Dec. 24 (Bloomberg) -- A report by Barack Obama’s transition team concluded that neither the president-elect nor his staff had “inappropriate” talks with Illinois Governor Rod Blagojevich or his office about who would replace Obama in the U.S. Senate.

While Obama himself had said he had no contact with the embattled governor, the internal report highlighted efforts by one member of the president-elect’s inner circle, Rahm Emanuel, to push Obama confidante Valerie Jarrett for the Senate seat.

In releasing the four-page document, Obama is trying to put to rest questions about contacts between his aides and the Illinois governor’s office that have dogged the president-elect since Blagojevich’s arrest earlier this month. An investigation by U.S. attorney Patrick Fitzgerald is continuing.

“They’ve done about as well as could be expected, given the circumstances,” Carl Tobias, a law professor at the University of Richmond, said of the transition team’s report. “Everybody knows it was done internally, of course, and that’s always different than something that’s done independently.”

Blagojevich, a 52-year-old Democrat, has been charged with trying to sell Obama’s Senate seat for cash. He is accused of soliciting bribes and conspiracy to commit mail and wire fraud. Blagojevich said he is innocent and will fight the charges.

Obama, 47, who was questioned by federal investigators last week in connection with the case, resigned from the Senate effective Nov. 17, and the Illinois governor has the authority to appoint his replacement.

‘One or Two’

Emanuel, 49, an Illinois congressman who will become White House chief of staff, had “one or two” conversations with Blagojevich about that replacement, and initially recommended Jarrett, a close Obama friend and adviser, for the post. He did so before learning that Obama had “ruled out communicating a preference for any one candidate,” according to the report.

The president-elect, also a Democrat, told advisers he wanted Jarrett to work with him in the White House. He also said that while he wouldn’t prevent her from pursuing the seat, he wouldn’t “actively seek to have her or any other particular candidate appointed to the vacancy” either, the report said.

It isn’t clear whether Emanuel already knew Obama preferred that Jarrett remain an adviser when he discussed her appointment with Blagojevich. Jarrett withdrew from consideration on Nov. 9. The report doesn’t say why.

Emanuel and his family left yesterday on a long-planned trip to Africa, a transition aide said. Obama is vacationing in Hawaii and didn’t comment.

While Emanuel and adviser David Axelrod have long been close political consultants to Obama, Jarrett holds a separate and more personal relationship with the president-elect and could be a rival for influence within Obama’s circle.

Politics Involved

“The notion that there was no politics in this, that’s absurd,” said Allan Lichtman, a professor at American University in Washington. “The only real issue for the public was there anything untoward going on.”

The internal report’s credibility may be bolstered by recordings that prosecutors made of conversations that Blagojevich’s office had over the Senate seat. When Emanuel met with prosecutors on Dec. 20, he was given a chance to listen to a wiretapped conversation, according to a transition aide.

“Having had the opportunity to just recently listen to a tape of his conversation, it adds some strength to the report’s conclusion,” said Lawrence Barcella, a former federal prosecutor who is now an attorney at Paul Hastings in Washington. “It more likely reflects the government’s evidence and the government’s view as opposed to just Emanuel’s recollection.”

Greg Craig, Obama’s incoming White House counsel who assembled the report, called Emanuel’s conversations “predictable and appropriate” and said the aide wasn’t aware of the governor’s intentions to negotiate any quid pro quo until his Dec. 9 arrest.

Resigning House Seat

After Emanuel accepted the president-elect’s offer to become chief of staff, he called the governor between Nov. 6 and Nov. 8 to notify him he would be resigning his seat in the House of Representatives. The report said the two men spoke about potential candidates to replace Emanuel and about “the merits of various people” the governor might consider for the Senate seat.

Emanuel also had “about four” conversations concerning the Senate seat with Blagojevich’s chief of staff, John Harris, over the course of that month. Harris was arrested along with Blagojevich.

Potential Candidates

Aside from Jarrett, among the potential Senate successors were Illinois Comptroller Dan Hynes; Illinois Veteran Affairs chief Tammy Duckworth; and U.S. Representatives Jan Schakowsky and Jesse Jackson Jr.

After Jarrett took herself out of consideration, Emanuel, with Obama’s authorization, gave Harris the remaining names. The report said Emanuel and Blagojevich didn’t discuss quid pro quos that the governor was allegedly seeking, including a Cabinet position or any personal benefits for the governor, as outlined in the criminal complaint filed against Blagojevich.

The report said that before Jarrett withdrew from consideration, Tom Balanoff, head of the Illinois chapter of the Service Employees International Union, had spoken to Blagojevich about naming her to the post.

‘Ridiculous Proposition’

Jarrett said Balanoff told her the governor asked if he would be considered as a potential Health and Human Services secretary, and was told no.

She said there was no indication Blagojevich mentioned the Cabinet post as a potential quid pro quo, and Balanoff mentioned nothing about offering him a union position, the report said.

Jarrett “did not perceive Balanoff to be communicating as an emissary of Governor Blagojevich” and she viewed a Cabinet appointment for the Illinois governor as “a ridiculous proposition,” Craig said.

The report said Jarrett had one conversation with Blagojevich on Dec. 2, at a governors’ conference in Philadelphia, weeks after she had taken her name out of contention. Blagojevich “wished her well,” it said.

Randall Samborn, a spokesman for prosecutor Fitzgerald, said the office wouldn’t comment on the Obama report.

To contact the reporter on this story: Julianna Goldman in Washington at Jgoldman6@bloomberg.net

Last Updated: December 24, 2008 00:01 EST