By Cindi Canary
Testimony given to the Illinois House Special Investigative Committee, December 22, 2008
I am Cindi Canary, Director of the Illinois Campaign for Political Reform, a non-profit, non-partisan public interest group that conducts research and advocates reforms to promote public participation, address the role of money in politics and encourage integrity, accountability and transparency in government.
Ten years ago, ICPR was founded by the late Sen. Paul Simon, who throughout his government career – including his service in the Illinois House and the Senate – was dedicated to cleaning up politics and government in Illinois.
I am here today at the invitation of this Committee to address the pay-to-play scandal that has enveloped the Blagojevich Administration.
I want this Committee to be aware, that ICPR has publicly called for the governor’s resignation. After reading the complaint lodged by the U.S. Attorney for the Northern District of Illinois, it was clear to ICPR that the allegations have created, at the very least, a serious appearance of corruption, which has impeded the governor’s ability to govern. The governor’s intention to fight these charges without leaving office has made impeachment proceedings unavoidable.
We believe that the federal government’s complaint provides ample basis for removing Gov. Blagojevich from office, particularly when viewed in conjunction with the fundraising and contracting patterns, which I will outline in my testimony.
I do not personally know if the Governor has committed acts of corruption, but the appearance of corruption – a standard our courts have acknowledged in upholding campaign contribution limits – is indisputable. Over the past six years it has eaten away at the trust of Illinois citizens in their Governor and eviscerated his ability to govern.
ICPR fully recognizes and supports the governor’s right to present a spirited and full defense in federal court. However, we do not confuse the anticipated federal indictment with the Illinois Constitutional proceeding, which this Committee is undertaking.
We believe that this Committee should consider whether the governor has through his actions, undermined public faith and confidence in government and the office of the governor.
My testimony is about “pay-to-play,” which in the broadest terms, is offering or asking for an inducement in exchange for an administrative action taken by a public official. The object of pay-to-play is to obtain a government contract, job or other favor. Pay-to-play is a two-way street. It can be initiated by a corrupt official seeking private benefit from their public position or by a private citizen seeking to corrupt a public official. Pay-to-play is not unique to the Blagojevich Administration or to Illinois. Pay-to-play is partly the reason that former Governor George Ryan is housed today at a federal prison camp in Terre Haute, Indiana.
As long as both parties to a quid pro quo agreement keep the scheme to themselves, pay-to-play is extremely difficult to prove. However, this special investigative committee has the ability to dig much deeper than our researchers and the newspaper reporters who have examined the contributions and contracts.
ICPR has given Committee staff copies of numerous newspaper articles, as well as our research, showing the significant numbers of state contracts that have been awarded by the Blagojevich Administration to corporations and individuals who also have made large contributions to “Friends of Blagojevich,” the governor’s campaign committee.
ROD BLAGOJEVICH’S AGGRESSIVE FUNDRAISING PRACTICES
While it is unnecessary to explain Illinois’ campaign finance law to this Committee, we should note for the record that Illinois places no limits on the size of campaign contributions and no restrictions on the transfer of money between committees, and (in contrast to federal law) allows corporations and unions to make direct contributions. Instead of limits and restrictions, Illinois requires only disclosure. If a public official wants to leverage governmental authority to generate campaign contributions or if a private party wants to use campaign contributions to influence a public official, Illinois’ campaign finance law does nothing to prevent attempts at corruption.
When then-Congressman Rod Blagojevich created the “Prairie State Committee,” a state political action committee and raised an inordinate amount of money for a committee not explicitly formed to support any cause or candidate, ICPR began to keep a close eye on the receipts.
By the time the committee formally changed its name to “Blagojevich for Governor” in August 2001, it had already amassed over $2.25 million in receipts. Over the next six years the Governor raised an additional $56 million. We believe that the patterns of fundraising that I will outline, when viewed in total, create an appearance of corruption, which has been a significant factor in the deterioration of our citizens’ belief in the legitimacy of the Governor’s continuation in office.
DISTURBING PATTERNS OF FUNDRAISING FROM 2002
As Rod Blagojevich ramped up his fundraising for the 2002 Primary Election, he reported significant, 5- and 6-figure donations from three different construction companies, all of which shared the same address in Markham, Illinois. Research determined that these three companies were affiliated with Chris Kelly, and that a fourth company, CGK Consulting in Frankfort, was also connected. Together, these four firms accounted for over $650,000 in donations and loans to the Blagojevich campaign. Kelly, of course, played a key role within his campaign as finance chairman, and later was named a Special Government Agent representing the governor with the Illinois Gaming Board. He is currently charged with tax fraud relating to gambling debts.
The pattern of making multiple, large, and apparently coordinated campaign contributions from affiliated entities to the governor’s campaign fund was established early, and it became a pattern we looked for, and found, regularly.
From the day the gubernatorial campaign committee was formed, Rod Blagojevich’s campaign fund has raised more than $58 million in eight years – an astonishing achievement. We came to see the fund as one of the most aggressive and effective fundraising machines in state history.
I outline this to illustrate that questionable, even alarming, fundraising practices were in evidence from the time that Mr. Blagojevich first set his eye on the governor’s office. During Blagojevich’s tenure, we have witnessed a sea change in how money and politics intersect.
I call your attention to a Chicago Tribune article from earlier this year. (“The governor’s $25,000 club; Big campaign donors to Blagojevich benefit from state,” Chicago Tribune, April 27, 2008.)
The Tribune’s investigation found 235 checks written for exactly $25,000 and payable to the governor’s campaign. The Tribune discovered that three-fourths of them came from people or organizations that had gotten something favorable from the administration, such as contracts, board appointments, favorable policy positions and regulatory actions.
An examination of records at the State Board of Elections found that Rod Blagojevich’s gubernatorial campaign fund has reported over 440 donations of $25,000 or more, and that these donations account for more than $21 million in receipts (including direct contributions, transfers, in-kind donations, and loans, but excluding other receipts).
Rod Blagojevich has raised more money than any other politician in this state’s rich history and he has raised more, in large amounts of $25,000 or more than any other candidate in the history of Illinois.
These donations raise red flags to outside observers such as ourselves. The disclosure reports say how much donors gave to whom and when, but they do not tell why the donation was made. In many instances, there is a troubling, apparent correlation between donations and state actions. Media reports have noted that on many, many occasions, large donations to the governor’s campaign fund came within weeks or days of the donor benefited from a positive action by an agency under the governor’s control shortly after making a donation.
The Chicago Tribune highlighted several of these apparent correlations in a story published last April on what the Tribune called the governor’s “$25,000 Club.”
The Tribune noted:
* Attorney and political fundraiser Myron “Mike” Cherry made a $25,000 donation on September 9, 2002; his law firm, Myron M. Cherry and Associates made another $25,000 donation on June 18, 2004. According to the Tribune, the Department of Financial and Professional Regulation hired Cherry’s law firm, and the firm billed the state over $900,000 for legal services.
* Cordogan, Clark & Associates gave the Blagojevich fund $25,000 on July 25, 2003. John Clark, a named partner with Cordogan, Clark & Associates, told the Tribune that Wilton Partners, the lead contractor on the Tollway Oasis project had urged him to make this contribution. John Clark’s firm, Cordogan Clark, had a subcontract with Wilton Partners.
* Patrick Engineering made a $150 donation on July 19, 2002; in September of that year the company gave $1,000; by 2007, it had given over $56,000. The company has held state contracts worth an average of $4 million in each of the last six fiscal years, principally with IDOT and the Tollway Authority.
* ACS State and Local Solutions gave its first donation to the Blagojevich fund, of $25,000, on July 25, 2003. It has since given about another $25,000, over three donations. Its contracts with state agencies, mainly the Department of Healthcare and Family Services, have averaged $17 million in each of the last six fiscal years. The Tribune noted that the contract, while initiated under the George Ryan administration, was finalized in 2003 in the same month as the $25,000 donation was made to the Blagojevich fund.
* Wight & Company gave the Blagojevich campaign fund $500 on March 6, 2002, $6,000 on May 22, 2002, and other donations through June of this year, bringing its total giving to the fund to over $125,000. The company has three no-bid contracts with the Tollway, where most of its state contracts are; total state contracts have averaged over $2.5 million over the last six years.
* System Development Integration gave $2,000 to the Blagojevich fund on June 23, 2000. The company made additional donations of $10,000 on June 8, 2004 and $5,000 on March 31, 2006; CEO David Gupta wrote a personal check for $25,000 on July 14, 2003. The Tribune reported that System Development Integration was a subcontractor on a new emergency response headquarters; the firm has a contract with the Tollway worth over $2 million for FY2009.
* Environmental Design International gave over $57,000 to the Blagojevich campaign fund, including donations of $25,000 each on July 25, 2003 and June 21, 2004. The company had contracts worth $560,000 in FY 2004.
These, sadly, are only a handful of examples of the troubling nexus between campaign contributions and the operation of state government.
In the last two decades, the size of campaign contributions made by state contractors to governors has grown tremendously.
Ten years ago, a contribution in excess of $2,500 would raise eyebrows. Those are the ones that ICPR and journalists would look at more closely to see whether there was a connection to a state contractor. Some were from old friends and wealthy relatives, while others were from executives, corporations and labor unions that had received some benefit from state government.
When there is a nexus between a campaign contribution and a state contract or government job, the questions that we ask are: Were they just supporting officeholders who shared their political views? Or were they using campaign contributions to insure favorable treatment? Or were they responding to shakedowns by making campaign contributions to insure that the officeholder would not shut them out from consideration?
In recent years – the Blagojevich years – the size of such contributions has exploded.
No longer does a $2,500 contribution make anyone blink.
ICPR, with assistance from Kent Redfield and the Sunshine Project, examined contributions at the level of $25,000 and above to the campaigns of Gov. Blagojevich, former Gov. George Ryan and former Governor
Edgar.
Here are the numbers we found:
* Jim Edgar – We examined his last six years as governor and found he raised nearly $11.8 million total. That included just eight contributions of $25,000 or more, a total of $422,000. The eight really big contributions to Edgar constituted about 3.6 percent of the total Edgar raised.
* George Ryan – We examined a six-year period that included his four years as Governor and as he geared up for his 2000 campaign. George Ryan raised almost $20 million, and that included 35 contributions of $25,000 or more, a total of $1.6 million in those big contributions. Those 35 really big contributors to Ryan constituted 8.2 percent of the total Ryan raised.
* Rod Blagojevich – We examined eight years that included his time as governor and the ramp up to the 2002 election. Rod Blagojevich raised $58.3 million, and that included 435 contributions of $25,000 or more, a total of $20.6 million in those big contributions. Those 435 really big contributions constituted 35.3 percent of the total Blagojevich has raised.
Those large contributions are the ones that have been raising questions since Gov. Blagojevich took office.
THE ROLE OF STATE CONTRACTORS IN CAMPAIGN FUNDRAISING
In the last two decades, the size of campaign contributions made by state contractors to governors has grown tremendously.
In 2005, the Chicago Sun-Times analyzed contributions and state contracts. (“Donations and deals raise eyebrows,” Chicago Sun-Times, January 30, 2005.) The Sun-Times looked at 20 companies that had given a combined $925,500 to Friends of Blagojevich and discovered the firms had been paid or were under contract to be paid a total of $365 million by state government.
The criminal prosecutions of Tony Rezko, Chris Kelly, Stuart Levine and others have dramatically increased the public perception that state contracts, jobs and other benefits in the Blagojevich Administration are handed out to the largest campaign contributors and not to the firms or persons most qualified to receive them.
More recently, the Chicago Tribune found that state contractors had given $250,000 of the $650,000 in contributions that Blagojevich raised in June of this year, which happened to be the first 30 days after the House unanimously passed House Bill 824, the pay-to-play reform legislation. (“Governor steps up fundraising; Contractors’ donations flow as reform bill sits,” Chicago Tribune, July 29, 2008.)
According to the Tribune analysis, more than 125 state contractors or their employees contributed at least $399,000 to the governor’s campaign in the first six months of this year. Those contractors have been awarded more than $1.1 billion in state business since he was elected governor.
Utilizing public databases available from the State Board of Elections and Comptroller’s Office, ICPR’s own research has independently confirmed many of these news accounts.
Those contributions and the headlines led to the ultimate passage – over Gov. Blagojevich’s veto – of House Bill 824. Beginning January 1, 2009, holders of state contracts valued at $50,000 or more will be banned from contributing to the officeholder who awarded the contract.
Strangely and sadly, the enactment of that law is alleged to have caused the governor to go into overdrive to squeeze more campaign funds from state contractors. The complaint from the federal government explains that the governor recently attempted to raise as much money as possible from state contractors in advance of the ban.
Because the ban did not take effect immediately, it was a little like handing an arsonist the keys to a gas station and a box of matches and telling him you would be back to check on him in three months.
The people of Illinois and, indeed, the world are now viewing the five-alarm fire that has resulted.
As I noted above, at the beginning of my remarks, ICPR is a non-partisan research and advocacy organization. Our work has been broadly recognized as effective in bringing necessary and important reform to Illinois, including in the pay-to-play area, but clearly we have much, much more to do.
I am personally saddened and angered by the devastating impact that the alleged pay-to-play practices of the Blagojevich Administration have had on our state and on the public’s confidence in government.
I would like to close by again applauding this Committee for its work in helping the Illinois General Assembly fulfill its responsibility under the Illinois Constitution.
Posted on December 23, 2008