Report: Ed Rendell PA Lottery Scheme Scams Taxpayers
Former Democratic Pennsylvania Gov. Ed Rendell may be loading his own pockets up with taxpayer money via a privatization overhaul of the PA state lottery system, Breitbart News has learned.
One of Rendell’s lucrative post-gubernatorial gigs is as a “senior adviser” to financial services firm Greenhill and Co. When he was hired in early 2011, firm chairman Robert Greenhill and CEO Scott Bok cited in a joint statement that Rendell’s “broad network of important relationships and his deep experience in government, particularly as it relates to public- private partnerships and infrastructure” as an asset to the firm.
A series of news reports and contracting system change documents show Rendell’s team has manipulated the bidding system via a series of sole-source contracts and insider deals. Rendell's team profits from that system.
On December 6, 2011, Greenhill and Co. was awarded a sole-source financial services contract. The contract was for Greenhill to work with Pennsylvania Republican Gov. Tom Corbett’s Budget Office to help identify “potential projects for privatization, public-private partnerships, and managed competition” and then help the government actually implement those recommendations deemed worthy.
A February 21, 2012, state government document – the “Statement of Work Number 1” issued as part of the sole-source contract Rendell’s firm had secured with the state government a couple of months earlier – shows that the first such project recommendation Rendell’s team pushed for that Corbett’s team deemed worthy was “pursuing private management of the Pennsylvania lottery.”
The state lottery overhaul involves a four-step process. At the end of each step, Rendell's firm clears hundreds of thousands of dollars. The state treasury published those documents here.
The deal is reportedly lingering right now before the final step – which, if implemented, the local Pennsylvania Patriot News newspaper reports, would land Rendell’s firm an even bigger payday: about $3 million.
The Patriot News notes that “highly paid consultants” crafted the plan as currently structured.
“It's striking that if the state moves forward with privatization, financial adviser Greenhill and Co. will make $3 million more,” the Patriot News reported. “That's a highly perverse incentive in place for consultants to push for privatization, even if it's not in the best interests of Pennsylvania citizens.”
On Friday, the Associated Press estimated the gains for the consultants like Rendell’s firm as much higher – in the “tens of millions.” The AP ripped both Democrats and Republicans involved in the current push for their lack of transparency surrounding this deal, but failed to mention Rendell’s involvement atop Greenhill.
According to the documents published by the Pennsylvania State Treasury, Rendell’s firm actually stands to make as much as $40 million off the deal according to the “success fee” model laid out in their contracts with the state. That means that as the contracting process moves forward and Corbett’s administration implements parts of Rendell’s firm’s plans, Rendell’s team makes more and more money off the contract – as opposed to the contract’s original $150,000 signing fee.
In a separate report, the local Patriot News newspaper argues that both Corbett and Rendell will both benefit, albeit in much different ways, from the current lottery privatization plan.
Arguably, the reason why Corbett would go along with Rendell’s cronyism is because he wants to privatize the lottery by any means necessary because it fits his political worldview.
A report from industry-specialized publication NACS online shows that the British firm Camelot Global Services PA LLC is the “lone bidder on the contract” and expected to win it.
Rendell’s Greenhill and Co. has worked closely with Camelot in the past. As the Patriot News newspaper reported, Greenhill and Co. teamed with Camelot on a $576 million deal in 2010. Greenhill and Co. helped the Ontario Teachers’ Pension Plan purchase Camelot. OTPP still owns Camelot.
For his part, Rendell has claimed he wanted nothing to do with this contract Greenhill has with the Pennsylvania government. “I said keep me out of it because one, it might be some form of conflict; and two, I’m obviously not the favored person in the Corbett administration,” Rendell said according to the Patriot News.
But Rendell’s firm Greenhill and Co. only makes those millions of dollars if Corbett’s administration gives Camelot that lottery contract. The far left-wing Daily Kos suggests that the former Democratic governor is greasing the wheels behind the scenes. Daily Kos attacked Rendell a couple of weeks ago for his Greenhill work, labeling it “corporate shilling as a consultant – which is just a pretty name for a ‘lobbyist.’”
Rendell has advocated in favor of the deal, publicly, too, even though he says he’s unfamiliar with Camelot’s offer. “If they are offering something that increases the revenue we’re getting now and there’s no risk to the commonwealth and the risk is all on the vendor side, then it’s probably a good deal,” Rendell said.
The Greenhill and Co. managing director running this lottery deal, Rob Collins, has deep connections to Rendell throughout his post-gubernatorial career as well. The Patriot News notes that Collins was the financial adviser to Rendell’s team at Morgan Stanley, the financial services firm he worked at before joining Greenhill, when Rendell failed in an effort to privatize the Pennsylvania Turnpike.
A spokesman for Greenhill hasn’t returned Breitbart News’ requests for comment, or for interviews with Rendell and others from Greenhill involved in this matter, in response to these revelations.