A Just Cause (5 page)

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.”
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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.
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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.
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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.
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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.
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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.
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The governor's office, not CMS, was involved in deciding what agencies were to be billed for efficiency initiatives.
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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.
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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.
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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.
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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.”
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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.
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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 out 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.
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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.
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Although the events presented in the two auditor general reports had occurred years before, during Blagojevich's first term, legislative leaders had taken no action. Ellis, however, took note. He had a mere six days to prepare a case. The CMS audit showed a pattern that was suspicious, but
investigating the contract delays would take time, and anything of tangible substance would require an investigative staff to uncover. But the content in the available auditor general's reports concerning the flu vaccines and the I-SaveRx program provided ready grist for establishing a cause for impeachment.

Another administrative incident that Ellis could quickly draw on concerned an ongoing conflict between the governor's office and the legislature over the authority of the Joint Committee on Administrative Rules (JCAR) to review, approve, change, or prohibit administrative rules developed by state agencies under control of the governor. Administrative rules interpret and implement the provisions of statutes passed by the legislative branch of government. In 1977, through an amendment to the 1975 Illinois Administrative Procedure Act, Illinois required that all rules proposed by state agencies be submitted to JCAR for review and approval. JCAR is made up of twelve members, equally divided among the two parties and the two houses, and is supported by a staff of specialists. The committee, established as a service agency of the General Assembly, presents the opportunity for public and private entities to participate in the process of rule development through written comments or by an appearance before the committee.
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JCAR can issue a formal objection to a proposed rule if the rule is determined not to be in the public interest, safety, or general welfare, or if it would violate existing law. By a two-thirds majority vote, the committee can reject a rule. The purpose of the JCAR review is to ensure a balance between the executive and legislative branches of government.
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The controversy between JCAR and the governor began in 2007, when the Department of Healthcare and Family Services (HFS), the state agency responsible for state health care programs, refused to comply with a decision by JCAR. The federal government had assisted in a state program, FamilyCare, which provided health care coverage for children and the adult relatives responsible for the children enrolled in the program. In 2007 federal assistance with the adult coverage expired, and an estimated fifteen to twenty thousand Illinois adult participants would lose health care coverage unless the state made up the federal shortfall. The state statute that created the adult participation was tied to the federal contribution and set an income limit for the adult program participants of 185 percent of the federal poverty
level. At the end of 2007 HFS responded with an emergency rule before JCAR to continue the adult coverage.
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But the emergency rule expanded the coverage income limit to 400 percent of the federal poverty level. The adjustment in income level would add thousands of new participants to the program without legislative approval or appropriation. JCAR rejected the emergency rule and urged HFS to resubmit the rule using 185 percent of the federal poverty level, the established income level. HFS ignored JCAR's action, however, and continued to enroll participants at 400 percent of the federal poverty level.

The actions of HFS became the subject of a citizen suit. Richard Caro, a lawyer from Riverside, filed suit to prevent the governor from unilaterally imposing unfunded programs that were not authorized by the General Assembly—a violation, Caro claimed, of the prerogative of the General Assembly and the Illinois Constitution. The lawsuit was filed two weeks after JCAR rejected the emergency rule.