In Massachusetts, the practice of using politically connected consultants and lobbyists to drum up municipal customers is a thriving business.
As in other areas of the country, a long career of public service is often parlayed into a much more lucrative post at a consulting or public relations firm.
Opportunities for consultants are drawn fairly clearly along Democratic and Republican lines.
During the recent syndicate selection for the Massachusetts Water Resources Authority, for example, Bear, Steams & Co. disclosed an ongoing relationship between the firm and Kevin Harrington, the owner and president of Issues Management Inc.
Sources in Boston say Harrington has unparalleled access to Democratic legislators. Before starting Issues Management, he served as president of the state Senate from 1971 to 1978. The position is considered second only to the governor, with the power to decide when bond-related legislation can appear, approve the final language of legislation, establish and oversee Senate committees, and approve the committees' budgets.
Harrington was even able to choose his successor, quickly arranging Senate approval of William F. Bulger in 1978. Bulger has held the post ever since.
Several market sources said Harrington still has almost as much power in the State House today.
Services in Demand
Since leaving the public sector, Harrington has been employed by such diverse interests as Shell Oil, Blue Cross and Blue Shield, the Massachusetts Committee for Fair Insurance Rates, and the Massachusetts Air Conditioning and Refrigeration Institute, according to disclosure statements at the Massachusetts secretary of state's office.
Harrington's firm is paid $3,000 per month by Bear Steams. According to the secretary of state's office, he earned a total of $125,000 in consulting fees during 1992.
Underwriters in the state said his presence at meetings more than justifies his salary.
"Harrington will go in and sit down with a firm or a banker and can Spell out what a certain legislator is looking to hear about a program, how he or she has voted in the past on bond issues, and who to speak to first," a market participant in Boston said. "He opens a lot of doors."
One source said Harrington was extremely helpful with the Massachusetts Turnpike Authority. Bear Steams served as senior manager for the authority's sale of $366 million of revenue bonds in March of this year.
The firm was also named one of the three senior managers for the MWRA and will serve as bookrunner for a $275 million revenue bond sale scheduled for this week.
A turnpike spokeswoman said Harrington was not involved in the selection of Bear Stearns as senior manager. Harrington is a longtime friend of Masspike's executive director, Allan R. McKinnon. McKinnon served in the state Senate from 1971 through 1984.
Another prominent Democrat on the Issues Management payroll is Robert Q. Crane, who served as state treasurer from 1964 through 1990 before losing to the current treasurer, Joseph D. Malone.
Since leaving state government, Crane has represented such diverse clients as United Liquors Ltd., the Elevator Association of Massachusetts, and the Raynham-Taunton Dog Track.
Sources said Crane has done a great deal at the firm in helping underwriters construct better proposals for issuers.
On the other side of the aisle, a consultant named Alexander "Sandy" Tennant is considered one of the top Republican lobbyists in the state. Tennant has represented several municipal bond firms and was pivotal in raising funds for the successful 1990 campaign of Gov. William F. Weld and Lieut. Gov. A. Paul Cellucci.
Tennant is the president of the New England Strategic Development Corp. and also ran a now-defunct political action committee called the Committee for a Better America.
His political action committee recently came under fire when it was reported that in 1991 and 1992 it raised more than $70,000 for Republican candidates but made only one campaign donation: $200 to New Hampshire's U.S. Sen. Judd Gregg of New Hampshire.
According to a report in last week's Boston Herald, at least $45,000 of the total raised went directly to Tennant's consulting firm and its employees.
Tennant was retained by Dillon Read when the firm was looking to gain a spot in the Massachusetts Industrial Finance Agency's underwriting syndicate for last week's sale by Chelsea Industrial Development Authority.
A source at the finance agency said Tennant was recently listed as a consultant for both Dillon Read and U.S. Securities Inc. Neither firm was selected to manage the sale.
Dillion Read paid Tennant's firm $3,000 per month, 10% of all the profits from bond deals that New England Strategic Development worked with the firm on, and an additional 10% of all profits from underwriting opportunities discovered by the firm for Dillon Read, according to finance agency disclosure forms.
Tennant provides Dillon Read with information and advice on how to best gain underwriting slots on the Massachusetts Water Resources Authority, the Massachusetts Health and Educational Facilities Authority, the Massachusetts Bay Transportation Authority, the Massachusetts Port Authority, MIFA, and the state treasurer's office.
A source familiar with the water authority's underwriting process said Tennant was unable to gain an underwriting spot for Dillon Read.
In the disclosure statements from the water resources authority, CS First Boston said it retains the services of Ferd Harrison as a national consultant at a rate of at least $5,000 per month.
Harrison was used in Massachusetts to help gain a slot on the MWRA underwriting syndicate, according to a CS First Boston memo. The firm was recently awarded a co-manager's slot on the MWRA underwriting team.
Harrison is in an excellent position to gain new business for CS First Boston. Before he began his consulting practice, Harrison was president of the National Council of Mayors.
Choate Group Gets Retainer
To help J.P. Morgan & Co. increase its presence in New England, the firm retains the Choate Group at a rate of $5,000 per month.
The Choate Group -- which is associated with the Boston law firm of Choate, Hall & Stewart -- serves as "the eyes and ears of J.P. Morgan" in Boston, according to Eric H. Altman, a managing director in J.P. Morgan's public finance department.
"The Choate Group helps us compensate for not having an office in Massachusetts," Altman said. "They keep us up to date on coming deals in the state and help maintain some sort of regional presence."
Point men for the Choate Group in Massachusetts are Joseph Baerlein and Edward O'Sullivan.
Baerlein was chief of staff for Evelyn F. Murphy, former lieutenant governor under Gov. Michael S. Dukakis.
"When I walk in the door, though, people don't see me as someone who specifically represents J.P. Morgan," Baerlein said. "Legislators see me as someone who used to work in state government."
Merrill Lynch & Co. employs two of the busiest consultants in the state, Richard J. Underwood and David Finnegan of the law firm of Finnegan, Underwood, Coombs, Ryan & Tierney.
From September 1991 through September 1993, Merrill Lynch paid the firm $35,000 for consulting and lobbying services.
Finnegan Underwood is also an equity partner in the consulting firm Custom House Street Associates. Custom House is owned by Peter Berlandi, who is the executive director of the Weld Committee.
The Weld Committee is involved in fund-raising for Weld's expected re-election campaign.
During 1991, Berlandi was retained by First Albany Corp. to aide them with their strategic planning in the region.
At that time, First Albany was looking to gain a larger market share of business in Boston. The desire contributed to First Albany's hiring of Mark S. Ferber and his team from Lazard Freres & Co.
Ferber was a former chief of staff for Senate president Bulger and a long-time supporter of former Boston Mayor Raymond F. Flynn.
Ferber was fired by the firm last summer for being part of an undisclosed retainer agreement with Merrill Lynch & Co. when he was a partner at Lazard Freres.