Emerging Philadelphia scandal reveals 'pay-to-play' culture
With the Pittsburgh Steelers and the Philadelphia Eagles still in the hunt for the Super Bowl, Pennsylvania's two largest cites are making news in the football world. But Philadelphia, and Pittsburgh to a lesser extent, are also making news in world of government influence peddling - or allegations of corruption. Philadelphia appears to be the clear winner of the "Scandal Bowl" as trials are getting underway in a massive and widespread influence-peddling scheme involving how municipal contracts were awarded to financial firms.
While the Steelers might seem to have an edge over the Eagles on the football field, Philadelphia appears to be in a league of its own when it comes to allegations of corruption in government.
The latest developments came this week when a former J.P. Morgan executive pleaded guilty to trying to influence his firm's chances at winning bond underwriting contracts with the city by giving $50,000 to attorney Ronald White, a confidant of Mayor John Street. White, who died of cancer in November, had been an influential friend and advisor to Street.
Last week, a different JP Morgan pled guilty to the same charges involving the same incident.
A sweeping federal investigation into how contracts have been awarded in Philadelphia has produced evidence showing that only those companies that contributed money to key administration officials would be considered for contracts - an environment known as "pay to play."
The mountain of evidence gathered by the FBI supporting an atmosphere of influence peddling for companies seeking lucrative contracts for city services should serve as a reminder why competitive and open bidding should be the norm for all levels of government. While competitive bidding is stated as the preferred procedure for procurement in Pennsylvania, there are exceptions for certain "services." As evidence continues to emerge painting a picture of corruption in Philadelphia, state lawmakers should re-examine requirements for municipalities contracting for services. Ways must be found to shine more sunlight and public awareness of how the process is handled.
But competitive bidding alone is not enough to prevent influence-selling. Companies who were generous with campaign contributions, favorable loans, use of condos and other goodies to key city hall officials appear to have been routinely given the nod when seeking city contracts for bond underwriting and other, generally financial, services.
In Pittsburgh, the allegations of influence trading pale in comparison. There are, however, allegations that Mayor Tom Murphy traded some $10 million in pay hikes and contract enhancements in exchange for a political endorsement from the firefighters union. Murphy has denied there was any deal with city firefighters going into his 2001 re-election campaign. Still, a federal grand jury is examining documents related to the allegations.
Across the state, the FBI probe in Philadelphia is believed to be the largest federal corruption investigation since Abscam in 1978, with some 25,000 conversations secretly recorded. The entire investigation first came to light when news reports of Mayor Street's office being bugged in the weeks prior to his re-election in Oct. 2003.
White and former Philadelphia treasurer Corey Kemp are at the center of the far-reaching corruption scandal, and if convicted Kemp could face 798 years in prison and $10.7 million in fines.
Kemp, who resigned in late 2003, is charged with accepting gifts including cash, a Super Bowl trip - involving tickets, a private jet, limousine - use of a Wall Street banker's condo and other favors, all in return for steering multimillion dollar municipal contracts to favored banks, brokers and bond underwriters.
If Street's administration didn't have enough trouble with the influence peddling scandal involving city contracts, it was also revealed this week that his brother, T. Milton Street, had been paid a $30,000 per month fee for "consulting services" from a company that had been awarded a four-year, $50 million contract for maintaining the grounds and non-flying equipment at the Philadelphia International Airport.
Mayor Street has not been implicated in this evolving and ever-expanding scandal, but the fact that his brother, a former state senator and hot dog vendor, received more than $1 million for what appears to be phantom work -or for earlier help in influencing the awarding of a city contract- suggests clouds of scandal and suspicion will remain over his head and over Philadelphia's reputation for a long, long time.
Sadly, such a reputation for corruption and influence selling, even if rooted in the actions of a small handful of people, can take decades to overcome.
People inclined toward corruption are not easily deterred, but Harrisburg lawmakers and municipal officials across the state should examine ways to close loopholes in how municipal service contracts are awarded.
