Watchdogs: City Hall deal’s deep Ohio ties

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The investigation that cleared Mayor Rahm Emanuel’s convicted former city comptroller of any wrongdoing in Chicago also offers new details about the relationship between another top comptroller’s official and a lobbyist whose client won a multimillion-dollar city deal.

Just as they did with Amer Ahmad — who quit as comptroller in July before being charged in a public-corruption scheme in Ohio — attorneys from the law firm Drinker, Biddle & Reath said they found no wrongdoing by James T. Raussen, the city’s $127,332-a-year managing deputy comptroller.

But the report that the law firm produced provides an inside look into how Raussen oversaw the awarding of city business to USI Insurance Services, a client of Raussen’s onetime political supporter, Christopher S. Colwell.

Raussen is a former Ohio state representative. He met Ahmad — a former Ohio state deputy treasurer — when both worked on a business loan program in that state’s government. Raussen joined Emanuel’s administration in July 2011, about three months after Ahmad was hired as city comptroller.

The Emanuel administration brought in Drinker, Biddle & Reath in the wake of Ahmad’s indictment to make sure nothing was amiss here during his time at City Hall. Ahmad, 38, pleaded guilty Monday to conspiracy and bribery charges for using his former job in the Ohio state treasurer’s office to steer lucrative securities brokerage business to a financial adviser in exchange for hundreds of thousands of dollars in payments to himself and two associates.

At City Hall, Ahmad “had little direct involvement” in insurance contracts, “including the replacement of insurance brokers for particular policies,” attorneys for Drinker Biddle & Reath found. The law firm said those responsibilities fell to Raussen and Susan Schmitz, a 22-year city employee who’s the risk-management manager for the comptroller’s office.

In November 2011, Colwell was brought in by USI, a longtime city contractor, as its lobbyist even though USI hadn’t had a City Hall lobbyist before, and records show Colwell never lobbied Chicago, Cook County or state of Illinois government officials.

Colwell, of Loveland, Ohio, told investigators he’s known Raussen “for approximately 14 years, including when Raussen served as a state representative in Ohio,” according to the report.

“Colwell acknowledged he donated to Raussen’s campaigns both individually and as a representative of Cincinnati Bell,” where he’d been vice president of government relations. Raussen got $5,653 in campaign contributions from Colwell and Cincinnati Bell when Colwell was employed there, Ohio records show.

After learning of Raussen’s hiring in Chicago, Colwell “contacted USI to offer his services,” said Daniel J. Collins, a Drinker, Biddle & Reath attorney who helped lead the investigation.

“Colwell explained that USI was concerned about the change in administration and the lack of a relationship between Raussen, the new managing deputy comptroller, and [USI executive vice president Ralph] Wilson, USI’s lead contact for the city,” according to the report. “Colwell stated he was hired to better communicate USI’s insurance brokerage capability and experience to Raussen.”

“Beyond being at a couple meetings, Colwell was not involved in the negotiations of the contract itself,” Collins said.

Colwell, who has been paid $56,000 in lobbying fees by USI, could not be reached for comment. Raussen also could not be reached.

The same month that USI hired Colwell, the City Council gave Ahmad’s office direct authority to choose insurance providers for the city, rather than require such contracts be bid through the Department of Procurement Services.

In early 2012, Raussen and Schmitz “met with brokers individually regarding their ideas to improve the service provided to the city and to achieve cost savings,” according to the report. It didn’t list those brokers, but city records show just two firms submitted formal proposals: USI and Arthur J. Gallagher & Co., which also won city business.

Later that year, USI was picked as insurance broker for the 2012 NATO Summit. Raussen told the outside investigators “that, after seeing its performance” on NATO, he concluded USI had the “creativity to improve service” on a new city deal for insurance-brokerage work for Chicago’s airports.

USI won that $1.5 million city contract in October 2012. The deal since was extended through August 2017, raising its value to $2.5 million.

According to Drinker, Biddle & Reath, USI has saved the city about $2.2 million through the companies it’s hired to insure O’Hare and Midway.

Schmitz had complained in internal emails about USI being late completing some key tasks and not doing others. But “we talked to Ms. Schmitz about her view of USI, and I think she would be the first one to say that there were days she was bothered by particular events, but overall her view of USI as an insurance broker is positive,” Collins said.

Caesar A. Tabet, an attorney representing USI, said, “The report is thorough and comprehensive, and it accurately reflects the complexity of the insurance services and millions of dollars of cost savings that USI provides to the city of Chicago.”

Though the investigation found no wrongdoing, it did prompt Emanuel to take away the power of the comptroller’s office to choose insurance companies. On Sept. 18, the mayor ordered that the city resume bidding such contracts through the procurement department “because of the safeguards it provides to the city and its taxpayers,” Corporation Counsel Stephen L. Patton said.

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