September 17, 2014
Mayor Rahm Emanuel’s administration is changing the way it awards insurance brokerage contracts in the wake of former city Comptroller Amer Ahmad’s indictment and a Chicago Sun-Times report about the awarding of insurance business to a company whose lobbyist has ties to a top deputy in the comptroller’s office.
The move reverses a change made nearly two years ago — months after Emanuel took office and appointed Ahmad — that gave the comptroller’s office “the power to purchase, directly or through an insurance broker that he engages, and subject to the approval of the budget director, insurance for the city.”
The expansion of the comptroller’s power was proposed by Emanuel and approved by the City Council in November 2011.
Now, City Hall will once again hire insurance brokers by competitive bidding through the city’s Department of Procurement Services, Emanuel spokeswoman Sarah Hamilton said Wednesday, calling the change a “precautionary measure.”
Ahmad was indicted last month in Ohio in what prosecutors described as a kickback scheme involving his work as that state’s deputy treasurer before he moved to Chicago to join the Emanuel administration.
City Hall has hired attorneys from the Drinker Biddle law firm to examine all work done in the comptroller’s office under Ahmad, though Hamilton said officials have “no reason to believe anything improper was done regarding the current contracts,” which include more than $2.5 million in deals that Ahmad gave USI Insurance Services last year.
“We await the Drinker Biddle process to determine if any additional steps are needed,” Hamilton said.
Emanuel’s point man on insurance deals is James T. Raussen, hired by Ahmad on July 1, 2011, as the city’s $127,332-a-year managing deputy comptroller.
Like Ahmad, Raussen previously worked in Ohio government, first as a Cincinnati-area legislator in the Ohio General Assembly between 2003 and 2008, later as an aide to Ohio Gov. Ted Strickland specializing in insurance and economic development. Raussen and Ahmad worked together on a business-lending initiative called the Ohio Business Growth Partnership Loan Fund, according to Ohio government emails they exchanged in 2010.
Five months after Ahmad hired Raussen to join him in Chicago, USI’s Midwest office hired Christopher S. Colwell of Loveland, Ohio, as its lobbyist.
Colwell was one of Raussen’s early campaign contributors when Raussen was running for the Ohio General Assembly, the Sun-Times has reported. Colwell also lobbied the Ohio legislative body on behalf of two suburbs in Raussen’s district when Raussen was a state representative.
USI ended up winning two city contracts for insurance brokerage services — a $200,000 deal in May 2012 and a $1.5 million deal in October 2012. The larger contract calls for USI to be the city’s insurance broker for O’Hare and Midway airports and for special events including Taste of Chicago, as well its broker for a type of insurance known as excess liability coverage.
Two weeks before he resigned from Emanuel’s administration on July 23, Ahmad amended the second contract, extending it for two years, through August 2017. That increased the value of the deal to $2.5 million — a $1 million increase.
Colwell reported being paid $48,000 in lobbying fees by USI in 2012. He also billed the firm for $5,437 in expenses, records show.
Colwell stopped lobbying for the company in February but re-registered as its lobbyist last month. On Monday, he amended his lobbyist registration to note he was no longer lobbying under a previously undisclosed “monthly retainer” but is now working under a written agreement that will pay him $4,000 a month, records show.
Attempts to reach Colwell, Raussen and Ahmad failed.
USI says it “has saved the city of Chicago millions of dollars in premiums and losses,” “has provided the highest quality insurance brokerage services” and “has done so with professionalism and full integrity.”