A former top Chicago Housing Authority official, who was abruptly fired Jan. 23, said Thursday she has provided federal investigators, including the FBI, with information about ”at least $2 million in kickbacks” she says were paid to CHA officials from firms doing business with the agency.
Lynne Borrell, the former deputy executive director for special housing programs at the CHA, said several past and present members of the CHA board are ”potential targets” of federal investigations into alleged kickbacks.
She said she has been feeding information to U.S. Atty. Anton Valukas about kickbacks at the CHA since the spring of 1985, and she said the FBI was looking into instances in which the CHA board rejected a low bidder on a contract ”at the last minute, apparently for refusing to pay kickbacks.”
Valukas declined to comment Thursday on whether an investigation was underway, but sources confirmed that Borrell had turned information over to his office.
Borrell made her comments after filing a $6.5 million federal lawsuit against Mayor Harold Washington, former CHA chairman Renault Robinson and other CHA and city officials.
The lawsuit charges that Borrell was fired for cooperating with federal investigators and for refusing to go along with attempts by the Washington administration to use the CHA to help the mayor`s re-election campaign.
Borrell`s suit charges that since Feb. 28, 1986, Washington, Robinson, mayoral chief of staff Ernest Barefield and deputy chief of staff Brenda Gaines, now interim CHA executive director, established ”Washington`s re-election as the overriding goal of all planning of CHA operations, staff agenda and assignments, and the expenditure of CHA resources.”
Borrell included in her suit a copy of a memo dated Feb. 28, 1986, that, she said, was written by Robinson to Washington saying:
”CHA is of unique importance to the administration in two respects. First, as the only semi-autonomous agency which the administration clearly controls, it is the focus of both unmitigated opportunity and responsibility to demonstrate successful performance. Second, more than any other agency the CHA directly serves the administration`s core constituency.
”However, almost three years into the term, CHA has not yet built a record which the administration can proclaim, or perhaps even defend.”
The mayor said Thursday that he had not seen the lawsuit and would have no comment until he had.
Attempts to reach Robinson for comment were unsuccessful. He has refused all requests for interviews since he resigned under fire from the CHA board on Jan. 16.
CHA spokeswoman Helene Colvin denied that CHA and city officials had acted for political reasons in establishing a number of new programs for residents over the last year.
”The welfare of the residents of the CHA has always been of primary importance to the board of commissioners and to the staff,” she said. ”To suggest these programs were set up for political reasons is fabrication, fiction and a bad short story.”
In response to the allegations about kickbacks, Colvin said Robinson had gone to Valukas in August, 1985, and to the FBI in September, 1986, to seek investigations of apparent irregularities in the awarding of CHA contracts.
Colvin also criticized Borrell for failing to share with CHA officials information that she had been handing over to Valukas about the alleged kickbacks.
In firing Borrell, the CHA said she had failed to implement the authority`s scattered-site housing program in a timely and efficient manner, failed to supervise its modernization program and failed to prepare timely reports and other documents required by federal authorities.
Thursday`s developments rekindled a controversy about the CHA that has plagued Washington`s re-election campaign for more than a month.
The controversy began on New Year`s Eve when the CHA lost $7 million in federal funds and endangered another $4 million by missing a deadline for awarding contracts.
The loss was especially galling because, at a time of deep federal housing cutbacks, the agency finished 1986 with a deficit of about $8 million, is facing a 1987 deficit of as much as $38 million and needs to do $724 million in rehabilitation work to its 1,325 buildings over the next five years.
Faced with the missed deadline, Robinson at first blamed executive director Zirl Smith in what turned out to be the climax of a long-running battle between the two men over day-to-day control of the agency.
Although later exonerated of fault, Smith resigned Jan. 7 when Washington refused to support him, and Robinson followed him nine days later when federal documents indicated that he was responsible for the funding loss.
Borrell is the second top-ranking CHA official to sue the agency within the last month on grounds that she was fired for being open with
investigators.
In a suit filed Jan. 6, Michael Gorman, the CHA`s former deputy director of procurement and inventory control, accused Robinson of firing him Dec. 15 because he was cooperating with an FBI investigation of CHA contracts.
Nonetheless, Borrell`s accusations Thursday about the alleged political program implemented at the CHA by the Washington administration are the strongest allegations so far that the mayor and other city and CHA officials have tried to use the agency to improve the mayor`s chances of winning a second term.
Similarly, the statements by Borrell and Colvin concerning requests for federal investigations paint the clearest picture so far of an agency at which top officials believed they saw evidence of widespread wrong-doing.
Colvin said Robinson originally met with Valukas in August, 1985, because he was ”concerned about irregularities in the construction contracts for scattered-site projects” and about a pattern of many CHA contracts going to a relatively small group of bidders.
On Sept. 11, 1985, Robinson sent Valukas a letter with a list of 47 contractors who should be investigated, Colvin said.
Robinson kept in close contact with Valukas, Colvin said, but she added,
”As far as we know, there was no federal investigation launched by the U.S. attorney`s office.”
Borrell contended Thursday Robinson went to Valukas only because she and Smith had gone in the spring of 1985 to the U.S. attorney`s office and to the Cook County state`s attorney`s office with information about kickbacks.
She said she became aware of contract irregularities when a CHA roofing contractor, whom she declined to name, came to her and showed her a copy of his contract with the housing authority.
That contract, Borrell said, contained a clause that ”30 percent of the gross contract award was to be kicked back to someone at the CHA.”
CHA documents obtained by The Tribune indicate that Borrell told Valukas about at least 11 firms that were possibly involved in kickbacks.
One of those documents was a letter to CHA general counsel James Thomas from private attorney Mark C. Friedlander, who was doing work for the agency, and it dealt with a meeting that Friedlander had June 10, 1986, with Borrell and Smith.
After the meeting, Borrell told Friedlander about a $26,000 kickback that one CHA official allegedly accepted as payment for awarding a contract, and she named 10 other firms as having given kickbacks, the letter said.
”Lynne Borrell told us that she had been personally approached by one or more of these contractors and offered a kickback for preferential treatment,” Friedlander wrote in the letter. ”She said that she kept records of these encounters and turned all the records over to . . . Valukas.”
Efforts to reach Friedlander for comment were unsucessful.
