped him to buy his $1.65m house in Chicago by purchasing an adjacent plot on the same day, has also been talking to investigators in an attempt to reduce a prison sentence following his conviction for fraud and bribery. Rezko is expected to be a key witness in the corruption case against Blagojevich but he also knows more than anybody about the house purchase and other deals with Obama.

When the house came on the market, the seller insisted that both plots were sold at the same time. But while Obama bought his part of the property for $300,000 under the asking price, it has emerged that Rezko’s wife not only paid the asking price for their slice of land – $625,000 – but that the extra piece of property may have been deliberately overvalued.

A valuer who made an initial lower estimate, only to be overruled, is believed to be giving evidence to Fitzgerald’s team.

Rezko also appears to have helped Blagojevich with his domestic affairs. Investigators have been trying to find out whether he charged the governor for $90,000 worth of improvements to the family room and deck of his house.

The governor’s wife, Patti Blagojevich, a Lady Macbeth figure who may face charges herself for encouraging her husband to behave corruptly, received $47,000 in commission from a property deal involving Rezko.

In a further disturbing connection, Rezko regularly supplied Blagojevich with a “clout list” of names of people he thought the governor should appoint to state boards and jobs.

Obama made use of Rezko’s clout list on at least one occasion, when he recommended that Eric Whitaker, an old Harvard friend and doctor, be hired as director of Illinois’s public health department.

Whitaker, Obama said, “had expressed an interest in that job. He did contact me, or Tony contacted me, and I gave him a glowing recommendation because I thought he was outstanding”.

Fitzgerald made it clear that Obama is not a target of investigation. Emanuel is thought to be free from any threat of charges. But that will not be the end of the matter.

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