Illinois Inquiry Wraps Up

2009010895sxxhto-1-blagojevich-rod-newscom.jpg

CHICAGO — The Illinois House is expected to debate and vote today on the impeachment of Gov. Rod Blagojevich following a special investigative committee’s recommendation that his arrest on federal corruption charges and other alleged abuses of power warrant his removal.

The 21-member committee adopted a report Thursday evening with articles of impeachment in a unanimous vote.

“This is a very sad day in the state of Illinois,” said committee chairwoman Barbara Flynn Curie, D-Chicago, adding that the evidence shows Blagojevich “is an individual who is not fit to be governor of the state of Illinois.”

Rep. William Black, R-Danville, called it “a good, glad, happy day,” adding “I hope the message is received by all those in office …. enough is enough.”

Rep. Jack Franks, D-Woodstock, an early supporter of impeachment, accused the governor of bringing shame on the state as he called him “AWOL and derelict in his duties.”

“The evidence is overwhelming and damning,” said Rep. Chapin Rose, R-Charleston.

The governor's press office issued the following statement. "Thursday’s vote was not a surprise. The outcome was a foregone conclusion especially when you consider the committee released its report hours before wrapping up testimony. The Governor believes that the impeachment proceedings were flawed, biased and did not follow the rules of law. His team was not allowed to subpoena witnesses, they were never allowed to cross examine people and never given the chance to put on any kind of defense. In all, the Governor’s rights to due process were deprived. When the case moves to the Senate, an actual judge will preside over the hearings, and the Governor believes the outcome will be much different.”

The committee early yesterday released a 69-page draft version of its report recommending the governor’s impeachment ahead of its afternoon hearing in which it also questioned Blagojevich’s U.S. Senate pick to replace President-elect Barack Obama: former state Attorney General Roland Burris.

The report laid out the committee’s case in finding that “cause” exists for the governor’s impeachment based on allegations of corruption and abuse of power. “The purpose of impeachment is not to punish the officeholder. The purpose is to protect the citizens from the abuses of an official,” the report reads.

The report highlights the financial impact of the governor’s arrest, citing the delay in the state’s issue of $1.4 billion of notes to pay down a backlog of $4 billion in overdue bills because of language changes needed in the deal’s offering documents following the arrest.

The report notes that the recent downgrades from Fitch Ratings and Moody’s Investors Service will add $20 million to the state’s interest cost on the notes. It also quotes Standard & Poor’s report putting Illinois — which faces a $2 billion budget gap — on negative watch because Blagojevich’s legal troubles “may challenge the state to respond to its fiscal situation on a timely basis.”

The committee’s report places significant weight on the allegations outlined in the federal government’s criminal complaint against the governor. It also cites other instances of alleged abuses by him during his six-year tenure, some of which have been the subject of federal court testimony in the trials of individuals charged in the federal probe of state corruption known as Operation Board Games.

The more recent federal allegations that are outlined in the report accuse Blagojevich of attempting to shake down potential candidates to fill Obama’s Senate seat in exchange for a federal job, ambassadorship, or campaign contributions.

“His many statements over the numerous intercepted conversations show that his principal concern in making an appointment to the Senate seat was not the people of the state of Illinois, but rather his own personal agenda,” the report reads.

Blagojevich also allegedly attempted to force the Tribune Co. to fire his critics on the Chicago Tribune’s editorial board in exchange for a bond financing involving Wrigley Field through the Illinois Finance Authority to benefit the Tribune-owned Chicago Cubs. The report also criticizes the governor for allegedly shaking down a concrete contractor for a $500,000 donation ahead of the state’s announcement of a $1.8 billion bond-financed capital program for the Illinois State Toll Highway Authority.

The report further cites as evidence testimony from the former executive director of the IFA, Ali Ata, during Antoin Rezko’s recent pay-to-play trial. During the trial Ata said the governor gave him the job in exchange for $50,000 in campaign contributions. Rezko was a top fundraiser for Blagojevich.

The report also recounts the charges that the governor was aware Rezko was using the Illinois Health Facilities Planning Board — which governs proposed hospital construction projects — to benefit the governor’s campaign coffers. Former Bear Stearns & Co. banker P. Nicholas Hurtgen is still facing a trial on attempted extortion charges for allegedly participating in an effort to shakedown a suburban hospital in exchange for board support for a new hospital.

The evidence reveals “a disturbing and long-running pattern of trading campaign contributions for official acts of the governor,” concludes the report, which also cites a series of other alleged abuses involving state hiring practices, leases, and legislative initiatives, and notes Blagojevich’s refusal to appear before the committee.

A simple majority is needed to approve impeachment in the House. Blagojevich’s trial would be held in the Senate where a two-thirds majority vote would be required to convict the governor and remove him from office. If convicted, Lieut. Gov. Pat Quinn would become governor. While Blagojevich’s attorneys have challenged the committee’s actions, the state constitution gives House members wide discretion in deciding whether “cause” exists for impeachment.

Meanwhile, Blagojevich’s pick to fill the seat, former AG Roland Burris, took questions from panel members for 90 minutes on his contact with the governor and his aides regarding the appointment, campaign contributions to the governor, lobbying and consulting work with the state, and his run against Blagojevich in the 2002 Democratic primary.

Since Burris left state government, he founded Burris & Lebed Consulting LLC, which previously did consulting work for investment banks. He also worked as an attorney at his son’s minority-owned law firm, Burris, Wright, Slaughter & Tom LLC, which has done co-bond counsel and co-underwriter’ counsel work.

Burris joined the Milwaukee-based law firm Gonzalez, Saggio and Harlan LLC in mid-2007. The firm did $445 million worth of work on Illinois issuer transactions as underwriters counsel in 2008, up from $12 million in 2007, and $1.2 billion of bond counsel work last year compared to $452 million in 2007 and none in 2006, according to Thomson Reuters. Burris said yesterday that he has resigned from his “of counsel” position with Gonzalez.

 

For reprint and licensing requests for this article, click here.
Bankruptcy
MORE FROM BOND BUYER