ABC News: The Blotter
Despite Rhetoric, Obama Pushed Lobbyists’ Interests
Away from the bright lights and high-minded rhetoric of the campaign trail, Democratic presidential hopeful Sen. Barack Obama, D-Ill., has quietly worked with corporate lobbyists to help pass breaks worth $12 million.
In his speeches, Obama has lambasted lobbyists and moneyed interests who “have turned our government into a game only they can afford to play.”
“It’s an entire culture in Washington — some of it legal, some of it not,” the Democratic hopeful told a New York crowd in June, rallying support for his ethics reform agenda.
But last year, at the request of a hired representative for an Australian-owned chemical corporation Nufarm, Obama introduced nine separate bills exempting the company from import fees on a range of chemical ingredients it uses in the manufacture of pesticides and herbicides. Nufarm’s U.S. subsidiary is based in Illinois.
Nufarm wasn’t the only beneficiary of Obama’s efforts to reduce customs fees and duties. In early May of 2006, two Washington lobbyists registered to work on behalf of Astellas Pharma, a Japanese-owned drug company which also has offices in Illinois.
The lobbyists’ task? “Introduce legislation to temporarily suspend customs duties for the importation of a pharmaceutical ingredient,” they wrote on their lobbying forms. Less than three weeks later, the men had earned their $20,000 fee, thanks to Obama. On May 26, he introduced S. 3155, a bill specifically exempting Astellas’ key ingredient from tariff payments. The bill cost the federal government more than $1 million in lost revenue, according to government estimates.
Together, Obama’s obscure measures — known as tariff suspensions — steered more than $12 million away from federal coffers, according to government estimates.
A spokesman for the senator defended Obama’s efforts on behalf of the two firms.
“Sen. Obama helped his constituents obtain foreign products necessary for their business at an affordable rate,” said Ben LaBolt, noting that Obama made sure all the products “met strong environmental standards” before pushing to make it cheaper to import them.
While legal, Obama’s bills on behalf of Nufarm and other companies are part of the special treatment machine Washington rolls out for special interests, say good-government watchdogs.
“If you have a company…there’s a whole factory set up to help you get these suspensions,” said Steve Ellis, president of the Washington, D.C.-based watchdog group Taxpayers for Common Sense. “It’s a pay-to-play system you have to rev up and work.” Hire the right lobbyist, pay the right fee, and you can save millions, he explained.
In Nufarm’s case, Obama’s staff met with a lawyer representing the company, Joel Junker, in person and on the phone several times, Junker told ABC News. Junker says he worked with Obama’s staff to craft the nine bills and keep them moving forward.
“To the extent [the legislation] needs a little shepherding, you work with their staff, to be aware of the status, and work with the committee staff,” he said, and spoke highly of Obama’s staff. “Everything was very professional, very constituent-service oriented.”
Unlike Astella’s representatives, Junker did not register to lobby on behalf of Nufarm and did not disclose his fees. In an interview, Junker declined to say whether he believed his work could be considered “lobbying.”
Obama’s office said its staffers met once with Junker and once with the Astellas lobbyists, but it did not know how often the senator’s staffers spoke with Junker or the Astellas lobbyists by phone. Astellas did not respond to a request for comment on this story. Nufarm Americas’ marketing director, Tim Stoehr, confirmed his company had requested several tariff suspensions, including on products it “bought” from other Nufarm subsidiaries overseas.
A review of campaign finance records turned up no record of contributions from Nufarm to Obama. Astellas Pharma employees gave $1,100 to Obama’s campaign in recent months, the documents show.
Junker defended tariff suspensions as good for American businesses. The high fees are charged to protect American manufacturers from being undercut by cheap imports, argued the former U.S. trade official. If no U.S. firm makes a particular item, the cost only hurts a company which needs to buy it overseas.
“It’s nothing to be embarrassed, ashamed or suspicious of,” he said.
In letters to Congress supporting Obama’s measures, Junker justified the breaks for Nufarm to import a chemical known as 2,4 D and other ingredients by claiming they would “eliminate these unnecessary and avoidable…costs to [Nufarm’s] consumers.”
In a statement to ABC News defending the measures, Obama’s spokesman echoed Junker’s argument.
“Just like he fought for funding to ensure Chicago’s transit system remains affordable and to invest in ethanol research, Senator Obama helped keep costs low for Illinois residents by helping them get the goods they need to do their jobs,” Ben LaBolt wrote.
But the company’s financial reports indicate that may not be the case. In a glowing financial report issued just two months after Obama introduced Nufarm’s numerous tariff-lifting bills, Nufarm told its shareholders it was making more money than ever before in North America because it had increased its prices on its U.S. and Canadian customers, predominantly farmers.
Nufarm saw “strong revenue growth” in North America, it said in a July 31, 2006, company report. “Net profit was also up strongly,” driven in part by “price rises on key products,” it said. Nufarm trades on the Australian Stock Exchange.
When asked about the company’s contrasting statements, Nufarm America’s Stoehr told ABC News the financial report wasn’t accurate.
“I don’t know if I believe that,” he said. “A lot of that is a little more hype.” If the company had increased its prices, said Stoehr, it was only because its costs had “skyrocketed.” “Our profit remained steady,” said the executive.
In particular, “price rises on phenoxy herbicides,” a family which includes 2,4 D, “improved the profitability of those products, despite no significant increase in sales volumes.”
Economics aside, some medical researchers also harbor concerns over 2,4 D. Studies have purported to find a link between high exposure to the chemical and non-Hodgkin’s lymphoma, a type of cancer. Defenders of the chemical say it is safe, and note that even scientists who believe a link exists cannot explain how the chemical may cause the cancer.
With a dozen tariff suspension bills to his name, Obama stands out as the most prolific of any Democratic presidential hopeful on the topic. Sen. Hillary Clinton, N.Y., has introduced none, although she has co-sponsored 19 that were introduced by Sen. Charles Schumer, D-N.Y. Seven were to benefit the Honeywell Corporation, whose lobbyist has contributed $6,500 to Clinton since 2005. Sen. Joseph Biden, Del., has introduced none.
Only one other 2008 presidential hopeful has introduced more tariff suspension bills than Obama. Longshot GOP candidate Sen. Sam Brownback, Kan., introduced 30 such measures in the 109th Congress. Fellow dark horse candidate Rep. Tom Tancredo, R-Colo., introduced one in 2001; Sen. John McCain, R-Ariz., and Rep. Duncan Hunter, R-Calif. have introduced none.
Some say the tariff suspension process isn’t how Washington should operate.
“We all saw ‘Schoolhouse Rock’ and learned how Washington is supposed to work,” Taxpayers for Common Sense president Steve Ellis told the Blotter on ABCNews.com. “There’s no ‘Schoolhouse Rock’ episode on tariff suspensions.”
In his speeches, Sen. Obama seems to agree.
“We need a president who sees government not as a tool to enrich well-connected friends and high-priced lobbyists, but as the defender of fairness and opportunity for every American,” the candidate said in his June speech. “That’s the kind of president I intend to be.”
Mansi Mehan contributed to this report.
This post has been updated.