After an unsuccessful campaign for Congress in 2000, Illinois state Sen. Barack Obama faced serious financial pressure: numerous debts, limited cash and a law practice he had neglected for a year. Help arrived in early 2001 from a significant new legal client -- a longtime political supporter.

Chicago entrepreneur Robert Blackwell Jr. paid Obama an $8,000-a-month retainer to give legal advice to his growing technology firm, Electronic Knowledge Interchange. It allowed Obama to supplement his $58,000 part-time state Senate salary for over a year with regular payments from Blackwell's firm that eventually totaled $112,000.

A few months after receiving his final payment from EKI, Obama sent a request on state Senate letterhead urging Illinois officials to provide a $50,000 tourism promotion grant to another Blackwell company, Killerspin.

Killerspin specializes in table tennis, running tournaments nationwide and selling its own line of equipment and apparel and DVD recordings of the competitions. With support from Obama, other state officials and an Obama aide who went to work part time for Killerspin, the company eventually obtained $320,000 in state grants between 2002 and 2004 to subsidize its tournaments.

Obama's staff said the senator advocated only for the first year's grant -- which ended up being $20,000, not $50,000. The day after Obama wrote his letter urging the awarding of the state funds, Obama's U.S. Senate campaign received a $1,000 donation from Blackwell.

Obama's presidential campaign rejects any suggestion that there was a connection between the legal work, the campaign contribution and the help with the grant. "Any implication that Sen. Obama would risk an ethical breach in order to secure a small grant for a pingpong tournament is nuts," said David Axelrod, Obama's chief political advisor.

Image-conscious

Business relationships between lawmakers and people with government interests are not illegal or uncommon in Illinois or other states with a part-time Legislature, where lawmakers supplement their state salaries with income from the private sector.

But Obama portrays himself as a lawmaker dedicated to transparency and sensitive to even the appearance of a conflict of interest.

Recently, Obama expressed regret over a property deal with Illinois power broker Tony Rezko after Obama was elected to the U.S. Senate in 2004. In an interview this spring with the Chicago Sun-Times, Obama said his regret was not just because the real estate and restaurant entrepreneur was under criminal scrutiny, but because he was "a contributor and someone doing business before the state."

Obama spokesman Robert Gibbs, who provided The Times with details of Obama's compensation from EKI, said Obama did nothing wrong acting on behalf of Killerspin. He said the state senator simply wrote a letter backing a worthy project developed by a constituent.

Killerspin's owner, Blackwell, was a political supporter and friend as well. Both men lived on Chicago's South Side. Blackwell, a savvy and successful entrepreneur, was one of the first donors to Obama's early campaigns, including the state senator's failed bid for a congressional seat in 2000. In the presidential race he is credited on Obama's website with committing to raise $100,000 to $200,000 for Obama's campaign.

When Blackwell sought backing for his table tennis tournament in 2002, other politicians, including U.S. Sen. Richard J. Durbin (D-Ill.) and Chicago Mayor Richard M. Daley, offered support for the event. But Obama was the only one who provided a letter that became part of the initial application for state funds, state records show. In addition, he wrote a state Senate proclamation heralding the first tournament and an official letter that welcomed “table tennis friends” to the 2004 contest and thanked spectators for helping to "make Chicago the table tennis capital of this nation."

Initially, the idea of table tennis receiving funds from a state tourism program -- designed to encourage overnight visits to Illinois -- was met with skepticism by one Republican state official. But the funding was granted at the $20,000 level that first year, grew to $200,000 in 2003 and totaled $100,000 in 2004.

High-dollar tourism grants from the state are often reserved for events like the Breeders' Cup, an internationally known horse race that brought 50,000 to the Chicago area in 2002. But Blackwell and his allies promised good attendance, hotel bookings and international attention. Today, Illinois Tourism Director Jan Kosner lauds the state's decision to support the table tennis tourneys and dismisses the role that letters from politicians play in the grant-making process.

Unofficial estimates place 3,000 to 6,000 spectators in the 8,000-seat University of Illinois-Chicago arena during some table tennis events. Blackwell said in a statement that "the 2002 and 2003 events were among the largest-ever table tennis events held on U.S. soil in terms of attendance."

Blackwell deployed high-wattage showmanship that put an international spotlight on his tournaments and his brand of table tennis equipment, DVDs and sportswear. Under a plan developed by Blackwell, the 2003 and 2004 tournaments were filmed at Killerspin's expense for occasional broadcast later by ESPN. The cost to Killerspin for the broadcast, laced with promotions for the company as well as Illinois tourism, was in effect defrayed by the state aid.

Blackwell said the grants -- which paid only part of the cost his company had to bear -- provided the state with "thousands of hours of domestic and international exposure via ESPN. . . . Additionally, hundreds of hotel rooms were occupied all three years that the state supported the event."

'A very dry period'