FBI bug was catalyst for city political reform

Posted: October 07, 2013

The discovery of an FBI listening device in the office of Mayor John F. Street 10 years ago this week had dramatic but unexpected consequences.

The disclosure came just a month before a political rematch between Street and Republican mayoral candidate Sam Katz, who had come within 9,500 votes of beating Street in 1999.

Short term, the bug paradoxically was a political plus for Street. Without any evidence, Democratic Party leaders portrayed the federal investigation as an effort by the Bush administration to topple a Democratic mayor.

The uproar energized Street's political base, and the mayor easily won reelection, by 77,919 votes.

"I was just spinning the [obscenity]," said the city's Democratic Party chairman, Congressman Robert Brady, in a moment of candor quoted by Philadelphia Magazine.

Longer term, the bug - and the federal investigation that spawned it - was the biggest catalyst for city political reform since a new City Charter was adopted in 1951.

It led to laws limiting campaign contributions, a Charter change designed to sever links between city contracts and political donations, and the creation of an independent city Board of Ethics that has become a strong watchdog on campaign finance and other integrity issues - reforms that already have had a dramatic impact on city government and politics.

"The report of a listening device in the mayor's office . . . sent shock waves through the city," said Mayor Nutter, then a City Council member who had clashed frequently with Street. "It was one of the most devastating, negative, and embarrassing moments in public service. . . . It was almost like our local version of Watergate."

"People were angry. They were fed up," he said. ". . . There was an environment in the building - and certainly within the Council - that something needed to be done."

The first "something" was a bill introduced by Councilman W. Wilson Goode Jr. proposing limits on city campaign contributions - a $1,000 cap on what individual donors could give to candidates and a $5,000 cap for political action committees.

To this day, Pennsylvania law puts no restrictions on the size of political contributions. Under Street and his predecessor, Ed Rendell, it was not uncommon to see campaign donations of $100,000 or more from law firms, labor unions, or real-estate developers.

Often, the donors had contracts with the city or business interests that depended on goodwill in City Hall. There was a phrase for the link between campaign donations and contracts - "pay to play."

Running for mayor in 1999, Street had said that people who donated to his campaign stood "a greater chance of getting business from my administration" than those who gave to his opponent. "I think that's the way it works," he said.

The Inquirer reported in 2002 that, out of the top 100 donors to Street during his political career, 93 had won city contracts, subsidies, or appointments since he became mayor, or had benefited from the administration's regulatory decisions.

By 2003, nine of the nation's 10 biggest cities had already imposed contribution limits. The exception was Philadelphia.

After the discovery of the bug and in spite of Street's reelection, the political climate in Council had changed.

Council passed the contribution limits. Street vetoed the bill, telling reporters, "If you're going to have real reform, it's going to have to come out of Harrisburg."

But Council overrode the veto in December 2003 with the bare minimum of 12 votes. "People are cynical and think everything in Philadelphia is for sale," said then-Councilman David Cohen. "I don't think the details are as important as the message we're sending that things have to change."

In 2004, the federal government indicted City Treasurer Corey Kemp; attorney Ronald A. White, a Street friend and fund-raiser; and 10 others. White was accused of showering Kemp with gifts to let White choose the recipients of lucrative city contracts.

While the government decided not to bring criminal charges against Street, the indictment alleged that he had instructed his staff, "If White or firms he touted appeared to be qualified, the staff members should award the city business White sought and provide White with inside information . . . otherwise unavailable to the public."

Street has denied any wrongdoing in his handling of city contracts. Those allegations and subsequent disclosures fueled a new set of political reforms, drafted by then-Councilman Nutter, who seemed already maneuvering to ride a wave of reform initiatives into the mayor's office.

The first was a Charter change rewriting the city's rules for awarding no-bid contracts, an effort to undermine pay to play, approved by voters in 2005. The next was a more sophisticated redraft of the city's campaign-finance laws, raising the maximum contribution levels to $2,500 for individuals and $10,000 for PACs.

And in 2006, Council passed and voters approved another Charter change, creating the ethics board, its members appointed by the mayor and confirmed by City Council.

The panel, led by its first chairman, Richard Glazer, and executive director Shane Creamer, quickly established its independence as a campaign-finance watchdog.

"Without a doubt, the City of Philadelphia is in the top tier of local governments around the country in terms of campaign-finance policies and enforcement," said Paul Ryan, senior counsel at the Campaign Legal Center in Washington.

The Ethics Board has also set out to enforce longtime provisions of the City Charter, like its restrictions on political activity by city employees. It was tapped by Council to handle lobbyist registration and disclosure under a bill passed two years ago, and the panel is also working on rules to govern gifts to city employees.

When Nutter took office, he hired two former federal prosecutors to prominent positions - Amy Kurland as the city's inspector general, leading a staff of 20 who investigate allegations of wrongdoing by city employees and city contractors; and Joan Markman, who helped convict Kemp, as the city's "chief integrity officer."

Has Philadelphia's culture - famously labeled "corrupt and contented" in 1903 by muckraker Lincoln Steffens - actually changed in the last 10 years?

Ask Kurland.

She says she's struck by how many of her investigations are based on tips from city workers.

"We've had an enormous increase in city employees' reporting misconduct to our office," she said. "I think city employees are sick and tired of the idea that they're lazy and dishonest."

Philip Goldsmith, who was city managing director under Street at the time the bug was discovered, agrees. "Ten years later, I think the ethical tone in the city is a lot better, and I think the practices are different. I think that's good," Goldsmith said, "and Mayor Nutter deserves a lot of credit."

He added that continued vigilance was needed.

"We still have incidents of corruption that take place. There will always be temptations," Goldsmith said. "The trick is to make it harder to do, easier to detect, and make sure the punishment is swift and severe."


warnerb@phillynews.com

215-854-5885

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