Richardson Exits Cabinet Due To Probe

New Mexico Gov. Bill Richardson announced Sunday afternoon that he is withdrawing as President-elect Barack Obama’s nominee for secretary of Commerce because of unanswered questions about a federal grand jury investigation back home.

"I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process," Richardson said in an e-mailed statement issued by the transition.

Obama accepted the withdrawal with regret, saying in an accompanying statement that he looks forward to Richardson's "future service to our country and in my administration."

Richardson said he had told Obama that "eager to serve in the future in any way he deems useful."

The grand jury has been investigating “pay-to-play” allegations concerning a New Mexico state contract awarded to a California firm that has contributed to three political committees formed by Richardson, The Associated Press reported last month.

A source close to Richardson told Politico, "There are too many unanswered questions and while he thinks the results of the grand jury will turn out in his favor, he doesn't want to distract attention from the administration."

A Senate aide told Politico there had been "nervousness" within the Senate and more specifically the Senate Commerce Committee about the grand jury probe in recent weeks.

The announcement prompted immediate finger-pointing about the vetting process, with Democrats wondering what Obama screeners asked Richardson and what he told them, and whether he was really involved or was just being tarred by the actions of others.

One source told Politico that he heard from several members of the Commerce committee who were uncomfortable with the probe.

In a statement first reported by NBC’s Andrea Mitchell, Richardson said: "Let me say unequivocally that I and my administration have acted properly in all matters and that this investigation will bear out that fact."

Richardson, who had sought the Democratic presidential nomination himself, was the highest-ranking Hispanic in the prospective Obama administration.

The revelation came in the hours before Obama was scheduled to leave Chicago to come to Washington to live and work ahead of the inauguration on Jan. 20.

Richardson’s withdrawal is the first false start for a presidential transition that has had an exceedingly smooth public face.

His decision is linked to a federal grand jury investigation into whether a financial services company won state contracts after its CEO contributed to a PAC controlled by the governor.

California-based CDR Financial Products Inc won nearly $1.5 million in contracts from the New Mexico Finance Authority in 2004 after company president and founder David Rubin gave thousands to Richardson, including money that helped underwrite his expenses at that year’s Democratic National Convention. Rubin also later gave money to Richardson’s failed presidential campaign.

The FBI is asking whether members of the governor’s office asked other state officials to give preferred treatment to CDR.

At a time when Obama’s own governor is facing criminal charges for, among other things, pay-to-play politics involving the Senate seat the president-elect is vacating, the prospect of headlines alleging  similar behavior in New Mexico were enough to imperil Richardson’s appointment.

Richardson, who was Energy secretary and U.S. ambassador to the United Nations under President Bill Clinton, said he will continue as governor.

The full statements from Obama and Richardson are on the next page.

Obama:

"It is with deep regret that I accept Gov. Bill Richardson's decision to withdraw his name for nomination as the next secretary of commerce. Gov. Richardson is an outstanding public servant and would have brought to the job of commerce secretary and our economic team great insigts accumulated through an extraordinary career in federal and state office. It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet in order to avoid any delay in filling this important economic post at this critical time. Although we must move quickly to fill the void left by Gov. Richardson's decision, I look forward to his future service to our country and in my administration."

Richardson:

"For nearly three decades, I have been honored to serve my state and our nation in Congress, at the U.N., as secretary of energy and as governor. So when the president-elect asked me to serve as Secretary of Commerce, I felt a duty to answer the call. I felt that duty particularly because America is facing such extraordinary economic challenges. The Department of Commerce must play an important role in solving them by helping to grow the new jobs and businesses America so badly needs.

"It is also because of that sense of urgency about the work of the Commerce Department that I have asked the president-elect not to move forward with my nomination at this time. I do so with great sorrow. But a pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks or, perhaps, even months.

"Let me say unequivocally that I and my administration have acted properly in all matters and that this investigation will bear out that fact. But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process. Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the president-elect and his administration to delay for one day the important work that needs to be done.

"So, for now, I will remain in the job I love, governor of New Mexico, and will continue to work every day, with Lt. Gov. Diane Denish, to make a positive difference in the lives of New Mexicans. I believe she will be a terrific governor in the future. I appreciate the confidence President-elect Obama has shown in me, and value our friendship and working partnership. I told him that I am eager to serve in the future in any way he deems useful. And like all Americans, I pray for his success and the success of our beloved country."

Ben Smith and Jonathan Martin contributed to this story.