CHICAGO -- State officials in Illinois have launched investigations into who paid for limousine services provided to state housing authority officials visiting New York City over the past several years.

James Montana, chief legal counsel to Illinois Gov. Jim Edgar, said yesterday that the state police and the Illinois Housing Development Authority have begun investigations into allegations that "vendors" that do business with the authority may have paid for ground transportation services in New York.

While Montana would not comment on who the vendors might be, he said that the definition of vendors could include bond underwriters.

Authority officials' travel to New York involved meeting with the rating agencies and interviewing investment banking firms, according to Pamela Lenane, the authority's acting director. She said a number of authority officials made five to seven trips last summer to New York to interview firms that responded to a request for proposals from underwriters.

Lenane said that after receiving an anonymous complaint and a freedom of information request from a local newspaper, the authority could find no record of payment for any out-of-town limousine services.

"There were no limo bills on the premises," she said.

Lenane said that the authority is concerned that vendors may have been paying the bills and "passing the cost on to us in some fashion."

Lenane said the authority formed a "special independent committee of the board" that has retained former Chicago U.S. Attorney Anton Valukas to conduct an internal investigation. Valukas did not return phone calls.

The practice of using limousines in New York City predates 1988, when Lenane's predecessor, Peter Dwars, became the authority's director, Lenane said. Dwars left the authority last week to join CS First Boston's Chicago office as a vice president in public finance. He did not return phone calls yesterday.

Lenane said the authority felt the use of limousines was appropriate in New York because four or more authority officials went on the trips and had a number of appointments there.

Montana said he asked the state police last week also to investigate the matter. He declined to comment on what state law if any might have been broken if a vendor paid for the authority's transportation services.

"It may end up to be bad bookkeeping or something more," Montana said.

He said the state police and Valukas need to obtain more information before they can determine if anything "improper" was done.

Providing cars or limousines for out-of-town issuers appears to be a standard practice among Wall Street firms. One public finance executive in New York said that a bond firm typically will make arrangements for an issuer to have access to a car service for business purposes during a New York visit.

"It's more expensive than a taxi, but more reliable," the executive said.

He said that many firms, which have an account with a specific car service, initially pick up the cost of a car for an issuer. The bond firm then will "pass the cost" along to the issuer, the executive said.

Since 1990, Bear, Stearns & Co.; CS First Boston; Lehman Brothers; Paine Webber Inc.; Merrill Lynch & Co.; and Smith Barney Inc. were senior managers of authority bond issues, according to Securities Data Co.

CS First Boston, Bear Stearns, and Goldman, Sachs & Co. were picked in October as rotating senior managers for 1994 and 1995 authority issues.

A spokesman for CS First Boston said the firm has not provided limousines for the authority at the firm's expense since at least the early 1980s.

A spokesman for Merrill Lynch read a statement that "as a matter of policy, Merrill Lynch adheres to those laws and practices governing expenses incurred in connection with municipal business."

Spokespersons for Goldman Sachs and Bear Stearns declined to comment. Spokespersons at Lehman, PaineWebber, and Smith Barney did not return calls.

In the future, firms that pay for transportation services for state officials may have to report the expenditures. An Illinois law that took effect Jan. 1 requires any firm seeking to do business with the state to register itself and its lobbyists with the Illinois secretary of state's office and to report expenditures made to help acquire state business. The deadline for filing expenditure reports with the state for the first half of 1994 is July 31. Montana said the housing authority is covered by the law.

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