* Mayorkas says he had been unaware of investigation
* Says never exercised "undue influence"
* Republicans say "unfair" to hold hearing in view of probe
At a confirmation hearing on Thursday boycotted by Republican senators, President Barack Obama's nominee for deputy homeland security secretary denied allegations he abused his current government position to help politically connected companies.
Alejandro Mayorkas, currently director of U.S. Citizenship and Immigration Services, appeared before a Senate committee just days after reports he was being investigated by the Department of Homeland Security's Office of Inspector General.
Republicans on the Senate Homeland Security and Governmental Affairs Committee had asked for a postponement in Mayorkas' confirmation hearing once they heard about the investigation.
But the Democratic chairman, Senator Tom Carper, refused. So the Republicans boycotted, with the top-ranking Republican, Senator Tom Coburn, filing a statement saying it was "unfair and improper" to hold a hearing in light of the investigation.
Sitting in front of a sparsely populated row of Democratic senators, Mayorkas said he did not know about the investigation until Monday night when he was forwarded an email originally sent from the inspector general's office to lawmakers on the committee.
"I had no idea of the existence of that investigation and quite frankly, I still don't understand it," said Mayorkas. "I have never ever in my career exercised undue influence to influence the outcome of a case."
If confirmed as deputy secretary of homeland security, Mayorkas would likely run the department on an acting basis following the September departure of Secretary Janet Napolitano, who is leaving to run the University of California.
The DHS' Inspector General's Office said in the email to lawmakers that it was investigating Mayorkas for alleged conflicts of interest, misuse of position and an appearance of impropriety by Mayorkas and other top USCIS management.
The email said investigators were looking into whether Mayorkas had assisted in securing an EB-5 immigrant investor visa on behalf of Gulf Coast Funds Management.
Gulf Coast Funds Management is run by Anthony Rodham, the brother of former Secretary of State Hillary Clinton.
The inspector general's office said in the email that "at this point in our investigation, we do not have any findings of criminal misconduct."
Carper, who said he disagreed with the Republicans' decision to boycott, said the hearing offered a good opportunity to allow Mayorkas to explain himself.
"Rather than allowing rumor, speculation and innuendo to rule the day, this hearing will allow us to continue the process of vetting this nominee," Carper said.
Mayorkas said he wanted to learn more about the allegations but said, "I will tell you the allegations as they have been framed are unequivocally false."
He said USCIS regularly got complaints about the EB-5 immigrant investor program, which grants foreigners visas if they invest between $500,000 and $1 million in businesses that create U.S. jobs.
White House counsel Kathryn Ruemmler sent a letter to Carper noting she was aware that concerns had been raised about the inspector general's investigation but that Mayorkas had a thorough FBI background check before his nomination.
"These standard practices were followed with respect to the nomination of Director Mayorkas, and we have no concerns about his suitability for this important position," Ruemmler said in the letter, obtained by Reuters.
After the hearing, Carper would not speculate on the timing of a vote on Mayorkas' nomination.