Were Consulting Payments To Peterson Officials Legal?

Fellow blogger Paul Ogden has a disturbing post today about how two top officials in the Peterson administration, John Dillon and Robert Clifford, received lucrative consulting fees from the Indianapolis Bond Bank at the same time they held key board positions or drew paychecks as city employees. Dillon's company, Appomatox received several hundred thousand dollars in consulting payments over a several year period while Dillon worked for an outside firm and served as Chairman of the Indianapolis Bond Bank.

The Bond Bank entered into a contract with Dillon's firm to advise it on the water company purchase and paid him close to $80,000, while he served as the Bond Bank's Chairman. He later became Deputy Mayor under Peterson. According to Ogden's post, while Dillon was serving as Bond Band Chairman, he passed the gavel to another board member, Mary Chandler, when the Bond Bank board acted on the approval of a consulting contract for work related to the expansion of the CIB's convention center as part of the Lucas Oil Stadium deal. The contract approved by the bond bank paid Dillon's firm at the rate of $140 an hour, but it did not cap payments to him as such contracts typically do. The Bond Bank eventually paid Dillon's firm more than $354,000 over a 2-year period.

Ogden's review of the Statements of Economic Interest filed by Dillon for the years 2001-05 found no mention of the consulting work he performed for the Bond Bank. It was not until he became deputy mayor that he reported his ownership of Appomattox and the consulting contracts. Clearly, the conflict of interest post by these lucrative consulting payments to Dillon should have disqualified him from serving as the Bond Bank board's Chairman. Is it any wonder Indianapolis taxpayers got screwed so badly in the water company deal when you have a self-dealer like Dillon serving as the board's chairman while that deal was approved, along with the subsequent refinancing of the water company's debt with variable rate bonds that proved financially disastrous? Under Indiana law, a public servant who knowingly or intentionally has a pecuniary interest in, or derives a profit from a contract or purchase connected with an action by the governmental entity served by the public servant, commits conflict of interest, a Class D felony.

Dillon is now employed by City Securities, the firm the Bond Bank used to help underwrite bonds for the Indianapolis Water Company' purchase and the refinancing of the original long-term bonds with variable interest rate bonds. He is an executive vice president and insurance manager according to the firm's website. He previously worked as an executive officer of Standard Management Corporation while serving as Bond Bank Chairman, as well as two civil engineering firms, MSE Corporation and ASI Corporation. He also served as the State Insurance Commissioner.

Robert Clifford served as executive director of the Indianapolis Bond Bank and later became the City Controller. Although Clifford resigned his position with the Bond Bank and assumed his full-time responsibility as City Controller in January, 2005, he received a consulting contract from the Bond Bank that paid him an additional $30,000 according to Ogden's research during 2005. According to Ogden, Clifford's statement of economic interest he filed with the City never disclosed the consulting contract with the Bond Bank. The extra consulting payments to Clifford raise questions about whether there was a violation of Indiana's ghost employment law. Was he being paid consulting payments to work for the Bond Bank while he was being paid full-time to work as the City's chief financial officer? His work as City Controller should have encompassed the services he was being compensated to perform for the Bond Bank. Perhaps this was just a ruse to boost Clifford's annual pay at a time when the City was facing serious financial problems. After leaving as City Controller, Umbaugh & Associates hired Clifford as a full-time employee. The Bond Bank retained Umbaugh & Associates as financial adviser for the water company while Clifford was employed as the Bond Bank's executive director.

This is precisely the reason I've been preaching for the online disclosure of all statements of economic interest on file with the City. Despite a promise to post these online, the Ballard administration has failed to do so. These disclosure statements are sloppily prepared by many of the city-county officials required to disclose them and often fail to make relevant disclosures. Both Dillon and Clifford are also perfect examples of why we need tough revolving door laws. If our friends in the local FBI office are reading, you have something else to investigate. We're entitled to honest services for the work our public officials perform, and we're not getting them.