A day after Sam Zell's Tribune Co. filed for Chapter 11 bankruptcy
protection, the Federal Bureau of Investigation arrested Illinois
Governor Rod Blagojevich and Chief of Staff John Harris on charges of
corruption, alleging that, among other transgressions, they meddled
with Tribune's troubled businesses, including the auction of the
Chicago Cubs.
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The Chicago Tribune's editorial page has been critical of the
governor, and suspicious of his activities; if the government's
allegations turn out to be true, then they had plenty of reason to be
wary. Interestingly, Blagojevich was equally suspicious of the
Tribune's editorial board, and allegedly sought to trade his influence
in the auction of the Cubs and Wrigley Field in exchange for the
Tribune firing its editorial board. Below is the Department of
Justice's allegations against Blagojevich that specifically involves
the Tribune:
According to the affidavit, intercepted phone calls
revealed that the Tribune Company, which owns the Chicago Tribune and
the Chicago Cubs, has explored the possibility of obtaining assistance
from the Illinois Finance Authority (IFA) relating to the Tribune
Company's efforts to sell the Cubs and the financing or sale of Wrigley
Field. In a November 6 phone call, Harris explained to Blagojevich that
the deal the Tribune Company was trying to get through the IFA was
basically a tax mitigation scheme in which the IFA would own title to
Wrigley Field and the Tribune would not have to pay capital gains tax,
which Harris estimated would save the company approximately $100
million. Intercepted calls allegedly show that Blagojevich directed
Harris to inform Tribune Owner and an associate, identified as Tribune
Financial Advisor, that state financial assistance would be withheld
unless members of the Chicago Tribune's editorial board were fired,
primarily because Blagojevich viewed them as driving discussion of his
possible impeachment. In a November 4 phone call, Blagojevich allegedly
told Harris that he should say to Tribune Financial Advisor, Cubs
Chairman and Tribune Owner, "our recommendation is fire all those
[expletive] people, get 'em the [expletive] out of there and get us
some editorial support."
On November 6, the day of a Tribune editorial critical of
Blagojevich , Harris told Blagojevich that he told Tribune Financial
Advisor the previous day that things "look like they could move ahead
fine but, you know, there is a risk that all of this is going to get
derailed by your own editorial page." Harris also told Blagojevich that
he was meeting with Tribune Financial Advisor on November 10.
In a November 11 intercepted call, Harris allegedly told
Blagojevich that Tribune Financial Advisor talked to Tribune Owner and
Tribune Owner "got the message and is very sensitive to the issue."
Harris told Blagojevich that according to Tribune Financial Advisor,
there would be "certain corporate reorganizations and budget cuts
coming and, reading between the lines, he's going after that section."
Blagojevich allegedly responded. "Oh. That's fantastic." After further
discussion, Blagojevich said, "Wow. Okay, keep our fingers crossed.
You're the man. Good job, John." In a further conversation on November
21, Harris told Blagojevich that he had singled out to Tribune
Financial Advisor the Tribune's deputy editorial page editor, John
McCormick, "as somebody who was the most biased and unfair." After
hearing that Tribune Financial Advisor had assured Harris that the
Tribune would be making changes affecting the editorial board,
Blagojevich allegedly had a series of conversations with Chicago Cubs
representatives regarding efforts to provide state financing for
Wrigley Field. On November 30, Blagojevich spoke with the president of
a Chicago-area sports consulting firm, who indicated that he was
working with the Cubs on matters involving Wrigley Field. Blagojevich
and Sports Consultant discussed the importance of getting the IFA
transaction approved at the agency's December or January meeting
because Blagojevich was contemplating leaving office in early January
and his IFA appointees would still be in place to approve the deal, the
charges allege.
The reference to "Tribune Owner" would seem to mean Sam Zell. If
that's the case, is Zell in hot water? Did he help the government? What
impact if any will the Blagojevich allegations have on Tribune's
bankruptcy filing? In the end, it's doubtful that Blagojevich's alleged
role in the Cubs auction, which may have slowed the sale, was directly
material to its bankruptcy filing. The team, for instance, is not part
of the filing. Nonetheless, it offers some colorful insight into the
auction. - Matthew Wurtzel
See the DOJ's_complaint_(pdf)
Matthew Wurtzel is the editor of Dealscape.
Comments
Blagojevich's corruption runs deep.
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