WASHINGTON – Democratic presidential candidate Barack Obama said Wednesday that he was not aware that he had invested in two companies backed by some of his top donors and did nothing to aid their business before the government.
The Illinois senator faced questions about more than $50,000 in investments he made right after taking office in 2005 in two speculative companies, AVI Biopharma and Skyterra Communications. Obama said his broker bought the stocks as part of a quasi-blind trust.
"At no point did I know what stocks were held, and at no point did I direct how those stocks were invested," Obama told reporters at the end of a press conference called to tout an unrelated immigration bill.
"What I wanted to make sure is that I didn't want to invest in companies that potentially would create conflicts with my work here," said Obama, who has campaigned on the need for stronger congressional ethics rules. "Obviously, the thing didn't work the way I wanted it to."
Obama purchased $5,000 in shares for AVI, which was developing a drug to treat avian flu. Two weeks after buying the stock, Obama pushed for more federal funding to fight the disease, but he said he did not discuss the matter with any company officials.
Obama also had more than $50,000 in shares of Skyterra, a company that had just received federal permission to create a nationwide wireless network that combined satellite and land-based communications systems.
Among the company's top investors were donors who raised more than $150,000 for Obama's political committees, the New York Times reported Wednesday. The stock holdings were first examined Monday by the financial Web site, Thestreet.com.
The reports found no evidence that any of his actions ended up benefiting either company during the roughly eight months he owned the stocks. Obama lost about $15,000 on Skyterra and earned a profit of about $2,000 on AVI.
Obama said he wanted to invest in stocks after signing a $1.9 million deal for his second book, "The Audacity of Hope." He said after buying a home and putting money in the bank and mutual funds, he asked a friend and political donor, investor George Haywood, to recommend a broker so he could invest a portion more aggressively.
"I thought about going to (billionaire investor) Warren Buffett, and I decided it would be embarrassing that I only had $100,000 to invest," Obama said.
Haywood, who was a major backer of both AVI and Skyterra, recommended a broker at USB who also bought stock for Obama in those companies.
Obama said at some point in fall 2005 he got a stockholder letter. He said he believes it was from AVI or Skyterra, but he couldn't remember which company. But he decided to liquidate the quasi-blind trust and put his money in mutual funds and money market accounts that wouldn't raise such questions.
"It's at that point that I became concerned that I might not be able to insulate myself from knowledge of my holdings, that this trust instrument might not be working the way I wanted it to," Obama said.
Obama said he didn't invest in a standard blind trust because it wouldn't allow him to limit which companies he invested in, such as those in the tobacco industry and other areas that he did not want to support.
"At this point, I'm only invested in mutual funds or cash or money market accounts. That's my instruction to my accountant," Obama said. "We are not going to own individual stocks precisely because it raises questions like this."
Senate ethics rules do not prohibit lawmakers from owning stocks in companies that do business with the federal government.
One of the other investors involved in Skyterra was Jared Abbruzzese, a New York businessman now at the center of a federal inquiry into public corruption.
Abbruzzese and his wife had contributed $10,000 to Obama's political action committee. But normally they back Republican causes, such as the Swift Boat Veterans for Truth that damaged John Kerry's presidential campaign and the Republican National Committee.
Obama said he has never met Abbruzzese.