Obama transition hits bump as Richardson withdraws

By Deborah Charles

CHICAGO (Reuters) - President-elect Barack Obama stumbled in his quest for a smooth transition on Sunday when New Mexico Gov. Bill Richardson withdrew as his nominee for commerce secretary in the face of a legal inquiry.

Richardson, a former Democratic presidential candidate and one of the country's most prominent Hispanic politicians, became the first casualty among Obama's Cabinet picks 16 days before the new administration takes office.

Obama, who was headed to Washington on Sunday to begin the final work ahead of his January 20 inauguration, said in a statement that he accepted Richardson's withdrawal with "deep regret."

Richardson denied any wrongdoing in connection with the probe of a California-based financial company that had done business with the New Mexico state government.

But he said an investigation lasting possibly weeks or even months "would have forced an untenable delay in the confirmation process."

Richardson had been expected to win easy confirmation by the Democrat-controlled Senate, which will begin vetting Obama's cabinet picks this week.

But an extensive public discussion of the New Mexico case, which news reports have said involves a probe of payments by a California company to political action committees run by Richardson, could embarrass an Obama camp that has already had to distance itself from a "pay-to-play" scandal involving the Democratic governor of Illinois.

Richardson served as U.S. ambassador to the United Nations and energy secretary in the Clinton administration and is a former member of the U.S. House of Representatives.

He became an early Obama supporter after dropping his own presidential ambitions, and said on Sunday he planned to remain as New Mexico's governor.

"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 said in his statement.

Obama said he would move quickly to name a new head for the commerce department, who will serve as his government's chief spokesperson for business.

Among those mentioned in the past as potential candidates for the job are Kansas Gov. Kathleen Sebelius, trade law expert Scott Harris and former media executive Leo Hindery.

A transition aide said Obama has picked Virginia Gov. Tim Kaine to head the Democratic National Committee.

CONTRIBUTION QUESTIONS

Richardson's announcement follows news that a federal grand jury in Albuquerque is investigating whether CDR Financial Products improperly won more than $1.4 million in work for the state of New Mexico shortly after making contributions to political action committees linked to Richardson.