Six months later Blackwell hired Obama to serve as general counsel for his tech company, EKI, which had been launched a few years earlier.
The entire EKI retainer went to Obama, who was considered "of counsel" to the firm, according to details provided to The Times by the Obama campaign and confirmed by Miner. Blackwell said he had no knowledge of Obama's finances and hired Obama solely based on his abilities. "His personal financial situation was not and is not my concern," Blackwell said. "I hired Barack because he is a brilliant person and a lawyer with great insight and judgment."
Obama's tax returns show that he made no money from his law practice in 2000, the year of his unsuccessful run for a congressional seat. But that changed in 2001, when Obama reported $98,158 income for providing legal services. Of that, $80,000 was from Blackwell's company.
In 2002, the state senator reported $34,491 from legal services and speeches. Of that, $32,000 came from the EKI legal assignment, which ended in April 2002 by mutual agreement, as Obama ceased the practice of law and looked ahead to the possibility of running for the U.S. Senate. .
Blackwell said that "Barack worked extensive hours advising the company on compliance and human resource issues," negotiated contracts, reviewed confidentiality agreements and provided reports on topics requested by the company's senior management. Obama was not involved in soliciting city or state contracts for EKI, Blackwell said, and there was an agreement that he would not contact any government agencies.
Illinois ethics disclosure forms are designed to reveal possible financial conflicts by lawmakers. On disclosure forms for 2001 and 2002, Obama did not specify that EKI provided him with the bulk of the private-sector compensation he received. As was his custom, he attached a multi-page list of all the law firm's clients, which included EKI among hundreds. Illinois law does not require more specific disclosure.
Stanley Brand, a Washington lawyer who counsels members of Congress and others on ethics rules, said he would have advised a lawmaker in Obama's circumstances to separately disclose such a singularly important client and not simply include it on a list of hundreds of firm clients, even if the law does not explicitly require it. "I would say you should disclose that to protect and insulate yourself against the charge that you are concealing it," Brand said.
An Illinois ethics advocate who worked with Obama to pass state ethics reforms, Cynthia Canary, said she was not troubled by Obama's handling of the Blackwell business. She said his listing of all the law firm's clients "was a more complete disclosure than you see 80% of the time in Illinois." Further, she said that Obama's letter on behalf of the table tennis tournament did not "rise to the level of a conflict of interest" because Obama did not have decision-making authority over the grant.
Obama's spokesman said that listing all clients was appropriate and that doing so allowed the public to see any and all potential conflicts for Obama and his law firm colleagues. "He was especially mindful of this responsibility as a leader of ethics reform," said Gibbs, his chief campaign spokesman.
Obama's wife, Michelle, then a member of the Commission on Chicago Landmarks, reported her husband's work for EKI on a city of Chicago financial disclosure form obtained by The Times. Gibbs said she had identified EKI on her form after consulting with her husband. Gibbs said the questions on the city form were different from the state's and required different answers.
Gibbs said the letter Obama wrote on behalf of the Killerspin-backed tournament was appropriate and entirely unrelated to any payments by Blackwell's other firm for Obama's legal services.
"He wrote the letter on behalf of a constituent" with a worthy cause, Gibbs said, noting that the contest was broadcast internationally, reaching as many as 200 million viewers in 156 countries.
Though Obama's formal efforts for Killerspin consisted of writing a letter and a proclamation, the nitty-gritty of obtaining state grants fell to a former state Senate and campaign aide to Obama, Dan Shomon.
Shomon, working part time for Obama's campaign and for Killerspin, helped prepare Killerspin's initial grant application in 2002. Still working part time with Obama, Shomon helped Killerspin secure a $200,000 grant for its 2003 tournament and a $100,000 grant for its 2004 tournament.