Rendell's fund-raising legacy troubles some

During the 2002 primary for governor, Ed Rendell worked the crowd on Locust Street amid the PrideFest celebration.
During the 2002 primary for governor, Ed Rendell worked the crowd on Locust Street amid the PrideFest celebration.
Posted: January 14, 2011

As friends and foes assess Ed Rendell's tenure as governor, few events better illustrate his record in one contentious arena - campaign fund-raising - than his 2001 trip to see a Chicago businessman.

Rendell was in the early stages of the governor's race. Aides had dispatched him to the Windy City with what they thought was a reasonable goal - a $50,000 check, according to one who spoke on condition of anonymity.

Rendell left the meeting buoyant, but confessed to aides he never asked the would-be donor for a set amount. Rendell "just had a feeling," he told them.

A week or so later, the Chicagoan, Bruce Rauner, sent a check for $200,000. Another check, for $100,000, came just before the election.

At the time, Rauner's private-equity firm had business with the state of Pennsylvania. GTCR L.L.C. was managing $110 million in pension funds for the State Employee Retirement System, records show.

After Rendell became governor, the state doubled its stake in GTCR funds, to $226 million. That meant at least $4 million more in management fees to the firm.

There's nothing improper about the contract, nor anything to suggest Rendell influenced it or even knew about it. (Neither the governor nor Rauner replied to requests for interviews this week.)

Even so, it is the kind of coincidence that has characterized Rendell's fund-raising through the years. To some, it colors what otherwise is undisputable: He leaves office next week as the most prolific political fund-raiser the state has ever seen, and maybe ever will.

His campaigns for mayor and governor together raised nearly $100 million, shattering all records.

"Ed Rendell is the best political fund-raiser in the history of the Commonwealth of Pennsylvania, and he's probably in the top three to five in the United States of America," says David L. Cohen, his former chief of staff, campaign manager, and top aide.

Rendell's money-raising prowess also helped shape the calculus in Harrisburg and could ripple long after he leaves, political observers say.

Democrats were less likely to press for campaign-finance reform with such a rainmaker atop their party. Republicans routinely pounced when a name on his ever-growing list of donors ended up with a state contract, or in trouble.

And critics pointed to the governor's cavernous campaign coffers as the perfect proof of the state's flawed campaign-money laws and the cynicism of its politicians.

"People would not be giving this money if they did not expect something in return," said Tim Potts, a former legislative staffer and founder of DemocracyRisingPA, a watchdog group. "It's human nature, the way the political process works."

Rendell has bristled whenever someone suggests political donations buy or even influence his official decisions.

"The only thing I have given a contributor," he told reporters in an exit interview last week, "is access."

Even after winning his second term, Rendell continued to haul in cash. At his last fund-raiser, a few hundred patrons paid $5,000 each to mingle with celebrities Cybill Shepherd and Morgan Fairchild and nosh on top-shelf food at the A-list Philadelphia restaurant Table 31.

That was in April - long after Rendell's final race and only months before the end of his term.

His campaign committee won't report its final figures until the end of this month, but he's likely to retire from office with at least $2 million in his political war chest.

Confidants say Rendell wooed donors with the same traits that helped him win races and excel in office: attentiveness, charisma, and an ability to relate to multimillionaires as easily as he can chat up an ironworker or a dejected Eagles fan.

"He connects," said Mitchell Berger, a Fort Lauderdale, Fla., lawyer, friend, and Democratic fund-raiser. "Everyone knows Ed. And he makes a point of knowing you."

Before he won the governorship, his Rolodex ballooned when he took the reins as chairman of the Democratic National Committee, in 1999. But Rendell's supporters trace his epic fund-raising to his earliest days in Philadelphia politics. He lost primary races for mayor and governor, but showed a knack for cultivating donors - many of whom have stayed with him for decades.

Arnold Katz, an insurance executive, recalled asking a question from the audience during a Rendell 2002 campaign speech to underwriters at the Green Valley Country Club in Lafayette Hill.

Katz had met the candidate a few times, but said he was surprised when Rendell asked him to stand, then addressed him by name: "Arnie, you know a lot about the business . . ."

Katz was impressed. He ultimately gave about $145,000 to Rendell's campaigns.

He said that Rendell had done "wonderful things" for Philadelphia and that he viewed his donations as money well spent.

Katz said that while the governor "never asked me for a nickel," Rendell's aides occasionally did. He said that he never sought anything in return, and had no contracts with the city while Rendell was mayor - and that the only state contract for his company, Brokerage Concepts, came from House Republicans.

"When you've got 30,000 donors, there's going to inevitably be some" who get state work, said Chuck Ardo, the governor's spokesman until 2009. "But from my experience and my observation in almost 10 years with Ed Rendell, he never once advocated for anybody because they were a donor."

But time and again in Rendell's career, critics have drawn lines between contributors and contracts.

Such as the contract given to Ken Bailey, a Houston lawyer who donated $90,000 to the governor's campaign and was hired by the administration to represent Pennsylvania in a trial against a drugmaker. (Rendell said Bailey had unique expertise in the field.)

Or the roughly $29 million that state Auditor General Jack Wagner said he found in no-bid contracts to Deloitte Touche, a New York-based consulting firm that hired several Rendell aides. The governor defended the contracts as a "reward" for good performance.

Rendell often notes that he follows the rules as they are written. "I have not given contributors business just because they're contributors," Rendell said this month. "Many of the biggest contracts I gave out to people who gave infinitely less than others."

Ken Jarin, one of Rendell's chief fund-raisers, went further. He said "tons of people" donated to the campaign expecting to get something - but didn't.

How does Jarin know? "Because they complained that they didn't - that's how I knew," he said.

Jarin is a partner in Ballard Spahr, a Philadelphia law firm that is a favorite target of the governor's critics. Rendell was on the payroll there during his 2002 campaign, collecting a $250,000 salary for what he acknowledged at the time was "very little work."

Since then, Ballard lawyers have chipped in nearly $900,000 for his gubernatorial runs, and the firm managed his campaign's expenses, records show.

During Rendell's tenure in Harrisburg, Ballard won nearly $20 million in no-bid state contracts, including $6 million worth in the last two years from the Governor's Office or his counsel, for work on labor, gaming, and other issues, state records show.

"The unfortunate aspect of this is that it sends a message out to the public that for a certain amount of a campaign contribution, you're going to do better in the long run," said State Rep. Doug Reichley (R., Lehigh), who contends that no-bid contracts under Rendell have cost taxpayers hundreds of millions of dollars; he introduced a bill to curb them.

Such arguments have always gnawed at Rendell and his supporters. Ballard, they note, wasn't the only law firm to get state contracts during Rendell's tenure, nor the only one to contribute to his campaigns.

"In some ways, Ed Rendell is the perfect example for why there's not a problem here," says Cohen, a former Ballard Spahr chairman who is now executive vice president of Comcast Corp. "Because there wasn't a city procurement that came up, a state procurement that came up, where significant Ed Rendell financial contributors weren't on all sides. . . . He raised so much money - from everyone - that there wasn't any bias."

Pennsylvania law has no limits on individuals' contributions to campaigns. For years, Rendell has said he would support changing that. As recently as this month, he spoke in favor of contribution caps or other reforms to attack the perception of "pay-to-play" contracts given to big donors.

"Privately, we would say to each other many times: It's a horrible system," Jarin said. "Even though he was probably the best I've ever seen at raising money as a candidate and officeholder, he thought it was terrible."

But as governor, he never made changing it a priority.

In 2009, the last year of reported contributions, Rendell's campaign committee took in $1.1 million. Most of the donations were four- or five-figure checks, many flowing in from far corners of the country: $1,000 from the president of a Nashville firm; $5,000 from a South Florida socialite; $10,000 from the wife of a Hollywood producer.

Four of the donations were $25,000 checks, logged on the same day, from executives at three major parking-garage operators in New York.

None had readily apparent business interests or property in Pennsylvania. The donations occurred as officials in Pittsburgh and Harrisburg were considering privatizing their parking systems - a step that could be worth hundreds of millions in contracts. (Three of the donors did not respond to requests for comment. A fourth could not be reached.)

Rendell's campaign committee isn't hoarding the cash. State records show the fund doled out about $800,000 to Democrats and committees in 2010. The rest - at least $2 million - will go to future candidates, the governor said.

That sunset bankroll, his friends say, is Rendell's way of remaining relevant.

"And how do you maintain relevance? You've got to have money to do that," said Alan Kessler, a friend and fund-raiser for 30 years. "Unless he was going to go ride off into the sunset, money still plays a role - whether you're running for office or not running for office. It makes people stand up and listen a little more."


Contact staff writer John P. Martin at 610-313-8120 or jmartin@phillynews.com.

Inquirer staff writers Joseph N. DiStefano and Amy Worden contributed to this article.

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