CHICAGO — In the last two years, the law firm for which Norman Gold, a board member of the Illinois State Toll Highway Authority, works has reaped $2.5 million in state legal work.

Two years ago, the Illinois Department of Central Management Services renewed a lease worth $315,000 with the husband of the agency’s director of local government affairs.

Two state employees run a construction business on the side that, since 1999, has won $1.4 million in construction contracts to repair numerous state buildings.

The company owned by the chairman of the state’s property tax appeal board recently sold $37,000 worth of equipment to the state Highway Department.

Once, such contracts would have been illegal unless vetted for potential conflicts of interest by the governor’s board of ethics.

But a major rewrite of the state ethics law four years ago, touted at the time by advocates as a reform that would make the law tougher, has instead rendered it virtually toothless, an examination by the Tribune and the Better Government Association has found.

Scrutiny lost The revisions gave the state’s constitutional officers the ability, for the first time in decades, to pass out contracts–which have become a form of patronage in Illinois–to their political supporters and donors with little scrutiny.

The changes also virtually wiped off the books rules that prevented all state employees, state lawmakers and members appointed to boards and commissions from obtaining state contracts unless they received a waiver from the governor.

The new law now applies only to about 900 of the 69,000 executive- branch employees, and the number will shrink even further next year, the Tribune/BGA analysis found.

Now, the state legislators who authored the bill think their changes to the ethics rules may have gone too far. “I am not sure we got it right,” said state Sen. Steven Rauschenberger (R-Elgin), who was co-sponsor of the bill. “I am not sure we intended to go as far as we did.”

“If there was any weakening of disclosure, it was an unintended consequence that should be corrected immediately,” said state Rep. Jeffrey Schoenberg (D-Evanston), who was the other co-sponsor. Rauschenberger said part of the intent of the new law was to reduce the number of waivers sought by state employees and others. He maintained that many of the waivers were needless, requiring low- level employees to go to the governor to obtain a minor contract.

The new rules require a gubernatorial waiver for state employees only when their salary exceeds 60 percent of the governor’s salary.

That means only those state employees who made $87,500 or more in 2000 had to seek an exemption or waiver from Gov. George Ryan.

Every year since the bill passed, the threshold amount has increased as the governor’s salary went up. And, with a recent cost-of-living raise for Ryan, that threshold has increased to $90,414.

The revised law also imposed a new, tough disclosure requirement for state lawmakers, lobbyists, state employees and others who sought contracts of $10,000 or more.

But in crafting how the disclosure law was to be enforced, Ryan’s administration drafted rules that dramatically altered the statutory language and created numerous loopholes.

“We essentially don’t get [disclosure statements] if they are under the bid limits,” said Marcia Rotunda, a legal counsel with the University of Illinois. Currently, the universities must seek bids if a contract for goods or services exceeds $27,000.

State records show several instances where firms employing state lawmakers, using loopholes in the current law, never sought a gubernatorial waiver or disclosed that a legislator worked for the firm.

State Rep. David Leitch (R-Peoria) is a vice president at National City Bank in Michigan, a firm that has received millions of dollars in state business.

Because of loopholes in the law, Leitch didn’t need an exemption from the governor for the contracts because his financial holdings at the bank do not meet the statutory requirements that would mandate he seek the waiver.

Nor was the bank required to disclose his employment even though the contracts exceeded $10,000. Nevertheless, a spokesman for the bank said that it was notifying all state agencies that Leitch is an employee of the bank.

A spokesman for the governor said the disclosure aspects of the law either need to be rewritten or new rules drafted to prompt such disclosures.

Still another loophole allowed the engineering firm of state Rep. Thomas Bern (R-Urbana) to do state business.

Bern, who was appointed to the legislative post last November, had a small existing contract with the state to prepare engineering work for dams at the Menard Correctional Center.

Another exemption

But three months after his appointment, the state boosted the contract an additional $95,000. A spokeswoman for the Illinois Capital Development Board said Bern didn’t need a gubernatorial waiver on the contract because it was in existence prior to his taking office.

Among those benefiting from the change in the law were appointed members of boards and commissions, most of whom no longer have to obtain gubernatorial waivers, though they must still comply with disclosure aspects of the law.

For example, Lawrence Warner, a longtime friend of Ryan and a lobbyist, was named by the governor to the Metropolitan Pier and Exposition Authority in April 1999.

Two months before he was appointed, his partner in a Joliet office building had signed a five-year extension of a lease of the building that provided a financial windfall for the owners.

By 2004, state taxpayers will have shelled out more than $2 million in rent–10 times the purchase price–for the office building for the Illinois secretary of state.

Two months after the extension was signed and after his appointment to the board, Warner’s partner filled out a disclosure form, but failed to disclose Warner’s interest in the property. Under the law, the disclosure form should have revealed that Warner was an investor and disclosed his appointment to the board and the fact that he was a registered lobbyist. That requirement was triggered because Warner’s ownership interest in the property is greater than 5 percent, according to his attorney.

Although Warner has never indicated to the secretary of state that he has any financial interest in the building, a spokesman for the secretary of state said Warner’s possible ownership of the building is under review. The office may ask for help from the Illinois attorney general to figure out who the actual owners of the building are.

State law allows the office to revoke the lease if the property disclosure statement isn’t filed.

No disclosure

Not only does Gold, the Altheimer & Gray lawyer who is on the tollway board, not have to seek an exemption from the governor, but he also doesn’t have to file a disclosure statement either.

Law firms like Gold’s lobbied hard four years ago for an exemption from having to comply with the disclosure requirements when the law firms are hired “to prepare for anticipated litigation, enforcement actions or investigations,” according to the law.

“That is surprising to me and certainly not the legislative intent of the sponsors,” said Schoenberg.

Part of the reason that ethics rules have been paid little notice is the Ryan administration’s decision 21/2 years ago to do away with the State Board of Ethics. The decades-old panel routinely reviewed all declarations of economic interest filed by employees, searching for anything questionable. Also, state agencies were required to bring the details of proposed contracts to the board to make sure there were no potential conflicts of interests. The board also recommended who would get a waiver from the governor.

Ryan’s administration took the step of eliminating the board after lawmakers in 1998 created six “ethics commissions.” The commissions are in legal limbo, however, while the Illinois Supreme Court considers whether the law that created them is constitutional.

During the two years that the commissions were supposed to be in full swing, they rarely met and not one of them has launched a single investigation into any possible conflict of interest.

“The old group had a full docket,” said Cindy Canary, director of the Illinois Campaign for Political Reform. “Then there’s this switch and, suddenly, there are no issues anymore? That’s hard to believe.”

(Copyright 2001 by the Chicago Tribune)