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David Axelrod’s Very Big Problem (Updated)

Tuesday, August 18, 2009  |  posted by Hugh Hewitt
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The allegations in this Bloomberg storyif true— pose a huge problem for a senior advisor to the president, David Axelrod. This is the heart of the problem:

Axelrod was president and sole shareholder of AKPD from 1985 until he sold his interest after Obama’s victory, government records show. The firm owes Axelrod $2 million, which it’s due to pay in installments beginning Dec. 31. Axelrod’s son, Michael, still works there. He didn’t return a phone call. The firm’s Web site continues to feature David Axelrod’s work on the Obama campaign. (Emphasis added.)

The problem is that Axelrod’s former firm is currently receiving huge fees “from Healthy Economy Now, a coalition that includes the Washington-based Pharmaceutical Research & Manufacturers of America, known as PhRMA,” as well as AARP, the SEIU and other big players in the health care debate.

If Axelrod has been negotiating any part of any deal involving any of these players which are funneling money to the firm that owes him money, or if he is advising the president on the deals with any of these groups, that’s a conflict of interest. Laundering the money through a “coalition” doesn’t remove the conflict much less the appearance of impropriety. The coalition is in effect partially funding David Axelrod’s severance package though its members might have done so unknowingly. These forthcoming payments to Axelrod are much more significant than the sort of “retained ties” that Democrats blasted Dick Cheney for vis-a-vis Halliburton even though there was no high level negotiations between the vice president and his former company.

David Axelrod has some tough questions to answer, and according to Politico’s Mike Allen, Politico’s Ken Vogel will be publishing more on matters Axelrodian tomorrow. (The transcript of my interview with Allen is here.) Vogel’s story on Axelrod’s son from a few days back casts doubt on the Bloomberg story’s accuracy as Bloomberg has Axelrod’s son still at Axelrod’s old firm, but Vogel has him at The Huffington Post.

If it was Karl Rove in a similar set of circumstances, the blogs and some in MSM would already be demanding a special prosecutor. There are lots of questions for Mr. Axelrod, the first one being whether the Bloomberg story is accurate. if the answer is “yes,” the second will be: “Have you lawyered up?”

UPDATE: Ken Vogel just confirmed that his story in tomorrow’s Politico delves into this issue and that Axelrod did not respond to Vogel’s e-mail on the subject, though he has done so in the past. The transcript of the Vogel interview is here.

Vogel also informed me that Axelrod has two sons, one of whom does indeed continue to work at his dad’s old firm which is powered up on health care debate dollars.

UPDATE 2: Senator Jon Kyl just expressed surprise when I told him the outline of the story and, without prompting, suggested as I have above that if Karl Rove had been discovered to be in the same situation as David Axelrod, the hounds would be in the hunt already. (The transcript of my conversation with Senator Kyl is here.) Of course, this is the Obama-smitten MSM, so it remains to be seen whether any of them start asking the obvious questions. The transcript of my conversation with Senator Kyl will be posted later at the Transcripts page.

UPDATE 3: Ken Vogel’s Politico story is here. Michelle Malkin has begun to analyze the case. As has Darlene Click at Protein Wisdom, where the comments are piling up. Flopping Aces and Wizbang are also watching the story.

It should take about ten minutes this morning for Robert Gibbs to provide details of Axelrod’s “retained interest” in his old firm —the term used by Democratic Senator Frank Lautenberg when he was blasting Dick Cheney vis-a-vis Halliburton— and Axelrod’s participation in negotiations with any interest that is providing money to any group providing money to his old firm. With those facts in hand there are scores of D.C. lawyers who can comment on whether any of the many ethics laws governing the financial interests of senior advisors to the president have been violated.

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