Mayor Rahm Emanuel accepted $10,000 in campaign contributions from the spouses of two top executives of a longtime city contractor that is also vying to take over the city's beleaguered red light camera program.
The mayor's office Tuesday defended the two $5,000 donations following a Tribune inquiry — the latest disclosure to raise questions about the limitations of Emanuel's self-imposed order banning political donations from people who have or are bidding for city contracts.
Last month, Emanuel returned four donations totaling $25,000 and disqualified a company from a city marketing program after the newspaper revealed the contributions from that company's executives.
Such a disqualification could prove very costly for David Gupta and the company he founded — System Development Integration — which in addition to seeking the red light contract has collected more than $137million from various city computer systems contracts over the past decade.
The mayor's Chicago for Rahm Emanuel campaign fund has reported two contributions from the wives of SDI's top executives, although in neither case is the connection to SDI disclosed by the Emanuel campaign. One $5,000 donation was reported Dec. 28, 2012, from Gupta's wife, Dawn. Campaign records identify her as the founder of a small holistic health company created in September called Balex LLC.
The other $5,000 contribution to Emanuel was reported Jan. 10 from a woman listed as a "homemaker" named Debra Diver. She is the wife of Brian Diver, the president and chief operating officer at SDI.
The contributions to Emanuel came at a time when the city's longtime red light camera vendor was in trouble at City Hall over its cozy relationship to a former city official who oversaw its contract. The alleged bribery scandal, first disclosed by the Tribune, has prompted a federal investigation and led Emanuel to fire the old vendor — Redflex Traffic Systems Inc. — in February.
Gupta's company is among the seven bidders that filed proposals last month to replace Redflex. City Hall is evaluating those bids.
SDI executives attended a meeting about the red light contract with city officials on March 11, records show.
The company also showed an early interest in Emanuel's speed camera initiative, according to records showing that the same SDI executives showed up at a July 10, 2012, City Hall meeting for potential bidders.
In addition to seeking the new business, SDI received a $1.5 million contract in November 2011 from the Emanuel administration to provide a paperless permit system in the city Buildings Department.
Gupta's company also holds a $40 million city contract to provide tech support and computer maintenance for security systems at both Chicago airports, an $8.8 million contract to maintain the customer service and billing systems at the Water Management Department and a $5 million contract to help fix city payroll issues. All those contracts were signed by Emanuel's predecessor, former Mayor Richard M. Daley.
Gupta, 50, is a longtime donor to state and local politicians. Campaign finance records show he has donated more than $150,000 to various political candidates since 2001, more than half going to former Gov. Rod Blagojevich. In the early days of the Chicago mayoral race, he gave $15,000 to Emanuel rival Gerry Chico and $10,000 to Emanuel.
Emanuel raised large sums from city contractors and potential contractors during his mayoral run. But on his first day in office in May 2011, he signed an executive order banning city contractors or anyone vying for city business from contributing to his campaign on grounds that it is "essential that the public have confidence that the selection of city contractors is based on merit."
The executive order covers bidders, contractors, their owners and the spouses of those owners. The penalty can be rejection of the bid or termination of the contract.
Gupta, Diver and their wives did not return telephone calls for comment. A company spokesman would not say under what circumstances the donations were made but said they were not a violation of the mayor's ban.
David Gupta, who is still the CEO of SDI, sold a majority interest in the company to private equity firms in June 2012, spokesman Steve Patterson said. Neither David Gupta nor Brian Diver owns enough of the company to trigger the mayor's restriction on donations from spouses, Patterson said.
Emanuel spokeswoman Sarah Hamilton at first told the Tribune that Dawn Gupta's donation would be returned because her husband qualified as an owner under the mayor's donation restrictions, which define an owner as "any person with an ownership or beneficial interest in an entity of more than" 7.5 percent.
"It appears that one of the two donations does not comply with the executive order, and it is being returned," Hamilton said in a statement. "This was an oversight, and when oversights are brought to our attention, donations are returned immediately, as is being done in this case."
But when informed that the company said Gupta has owned less than 7.5 percent of SDI since June 2012, Hamilton reversed course late Tuesday, saying in an email "we had incomplete information earlier" and the donation would not be returned.
"When his wife made the donation in December 2012, he was no longer an owner of the company as defined by city ordinance," she wrote. "... Therefore, the donation is not in violation of the executive order."
The decision to keep the money highlights an apparent loophole in Emanuel's rules. Gupta and Diver, as top executives of the vendor, would be precluded from donating. But their wives are allowed to give because the executives do not qualify as owners. It is common for a company's executives and their spouses to donate to a politician, but it is not common for the spouses to give alone.
Dawn Gupta gave two $2,500 contributions to Blagojevich in 2008, state records show. In each case she identified herself as a sales executive at SDI.
According to Dawn Gupta's company website at bebalex.com, Balex was formed to help executives balance their lives through a combination of stress relief, spiritual awareness and exercise. Balex is defined on the website as "the feeling one gets before and after a burst of enjoyment."
Emanuel has been on a fundraising tear in recent months since saying he plans to seek a second term in 2015, and a number of donations to his two campaign funds raise questions about the limitations of his self-imposed restrictions. The mayor has defended taking tens of thousands of dollars from business developers who need his administration's approval for everything from zoning changes and tax breaks to building permits and liquor licenses.
In addition, Emanuel has accepted more than $100,000 tied to private equity firm Madison Dearborn Partners, despite its 48 percent ownership interest of a company whose subsidiary got a $6 million city contract from his administration. The mayor's office has said the contract doesn't count under his ban because it was piggybacked on a similar state contract.