Municipal Bid Rigging Nationwide and Ethics Day in Chicago
<b>A Municipal Bid Rigging Scheme Comes to Light</b><br>
According to <a href="http://www.nytimes.com/2010/12/08/business/08muni.html" target="”_blank”">an
article in the New York <i>Times</i></a> this week, Banc of America Securities
(which recently merged with Merrill Lynch) agreed to pay the SEC and others $137 million to settle charges related to
a municipal bond bid-rigging scheme. For those who think competitive
bidding rules are enough, this case should make you think otherwise.<br>
<br>
According to the article, "bidding agents, who helped municipalities
with their efforts to raise money, steered business to their favored
companies by giving them inside information on competing bids or by
getting others to submit fake bids to make it appear as if there were
an actual market. In return ... Banc of America Securities steered
business to the bidding agents, sometimes paying them kickbacks and at
other times submitting purposefully nonwinning bids upon request." As
many as twelve other banks were involved in these schemes, and more
indictments are expected.<br>
<br>
Only $36 million of this settlement will go to the municipalities and
other organizations that issued bonds affected by the scheme.<br>
<br>
Were all the municipal officials ignorant of what was going on, or were
some of them in on it? Stay tuned.<br>
<br>
<b>Ethics Day in Chicago</b><br>
According to <a href="http://newsblogs.chicagotribune.com/clout_st/2010/11/chico-emanuel-offe…; target="”_blank”">an
article in the Chicago <i>Tribune<i></a>, last week two of the principal
candidates for mayor of Chicago focused on local government ethics, at
least for a day. Gery Chico called for consolidation of the board of
ethics, the compliance office, and the two inspectors general, with the
IG to be appointed by an independent commission. According
to <a href="http://blogs.suntimes.com/sweet/2010/12/gery_chico_chicago_mayoral_hop…; target="”_blank”">a
<i>Sun-Times</i> blog</a>, he would also bid out legal and financial advisory
contracts, have stronger revolving door provisions, and require much
more transparency in government and with respect to campaign
contributions.<br>
<br>
Rahm Emanuel focused on revolving door provisions and the city's ethics
environment. But according to <a href="http://blogs.suntimes.com/sweet/2010/12/rahm_emanuel_chicago_mayoral_e…; target="”_blank”">a
<i>Sun-Times</i> blog post</a>, he also wants to strengthen the board of
ethics and the ethics code, and get the IG and board to work together
more closely. He also says he would bring more transparency to bidding,
zoning, business licensing, and other areas where there is abuse behind
the scenes.<br>
<br>
It all sounds interesting on paper. Check back with these
pronouncements in a couple of years if one of these favorites is
elected.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
---