Aldermen demand investigation of O’Hare digital contract

Seventeen months ago, Mayor Rahm Emanuel got the green light to bring O’Hare and Midway airports into the digital advertising age amid concerns about sweetheart deals and Chicago turning into Las Vegas.

Now, aldermen have another concern: investigating allegations that Clear Channel Airports may have engaged in a form of bait-and-switch tantamount to minority business fraud.

At Wednesday’s City Council meeting, Ald. “Proco” Joe Moreno (1^st) introduced an “order” directing Chief Procurement Officer Jamie Rhee to launch a “full review” of the contract with Clear Channel Airports to determine whether there were any “substantive violations” and report back to the Aviation Committee within 60 days.

Co-signed by 24 aldermen, the order states that Clear Channel Airports promised to use a list of sub-contractors that City Hall relied upon in awarding the contract.

But the order states that it has since “come to the attention” of the City Council that the information “may have been falsified to give the impression that such work would be provided to minority and local companies when, in fact, the identical work was performed by a non-minority, non-local, California-based corporation.”

In a brief telephone interview Thursday, Moreno offered no evidence to substantiate his allegations against Clear Channel, whose clout-heavy lobbyists included Tim Dart, brother of Cook County Sheriff Tom Dart.

Moreno would only say that the controversy swirling around the O’Hare digital contract underscores why black and Hispanic aldermen want to create a “Legislative Office of Minority and Women-Owned Business Participation Compliance,” complete with its own auditor general.

“Some companies use minority sub-vendors to look good on paper. Then, if they happen to win the bid, minority vendors get kicked to the side,” Moreno said.

Referring to Clear Channel, he said, “They won it. Part of their bid was they were gonna use a Hispanic vendor to do kiosks within O’Hare,” but it never happened.

Clear Channel spokesman David Grabert responded to the demand for an investigation in an emailed statement.

“Clear Channel Airports values its business with the City of Chicago and continues to meet all contractual obligations in our mult-year agreement. All plans and contractors to date have been vetted with the Chicago Department of Aviation, and we are confident the City will be fully satisfied with our compliance,” the statement said.

Minority contracting fraud was a chronic problem during the 22-year reign of former Mayor Richard M. Daley.

In 2005, James Duff pleaded guilty to masterminding a scheme to defraud the city of $100 million in contracts earmarked for minorities and women.

A string of revelations by the Sun-Times provided further proof that Daley’s minority set-aside program had been manipulated by the politically connected at the expense of minorities.

They included: a company brokering plumbing supplies owned by former Intergovernmental Affairs Director Victor Reyes’ sister; a minority telecommunications company partially owned by Richard J. Daley’s longtime patronage chief Tom Donovan, and an O’Hare Airport restaurant owned by Billy Goat tavern owner Sam Sianis that was placed in the name of Sianis’ wife, apparently at the city’s direction.

One month after Emanuel took office, Inspector General Joe Ferguson released a follow-up audit claiming that Chicago’s minority-business program remained “dysfunctional” and “beset by fraud and abuse” because Daley lacked a commitment to clean it up.

Earlier this year, Ferguson changed his tune.

He noted that Jesse Brunt, a former Mississippi sharecropper who landed millions of dollars in city contracts was sentenced in March to 17 months in prison for his role in a minority-contracting scandal that involved sewer deals held by a company whose investors secretly included then-Mayor Richard M. Daley’s son and nephew.

Referring to both the cable and sewer contracting cases, Ferguson wrote, “These cases are trailing echoes of a [minority- and women-owned business] program once managed from place of neglect. In recent years, OIG program reviews and investigations — along with the continuing efforts of the city’s Department of Procurement Services — have resuscitated the program as a professional operation positioned to achieve its policy objectives.”

Last year, the City Council approved a pair of five-year agreements with Clear Channel Airports and JC Decaux — with five more years of renewal options for each — that have the potential to enrich both clout-heavy companies while transforming the look and feel of both airports as well as the O’Hare people mover system.

Clear Channel’s contract allows the company to take full advantage of the digital media revolution.

Highlights include: a 15-foot digital globe suspended from the ceiling of Terminal 3; 350 digital screens; interactive digital directories; power-charging stations and virtual concierges for air travelers; recycling centers with 70-inch digital screens; vertical “living walls” with foliage and water elements; rotating exhibit areas for Chicago area museums; AIRChicago radio and AIRChicago magazine and a free, location-based mobile app for frequent fliers.

The Clear Channel agreement includes a minimum annual guarantee of $8.6 million or a percentage fee of 71 percent of sales, whichever is greater.