CHICAGO -- So you want to go after a piece of that Illinois bond deal? How about buying state officials a meal, flowers, gift certificates, skybox tickets to Wrigley Field, or even a hat from Bloomingdale's? Those expenditures were made during the first half of the year by securities and bond counsel firms seeking to do business with the state and its bond-issuing agencies.
The expenditures were listed in semiannual reports required under the Illinois Lobbyist Registration Act, which took effect Jan. 1. The act requires all firms and their consultants or lobbyists to register if they are seeking business contracts with the state -- including contracts for municipal bond business. About 40 securities, bond counsel, and financial advisory firms had registered under the act as of Aug. 1.
All registrants were required last month to file a report listing any expenditures, including meals, entertainment, gifts, and honorariums, made to acquire state business over the first six months of the year. The law requires expenditures over $100 to be itemized and it also requires disclosure of the name of the lobbyist, the firm he or she is working for, the official being lobbied, and the subject matter of the discussion. Expenditures under $100 must also be reported, but on a lump sum basis.
While most firms involved in municipal bond business listed no expenditures for the first half of the year, several reported spending hundreds of dollars on meals, entertainment, and gifts for state officials.
CS First Boston was by far the biggest spender among firms vying for state bond business. The firm spent $3,365.92, all on Illinois Housing Development Authority officials. While the law requires the reporting of expenditures only to top officials at state bond agencies, CS First Boston initially reported money spent on all officials at the housing agency.
Peter Dwars, who was the authority's director up until June when he joined CS First Boston as an investment banker, was the recipient of much of the meals and entertainment spending reported by the firm. Some of the meetings between Dwars and CS First Boston officials to discuss securities underwriting took place in Washington, D.C., and Scottsdale, Ariz., according to the report.
CS First Boston was picked last October along with Bear, Steams & Co. and Goldman, Sachs & Co. as rotating senior managers for state housing deals over the next two years.
CS First Boston's expenditures also included a $50 gift certificate for Pamela Lenane, who had been the agency's deputy director and is now acting director, and a $50 hat from Bloomingdale's for an assistant manager at the agency.
A spokesman for CS First Boston said the expenditures were "related to financings and new product discussions that took place throughout the entire housing authority organization over the six-month period."
Dwars did not return phone calls. Lenane said she was flooded with calls from bankers after being named deputy director of the authority in April.
"Every banker called me up and wanted to take me out to lunch or dinner," she said. "Certainly, I wasn't to be influenced because the [underwriter] selection was set."
Bear, Stearns & Co. was another firm that showered attention on Lenane and Dwars. The firm reported buying Lenane $25 worth of flowers, as well as treating Dwars to meals at La Cote Basque in New York and Gordon Restaurant in Chicago. The firm reported total expenditures of $493.98. Other state officials listed as recipients on the report were Edward Czadowski, chairman of the Illinois Development Finance Authority, and John Hershman, legal counsel to the Illinois Student Assistance Commission.
Peter Fox, senior managing director in Bear Stearn's Chicago office, said the expenditures on Dwars and Lenane probably involved the transition period when Lenane was named acting director after Dwars announced he was leaving the agency.
Fox characterized taking government officials out as a routine business practice, adding "we don't feel pressure to do it or not to do it."
Morgan Stanley & Co. spent a total of $349.69 on Illinois housing authority officials, including Dwars.
Goldman Sachs reported several expenditures on Dwars among the $298 it spent during the first half of the year.
James Montana, Gov. Jim Edgar's chief legal counsel and pointman for the state's underwriter selection process, was also a popular choice for several firms.
Montana said he had lunch or dinner with firm executives to discuss their qualifications.
"It brings me up to date on what [the firms] are currently doing and so forth," Montana said.
Donaldson, Lufkin & Jenrette Securities Corp. reported spending $174.73, including $53.07 on Montana. Other recipients were Lenane and Frank Howard, the chief counsel to the Illinois State Toll Highway Authority.
Courthey Shea, a vice president at Artemis Capital Group, reported spending $108.50 on meals and entertainment for state officials.
Chemical Securities spent $101.87 on officials, including Montana. Smith Barney Inc. spent $56.08 on meals and entertainment for two officials with the Illinois Economic and Fiscal Commission.
Bond counsel Chapman & Cutler spent $116.15 in May on mezzanine box seats at Wrigley Field for Philip Howe, acting executive director of the Illinois Development Finance Authority.
Mary McInerney, executive director of the Illinois Health Facilities Authority, was the recipient of $89.90 worth of meals and entertainment from John Nuveen & Co. and $23.89 from Lehman Brothers. Tim Bobinsky, executive director of the Illinois Rural Bond Bank, was feted to the tune of $50 by A.G. Edwards & Sons and $31.50 by Firstar Bank Milwaukee.
Bobinsky said he began meeting with regional firms in an effort to open up the bond bank's underwriter business. Previously, Smith Barney handled all the bond bank deals, he said.
Now the bond bank is looking to firms to bring in deals to expand the scope of the agency's business, he said.
"If I can get [firms] to pick up the tab for lunch, so much the better," Bobinsky said.
The lobbyist registration law was championed by Illinois Secretary of State George Ryan, whose spokesman has called it "the most extensive and progressive lobbyist law in the nation." A previous law only covered lobbyists seeking to influence legislation and included only legislators as targets of lobbyists.
The new law expanded the definition of lobbying to state contracts and the list of targets to members of the governor's cabinet, top officials at state agencies and departments, and officials in the offices of lieutenant governor, secretary of state, treasurer, comptroller, and attorney general.
