Making an abrupt about-face, Gov. Rod Blagojevich on Thursday terminated a multimillion-dollar consulting contract that was central to his government cost-saving plans after initially dismissing an audit that said it was mismanaged and questioned its worth.
For more than a week, Blagojevich had stoutly defended the state’s more than $30 million contract with Illinois Property Asset Management LLC and ridiculed an audit that Auditor General William Holland said revealed so much waste and mismanagement that he sent it to the attorney general’s office for investigation.
Holland’s critique of the Department of Central Management Services, an agency that Blagojevich has used to centralize control of government administration, found scant evidence of more than $600 million in cost-savings touted by the administration.
It also found more than $500,000 in questionable tax-funded payments to department contractors, including $31,000 to Illinois Property Asset Management for such items as wining and dining state workers, extravagant sport-utility vehicle rentals, cell phone bills, parking at a Bulls game, an ice bucket and tongs. The firm was even reimbursed for a victory party it threw for itself when it won the state contract.
As recently as Wednesday, Blagojevich sought to downplay the company’s questionable spending, likening it to a bad outing by Cubs pitching star Mark Prior. “Mistakes happen from time to time, and I don’t want to prejudge this particular company until we know all of the facts,” the governor said.
But in the face of mounting criticism over his defense of the firm and Central Management Services, Blagojevich on Thursday signaled a retreat. He ended the contract and also said he had suspended a politically connected agency official who oversaw it.
“We’ve reviewed IPAM’s expense reports thoroughly, looked at the body of their work, and no matter how much money they’re helping us save elsewhere, in my mind billing the taxpayers for things like car rentals and meals is inexcusable and won’t be tolerated,” Blagojevich said in a statement.
“Let this serve as notice to every company that does business with the State of Illinois: If you try to stick taxpayers with these kinds of expenses, your contract will be terminated,” he said. Blagojevich also thanked Holland for the audit, although the governor had previously sought to trivialize it.
Aides to Illinois Atty. Gen. Lisa Madigan said her office would continue an investigation into the contract despite its cancellation.
“This does not impact our investigation, and we continue to carefully review the audit documents,” said Gail O’Connor, a Madigan spokeswoman.
`Gov. Flip-Flop’
Critics of Blagojevich were quick to pounce on the cancellation, with one Democratic lawmaker labeling Blagojevich “Gov. Flip-Flop.”
“The governor came to the right conclusion for the wrong reason,” said state Rep. Jack Franks (D-Woodstock), who said the House State Government Committee of which he is chairman will still hold hearings on the audit. “Like everything [Blagojevich] does, it’s all for politics and polls. There’s no substance there.”
State Sen. Steve Rauschenberger of Elgin, a potential GOP candidate for governor, likened Blagojevich’s administration to a gang of inept firefighters. “After the house is burned down,” he said, “they buy new fire extinguishers.”
Shortly after Holland released a draft of his audit to Central Management Services last month, the agency conducted an internal investigation and sought repayment from Illinois Property Asset Management of the questionable expenses. A company spokeswoman said Thursday that the firm believes only $11,000 was wrongly reimbursed.
In a statement, the firm said Blagojevich’s decision was “disappointing,” and that his office’s characterization of its business practices was “slanted and unfair.”
The surprise move to cancel the contract was just the latest effort by the Blagojevich administration to try to repair potential damage to its public reformist image.
Holland’s audit blasted the agency for mismanaging more than just the contract. It questioned the value of $69 million in contracts to consultants hired to find ways to save tax dollars.
Shortly after Holland gave Central Management Services a draft of his audit in March, agency Director Michael Rumman announced his resignation, although he insisted there was no connection.
But Rumman has indicated he will stay on indefinitely, and some lawmakers take that as an indication that Blagojevich’s handpicked replacement, Paul Campbell, might have trouble gaining Senate confirmation.
Campbell, a deputy Central Management Services director in charge of procurement, was the recipient of at least one meal with Illinois Property Asset Management officials that was reimbursed by the state.
Holland’s audit found that the firm was reimbursed with tax dollars for meals with Bruce Washington, a top department official who oversaw the firm’s contract at $110,000 a year. Washington also received tax-funded reimbursement for the same meals, the audit found.
Administration sources said Washington was placed on administrative leave without pay.
Campbell and Washington played a key role in awarding the contract to Illinois Property Asset Management, a subsidiary of Mesirow Stein Real Estate Inc., whose leadership includes prominent developer and political donor Richard Stein. David Malone, former Chicago purchasing director, ran the project, and one of the company’s subcontractors was a firm run by Orlando Jones, the godson of Cook County Board President John Stroger.
Business connections
Recently released state records show that Rumman was a business partner with Jones in a separate real estate venture. Rumman said he was brought into the investment by Antoin “Tony” Rezko, a developer who is a top Blagojevich adviser.
Even as Blagojevich finally came to support the findings of one Holland audit, he dismissed another–a critical audit of the state lottery released Wednesday. In that, Holland said he could find no documentation to prove that the lottery’s prime ad agency, R.J. Dale Advertising & Public Relations, deserved payment for as much as $5 million in advertising it claimed to have placed in the media.
“First of all, R.J. Dale is the new reality in my administration, which I take a great deal of pride in, and that is that we’re aggressively trying to seek more diversity and opportunities in state government,” Blagojevich said, noting the firm is owned by an African-American.
But problems with R.J. Dale have been so severe that the state’s inspector general conducted a review of the payments issue, and the lottery department took the unusual step of setting up an escrow account to ensure payments got to media outlets running ads.
Blagojevich, who has often promoted the transparency of his administration, refused to make public the inspector general’s report, saying that doing so would violate the law. But a top official in the inspector general’s office said it was an “open question” as to whether Blagojevich could make the report public.
———-
rap30@aol.com
rlong@tribune.com
