A Just Cause Read online

  The investigative committee next turned to the most powerful evidence supporting the charge of maladministration: the results of the audits of the flu vaccine, the I-SaveRx program, and the activities of the Department of Central Management Services (CMS). These audits had provided indisputable evidence of mismanagement and malfeasance, gleaned meticulously by independent professionals and substantiated by hard data. Auditor General Bill Holland summarized the audit findings. Holland was well known to the committee and well respected. A former member of both the house and senate staff, he was one of them.

  Holland addressed the two audits separately, beginning with the CMS audit, which focused on the administration of the efficiency initiatives program created by the legislature to seek efficient operations throughout state government. He quickly reviewed the legislative intent of the initiatives and the program’s structure as defined by statute. In sonorous tones, he related what the audit had uncovered: CMS was not complying with the efficiency initiatives statute. The audit found that CMS had overbilled the state agencies, and the money was then used to pay outside vendors and consultants picked by the governor’s office (418–21). As run by the Blagojevich administration, the efficiency initiatives had resulted in circumventing the legislature’s appropriation process.

  Holland took note of one particular company, Illinois Property Asset Management (IPAM), which received a $30 million, no-bid contract award before the company even existed. In another case, McKinsey and Company was awarded a $14.7 million contract to review the state’s procurement process after McKinsey donated $52,000 to the Friends of Blagojevich, and the contract was awarded by a CMS employee who was a former employee of the company (458–59).

  Jack Franks had anticipated Holland’s testimony. Since the State Government Administration Committee investigation of the flu vaccine episode in 2005, and the resulting audits of CMS, the flu vaccine, and I-SaveRx in 2005 and 2006, Franks had called for further action by the legislature. Now his efforts and the findings of the audits would at last be acted upon. He was ready.

  Franks interrupted Holland and began to ask questions that reinforced the findings of the audits and extended speculation of nefarious activity. Was it not true that 44 percent of contracts were not awarded to the lowest bidder? Did the company Team Services give a large contribution to Blagojevich and then receive a $5 million no-bid contract? And was it not correct that no performance guarantees were included in the IPAM contract? He asked Holland to elaborate on IPAM and if he remembered what the governor’s response to the CMS audit was. Holland deferred to Franks, who answered his own question, paraphrasing the governor’s statement: “this is a prize fight amongst accountants—a lot of noise but not a lot of muscle” (434). Thoroughly familiar with the audit, Franks made another supporting point: 77 percent of $708,000 of expenses examined were questionable (436).

  Holland continued that in seven out of the nine contracts examined in the CMS audit, people from the governor’s office had attended the selection committee meetings. Lang asked if that was unusual, and Holland answered, “Very unusual.” Holland said that when the audit was performed in 2005, he had thought some of the problems were the result of “simply inexperience with the procurement process,” but the events of the last nine days put what he had uncovered in 2005 in a new perspective. “In light of some of the disclosures that we see recently,” he said, “maybe in retrospect this audit is a lot more valuable and a lot more relevant than what we anticipated.” Lang remarked rhetorically that the committee had to face whether the actions of CMS were “simply incompetence or whether it goes beyond incompetence to some pattern of behavior that would relate to a conclusion or not as to whether the Governor was involved in an abuse of power with the distribution of contracts—the awarding of contracts at CMS” (447–50).

  Indeed, the CMS audit presented tangible, indisputable evidence of misfeasance. The efficiency initiatives program was being used to create funds to award contracts to selected vendors and consultants. In light of what had been discovered, the conduct of the governor’s office was cause for serious concern. The hearing-room audience listened intently as Holland related the audit findings. Many began to understand Jack Franks’s passion and the investigative committee’s motives.

  Holland next turned to the flu vaccine and I-SaveRx audit. He briefly went through the scenario of events leading to the governor’s office agreeing to purchase flu vaccines from the UK-based Ecosse Hospital Products. “The administration knew that the importation of flu vaccine was not legal,” he told the committee. Although the Centers for Disease Control located sufficient flu vaccines to cover the state’s priority population, the state increased the order for the number of doses to a total of 254,000. Holland pointed out that three weeks after agreeing to purchase the vaccine, the state had still not executed a contract. The governor’s special advocate for prescription drugs, who negotiated the purchase, claimed that he did not know a contract was required and had been informed that the flu vaccine would be paid COD. Holland told the committee, “I know of no other product, service, or contract ever paid COD—cash on delivery—for any service in the State of Illinois—certainly not for something that was in excess of $2 million” (466–67). A contract was signed by deputy governor Louanner Peters on January 13, 2005, two days after receiving a bill from Ecosse (489). Further, the state negotiated supplying other governments with flu vaccine and increased its order with Ecosse to 773,000 doses, but no agreements with other governments ever came to fruition, so the state was left with a total liability of $8.2 million. A troubling aspect of the report, Holland related, was that high-ranking officials were aware that the vaccine would never be delivered, “even prior to being billed by the vendor and executing a contract” (468). Ecosse filed suit to recoup $2 million, and at the time of the impeachment hearings, the suit was still in litigation.

  A second section of the audit concerned the I-SaveRx program, set up by the governor to provide prescriptions from pharmacies in Canada, the United Kingdom, Australia, and New Zealand. Holland testified that outreach activities for the I-SaveRx program were “primarily coordinated” by the governor’s office (470). The program had not been approved—in fact, the FDA had informed the governor in writing that it violated the law. But the governor ignored the FDA’s warning and expanded the program “to state employees and their dependents” (471).

  Franks again asked clarifying questions. He drew the committee’s attention to a visual timeline of the flu vaccine procurement and went over the events step by step. Franks asked for Holland’s confirmation of doses ordered, dates, and agreement that the governor’s office had signed the contract knowing the drugs would never be delivered. Holland concurred. Instead of seeking an avenue to be relieved of the contract, because it was illegal, the governor donated the $2 million worth of vaccines to the government of Pakistan, Franks claimed. Holland again agreed.

  Lou Lang continued with questions for the committee record. Concerning the flu vaccine procurement, “Where was the money to come from?” Holland answered, “One of the trust funds within the Department of Public Aid.” “Assuming all of the transactions were legal,” Lang asked, “would that have been appropriate?” Holland referred to a letter from Deputy Comptroller Keith Taylor to the governor’s chief of staff, Lon Monk, dated January 31, 2005. The letter expressed that the comptroller’s office did “not believe the Governor’s office can obligate . . . another agency’s appropriations to make payments for its own contract liabilities” (491–93).

  Holland entertained a few random questions from the committee, but his testimony was finished and the clarifying questions exhausted. The most powerful evidence for administrative cause had been presented. David Ellis and the committee had what they wanted—tangible evidence of administrative incompetence and a pattern of suspicious behavior that more than hinted at wrongdoing.

  The day was growing late, but one more set of witnesses was still to come before the committee. A growing
concern throughout Blagojevich’s terms in office was the disregard of requests submitted by various government watchdog groups under the Freedom of Information Act (FOIA). Several witnesses—Jay Stewart, executive director of the Better Government Association; Don Craven, appearing as a private citizen; and Paul Orfanedes, director of litigation for the conservative organization Judicial Watch—were to testify regarding the many FOIA requests, denials, and resultant ongoing litigation. But the hour was late and the committee members had expended their enthusiasm. Currie asked the witnesses to be brief. The witnesses reinforced a negative attitude toward the Blagojevich administration but provided no solid evidence. Although the FOIA denials displayed a pattern of reticent behavior, the court cases were not yet settled.

  It had been an exhausting day. After a few questions from committee members, Currie announced that the committee would meet again on December 22 and cautioned members to prepare for two days of hearings. To everyone’s relief, the committee adjourned.

  Administrative Charges, Part II

  Three days before Christmas, when the committee reconvened, the trappings of the holidays were on full display in the state capitol. The outside dome was festooned with colored lights, and a large Christmas tree adorned the center of the first floor of the rotunda. But the holiday atmosphere did not pervade the building. Inside room 114, it was business as usual. House staff was busy preparing for the meeting, doing the things that had been done hundreds of times for committee meetings. Documents were passed out and microphones checked as committee members began to drift in. It had been thirteen days since the self-assured governor was last seen shaking hands in the federal court, and despite the national media focus and widespread speculation that he would resign and reach a compromise plea with federal prosecutors, he had not. Instead, the governor had engaged in a national media campaign, attacking leaders of the house and senate and proclaiming his innocence.

  Over the previous four days, through the weekend, the committee staff had worked nonstop. The cause for the impeachment resolution was beginning to take shape. The resolution would include the allegations contained in the criminal complaint, but impeachment based solely on the criminal complaint, without an indictment, no matter what degree of probable cause could be demonstrated; would be difficult. The impeachment resolution had to include incidences of misconduct or the unlawful execution of lawful acts that had occurred during the governor’s administration. The previous hearing had provided what the committee needed—tangible evidence that there had been constitutional violations, the governor had usurped legislative prerogative, and he had possibly engaged in criminal activity. It was expected that the prosecution would continue to add to the growing administrative charges.

  The governor’s defense attorney had questioned the legality of using the federal wiretaps in the impeachment hearings, and the house counsel felt that it was important to reinforce the use of the tapes as evidence of probable cause. To justify the federal government’s use of wiretaps, the committee invited retired assistant US attorney John Scully to testify. Scully was not involved with the Blagojevich case, but he was an ideal, credible witness for the prosecution. A US Naval Academy graduate, he had gone on to law school and served as a lawyer in the navy. After retiring from military service, he joined the Department of Justice. Scully was familiar with the procedures required to obtain court permission to install wiretaps, and his experience and integrity were beyond reproach.

  The committee had chosen Republican Jim Durkin to be the lead interrogator to question Sully. Durkin was a seasoned trial prosecutor who was also familiar with the procedures necessary to install wiretaps.23 His purpose was to ask questions and elicit answers that would serve to validate the necessity of, and establish a justifiable cause for, installing wiretaps. Scully’s testimony would walk the committee through the process of review by the US Attorney’s Office, court review, and authorization. To further legitimize Scully’s testimony regarding wiretaps, Durkin started with basic questions: What were the types of intrusive devices, bugs, and wiretaps, and what did it mean to be a cooperating witness wearing a wire? Scully dutifully answered. Could he explain the process of obtaining permission to install a wiretap? Scully reviewed the steps necessary within the US Attorney’s Office to prepare an affidavit and apply for court permission to install a wiretap (555–97).24 “What you are trying to do . . . is establish probable cause, that there is evidence that various federal felonies are being committed,” he said (565). Scully’s testimony accomplished the committee’s intent: to establish that the wiretaps had been installed only after thorough review and approval by a federal judge and that the recordings had been obtained based on probable cause.

  There was little Genson could do to challenge the validity of Scully’s remarks. Instead, he attempted to use the witness to his advantage. He lauded Scully’s experience and cited the many awards that Scully had received during his career with the Department of Justice. He asked Scully a series of questions concerning wiretap procedures, not to probe but to solicit affirmation and show that he and the witness were in agreement. Then Genson turned the questioning to the Blagojevich case. Scully confirmed that he had played no part in the preparation of the documents necessary to install the wiretap, had not read the application, and therefore never made a judgment as to the existence of probable cause.

  Genson then asked if Scully knew whether the governor’s defense counsel had been given the affidavits used in the Blagojevich case, eliciting an immediate objection from Jim Durkin. Durkin did not know the objective of the lawyer’s question, but he was not going to provide the shrewd Genson any latitude. He objected because the question was not relevant and the witness had already stated that he had no knowledge of the Blagojevich case. Genson disagreed and continued by reading a section of a federal statute regarding the restrictions on the use of wiretaps. The lawyer was challenging the use of the wiretaps by the investigative committee and perhaps looking toward the eventual trial. He was attempting to use Scully’s reputation and prestige to support his claims, but Currie and the committee stopped him. Calling his questions and statements irrelevant, and saying they exceeded the limits of clarification, Currie informed Genson that the committee would be happy to accept the statute he cited or any statistics he may wish to present to the committee, but his line of questioning was inappropriate.

  The committee next swore in Matt Brown, executive director of the Procurement Policy Board (PPB) from its creation in 1998, and Ed Bedore, a member of the PPB since its founding, as witnesses for the prosecution. As members of the PPB, which has oversight over the state’s procurement process, Brown and Bedore could provide intimate details about highly suspicious activities of CMS in the award of contracts and leases since Blagojevich had taken office in 2003. The audit of CMS published in 2005 provided circumstantial evidence of administrative wrongdoing, but the committee needed solid evidence. The legislature was well aware of the problems the PPB and Brown were having dealing with CMS and the Blagojevich administration. Jack Franks had been investigating the procurement deficiencies since Blagojevich had taken office and on several occasions had engaged in verbal altercations with CMS personnel and had publicly criticized the governor. Lou Lang had kept in touch with Matt Brown concerning his ongoing problems with CMS.

  The committee had informed Brown and Bedore beforehand what it wanted them to discuss in their testimony. Hoping for tangible evidence, the committee had asked the witnesses to elaborate on sole source contracts where CMS or departments determined that the vendor was the only qualified supplier, cases where state leases had expired but the state continued to occupy the property (holdover leases), standards for leasing and building improvements, and the state’s conducting of business with offshore companies that paid no federal or state tax. The committee was focused; the areas selected had been the subject of investigations by Jack Franks and his State Government Administration Committee and had long been sources of controversy between the gove
rnor and the legislature.

  Like Bill Holland and Vicki Thomas, Brown was a consummate bureaucrat. He studiously addressed the problems that the PPB had encountered with CMS and the discrepancies in procurement procedures. His testimony was short but specific. He discussed Executive Order No. 2003-10, which consolidated all decision-making and administration for real estate under CMS. While promoted by Blagojevich as a cost-cutting move, the executive order had resulted in all decisions on contracts being under one agency, where they could easily be directed by the governor’s office. The PPB had repeatedly requested operating rules to accompany the administrative change but had been ignored.

  Brown also told the committee of the lack of transparency and justification of sole source procurement awards. The PPB had requested justification for “hundreds of [sole source] awards every year” (601). In many cases CMS simply canceled the awards rather than submit justification. The awarding of contracts was slipshod at best, but to many it reeked of corruption.25 Brown told the committee what most already knew. He reviewed the number of holdover leases, noting the increase since Blagojevich took office, and described the problems for the state. He said that the PPB had requested the adoption of rule revisions that would identify which improvements for leased facilities were permanent and which were temporary. The purpose of the rules would be to prevent lessors from making permanent improvements on their properties with state money. No rules were ever adopted. The PPB suspected that the refusal to negotiate new leases and to adopt rules, along with allowing wide latitude to lessors, was a conscious effort designed to reward lessors for campaign contributions. While Brown’s testimony was intriguing, raised speculation, and highlighted areas for future investigations, it provided no specific evidence of wrongdoing.

  Ed Bedore was called to add detail to Brown’s remarks. A former aide to Chicago mayor Richard J. Daley, grandfatherly in appearance, and with a reputation for financial acumen, he had the respect and confidence of both Republican and Democratic members of the committee. Bedore proceeded to give facts and figures and pointed out specific instances related to millions of dollars’ worth of potential waste that the PPB found at CMS because of incompetent or intentional mismanagement. Referring to past Chicago Tribune articles that mentioned the price of influence to the Blagojevich administration, Bedore told the committee that everyone had heard about the $25,000 club, but the owner of one of the properties he cited in his testimony was a member of the $50,000 club. Emphatically, he stated that the examples he presented to the committee “have cost or would have costs to the people of the State of Illinois approximately $6 million in additional costs,” and then cited Sam Adam Jr., one of the governor’s attorneys, who said, “If the people of Illinois suffer, the governor will step aside.” Bedore started to elaborate on Adam’s remark when Genson interrupted. “This is inappropriate. This whole topic is inappropriate and this gentleman’s statements are inappropriate,” he said. Currie agreed that the remarks were “a bit over the top.” Trying to emphasize the connection between campaign contributions and CMS procurement, Bedore concluded that the PPB review had gone back just a few years and had saved $6 million by not approving leases because “the rates were too high or the space [rented] was too much” (612–13).