The O'Hare Scandal: Hijacking the System — Director's Summary
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By J. Terrence Brunner
September, 2002
"[The incessant fund-raising both by the president
and lawmakers] gives the American people the impression, which is
not always erroneous, that to get legislation passed or decisions
made, you've got to contribute money in a so-called legal bribe."
—Former President Jimmy Carter on CNN's "Late
Edition," Oct. 19, 1997
The Players Speak Out …
On Integrity in Government:
"I will not say that any of my colleagues are voting based
on contributions. I don't believe that. I don't think there's a
one-to-one direct relationship. But this is so lopsided that you
really don't have a balance of interests coming forward and trying
to come up with a compromise, a middle-of-the-road solution that
is really sensible."
—Sen. Dick Durbin (D-Ill.), March 15, 2001
"One of the most serious threats to the commercial health
of our democracy [is] the perception that the national government
is for sale to the highest bidder."
—Rep. Mark Kirk (R-Ill.), February 13, 2002
"By limiting the influence of big money in politics, elections
can be more about the voters and their voices, not big money donors
and their checkbooks."
—Sen. Tom Harkin (D-Iowa), March 20, 2002
"We started the fight to reform the way our campaigns are
funded over a decade ago … We finally have an opportunity to
reform the way campaigns are financed, eliminating many of the loopholes
and leveling the playing field so that all citizens will have equal
voices."
—Sen. John D. Rockefeller IV (D-W.Va.), March 20, 2002
Anatomy of a Scandal
What follows is the anatomy of a carefully orchestrated, coordinated
and calculated campaign by the city of Chicago, United and American
Airlines, and the Civic Committee of the Commercial Club of Chicago
(a group of downtown business fat cats) to expand O'Hare International
Airport and to cement the $13 billion deal via federal legislation,
effectively bypassing the messiness and uncertainty of an open democratic
process in Illinois that would include opposition views.
The legislation to achieve this is called Durbin/Lipinski.
Sixty-seven thousand pages documenting the city's deliberative
process provide a highly unusual inside look at Chicago's motivation
and planning. They said they had a "terrible dilemma."
Chicago couldn't admit they needed more runways at O'Hare because
they knew the response would be: Build Peotone.
If Peotone was built Mayor Richard M. Daley and the city would
have to accept a "regional authority" to operate all three
airports, thus losing "control" of O'Hare. The documents
repeat over and over that Chicago must not lose "control"
of O'Hare. What does control of O'Hare mean? "Jobs and contracts."
In the classic Chicago sense, jobs and contracts equal campaign
contributions and reciprocity, the mother's milk of politics.
Also included in the documents is the city's PR plan. It's designed
to make it appear that a great majority of Chicagoans favor O'Hare
expansion, while vilifying and marginalizing O'Hare opponents as
a small "minority of suburban residents." In fact, the
number of residents affected by expansion is close to one million.
The city has portrayed these people as a small minority of "NIMBYs"
- mere "fringe players."
Chicago planned to implement its PR plan by cutting off all debate,
not only locally, but in the Congress. To deceive the press and
the public, O'Hare advocates manufactured support for the project
using a variety of slick PR tricks.
United Airlines advocated setting up a "shell organization
that can front the campaign" to expand O'Hare. Using the Civic
Committee as cover, United concocted the Booz, Allen & Hamilton
study, which purported to provide an economic rationale for expansion
(Booz, Allen's president, Cyrus Freidheim, is also a member of the
Civic Committee). The study was cooked by Daley pal and O'Hare concession
broker Oscar D'Angelo, United lawyer Gery Chico and the city's aviation
commissioner, Mary Rose Loney.
O'Hare advocates set up two other front organizations: MAC, the
Midwest Aviation Coalition (actually the Chicagoland Chamber of
Commerce) and the Campaign to Expand National Aviation Capacity
(actually the city's PR firm, Jasculca/Terman & Associates).
They went so far as to avoid using federal money to bypass public
hearings and competitive bidding, and amazingly … they wrote
these things down.
Let's Meet the Players …
- Sen. Dick Durbin (D-Ill.): Originally
neutral on expansion, Durbin briefly opposed federal intrusion,
then flip-flopped completely, co-sponsoring the Durbin/Lipinski
legislation.
- Sen. Tom Harkin (D-Iowa): Though he
doesn't represent Illinois and does not sit on the Senate committee
which oversees aviation, Harkin has been a key player in advancing
Durbin's bill. He is up for election this November.
- Sen. John D. Rockefeller IV (D-W.Va.):
Chair of the Senate Commerce, Energy and Transportation Committee's
Aviation Subcommittee.
- Rep. Bill Lipinski (D-Ill.): Longtime
supporter of aviation interests, co-sponsor of Durbin/Lipinski
legislation, and Ranking Member of the House Transportation &
Infrastructure's Aviation Subcommittee.
- Rep. Mark Kirk (R-Ill.): Did not take
a position on expansion when running for office, but then became
the primary force in whipping other Congressmen into line. A member
of the House Transportation & Infrastructure Committee's Aviation
Subcommittee, Kirk was nicknamed "rim shot" by other
congressmen after Lipinski's bill was voted down the first time
around - he had said it would be a "slam dunk."
- House Speaker Dennis Hastert (R-Ill.):
Engineered Kirk's appointment to the House committee which passed
Lipinski's bill and voted for it, rare for a Speaker.
- Rep. James Oberstar (D-Minn.): A recipient
of more than $155,000 in donations from aviation interests since
1997, Oberstar - Ranking Member of the House Transportation &
Infrastructure Committee - persuaded Lipinski to remove the build
Peotone language from his bill.
- Donald Carty: CEO of American Airlines,
old business friend of President Bush's from the Dallas area,
and a "Bush Pioneer," a group of Bush backers who raised
at least $100,000 each for his 2000 presidential campaign.
- R. Eden Martin: Chair of the Civic
Committee of the Commercial Club of Chicago, a group of downtown
business interests and top area CEOs.
- Lester Crown: Chairman of Material
Services Corp., an O'Hare contractor, and chair of the Civic Committee's
Aviation Task Force. The Crown family also owns defense contractor
General Dynamics. In 1976, Crown received immunity from prosecution
for his role in bribing Illinois legislators from then-U.S. Attorney
Jim Thompson in exchange for testimony in the case.
How They Did It
1. In June 1999, Donald Carty, CEO of
American Airlines, gives $1,000 to Rep. Bill Lipinski (D-Ill.).
Out of 435 members in the House of Representatives, Carty chooses
to give to Lipinski, a Southwest Side Chicago Congressman in a safe
district. Carty also gave to George W. Bush, Rudy Giuliani, and
Kay Granger. Lipinski, at the time of the contribution, was the
ranking Democrat on the Aviation Subcommittee of the House Transportation
and Infrastructure Committee.
2. During a week spanning late July and
early Aug. 2000, Sen. Tom Harkin (D-Iowa) — who's running for
re-election in 2002 — receives $8,000 from eight top American
Airlines executives. Harkin is not a member of the Senate Commerce,
Science and Transportation Committee, which oversees the Aviation
Subcommittee. However, he suddenly speaks out on the O'Hare issue
and calls for parallel runways at O'Hare in October 2000.
James Dimon of Chicago's Civic Committee and Bank One gives Harkin
$1,000, while James Goodwin, United Airlines CEO and also a member
of the Civic Committee, gives Sen. John D. Rockefeller IV (D-W.Va.)
— now chairman of the Subcommittee on Aviation — $1,000.
Various industry PACs continue to shower contributions, totaling
$7,000 during October of 2000, on Lipinski.
3. On Dec. 26, 2000, 14 top executives
from American Airlines, essentially the same ones who gave to Harkin,
suddenly contribute $16,250 to Sen. Dick Durbin (D-Ill.). Durbin
has consistently claimed he is neutral on the O'Hare runway question.
4. In January 2001, Rep. Mark Kirk (R-Ill.),
who has been receiving significant contributions ($2,000) from the
Civic Committee, is assigned to the House Transportation and Infrastructure
Committee by House Speaker Dennis Hastert (R-Ill.). Kirk immediately
meets with Daley to discuss O'Hare. Illinois Gov. George Ryan, a
Republican, says President Bush favors Peotone.
The law firm of Winston & Strawn, led by former Illinois Republican
Gov. Jim Thompson and representing American Airlines, floats a memo
suggesting federal law may preempt Ryan's veto power at O'Hare.
American Airlines contributes $100,000 to the Bush inauguration.
5. In late January 2001, Ryan suggests
that runways at O'Hare could be part of a build Peotone deal. In
February, Durbin receives $1,000 from General Dynamics PAC controlled
by Civic Committee member Lester Crown, chair of the Civic Committee's
Aviation Task Force.
6. In March 2001, Durbin — a co-sponsor
of campaign finance reform which bans soft money - sets up a joint
fundraising committee with the Democratic Senatorial Campaign Committee
(DSCC) allowing him to receive unlimited contributions. Don Carty
— whose top executives at American have contributed more than
$16,000 to Durbin - meets with Durbin in Springfield and warns that
Peotone would decimate air service to Central Illinois.
7. That same month, Civic Committee members
begin contributing to Rockefeller, including Goodwin ($2,000) from
United and Crown ($1,000). Crown simultaneously gives $1,000 to
Harkin.
8. In April, the Illinois Transportation
Department begins buying land in Peotone, raising the stakes. Sens.
Charles Grassley (R-Iowa) and Harkin call for O'Hare runways and
Carty backs them up saying he would drop his resistance to Peotone
in exchange for new runways at O'Hare. Harkin sets up a joint fundraising
committee with the DSCC, allowing him to skirt limits on soft money.
9. Meanwhile (April 2001), United executives
give $6,000 to Durbin and $1,000 to Lipinski. Durbin gets an additional
$10,000 from industry PACs and $1,500 from the Civic Committee.
Rockefeller receives $6,500 from the aviation PACs.
10. In May 2001, while Illinois Sen.
Peter Fitzgerald (R-Ill.) pushes for Peotone to be added to the
federal airport planning list, Durbin continues to publicly maintain
that he has no position on the Harkin/Grassley call for new runways,
saying that the federal government should not intrude on local decisions.
The Chicago Tribune, whose CEO John Madigan is a member of the Civic
Committee, urges new runways and suggests that Fitzgerald "Help
to settle it. Or get out of the way."
11. In mid-May, Arizona Sen. John McCain
(R-AZ), who had received more than $50,000 from pro-expansion boosters
since 1997 and was then chair of the Commerce, Science and Transportation
Committee, announces that he and Rockefeller are heading for Chicago
in June to hold Senate hearings on expansion.
12. While Ryan expresses public opposition
to new runways.
13. On May 14, 2001, the Civic Committee
takes out full-page ads in the Tribune and Sun-Times urging new
runaways, "now." They address the pitch to legislative
leaders, Daley and Ryan, saying it is for the good of the region
and all Chicagoans and noting that the corporations represented
have "a huge stake in the future economic health of the region."
The ad was signed by top Chicago business leaders, including the
CEOs of the Tribune and Sun-Times, American and United and many
of the individuals who had contributed to Durbin and Lipinski, Rockefeller
and Harkin.
Harkin met with the Civic Committee on the 18th and threatened
to use his influence in the Senate to advance his runway proposal.
The city's records of their O'Hare Capital Improvement Plan Program
reveal that 13 of the ad's signers are affiliated
with corporations that have contracts at O'Hare totaling over $200
million as of January 2002. If O'Hare expansion were to pass (the
approximate cost is $13 billion) their corporations stand to receive
millions in city contracts at O'Hare.
14. On May 21, 2001, Durbin calls for
politicians to settle the issue by July 1 or hand over the task
to Congress. "Those who want to turn O'Hare into some kind
of forest preserve should take the next plane out of town."
15. The same day, less than five months
after receiving $16,250 from the American executives, the Tribune
reported that Durbin said the previous day "for the first time,"
that he supports new runways at O'Hare. "I'm for the runways,"
Durbin said. He praises Harkin for his Commercial Club visit. "Sen.
Harkin's visit was a wakeup call. If we put the decision off any
longer we will jeopardize air service at O'Hare and risk damaging
the economic vitality of the region." In less than six months
Durbin had come full circle and completely adopted the position
of the airlines, the city and the Commercial Club.
During that time, $36,750 was donated to Durbin. Within one week
of the Civic Committee's ad, Lester Crown, chair of the Aviation
Task Force, made three contributions: $2,500 to Durbin, $1,000 to
Lipinski and $1,000 to Kirk. In that same month, Bill Daley, the
mayor's brother, gave $1,500 to Durbin. Lawyers for Althemier &
Gray, United's lobbyists, also gave $3,000 to Durbin.
16. The Tribune notes that former Gov.
Thompson of Winston & Strawn was to present the reconfiguration
proposal - developed by the city's longtime aviation consultants,
Landrum & Brown, which has received hundreds of millions in
O'Hare contracts — to Ryan. Thompson is also the governor's
attorney, defending him in a lawsuit brought by the Better Government
Association to return to taxpayers bribe money which Ryan's campaign
fund had accepted. Ryan's legal bills are being paid by Illinois
taxpayers.
17. In May, Lipinski received $3,000
from the Civic Committee and $5,000 from the American Airlines PAC
and $1,000 from United and $5,000 from aviation industry PACs. At
the beginning of June, Lipinski introduced legislation in Congress
to remove Ryan's veto power at O'Hare. Chicagoland Chamber of Commerce
chair Jerry Roper proclaimed on June 16, "Based on my Durbin
discussions, based on my Lipinski discussions, there is a deal out
there."
18. On June 16, McCain and Rockefeller
hold Chicago hearings. The Tribune reports the senators ridicule
O'Hare opponents (including the Suburban O'Hare Commission's attorney,
Joe Karaganis) for exaggerating the project's cost and for making
unsubstantiated corruption allegations. For the period prior to
the hearings (since May), the airlines and their PACs, along with
the Civic Committee, had donated $17,500 to Rockefeller.
19. On the 19th, Sens. Tom Daschle (D-S.D.)
and Harry Reid (D-N.V.) sign a letter to senators urging action
on new runways for O'Hare this year. Daschle's wife, Linda, is a
key lobbyist for American Airlines.
20. In June, the Civic Committee lobbyist,
Greenberg-Traurig, led by Daley's former chief of staff, Victor
Reyes, gives $3,250 to Harkin. In the last week of June, Winston
& Strawn lawyers — American's lobbyists — donate $5,750
to Carnahan, Rockefeller, Durbin, Harkin and Johnson. Six give synchronized
contributions to Durbin and Rockefeller.
21. In late June, Daley presents his
plan for modernizing O'Hare. It's essentially the same layout as
discussed in United Airlines documents in 1981 and consistently
pushed by Landrum & Brown over the years. The aviation consulting
firm has received more than $100 million in fees at O'Hare for designing
runways and taxiways. Not surprisingly, their answer to America's
transportation needs in 2050 is, "Build more runways and terminals."
22. In mid-July, American Airlines officials
tell Ryan that he has "no legal authority to block new runways,"
citing Jim Thompson and Winston & Strawn's legal theory.
23. In early August 2001, Carty and Goodwin
ask Congress to pass the Durbin/Lipinski legislation. Carty praises
Durbin, Lipinski and Harkin in his testimony before the Aviation
Subcommittee and pushes Durbin/Lipinski (H.R. 2107/S. 2039). He
thanks Lipinski "for your leadership on this issue." He
notes the "tremendous benefits for our customers and the nation
that will be generated by modernizing O'Hare."
(Meanwhile, the General Accounting Office — Congress' non-partisan
investigative arm — estimates that Chicagoans are charged an
extra $623 million a year because of the monopolistic practices
of American and United at O'Hare, which together control 80 percent
of the slots at the airport. If the Durbin/Lipinski legislation
were passed, their dominance would be increased.) Carty said that
"a vocal, well-financed minority has succeeded in using an
antiquated state law to create a political logjam."
24. In an August 4th meeting with the
Sun-Times, President Bush said that he was open to the Lipinski
legislation "in principle."
25. On August 9th, Ryan announces that
he will not seek reelection.
26. Industry sources continued to contribute
$5,000 to Durbin and Chicago's Civic Committee gives $6,000 to Harkin.
27. After Sept. 11, Thomas Hansson, head
of Booz, Allen & Hamilton's airline unit, said he stands by
his 1998 report which is the only "study." Commissioned
by United Airlines, it forms the basic economic argument for O'Hare
expansion. Its conclusion was changed from "need runways,"
to "don't need runways" by Oscar D'Angelo, Daley's pal,
and Gery Chico, a lawyer for United. They feared a backlash prior
to Daley's 1999 re-election campaign. "I don't see any reason
that ... long term trend toward more international travel, more
vacations … will change," Hansson said.
Expanded international flights were the basis for Booz, Allen
& Hamilton's optimistic projections at O'Hare. After Sept. 11,
American cut O'Hare flights to Rome, Milan, Zurich and Stockholm,
leaving only London, Brussels, Manchester, Paris and Frankfurt.
In an ironic twist, Booz, Allen & Hamilton itself cut its own
business travel 20 percent.
On Aug. 18, 2002, The New York Times reports, "Booz, Allen
& Hamilton, a management consulting firm that sends employees
around the world, has reduced its travel spending by more than 20
percent this year, said Douglas Weeks, the firm's travel manager.
Satisfying their bosses' directives to save money, consultants are
more often using videoconferencing or flying out of airports that
have low-fare competition like Baltimore-Washington International.
'The airlines need to figure out a way to close the gap,' between
leisure and business fares, Mr. Weeks said. 'It's really backfired.'"
28. In an October 2001 article, The New
York Times noted that the airline industry bailout was the most
high-level surgical strike ever. The airlines achieved this bailout
by "concentrating their CEOs on a few crucial congressional
leaders."
29. After Sept. 11, American, whose capacity
was already off by 15 percent because of "changed consumer
behavior," cut another 10 percent, fired 30,000 employees and
began "de-peaking" its O'Hare hub. De-peaking is business
bafflegab for stretching out flights to use fewer gates and planes.
"De-peaking" effectively ends delays at O'Hare. Delay-reduction
was the purported reason why expansion was necessary to begin with.
30. In October 2001, the aviation industry
continues to contribute to Durbin ($5,500) and Lipinski ($1,000).
Kirk begins receiving more Civic Committee contributions ($5,000
total from industry).
31. Eden Martin, chair of the Civic Committee
and Lester Crown, Aviation Task Force chair, are quoted in support
of a Daley/Ryan deal. The Chicago Civic Committee lobbyist contributes
$1,250 to Iowa's Sen. Harkin.
32. Dec. 6, 2001 — The Daley/Ryan
deal is announced.
33. In the only contributions from the
O'Hare players, three days after signing on as a co-sponsor to Durbin/Lipinski,
Sen. Jean Carnahan (D-Mo.) receives $3,000 from Chicago's Civic
Committee members. Durbin ($4,600) and Harkin ($5,000) receive aviation
industry donations in December.
34. January 2002 —Rockefeller predicts
quick passage of Durbin/Lipinski.
35. March 2002 — Chicago spends
$29,000 for O'Hare postcards, sent out under the auspices of the
Campaign to Expand National Aviation Capacity. Eden Martin gives
$500 to Durbin. Three top American executives - Carty, Ris and Carpenter
— give $2,500 to Kirk, and Bill Daley gives $1,000 to Hastert.
36. In June, Daschle gives his "personal
guarantee" O'Hare legislation will pass.
37. In July, Martin argues in a letter
to the Tribune that "a highly organized local minority"
has blocked progress and that Durbin/Lipinski would "eliminate
the problem of locally inspired interference with expansion of O'Hare."
He claims O'Hare expansion would add $16 billion to the local economy
and create 200,000 jobs.
Conclusion — What Chicago's elite
business interests and aviation industry insiders have been able
to accomplish in such a short period of time is quite astounding.
But it is not a feat to admire, but a hijacking of the democratic
system that ought to be exposed. The people of Illinois are very
close to having their say in what happens at O'Hare removed by congressional
fiat, but they still have a right to know how this deal has gone
down.
Post Script — Things Fall Apart for the Airlines
In July 2002, House Speaker Dennis Hastert changed his position
from neutral, selling out hundreds of thousands of suburban Republicans,
to "whipping" House Republicans to beat suburban opposition
to pass Durbin/Lipinski. Hs House point man turned out to be Mark
Kirk, freshman Congressman from the north suburbs who received a
total of $44,000 from aviation industry sources.
The city erects new kiosks at O'Hare proclaiming the wonders of
the Daley deal, quoting Durbin, Harkin and Eden Martin. Durbin modestly
"praised the proposal as a comprehensive plan that would solve
delays and also improve ground access to the airport." The
other two are more effusive. Harkin is quoted as saying, "I
think your plan for O'Hare was masterfully done … I plan to
do all that I can to keep up a proper level of pressure this summer."
Meanwhile, Martin calls the expansion plan "a grand plan
for Chicago's aviation future." Martin also gives George Ryan
a copy of John F. Kennedy's Profiles in Courage. Because of the
licenses-for-bribes scandal in Ryan's Secretary of State Office,
pollster Zagat said corruption is the only issue in Illinois, as
73 percent of people surveyed say Ryan should resign as governor.
In June 2001, Martin poses for pictures with United Airlines President
Rono Dutta at Ravinia Festival's Gala Benefit, a black-tie affair.
United gave $1 million to Ravinia Festival, which is chaired by
Martin.
United Airlines announced that it would go bankrupt if its unions
didn't give back $1.8 billion by September 15, 2002. On Aug. 20,
2002, American and United pulled out of the $3.6 billion World Gateway
Terminal project at O'Hare, an integral part of the runway expansion.
But continued to press for new runways at O'Hare, sending to every
congressional staffer, under the Campaign to Expand National Aviation
Capacity a letter signed by Carty and United CEO Creighton, urging
more runways.
Mayor Daley said, "Airlines come, airlines go, but we gotta
build O'Hare." He said new terminals would be built with or
without United and American.
Since Sept. 11, American Airlines has cut over 20,000 jobs and
closed its ticket offices. In August 2002, Carty said because of
changed consumer behavior American would cut an additional 7,000
jobs and reduce its capacity by another 9 percent (they were operating
at about 90 percent of pre-Sept. 11 capacity).
On Sept. 6, 2002, Don Carty said American would cut permanent
costs by at least $3 billion yearly or more than 15 percent over
the next several years. They are spreading out flights at its Chicago
and Dallas-Fort Worth hubs. The New York Times reported that Carty
said, "The industry's problems were evident even before the
terror attacks because of a slump in business travel."
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