A Just Cause

by Sieracki, Bernard; Edgar, Jim;

The full house met on December 15, and after some obligatory political jousting, Republican efforts to have HR 1644 discharged from the Rules Committee and considered by the full house failed. The house took up the Democrats’ HR 1650 and approved it by a vote of 113 to 0.4 Soon after HR 1650 was passed, Madigan held a press conference announcing the formation of an investigative committee. The Speaker appointed a trusted ally, Barbara Currie, the house majority leader, as committee chairperson. Though not an attorney, Currie was skilled at running a committee, and she was unflappable. She also had chaired the impeachment committee investigating Heiple in 1997. Most important, Currie would not deviate from the Speaker’s script. James Durkin, the former prosecuting attorney from Cook County, was named Republican spokesman.

  December 15 was also the day that the delegates elected to the Electoral College in November met in Springfield to cast their votes for either Barack Obama or John McCain for president. Barbara Currie was one of these delegates. After she cast her vote, she attended the Illinois Speaker’s press conference. Currie had served in the Illinois house since 1979. Her district included the University of Chicago, and early in her legislative career, she was considered by some to be a “Hyde Park liberal.” Her skills soon became apparent, and among legislators, staff, and lobbyists, she was respected for her intelligence, fortitude, and refined comportment. A slight woman, Currie was a trusted and capable legislative manager and a confidant of the Speaker. She was fiercely loyal to Madigan, and it was safe to assume that when she spoke, Speaker Madigan was in agreement.

  To Currie, it seemed strange attending the press conference just moments after standing in Illinois’ Old State Capitol building to cast her vote for Barack Obama as president of the United States. Now she was attending an event a few blocks away in the capitol’s Blue Room to announce the beginning of an investigation of Rod Blagojevich for possible impeachment. The incongruity of events aroused conflicting emotions. She had felt pride voting for Barack Obama, a friend who had been the state senator from her legislative district, a US senator from Illinois, and the first black man to attain the highest elected office in the United States, and then experienced utter dejection and revulsion at the press conference to begin the impeachment of the governor of Illinois.5

  During the previous six days, Ellis had begun to prepare the case for impeachment. He considered using the criminal complaint filed by the federal government as part of the cause for impeachment, but the governor had not yet been found guilty of anything or indicted on any of the allegations pertaining to the arrest, and if he was indicted, a criminal trial would be months, perhaps years, away. In developing the evidence to justify the existence of cause, Ellis had to include conduct that constituted a pattern of maladministration and malfeasance. He had to show that the governor had used his office in an illegal manner, had used his position at times contrary to the law, and had failed to perform his official duties.6 But Ellis had only six days, not enough time to investigate and assemble new evidence. He had to rely on existing data developed by the legislature and state agencies in past administrative investigations. Fortunately, he had plenty of material to choose from.

  Ellis found one instance that had occurred halfway into Blagojevich’s first term particularly intriguing. In October 2004 the US Food and Drug Administration (FDA) announced that half of the US flu vaccine supply for the 2004–5 flu season was unsafe. Illinois, like many other states and municipalities, began searching for replacement vaccines. The Blagojevich administration immediately began negotiating the purchase of flu vaccines from Ecosse Hospital Products, a European company based in the United Kingdom, and on October 22, 2004, the state of Illinois’ special advocate for prescription drugs, Scott McKibbin, agreed to purchase thirty thousand doses of the vaccine from Ecosse. Aware that it was a violation of federal law to import drugs from a foreign country, the governor’s office announced that the agreement was subject to FDA approval.7 Deputy Governor Bradley Tusk increased the order the following day by two hundred thousand doses and again on November 1 by an additional thirty thousand doses.8 The Blagojevich administration had developed a plan to obtain vaccines not only for Illinois but also for other states and out-of-state municipal governments. The total cost for the vaccines ordered from Ecosse was $8.2 million.9 FDA approval was never granted. Although the flu vaccine program was promoted by the governor’s office with much fanfare, by the end of 2004 the state of Illinois and Ecosse still had not entered into a contract specifying the terms of purchase or delivery. And the US Centers for Disease Control (CDC) announced that it had located sufficient vaccines to serve Illinois’ priority population: people over age sixty-five, pregnant women, and other vulnerable citizens. In January 2005 the CDC announced that an additional two hundred thousand doses were available for Illinois. By late December 2004 McKibbin was already aware that the vaccines from Ecosse would not be allowed to legally enter the United States and that an adequate supply of vaccines was available. He sent an e-mail alerting administration staff, “We probably will never take delivery of these doses so we will need to find a way to pay [Ecosse] for the service they performed.”10 Saying “service” instead of “product” or “drugs” obfuscated just what the state had been planning to purchase. On January 11, 2005, Ecosse submitted a bill for $2.6 million. Even though Illinois did not need the vaccines, importing drugs from a foreign country was a violation of federal law, and the administration was aware that the drugs would never be delivered, two days after receiving the Ecosse bill, Deputy Chief of Staff for Social Services Louanner Peters signed a contract for the vaccines.11 The drugs were never shipped, and at the time of the governor’s arrest, Ecosse was still seeking payment of $2.6 million through the Illinois Court of Claims.

  Another incident involving the importation of drugs from foreign countries also took place in October 2004. The governor announced the I-SaveRx program, which would enable state employees and state retirees to obtain prescriptions from foreign pharmacies—another violation of federal law.12 The governor knew that it was illegal to import drugs from a foreign country—the FDA had written a letter warning Blagojevich that the program, “if implemented, would be in direct conflict with federal and state law.” The governor appealed to the FDA to allow Illinois to establish this pilot program, but the FDA denied the request. Nevertheless, Blagojevich launched the I-SaveRx program with another high-profile media campaign.13 He continued promoting the program and encouraged state employees and state retirees to illegally purchase drugs from foreign countries.

  The Blagojevich administration’s mismanagement of the flu vaccine purchase, the Ecosse claim for $2.6 million, and the I-SaveRx program did not go unnoticed by the legislature. In the spring session of 2005 Representative Jack Franks, chairman of the house State Government Administration Committee, was aware of the flu vaccine fiasco and the governor’s flagrant disregard of the FDA warning. Franks’s committee was responsible for administrative oversight and held hearings in March 2005 concerning both the flu vaccine and I-SaveRx drug procurement. The committee found several instances where both federal and Illinois law and state procurement procedures were not followed. Franks summoned the director of the Illinois Department of Central Management Services to appear before the committee. Instead, a department lawyer appeared. Franks was outraged. “I went ballistic,” he later said. Franks told the lawyer that the director should appear the next day and that he would be sworn in and would testify under oath. The director resigned that night, rather than appear and testify under oath before Franks’s committee. “I knew we were on to something,” Franks said.14

  After the hearings, Franks filed and the house passed identical House Resolution 394 and House Joint Resolution 040, instructing the state auditor general to audit and determine what roles the governor’s office and the special advocate for prescription drugs played in the flu vaccine procurement, what agencies were responsible for the I-SaveRx program, and whether the “entities involved in these programs followed all applic
able laws, regulations, policies, and procedures.”15 Senate President Emil Jones was an ally of the governor, and the senate never considered the house joint resolution. But HR 394 was sufficient for the auditor general to take action.

  The auditor general’s office began the mandated audit and released its findings sixteen months later, in September 2006, just a few weeks before the general election in early November. Blagojevich was up for reelection, and the audit was highly critical of the administration’s actions. The governor’s office was furious. John Harris, a former aide to Chicago mayor Richard M. Daley and then Rod Blagojevich’s deputy governor, called Bill Holland, the state auditor general, and complained about the timing of the report release and the negative effect it could have on Blagojevich’s chances of winning reelection. Normally, the auditor general’s office can complete an audit in about a year, but the flu vaccine and I-SaveRx audit took an additional four months. As a routine practice, in election years, Holland generally did not release audits between Labor Day and the election, but this audit was different. Holland told Harris that the report was delayed through no fault of the auditor general’s but because of the administration’s refusal to cooperate. The audit was delayed because the governor’s staff was not able or willing to give “simple answers to simple questions.” He went on to say that “the governor was going to win and he would be around for four more years.” Holland also reminded Harris that his term as auditor general ran for six more years. The message was clear: “learn to work with us.”16

  In the week prior to the release of the audit, the governor’s office, aware of the report’s contents, began the unprecedented action of attacking sections of the report. After the report was published, Holland took the equally unprecedented step of holding his own press conference in Springfield to answer the comments made by the governor’s office. An audit is usually viewed as a management tool, a constructive element designed to ensure the legal and efficient operation of government. Holland spent more than an hour in the capitol press room answering reporters’ questions concerning the report’s methodology, legal imperatives, and the audit’s conclusions. A few days after Holland’s press conference, the governor’s office stopped attacking the audit.17

  The audit found that the governor’s office decision to purchase flu vaccines violated federal law and state procurement procedures, that the administration did not present documentation or methodology to illustrate how it determined the number of vaccines needed, that the governor’s office was not timely in contract procurement, and that it had failed to secure contracts from other states and local governments for additional vaccines, creating a potential state liability of $8.2 million. The section of the report concerning the I-SaveRx program was also damning. The audit found that the program violated federal law and that pharmacies participating in the program might be in violation of the Illinois Pharmacy Practice Act. The audit also found that oversight of safety was lacking: the Department of Financial and Professional Regulation had not completely filled out 40 percent of the forms for pharmacies it had inspected, and the state had not monitored whether only approved pharmacies were filling prescriptions. Expenses for the program were also suspect: Illinois had spent nearly $750,000 for assistance, travel, and promotion of the illegal I-SaveRx program, and much of this amount had been awarded to outside contractual services.18

  Jack Franks was highly critical of the governor, but legislative leaders elected to take no action. Franks received a tip that someone would be visiting him to discuss his disparaging remarks about the governor. A lobbyist subsequently paid him a visit and urged him to abandon his investigation for the “good of the Democrat Party.” Franks said, “I didn’t know how high up this went and who was involved.” The situation unnerved the usually assured Jack Franks. A lawyer himself, he immediately sought the advice of a lawyer friend.19

  The audit reports regarding the flu vaccine and I-SaveRx provided David Ellis with clear documentation of serious mismanagement within the Blagojevich administration, but another audit—a routine financial and compliance audit of the Department of Central Management Services (CMS) conducted for 2003–4 and published in 2005—was a treasure trove of examples of maladministration and possibly corruption. The CMS audit, also conducted by the state auditor general, examined the activities of the governor’s “efficiency initiatives.” Passed as part of the Illinois Budget Implementation Act of 2004, the efficiency initiatives gave CMS the authority to implement a consolidation of services for departments under the governor’s control. Simply, as passed by the legislature, the consolidation of resources by state agencies would result in more efficacious and economical operation. CMS, by statute, was authorized to identify efficient restructuring and procurement within each agency or department. Each entity would be billed for its individual portion of the consolidation, rather than paying directly for the service, and each would benefit from a reduction in service costs. Each reduction in cost would be associated with a specific line item of the agency’s or department’s budget.

  However, the audit found that CMS was not complying with the statute and that the Governor’s Office of Management and Budget (GOMB) was interfering with the administration of the efficiency initiatives.20 Illinois statute requires that CMS identify specific line-item efficiencies, but the audit found that GOMB dictated the amounts to be billed from the agencies. CMS would select the agencies where initiatives service costs would be charged, print the amounts on CMS letterhead, and then return them to GOMB for final selection.21 The governor’s office, not CMS, was involved in deciding what agencies were to be billed for efficiency initiatives.22 CMS did not identify specific line items, and the agencies or departments simply paid the amounts established by GOMB where they could find the money. Franks later described the practice as an elaborate “money laundering scheme,” billing agencies and departments to create an amount of money for discretionary use by the governor’s office, money taken from line-item appropriations passed by the legislature.23

  The CMS audit of April 2005 also uncovered evidence that the governor’s office was often part of the selection process for contracts associated with the efficiency initiatives program and was sometimes part of the team that developed requests for proposals (RFPs), which established qualifications and performance specifications for services put out for bid.24 The audit also found that in some cases, vendors participated in the development of RFPs, writing their own specifications and vendor requirements. The entire RFP process and selection of applicants was questionable. In one instance, the audit uncovered evidence that a contract had been granted to a company, Illinois Property Asset Management (IPAM), that did not exist prior to the granting of the contract. IPAM was given the opportunity to change its proposal during the selection process, an opportunity given to no other proposed vendor, and in the course of its service, IPAM charged the state for many questionable expenses, including basketball tickets, limousines, and a victory dinner for everyone who helped IPAM receive the contract.25

  A section of the CMS audit that caused many to speculate about the motives of the governor, and that became the topic of conversation in many Springfield bars frequented by legislators and lobbyists, concerned the processing of state contracts. The Illinois Procurement Code requires that “whenever . . . a contract liability . . . exceeding $10,000 is incurred by any State agency, a copy of the contract . . . shall be filed with the comptroller within 15 days thereafter.”26 Work performed for the state cannot be paid until the comptroller receives a signed contract. Since Blagojevich had taken office in 2003, contract delivery to the comptroller for processing began to be delayed; some contracts took as long as 248 days to reach the comptroller.27 Performing work for the state without a contract in place has negative consequences for both the vendor and the state, but the bottom line for the vendor is that it would receive no compensation until a contract was forwarded to the comptroller. Departments responded that the delays were the result of paperwork and working ou
t contract details with vendors, but veterans of Springfield’s politics suspected that the contracts were being held up for political reasons. Contracting a vendor to perform a service or work and then wait to make payment seemingly resulted in leverage for the Blagojevich administration. Some speculated that a donation to the governor’s campaign fund or participating in a fund-raising event could speed up the payment process.

  Campaign donations have always been a major component of doing business in Illinois. A political donation purchases access to decision makers and inclusion in the policy dialog, and it may influence officials who determine contract awards, but as early as 2003 people spoke of the overt fund-raising approach of the new administration. At the Sangamo Club, a members-only restaurant and bar about two blocks from the capitol, where lobbyists hold court after each session day to entertain legislators or provide an introduction for their clients and their causes and claims, a common rumor circulated: the price of appointments to a directorship or senior staff position within the Blagojevich administration was $50,000, and appointments required the approval and direction of Blagojevich’s key advisors. The actions of the Blagojevich administration were conspicuous: nothing, not even price, was hidden. The pledges of Rod Blagojevich during his first campaign to clean up Springfield government “seemed to last about three minutes after taking office,” Auditor General Bill Holland later remarked.28

  The evidence uncovered in the two audits constituted tangible maladministration and malfeasance. Ellis called Bill Holland and asked if he wanted to be a witness before the Special Investigative Committee. Holland, a career state employee, had begun working with the legislature as an intern for house Democrats in 1974, moved to the senate, and eventually became chief of staff to senate president Phil Rock. When Rock retired from the senate, Holland was named state auditor general and had been serving in that position since 1992. Holland had a reputation as a capable, steady, no-nonsense bureaucrat. He answered that he certainly did not want to be a witness—being part of an impeachment process was not something the conscientious career bureaucrat would relish—but, he told Ellis, he would.29