CHICAGO BRIEFING May 2005

News this month

Setting a poor example

As the state's budget crunch threatens mass-transit reductions and other cutbacks, the top auditor in Illinois singled out Governor Rod Blagojevich’s administration on April 26th for wanton spending. This includes costly wining-and-dining, expensive parking spaces at Chicago Bulls games and profligacy with hundreds of thousands of taxpayer dollars. William Holland, the auditor general, also asked the attorney general to investigate the Department of Central Management Services, which oversees Mr Blagojevich's budget.

Mr Holland had broader criticism for the state's tangled process of awarding and managing contracts, and complained that state officials had not proved to him their claims that up to $600m in taxpayer funds had been saved. He suggested that the opposite might be true, saying: “This is worse than just sloppy.” Officials have called the report “deliberately inflammatory”. Mr Blagojevich has claimed that his efforts to streamline government bureaucracy will ease the state’s financial woes.

Widening investigation

An ongoing probe into a city-contract bribery scheme has federal investigators inching closer to top city officials. At issue is the now-defunct “hired truck” programme, in which private truck operators secured contracts to haul construction rubbish. Armed with search warrants, agents seized personnel documents from two city departments on April 29th, including Mayor Richard Daley’s Office of Intergovernmental Affairs. The warrants also covered the city’s Water Management Department. So far there have already been charges against 27 trucking company operators and city employees.

The search at City Hall was the first indication that the scandal may reach the mayor’s office. The Office of Intergovernmental Affairs works to promote Mr Daley’s agenda in the city council, and also controls patronage jobs. Prosecutors say that the city government has been co-operative, and Mr Daley has said his staff will continue to be so. “We’ll get to the bottom of this”, said the mayor, who cancelled the $40m-a-year programme earlier this year, as the scandal unfolded.

But will they go to jail?

In April, the FBI indicted 14 alleged mobsters, including two former police officers, in one of the biggest ever “hits” on the city's crime syndicates. Two suspects—Joey “the Clown” Lombardo and Frank “the German” Schweihs—escaped capture. (On the day of the federal round-up, Frank “Gumba” Saladino, a suspected hitman, was found dead in a motel room, apparently of natural causes.) The charges against the group include 18 unsolved murders, along with illegal gambling and loan sharking over more than three decades. The prosecution's testimony began with a bang on April 29th, when a federal agent outlined the killings of Anthony and Michael Spilotro 20 years ago.

Much of the prosecution’s case hinges on an informer: Nicholas W Calabrese, a hitman who has confessed to being involved in 15 murders. Lawyers for the alleged big boss, James Marcello, have denounced the prosecutors for relying on the word of a convicted felon, who could face the death penalty if he does not co-operate. (Mr Marcello's request for release was denied.) Many suspect that the mob’s violent silencing of witnesses largely accounts for Chicago's poor record thus far in getting convictions on gangland murders—only 14 among 1,111 murders since 1919, the year Al Capone arrived in the big city.

More options all around

Chicago’s derivatives exchanges, where traders deal in futures and options on everything from crops to currency, have had a busy spring. Not only are volume records being broken regularly by the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT), but in April the CBOT voted to convert its membership structure into a stockholder programme ahead of a planned initial public offering later this year. It has watched with envy as the CME’s stock price has more than quadrupled since that exchange, America’s largest futures marketplace, went public.

Meanwhile, the New York Stock Exchange announced plans in April to merge with Archipelago, an all-electronic exchange based in Chicago. And the Chicago Board Options Exchange (CBOE), the second-biggest US stock-options market, announced plans to begin buying the trading rights of members of the CBOT. William Brodsky, the CBOE’s chairman, said earlier this year that he might consider an IPO, but that could only happen with the sort of stockholder conversion the CBOT just completed.

Dearer than the car

The looming threat of transport cutbacks over the summer, and strong demand for cars (despite rising petrol prices), helped drive interest in a recent auction of downtown parking spaces. One customer bought five spaces scattered around the city centre so he could ensure easy parking as he moves about town. Spaces have sold for as much as $90,000 each in a smart building at Chestnut and Michigan—a price that is still well below those in New York and London.

Catch if you can

May 2005

“Romeo and Juliet”

Until June 19th 2005

Shakespeare’s story of star-crossed lovers has been called a great drama about being “short of time, out of time, never timely”. Indeed, the young lovers’ rush to be together yields a series of ill-timed incidents that, in the end, prove fatal. While capturing the tragedy of the story, this production by Chicago Shakespeare Theatre is also infused with humour, vigorous swordplay, and fine acting that make the familiar story fresh again. The veteran actors playing Juliet’s nurse (Rondi Reed) and Friar Laurence (Mike Nussbaum) are particularly delicious in their roles as confidants and accomplices. The theatre itself, modelled on the original Globe, offers great sightlines from all levels.

Chicago Shakespeare Theatre, Navy Pier, East Grand Ave. Tickets $42-65. Tel: +1 (312) 595-5600. For more information, see the theatre's website.

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