Baltimore's liquor board does business the old-fashioned way.

One liquor board employee runs campaigns for a powerful state senator. Others solicit political donations from bars they regulate -- an apparent violation of state law. Another is seen at a political fund-raiser, hanging around with a businessman lobbying for a liquor license.

The Board of Liquor License Commissioners -- under investigation by a city grand jury -- is a testament to the power and problems of political patronage. It's an agency riddled with potential conflicts of interest -- where board employees blend politics and business almost as freely as bartenders mix scotch and water.

The liquor board's three commissioners and its 33 full- and part-time inspectors are selected by state senators, whose political interests are then advanced by the employees. Inspectors John "Bernie" Martin and Leo Martin, for example, acknowledge that they have solicited campaign contributions for the senators from bars and restaurants they are assigned to regulate.

Inspectors in Baltimore cover fewer businesses than do their counterparts in most other major U.S. cities. And most are placed on the public payroll without any qualifications.

Most cities have scrapped the patronage system, citing payoffsand political favors.

A city grand jury is investigating whether that is occurring in Baltimore, where the liquor board has sweeping power over 1,608 establishments and its decisions to approve or deny licenses can shape the character of entire neighborhoods.

Police and prosecutors became suspicious of the board last year. State undercover troopers investigating The Block found drug-peddling and prostitution so commonplace that they couldn'tunderstand why the board permitted the seedy dance bars to stay open.

"We were amazed," said state police Maj. John Cook, who headed the drug investigation.

After the Jan. 14 state police raid on The Block, prosecutors convened a grand jury to investigate. The grand jury is examining claims -- contained in a search warrant affidavit -- that liquor board inspectors took bribes from the nude dance bars and that a board employee had a secret business partnership with one of the clubs.

Board members said they aren't sure why the grand jury is investigating. "We don't know what they're looking at," Commissioner Charles E. "Tommy" Thompson said.

Since the grand jury investigation began, more troubles have surfaced at the liquor board. Last month, board attorney Mark Keener resigned, citing the appearance of a conflict of interest by an inspector. The board then suspended the inspector, Bernie Martin, after a string of claims that he was becoming too cozy with the people he was assigned to regulate.

The commissioners who supervise the agency acknowledge that political patronage is creating problems. They say they have recommended reforms to state senators, but nothing ever happened.

"Is it antiquated?" board Chairman George G. Brown asked. "Yes."

Political plums

The liquor board is one of the last strongholds of patronage in Baltimore. Formed in the days after Prohibition, the board was built on the principle that public jobs were the property of the politicians.

Under state law, drafted by Baltimore senators years ago, liquor board commissioners and inspectors serve at the pleasure of politicians. The people responsible for changing the law: the nine senators representing the city.

L In political circles, the jobs are taxpayer-supported plums.

Senators name the commissioners and inspectors; the governor has the final say on who gets appointed. Senators use the jobs to reward election workers or to employ out-of-work constituents.

The jobs also are plums for the people appointed to the board. The hours are flexible. The work isn't hard. And the pay -- $18,800 a year for inspectors, plus full benefits -- isn't bad for checking out bars and restaurants.

There are no qualifications. There is no test and no training manual.

"We have no control over who walks through that door," Mr. Brown said.

He and other commissioners say most of their inspectors do a good job. Once inspectors are hired, they answer to the board before they answer to their political patrons, board members say.

"We have control over the inspectors," Mr. Brown said, "not the senators."

In Baltimore, inspectors cover fewer businesses than do inspectors in most other major U.S. cities, according to a sampling of liquor boards around the country. In Baltimore, there are 49 liquor licenses per inspector, the fewest among the 10 cities sampled. San Francisco has 526 licenses per inspector; Chicago has 750.

Other cities also have qualifications for liquor inspectors. In many of the cities sampled, inspectors must have a college education and some investigative or law enforcement experience, and must pass a test or take police training courses. In none of the other cities sampled are the inspectors politically appointed.

In Boston, lawmakers did away with political patronage on that city's liquor board nearly 20 years ago, transferring inspection and enforcement duties to the police.

Why?

"There were a lot of corruption problems: kickbacks, favors, fund-raising for politicians," said Stuart Krusell, chairman of the Alcoholic Beverage Control Commission in Massachusetts. "It doesn't happen anymore."

In Baltimore, the system has stayed the same for 60 years. The key job qualification: ties to the governor or a state senator.

"I think their hearts have to be beating," joked Sen. John A. Pica Jr., chairman of the city's Senate delegation, who has appointed a commissioner, an attorney and three inspectors. "They have to know how to tell when lights are on in the bars, how to tell time, what a pair of dice look like."

Of the 18 full-time inspectors in Baltimore, none has any prior law enforcement experience. But nearly everyone has a political connection.

There's Lawrence Hall, named by Sen. Clarence W. Blount, a Baltimore Democrat. His wife is City Council Vice President Vera Hall, chairwoman of the state Democratic Party.

There's John Linz, named by state Sen. American Joe Miedusiewski, a Baltimore Democrat. He is a former member of the House of Delegates and a current state central committeeman.

There's Samuel T. Daniels Jr., named by Gov. William Donald Schaefer. His father is Samuel T. Daniels Sr., an influential community leader who formed Blacks United for Schaefer in 1986.

Mr. Daniels worked as an artist before winning one of the posts six years ago.

"This job's a gift from heaven," he said.

Patronage problems

One recent case illustrates the problems that political patronage can cause for everyone in the system -- from a commissioner to an inspector to a family lobbying for a liquor license.

Mr. Pica appointed his old friend Curtis H. Baer as a commissioner five years ago. Mr. Baer is the senator's campaign manager. And each year, bars and restaurants regulated by Mr. Baer and the liquor board contribute thousands of dollars to Mr. Pica, election records show.

Among the contributors: members of the O'Malley family, who propose building a $750,000 bar and restaurant at the old site of the P.T. O'Malley Lumber Co. on South Eden Street in Fells Point. Family members have contributed at least $1,200 to Mr. Pica's campaign in the past year.

When the O'Malleys requested a liquor license, community groups,city planners and the Baltimore Police Department objected. They said at a hearing earlier this year that there were already too many bars in the busy neighborhood.

The board voted 2-1 on April 14 to approve the license. Mr. Baer sided with the O'Malleys.

Thomas J. Durel, president of the Fells Point Homeowners' Association, says Mr. Baer should have abstained because of his relationship to Mr. Pica's campaign. "He should have said, 'This is too close to a conflict of interest,' " Mr. Durel said.

Mr. Baer said he never considered stepping down.

"I have a clear conscience. You can't please everybody," he said.

There was another potential conflict that infuriated Fells Point residents -- prompting the suspension of a liquor inspector.

Three years ago, Mr. Pica appointed one of his lacrosse pals, Bernie Martin, to the board as an inspector. At the time, Mr. Martin, a former bartender, was between jobs.

His qualifications for the post?

"My experience in the food and beverage industry," Mr. Martin said.

During the past year, Mr. Martin also has worked for the senator's campaign -- handing out fund-raising tickets, canvassing neighborhoods, passing around campaign literature. For his help, Mr. Pica paid him about $10,000, campaign spending reports show.

A month before the board approved the liquor license for the O'Malleys, Mr. Martin was seen at a political fund-raiser hanging around with Michael O'Malley, a family member pushing for the plan.

Community groups were furious.

"We believe that it is completely inappropriate for a liquor inspector to be in attendance at any function with an individual whose application is pending before the board," Richard W. Drury, an attorney for the local homeowners association, wrote to the liquor board on March 30.

Mr. Martin said he was simply socializing.

"I wasn't doing anything for Michael or with Michael," he said.

Mr. O'Malley declined to talk about it. His public relations spokeswoman said, "It was social chitchat. It was much ado about nothing."

That wasn't the only incident that led to Mr. Martin's suspension. Fells Point residents grew angry with Mr. Martin over his failing to file dozens of their complaints about Bohager's Bar & Grill, a frequent contributor to Mr. Pica's campaign.

In another episode, Mr. Martin tried to pressure a board attorney to shut a Mount Vernon cafe after the inspector exchanged words with the owner. Inspectors rarely contact board lawyers about pending cases.

Last month, the board suspended Mr. Martin for four weeks.

"We felt our integrity was being abused," said Mr. Brown, the board chairman.

When the board reached its decision, two of the three commissioners said they were unaware of another incident involving Bernie Martin.

In a practice supposedly banned years ago, Mr. Martin peddled political fund-raising tickets for Mr. Pica to a cafe regulated by the board.

The practice, the board says, is an apparent violation of a Maryland law that prohibits board employees from receiving "directly or indirectly, any commission, remuneration or gift whatsoever" from the liquor industry.

Deal deemed improper

Last month, Mr. Martin attended a Saturday campaign meeting for Mr. Pica's re-election bid at a York Road restaurant. During the meeting, Mr. Martin handed out fund-raising tickets to one of the owners of the Fells Point Cafe, which is appealing a liquor board decision that restricts its operation.

Mark Keener, the attorney handling the appeal for the board, also attended the meeting. He said the ticket deal was improper, creating the appearance that an inspector may have been peddling his influence and that of a state senator.

"It was unusual that a liquor board inspector was in charge of distributing tickets for some sort of fund-raiser for an officeholder of the state," he said.

Mr. Martin said he did nothing wrong. "I wasn't there to hand out tickets as a liquor inspector."

Attorney resigns

Two days after the campaign meeting, Mr. Keener went to Annapolis and told Mr. Pica -- the man who had appointed him and Mr. Martin -- that he was resigning.

"The whole situation made me uneasy," Mr. Keener said.

Commissioner Baer, also appointed by Mr. Pica, said he knew Mr. Martin had peddled the tickets. But the other commissioners learned about the incident from a reporter. The board chairman said someone should have alerted him sooner.

"The outcome [of the suspension] might have been different," Mr. Brown said.

Bernie Martin isn't the only inspector who sells fund-raiser tickets for political patrons.

When Leo Martin, a retired postman, isn't making inspection rounds, he sometimes sells fund-raiser tickets to bars and restaurants for the man who appointed him to the board -- Sen. George W. Della Jr., a Baltimore Democrat.

"I offer them to some of the establishments, but I do this on my spare time," Mr. Martin said, declining to say which establishments purchased tickets. "Sometimes they say yes, and sometimes they say no.

"There's no pressure. It's nothing I feel is wrong."

Mr. Della said he didn't see any problems with the practice. "If they want to help me, I say, 'Great, help me.' As long as they're on their own clock."

Liquor commissioners said the practice is a firing offense.

"That's a pure conflict of interest," Mr. Brown said.

The practice is nothing new.

Two decades ago, inspector John Linz sold fund-raising tickets for his own political campaign. The contributors: 10 businessmen who owned nude dance bars on The Block. The board suspended Mr. Linz for two weeks. He declined to discuss what happened.

Many bar owners, fearing retribution from inspectors and

senators, are reluctant to talk about the practice or even to acknowledge that it occurs. One did.

"I would not accept tickets from an inspector," said Paul Oliver, owner of Dalesio's in Little Italy, which frequently contributes to Mr. Pica's campaign.

Mr. Oliver said his restaurant buys tickets from the senator's father, an old family friend, and not from inspectors.

"I've heard of inspectors selling tickets," Mr. Oliver said. "I don't think it's a good idea. Political issues and the liquor board are two different entities."

Part of the game

Not every senator enjoys the spoils of the patronage game.

rTC Senators who step out of line with the delegation can lose their appointments. Those who lose favor with the governor also can wind up without any patronage chips to play.

"It's done by seniority and who is more influential in the delegation and who has the best relationship with the governor," Mr. Pica said.

Sen. Julian L. Lapides, a Baltimore Democrat, has one of the worst relationships with the governor. He also has no appointments to the liquor board. When the governor wanted the public to finance Oriole Park at Camden Yards, Mr. Lapides opposed using tax money to build the baseball stadium.

"When I balked, the governor decided I was to have no patronage," said Mr. Lapides, who lost his only appointment to the board. "I've never questioned it and must confess I could care less. It's not my kind of politics."

A spokeswoman for the governor said it's all part of the political game.

"That's the nature of patronage," Page W. Boinest said. "That's the way it works."

The patronage system can also work against senators who challenge the liquor lobby.

Last year, the General Assembly approved a bill allowing the city to ban billboard ads for beer and liquor. Sen. Ralph M. Hughes, a Baltimore Democrat, was its sponsor.

The liquor lobby was infuriated by the bill, one of the first bans of its kind in the country.

"It's common knowledge that many legislators are sponsored by that industry, and anyone who stepped out of line certainly had a difficult time," said Bev Thomas, chair of the Baltimore City-Wide Liquor Coalition For Better Laws and Regulation.

Mr. Hughes may have paid a price. He was denied an appointment to the liquor board.

"That legislation might have been the reason," the senator said. "I was told it was not. I guess I have to believe what they tell me."

Defending patronage

Despite all the complaints and conflicts, little has changed at the liquor board.

Board commissioners say they have recommended reforms to the city's senators, who have kept the system in place. Among the suggestions were that job qualifications be drafted and that the political appointment of inspectors be phased out.

"I don't think [the senators] were taking out their pencils and jotting down notes," Mr. Baer said.

Most senators continue to defend the patronage-fueled system.

"I don't think you have to sanitize politics out of everything," said Sen. Barbara A. Hoffman, a Baltimore Democrat. "Patronage is not a terrible thing, as long as the people who take the jobs are honest."

The system shouldn't be scrapped, Mr. Pica said in an interview several weeks ago.

"If something is wrong, it may reflect upon me. If something is wrong, it should be stamped out," he said. "Let me tell you what doesn't exist -- people buying tickets to fund-raisers and getting favors in return.

"I just don't play that game. If that's true, those people should be indicted."

In a more recent interview, the senator said there should be some changes at the liquor board after all. He was unclear about what he thought should be changed but said he might name a panel to study some options.

"I think something has to be done," Mr. Pica said. "At a minimum, you have to have some sort of guidelines for the inspectors."