This story ran on nwitimes.com on Sunday, August 20, 2006 12:08 AM CDT

Political players helped pave way for Major Moves

BY PATRICK GUINANE
pguinane@nwitimes.com

INDIANAPOLIS | Four firms that received $1.6 million in legal and consulting work connected to the private leasing of the Indiana Toll Road have made $90,585 in campaign contributions to Republican Gov. Mitch Daniels during the last three years.

And one top attorney encouraged engineering firms to bankroll an ad blitz in support of the lease while he was under contract with the state.

The Daniels administration says such political considerations play no role in the awarding of contracts and the state simply selected the most qualified firms.

To bolster that argument, Chuck Schalliol, chairman of the Indiana Finance Authority -- the state agency that owns the Toll Road -- points to the losing law firms. Indeed, all nine of those unsuccessful bidders have given at least $2,000 to the governor's campaign, including nearly $146,000 by Baker & Daniels, Indiana's largest law firm.

The ubiquity of such contributions illustrates the well-traveled intersection between government and politics. The overlap, critics argue, drowns out individual residents.

Similar complaints were common during the legislative push to privatize the Toll Road, with a statewide poll by the Indianapolis Star in March showing that 60 percent of respondents thought the lease was a bad deal.

'They have the megaphone'

One watchdog group says the amount of campaign cash doled out by contractors connected to the lease deal is enough to raise eyebrows.

"It certainly gives the perception of a conflict of interests, but that's our system," said Stefanie Miller, outreach director for Common Cause Indiana, which advocates public financing of elections. "They have the megaphone because they have all the money."

The state began soliciting legal and consulting help nearly a year ago, a nod to the inherent complexity of privatizing a major public asset. And after a two-month battle to win legislative approval and a short-lived citizen lawsuit, the deal finally consummated in June, with the Spanish-Australian consortium of Cintra-Macquarie paying $3.8 billion to run the 157-mile road and collect tolls for the next 75 years.

Web of connections

To help pave the way for Major Moves -- the governor's 10-year road building plan tied to the Toll Road lease -- the state incurred a total of $22.3 million in transaction expenses. THe bulk of that -- $20.1 million in consulting fees -- went to Goldman Sachs, a New York-based global investment bank that did not make campaign contributions to Daniels or any other Indiana politician.

The remaining legal and consulting work was shared by seven firms, with the biggest chunk -- $1.3 million -- awarded to Ice Miller, the state's third largest law firm. The Indianapolis-based company employs several high-profile political players on both sides of the aisle, including state Rep. Luke Messer, a former executive director of the Indiana Republican Party, He joined the firm's lobbying team in April, one month after helping the Toll Road lease clear the House without a vote to spare. Ice Miller also is the former employer of Harry Gonso, who now serves as Daniels' chief of staff.

Near the top of the Ice Miller roster is John Hammond III, a veteran Republican powerbroker the state hired at $331 hourly to work on the Toll Road transaction. Hammond has contributed $20,699 to Daniels' campaign, and in January he gave a pep talk to engineering firms concerned about the legislative fate of Major Moves.

Such firms, along with construction trades that also stand to benefit from the road plan, helped steer more than $300,000 this year to Aiming Higher, a nonprofit advocacy group that used the contributions to fund a multimedia ad campaign in the weeks before the General Assembly OK'd the Toll Road lease.

'Favors not expected'

Hammond said he made the Aiming Higher sales pitch on his own time and the political contributions made by him, his firm and other Ice Miller staff are not intended to win state contracts or influence policy decisions.

"You cannot expect there to be any return favor," he said. "I think, in general, our view is you're trying to support people who are going to support policies that are good for the state of Indiana and the citizens of Indiana."

Ice Miller has made $7,386 in corporate contributions to Daniels' campaign since 2003 and, beyond Hammond, six other Ice Miller staffers who worked on the Toll Road contract have given a total of $11,008.

Schalliol, who serves as state budget director, noted that most major law firms make regular donations to both political parties. In fact, several other Ice Miller attorneys hired for the Toll Road work are regular patrons of Democrats and gave more than $3,500 to the re-election bid of Democratic Gov. Joe Kernan, who was defeated by Daniels in 2004.

"I've been an elected official and I don't believe that anyone I know, Republican or Democrat, would let a contribution affect their judgment and what's in the best interest of the public," said Dan Dumezich, a former Republican state representative from Schererville. "The thing people really have to understand is, just because you occasionally do work for people, that doesn't separate you from giving contributions to people that you think would be good leaders and take the state or the country in a direction that you want."

Dumezich now handles tax law for Mayer, Brown, Rowe and Maw, the mammoth Chicago law firm that worked on the private leasing of the Chicago Skyway. Dumezich also chairs the re-election campaign of Republican Secretary of State Todd Rokita and his law firm gave $10,000 to Daniels' campaign in 2004.

Dumezich submitted a proposal for Mayer, Brown, Rowe and Maw to handle the Toll Road legal work. His firm was not selected but did receive $312,000 in subcontracting work through Ice Miller.

Just inviting problems

State Public Finance Director Ryan Kitchell, the Indiana Finance Authority's top administrator, said Ice Miller was chosen because of its highly respected work on corporate mergers and acquisitions and because it offered a 15 percent discount from its standard hourly rates.

"The IFA sought qualified Indiana firms to submit (proposals)," Jane Jankowski, the governor's press secretary, said Friday. "IFA selected what it considered to be the best firm available to handle the transaction based on the responses."

In addition to the contributions by Ice Miller and Mayer, Brown, Rowe and Maw, Daniels' campaign has received $35,492 from Krieg DeVault, an Indianapolis law firm that helped defend against the Toll Road lawsuit, and $6,000 from Crowe Chizek, an accounting agency hired to provide an independent analysis of future toll revenues.

One local Democrat who vehemently opposed the Toll Road privatization, said the presence of political contributions by contractors connected to the lease makes what she thought already was a bad deal look worse.

"That kind of money just invites anything on the line from graft to friendly payments," said state Sen. Karen Tallian, D-Ogden Dunes. "It's a very good thing that we have (public records) so we can know that."