Philadelphia's Pay-to-Play Culture

June 30th, 2004
By Mark Fazlollah and Joseph Tanfani
Philadelphia Inquirer

In one page of yesterday's book-length federal corruption indictment, former City Treasurer Corey Kemp manages in one phrase to sum up Philadelphia's notorious pay-to-play culture.

"If they ain't with us," Kemp allegedly tells his mentor, lawyer Ronald A. White, "They ain't gonna get nothing."

In deal after deal, in quote after quote culled from months of federal wiretaps, the indictment provides a keyhole view on how the public's business allegedly became perverted. The picture is an ugly one, a reformer's darkest suspicions about what prosecutors called the city's "shadow government" come to life.

U.S. Attorney Patrick L. Meehan, in stinging remarks, made it clear that his prosecutors and the FBI were aiming to flush out a patronage system he characterized as rotten from top to bottom.

The indictment went on for 150 pages, as though prosecutors - stung early by charges of a political conspiracy -- wanted to build a case not only in court but in the realm of public opinion.

"Pay to play cannot be standard operating procedure in city government," Meehan said.

"We've charged 12 people here today, but in a sense we've indicted a culture, one in which quid pro quo needs no translation among the powerful."

According to federal authorities, bids were rigged for favored firms. People who agreed to play the game were cut in; those who balked were left out. Political fundraising, Philly-style, amounted to access-for-sale: one executive sat stunned as White offered to sell him a breakfast with Mayor Street for $5,000.

He didn't pay. And his company got no city business.

The city's business got traded for tickets to ballgames, for tickets to a Super Bowl game and Metallica concerts, for backyard decks and big dinners, for cocktails and car loans. "In short, life in the fast lane at the expense of the city taxpayer," said FBI special agent in charge Jeffrey Lampinksi.

Although a number of business executives who do business with the city weren't charged, or named, the indictment depicts most of them as willing to play along with the system, ready to contribute tens of thousands of dollars to White's political action committees or charities.

Forget political ideals. It was all just business, the indictment says.

"...You know I don't care about none of this s---, man, none of this politics s--- means nothing to me," White said. "What we want to do is, we business people, we want to protect our f----- investment, and we need to talk about how we going to do that if John loses."

As a reform effort, though, the indictment will provide at most a beginning. For all its detail, the heart of the case remains just a two-man show: Kemp, the young manager depicted by the feds as a puppet, and White, 20 years older, the well-connected lobbyist who pulled the strings.

Mayor Street wasn't charged, but the indictment says he bears responsibility for allowing White to become powerful enough to hijack some city decisions. If White or his firms appeared qualified, Street told his people to give him the deals - and provide him with inside information to boot, the indictment says.

"The mayor allowed White to wield the power, the corrupt power, that he did," Meehan said.

For their part, Street and his contracts czar George Burrell viewed the case more as an exoneration than a call for reform.

Street, who has said that he favors his friends and contributors for contracts, when they're qualified, said the indictments merely proved what he said all along: he did nothing wrong.

"I don't know what Ron was doing," Street said. "How do I know what he's doing?"

Said Burrell: "Certainly a Ron White would have a different access than someone who is not a supporter of the mayor, but would he have more access than other supporters of the mayor? I don't think so."

Street said he did not seek to micro-manage government, relying instead on cabinet members to gather information and carry out decisions. "I will not change that system," he said.

Federal authorities charge that the system, at least as played by White and Kemp, became a scheme cynically manipulated to squeeze campaign money and charitable donations out of potential vendors.

In one example, White offered Kemp a primer in how to solicit a contribution without explicitly tying it to city business.

"What you want to do, is call him and say, we were not going to move this deal until December, but it looks like we're moving it before then... and then just say, oh, by the way, did you take care of that thing with the Youth Leadership Foundation, just do it like that."

Youth Leadership is a small foundation run out of White's office.

White asked that businessman, Andre Allen, owner of a financial services firm, for $25,000 - in exchange for a ticket to the Mayor's box at the Eagles first game at Lincoln Financial Field. Allen balked.

Allen could not be reached for comment.

At one point, White told Kemp that he scolded Allen for trying to tie city business to contributions. "Don't have no quid pro quo conversation with me," White said.

But the indictment says the conversation went on to reveal that was "exactly their intent."

"...Either you down with us or you ain't," White said.

"You know, I hate to say it but that's the way it is man," Kemp said. "I mean, this is....election time. This is time to either get down or lay down man."

Kemp and White had so many deals going, the feds allege, that they had trouble keeping them all straight.

For instance, the indictment alleged that White was paid $50,000 for doing nothing more than submitting a phony invoice for work on a $122 million Mobile, Ala., bond deal for new schools last year.

In fact, White didn't even know he was supposed to have worked on the deal when he first learned of it. "Sounding confused," according to the indictment, White called one of his own lawyers and asked if they had done any work in Mobile.

Later, he was told by bond firm employee Anthony C. Snell that "the deal is done, and we just need an invoice from you." White agreed to send the invoice.

White's real work was helping push Snell's firm, J.P. Morgan, into bond deals in Philadelphia, according to the charges.

Mark D. Schwartz, a Bryn Mawr lawyer and former public finance investment banker, said the indictment should spur examination of a larger problem - how bond deals typically have been larded with layer after layer of extra attorneys.

"Hopefully this will focus a spotlight on whether there are ghost participants in Philadelphia bond deals," said Schwartz, who became a bond-industry whistleblower and now is in private practice.

Jerome J. Shestack, who served as president of the American Bar Association in 1997 and 1998, said much more than occasional federal indictments are needed to curb the pay-to-play culture.

Shestack, with the Philadelphia firm of Wolf, Block, Schorr and Solis-Cohen, suggests requiring competitive bidding for outside legal work on for the city and having competitive bidding for bond work, as done in some states. "Pay to play is a bad concept and states should do something about that," he said. "More competitive bidding would go a long way."

Announcing the indictments, Meehan said the corrupt culture in the city can produce inferior work and chase good companies away.

"Who can blame them?" he said. "When the game is rigged, why play it at all?"