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Lobbyist defends 800k contingency fee { January 4 2004 }

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WEEKEND REVIEW: Kjellander continues to defend $800,000 contingency fee

Sunday, January 04, 2004

By The Leader-Chicago Bureau

CHICAGO -- In a CNSNews ( nationally-syndicated story published on Monday, Illinois Republican National Committeeman Bob Kjellander once again defended the $800,000 contingency fee he received earlier this year from Bear Stearns, the bond house that handled Governor Rod Blagojevich's $10 billion mortgage to balance Illinois' FY 2004 budget.

"I don't mind someone earning money as a lobbyist, and I don't mind someone leading the Republican Party as our national committeeman," State Senator Chris Lauzen (R-Aurora) said in a recent interview with Illinois Leader. "What frustrates me is when someone does both of those at the same time," Lauzen said.

Kjellander declared himself as a lobbyist for Bear Stearns at the end of March while state budget negotiations were taking place. The fact that Kjellander holds a key political position as the state's Republican national committeeman, directs the Great Lakes region for the Bush 2004 campaign and financially benefitted from affecting legislation is troubling to political insiders and elected officials.

Why would a nationally known investment banking firm hire Illinois’ Republican National Committeeman to advance its interests during the first year of a Democrat-controlled state government?

“It is interesting that Kjellander has had success with this new administration,” observed former state representative Jim Nowlan (R-Toulon). “I wonder if Bear Stearns -- and it’s a long shot -- whether Bear Stearns was trying to buy access to Rove. It’s just a wild guess on my part. Why would Bear Stearns want to go to Kjellander to have influence with John Filan?"

Karl Rove, George W. Bush's chief political strategist, and Bob Kjellander have known each other since College Republican days.

John Filan is Blagojevich's budget director.

“I haven’t got a clue why Bear Stearns went to Kjellander,” David Morrison, Deputy Director of the Illinois Campaign for Political Reform, said. “He got $800,000 for making a phone call. Maybe he didn’t even do that."

“The only one getting more money for doing less is Chris Galvin (outgoing CEO of Motorola),” former State Senator Don Totten (R-Schaumburg) observed.

The Secretary of State’s Office reports that Kjellander registered as a lobbyist for Bear Stearns on March 26th. State law allows lobbyists ten days in which to report they have been hired. Bear Stearns, however, has never reported hiring any “contract lobbyists” like Kjellander’s firm, Springfield Consulting. The securities company registered with the state on January 21, 2003 “on its own behalf."

Neither Bear Stearns of Springfield Consulting reported any expenditure on their July lobbyists’ expenditure reports.

State law is unclear on what lobbyists are required to report. Illinois law in question requires registration of: any person who, for compensation or otherwise, either individually or as an employee or contractual employee of another person, undertakes to influence executive, legislative or administrative action; and any person who employs another person for the purposes of influencing executive, legislative or administrative action.

Nathan Maddox, Assistant General Counsel for the Secretary of State said, “My advice has been, ‘If you are in a gray area, register. It is possible that you would see one party of the transaction see it as the safe thing to register, while the other party would have a different viewpoint.”

The only direct connection from Republican Kjellander to Democrat Blagojevich was found in a Chicago Sun-Times report that last year, Kjellander's firm hired Tony Rezko, a chief Blagojevich fundraiser. State records show he no longer is employed by the company.

Kjellander recruited Rezko at the same time he was raising money for President Bush when Bush held his Chicago $3.5 million fundraising dinner this past September.

Crain’s Chicago Business reported, “GOP national committeeman Robert Kjellander Jr., the state's sole "Pioneer" in 2000 and Bush-Cheney Midwest chairman this year. It even includes Chicago real estate developer Tony Rezko, a major fund-raiser for Democratic Gov. Rod Blagojevich.” [Source: Crain’s Chicago Business, Sept. 29, 2003]

“Pioneers” raise at least $100,000 for Bush's presidential campaign.

Should a top Republican leader/lobbyist/fundraiser have helped put the State of Illinois in debt by $10 billion, plus interest, while getting an $800,000 “piece of the action” for doing so?

“There’s politics and then there’s business,” Kjellander told Crain’s Chicago Business in its Sept. 1st edition, and told the CNSNews reporter in Monday's story that criticism of the $800,000 contingency fee was absurd.

"There's absolutely nothing wrong with that," Kjellander told CNSNews. "Yeah, it's a lot of money, but it was a contingency fee. Just because we have a Democratic administration doesn't mean Republicans should crawl in a hole."

Echoing Kjellander’s comment to some extent Nowlan, who ran for Lt. Governor during Richard Ogilvie’s re-election campaign, said, “In terms of his role as a lobbyist to agencies, I doubt that he has a responsibility to look at the policy implications.”

Totten, who challenged House Speaker George Ryan (R-Kankakee) for Lt. Governor in 1982, seemed to disagree. “While his mentor Bush is cutting taxes,” Totten observed, “Kjellander is increasing spending.”

Should Illinois taxpayers have to depend on a voluntary reporting system set up by the public securities industry to discover what lobbyists are getting paid?

Nowlan said, “No. It should be something similar to the State Board of Elections disclosure web site. Lawyers have to say how much they receive in State of Illinois business. Each year the Chicago Daily Law bulletin publishes how much they receive from the state."

“We’ve said for some time that we need to take a fresh look at the lobbyist act," political reform advocate Morrison said. "It is not clear who has to register or what actions trigger a registration. The amount of disclosure we have is really appalling. Our lobbyist law is not clear where it ought to be.”

The contingency fee on bonds sparked other comments.

“I think that contingency fee lobbying is trouble from the get-go,” said Morrison.

Former Senator Totten agreed with Morrison.

“Why should they be any different than other lobbyists?” Totten asked.

“Kjellander is being paid for placing State of Illinois business,” Nowlan continued. “All lobbyists do right now is register. Should they reveal how much being paid? Good question. Yeah, I would think so.”

Such a contingency arrangement would be illegal if Kjellander had been hired as or worked as a lobbyist rather than a bond consultant.

State law bans anyone from hiring a lobbyist on a contingency basis concerning the passage or defeat of any legislation. It is also illegal to accept such payment.

As a lobbyist, the contingency fee Kjellander received would be illegal. But because he was considered a bond consultant, not a lobbyist, there appears to be no state law applying to that situation.

Senator Lauzen pointed out that $809,000 is more than sixteen times what the typical Illinois family earns in a year.

"How hard will a Republican political leader work against Democrats when he gets paid $809,000 to further their agenda? Here is a perfect example of what John Kass calls the Illinois bi-partisan political combine," Lauzen said. "It reinforces the perception of the man on the street that all politicians are the same."

"It is also a current example that needs to be corrected of what Sen. Peter Roskam [R-Wheaton] calls the 'shadow government'," he said.

© 2003 Illinois

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