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City moves to compel contractors to report corruption

Inspector General Joe Ferguson

Inspector General Joe Ferguson

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Updated: March 6, 2014 6:39AM

Chicago would become one of the nation’s first big cities to require its contractors to report “corrupt activity” by their employees — or be stripped of city business — under a crackdown advanced Tuesday at the behest of Inspector General Joe Ferguson.

The ordinance, championed by Mayor Rahm Emanuel and approved by the City Council’s Budget Committee, is aimed at removing a roadblock Ferguson encountered while investigating a contractor he and Chief Procurement Officer Jamie Rhee refused to identify.

“One of its employees was accepting bribes, representing that they could obtain certain city decisions or influence people, but in fact, they could not. But they were taking money for that ... at a high level. And there was no duty for that vendor to report that,” Rhee told aldermen Tuesday.

“Once they discovered that, they did take the right action. They fired the person. But they denied the city the ability to look and see if indeed this is a widespread problem. Do we need to put some other safeguards into our departments or user controls over contracting? It’s that sort of remedial action we want to be aware of [so] we can take” action.

The mayor’s ordinance states: “Every city contractor shall report directly and without undue delay to the inspector general any and all information concerning conduct by any person which such contractor knows to involve corrupt activity. ... A city contractor’s knowing failure to report corrupt activity ... shall constitute an event of default under the contract.”

Corrupt activity was described as bribery, attempted bribery, theft and fraud, among other things.

The mayor’s office has heralded Chicago as one of the nation’s first major cities to build in such a strict reporting requirement and compel city contractors to “act as partners” in fighting corruption.

But under questioning from Ald. Brendan Reilly (42nd), Rhee acknowledged that City Hall would not be investigating contractor compliance and would continue to rely on the inspector general or state and federal prosecutors to uncover it.

Reilly noted that the “auditing functions” of the inspector general’s office have been strengthened in recent years.

“The example that was used in committee was actually discovered through an IG audit. So I do think the inspector general’s office has the bandwidth to handle this. And I’m sure they’ll probably find other examples down the road,” Reilly said.

“We have to rely on the inspector general to catch folks who aren’t complying with this. But that’s the best tool we have today. ... It’ll give the city another mechanism to crack down on contractors that are perpetrating fraud against the taxpayers.”

Budget Committee Chairman Carrie Austin (34th) added, “You want to see good, clean government. And if somebody is taking a bribe or taking money and [somebody else is saying], `Well, I saw ’em, but I didn’t want to say nothing,’ we need to stop that. We need to start reporting that kind of activity that goes on because that rips the city off. And we want to try to strengthen our city — not tear it down with corruption like that.”

Ferguson refused to comment on the ordinance. His spokesperson insisted that the roadblock encountered by the inspector general’s office had nothing to do with the $2 million bribery scandal involving Chicago’s red-light camera vendor.


Twitter: @fspielman

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