WASHINGTON (Reuters) - President Barack Obama and U.S. lawmakers have vowed to donate to charity the campaign donations they got from Texas billionaire Allen Stanford, who now stands accused of massive fraud.
Stanford was a relative newcomer to Washington politics, but still managed to spread a fair amount of money on both sides of the aisle over the past decade, records show.
Now charged by the U.S. Securities and Exchange Commission with an $8 billion (5.6 billion pounds) fraud, the 58-year-old tycoon may find the largesse won him few lasting friends in the capital.
Democratic Senator Bill Nelson, one of the lawmakers who received Stanford donations, “wants every thin dime associated with him returned to charity or used in some way that could help folks who were ripped off by this guy,” Nelson’s office said in a statement.
Other lawmakers issued similar statements on the latest scandal to hit confidence in financial institutions, one that again promised to embarrass the U.S. Congress for failing to demand tighter regulation of the financial industry.
Federal regulators on Tuesday charged Stanford with having engaged in a massive fraud involving certificates of deposit with improbably high interest rates from his Antiguan affiliate, Stanford International Bank. FBI agents served the civil complaint on Stanford in Virginia on Thursday.
During the past decade, Stanford’s firm, the Stanford Financial Group, spent $4.8 million in lobbying, according to the Centre for Responsive Politics, a private group that tracks money and politics in the nation’s capital.
Stanford, his political action committee, employees and members of their families also made $2.4 million in campaign contributions to federal candidates, parties and committees since 2000, the Centre said.
According to the Centre, among members of Congress, Nelson was the biggest single recipient of such donations, taking in $45,900 since 2000. He was followed by Republican Representative Pete Sessions, at $41,375, and Obama, who last year was a senator running for president, at $31,750.
An aide said that $4,600 Obama received from Stanford himself was being donated to charities. The remaining $27,150 listed by the Centre would not be donated because “there was no indication that those contributions from people throughout the country were solicited by Stanford,” the Obama aide said.
Republican Senator John McCain, who lost the 2008 White House to Obama, said he was returning the $28,150 in Stanford-related donations the Centre said he received since 2000.
“The McCain campaign is donating all contributions from R. Allen Stanford, and from individuals associated with Stanford Financial, to charity,” McCain’s office said in a statement.
Overall, about 140 past and present members of Congress received Stanford-related donations during the past decade, with 65 percent of it going to Democrats, the Centre found.
Charles Rangel, chairman of the tax-writing committee in the U.S. House of Representatives, was among the high-powered recipients and promised to donate a total of $10,800 from his political action committee to charity to make up for political contributions received from Stanford over five years.
A spokeswoman for Senate Banking Committee Chairman Chris Dodd said he planned to do the same with $27,500 in campaign contributions.
While making campaign donations and lobbying Congress are legally protected rights of U.S. citizens, such actions have been criticized for giving big spenders unfair access to lawmakers and an advantage in the crafting of legislation.
“You don’t spend all this money on lobbying and campaign contributions unless you want something in return. And you don’t do it again unless it pays off,” said Massie Ritsch, a spokesman at the Centre for Responsive Politics.
In addition to making contributions and lobbying Congress, Stanford also provided lawmakers with trips. For example, it took Republican Senator John Cornyn of Texas in 2004 to Antigua, according to watchdog Legistorm.
Cornyn, chairman of the Senate Republican campaign Committee, called for an aggressive probe of Stanford.
“No one is above the law, and prosecutors should follow the facts, wherever they may lead,” Cornyn said in a statement.
Reporting by Thomas Ferraro; Additional reporting by Caren Bohan; Editing by Gary Hill