Heading home -- with a ton of baggage No doubt Mitch Daniels is leaving the Office of Management and Budget to run for governor of Indiana, just as Republican insiders explained to the Washington Post and the New York Times. But is that the only reason Daniels chose this particular moment to resign as Bush's budget director?
Aside from the federal fiscal wreckage that will be his Washington legacy, and his cameo in last year's Eli Lilly scandal, Daniels faces another potential problem: As my friends at Buzzflash pointed out this morning, the budget director has just been subpoenaed to explain his role in "Indiana's Enron."
Today's Indianapolis Star pairs the story of the budget director's resignation with a newsbreak on subpoenas issued by state investigators to 30 members of the state's "business elite," including Daniels. All are involved in an insider-trading scandal that began with the sale of the Indianapolis Power and Light Co. (known as IPALCO) to American Electric Systems in early 2001. Then a member of the IPALCO board of directors that recommended the sale to stockholders, Daniels was among the insiders who quickly dumped their stock just before the deal was completed. The stock price plunged after the merger -- from $49.60 in March 2001 to a low of 92 cents last October.
All told, IPALCO's officers and directors sold off more than $71 million in company stock -- while leaving the utility's employees, retirees and other investors holding an empty bag. Their lawsuits led to the state probe and the subpoenas issued in recent days. (Jason Vest ably reported this story's all-too-familiar details in the American Prospect last November.) Daniels himself sold off $1.45 million worth of IPALCO stock, according to the Star.
So when Mitch Daniels received a call this week from Star reporters working on the subpoena story, he didn't call them back. Instead, he obviously jumped ahead to announce his resignation. That allowed him to dance past the Washington press corps, which apparently had no clue about the IPALCO controversy that has been roiling the Hoosiers for many months.
[8:15 a.m. PDT, May 7, 2003]
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