The Insider

Since the FBI investigation of alleged bribes to members of City Council went public in May, critics of the operation have accused the agency of targeting only Hispanic and black councilmembers and lobbyists. But now it appears the G-men have diversified their probe by scrutinizing the mostly Anglo, Republican-oriented lobbying team representing PSG, the U.S. subsidiary of a French corporation that spent the spring months seeking the Council's support for a contract to manage the city's wastewater system. No such pact has yet been awarded, but it certainly hasn't been for lack of effort by PSG.

The FBI's specific area of inquiry is whether PSG officials routed contributions to Councilmen Joe Roach and John Kelley through a group of supporters, in effect creating a network of "nominee contributors" to influence the city officials to support PSG. A common technique in routing campaign gifts involves the real contributor's paying or giving the nominee the amount of the contribution plus the income tax liability accrued in the process. The nominee then donates directly to the official's campaign, getting around election laws limiting the size of campaign donations. In this case, while the councilmembers themselves may have committed no illegalities, the individuals who orchestrated contributions could be on the hot spot.

As a member of the Council's competitive services committee, Roach championed the idea of having one company manage a privatized wastewater system. The councilman even issued a memo on the subject with attached letters from several companies. In one of them, PSG president Mike Stump dangled an offer to provide a free estimate of savings his company could provide by running wastewater operations, then write a cashier's check to the city for that amount if PSG got the contract. Stump never had to write that check, but he did give a $1,000 donation to Kelley's campaign last November.

FBI agents have quizzed PSG lobbyist Karen Post of the Peppar & Post public relations firm on the subject of the contributions. In the last year, Post has become a fixture on the City Hall scene, operating with what one source describes as an unlimited PSG budget. Post's company was paid nearly $1,800 during the last election cycle by Roach for campaign design and graphics services. According to associates, she has also had a business relationship with PSG for some time. One observer of municipal politics claims Post "wants to be the new Joe B. Allen," a reference to the Vinson & Elkins kingmaker and leader of the giant law firm's PAC. Post did not return several phone inquiries from The Insider.

Other members of the PSG team included state senator-in-waiting Jon Lindsay, waste disposal company executive Willard Jackson, the husband of tennis star Zina Garrison Jackson, and consultant Denis Calabrese, who worked for Roach in the last election. Port Commissioner Betti Maldonado, who became a central figure in the FBI sting after helping undercover agents offer cash contributions to several councilmembers, was briefly a member of the PSG team. Maldonado dropped off the roster after finding she didn't fit into the Post-Calabrese-Lindsay mix.

Calabrese, who says he has not been contacted by the FBI, jumps to Roach's defense. The councilman, says Calabrese, "was not all that aggressive" in helping PSG, and he points out that during the time PSG was pressing for a contract to manage the entire system, it actually lost a pact to manage the Southeast Water Purification Plant. Calabrese also notes that his job with PSG did not involve campaign contributions.

Roach refused to confirm or deny that the FBI is examining contributions to his campaign. "If you want to provide me the name of someone who wants to go on-the-record with these kind of accusations," replies the councilman, "then I'll be happy to respond. But I don't have any interest in fueling speculation about rumors and innuendo." Roach did say he didn't know whether there was an effort by PSG operatives to route money into his campaign.

Other sources tell The Insider that PSG operatives made direct overtures to consultants with links to key councilmembers in the privatization arena, offering generous contracts in exchange for help in gaining the ear of those officials. "I was just very uncomfortable with how aggressive they were," says one of those folks approached by the PSG group. "I can't tell you how relieved I am we didn't get involved." This person apparently has no hankering for long summer chats with the FBI.

Meanwhile, for those of you wondering why the feds have taken such an abiding interest in Councilmen Michael Yarbrough and Jew Don Boney even though they have no listed contributions from the FBI-created Cayman Group, look for the government to try to prove that both campaigns received Cayman cash that is not listed on their finance reports. As to whether the FBI has tapes to prove it, only the grand jury knows for sure. One source tells us the panel was prepared to return at least one indictment two weeks ago, and had to be cooled down by prosecutors who hope to have a package of indictments at the end of the grand jury sessions. Guess they'll return no indictments before their time.

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