Mayor Rahm Emanuel was on hand when an organization of female business executives paid tribute last year to his financial guru, Lois Scott, for her pioneering role in helping cash-strapped governments solve their problems.
Many in the room shared an appreciation for Scott as a mentor, trailblazer and powerhouse in the public finance industry. But for some there was another connection — a financial stake in the long, successful career she built by leveraging her contacts and expertise.
Among her peers involved in the January 2012 awards were leaders from two financial firms with long-standing ties to Scott; within months she would tap both companies for important roles on city bond deals.
Also in attendance was then-city Comptroller Amer Ahmad, whom Emanuel hired with Scott's recommendation. As Ohio's deputy treasurer, Ahmad had directed government business to Scott's consulting firm, Scott Balice Strategies, when she was in the private sector.
Now Ahmad's recent indictment on unrelated corruption charges in Ohio — and the Tribune's disclosure about his ties to Scott — have put a spotlight on Scott's role in the Emanuel administration since she sold her firm and went to work for the mayor in May 2011.
In her pivotal role, Scott, 52, selects firms involved in everything from handling billions of dollars in city bond financing for public works projects to privatizing city assets. Scott, who has a long history in the public finance arena, is calling the shots on whether to award lucrative government contracts to companies represented by her former partners, employees and benefactors.
Experts say the potential for conflict of interest should be balanced against the benefit to the public of hiring professionals who have expertise in a complicated niche of the financial industry.
Who gets public financing work in Chicago and elsewhere has long been determined by a mixture of expertise and insider connections. And City Hall has long favored negotiating with bond firms, rather than doing competitive bidding, arguing it results in better value for taxpayers.
A Tribune review of dozens of complicated public financing transactions shows Scott has repeatedly selected firms with ties to her — either to serve as financial advisers to the city or underwriters for billions of dollars in taxpayer-supported bonds. The firms have received hundreds of thousands in fees for the transactions.
Among those decisions:
•The investment arm of KeyCorp, an Ohio-based banking company where Ahmad was working before Emanuel hired him, received $91,000 for work on a bond deal, after receiving fees in just one previous bond issue at City Hall, according to records.
•Two bond firms represented by former state officials who signed off on Scott Balice deals with the state of Illinois years ago have received more than half a million dollars in City Hall business at Scott's recommendation.
•A former senior vice president at Scott's firm, DePaul University professor Marty Luby, was selected by his former boss for $100,000 worth of city consulting contracts.
•Acacia Financial Group, which picked up top Scott lieutenants when she left her firm, was paid $100,000 to analyze green energy plans for the Chicago Infrastructure Trust set up by Emanuel and Scott to identify city projects that could be funded with private investment.
In addition, PFM Group, a giant firm that bought Scott's business in 2011, was given the influential but unpaid role of financial adviser to the infrastructure trust. Two key members of Scott's old firm now work at PFM.
Emanuel issued a vote of confidence in Scott after the Ahmad controversy broke and has said she is the right person to guide him on the monumental choices facing his administration as it struggles to find enough revenue to meet the city's needs.
Scott has declined repeated Tribune requests for an interview since the Ahmad controversy surfaced, and a spokeswoman for the city Finance Department that Scott leads issued a statement in response to the newspaper's questions.
"Having spent 30 years in municipal finance, it is not uncommon or unlikely that Ms. Scott would cross paths with former employees, colleagues or experts that she has met during her career," spokeswoman Kelley Quinn said in an email.
Quinn said the Emanuel administration "has worked with approximately 48 underwriting firms and 13 financial advisory firms since May 2011" and noted the firms highlighted by the newspaper have received city work under the previous administration.
The bond firms are selected from a pool of underwriters pre-qualified by the city.