Rendell contributor under investigation
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HARRISBURG -- A West Coast businessman at the crux of a pay-to-play investigation in New Mexico has political ties to Pennsylvania Gov. Ed Rendell and a contract with the state.
David Rubin, head of CDR Financial Products Inc. of California, contributed $40,000 to Mr. Rendell's political coffers between 2001 and 2005, campaign finance reports show. His company also has had $599,000 worth of no-bid contracts with the state since 2003, including a current one for $45,000, according to records released yesterday.
The governor's office insists there is no relationship between the political contribution and the contract.
CDR is at the center of a grand jury investigation into whether New Mexico Gov. Bill Richardson awarded financial contracts to CDR based on campaign contributions. The controversy prompted Mr. Richardson to withdraw from consideration for U.S. commerce secretary.
Mr. Rubin said there was no quid pro quo in New Mexico or anywhere else.
"CDR has never practiced pay-for-play on any playing field where we do business," he said in a statement on his Web site addressed to clients and friends.
Rendell spokesman Chuck Ardo yesterday vigorously defended the award of CDR's contracts for work as financial adviser to the Pennsylvania Housing Finance Agency.
"That had nothing to do with the governor, nothing to do with the administration," Mr. Ardo said. "You happen to have a large contributor whose business happens to coincide with governmental needs."
American Spectator reported Monday that federal officials are looking into CDR's ties to Mr. Rendell and Democratic leaders in six other states.
Mr. Ardo said the governor is aware of no such investigation.
"Speculation in a conservative magazine does not necessarily mean the speculation is well-founded," he said. "Nobody has contacted us. We have no knowledge of any investigation."
Brian A. Hudson, executive director of the PHFA, said he learned of CDR at a 2002 conference when the company made a presentation about swaps, complicated financial instruments used in bond stabilization to protect issuers from market volatility.
"There were really only two firms at that time that were near qualified to handle swaps. We talked to them and we negotiated," Mr. Hudson said. The company did good work so its contracts were renewed several times, he said.
Now, though, it's likely the work will go out to open bid because of pay-to-play accusations.
Mr. Hudson said he didn't know when the contracts were awarded that Mr. Rubin was a Rendell contributor and said he never had any discussions with the governor about the contract.
"There's a disconnect there. Rendell never called here about this, no lobbyist did, nobody," he said.
Mr. Ardo, meanwhile, distanced the governor from Mr. Rubin, saying they had only a tangential relationship, although Mr. Rubin served on Mr. Rendell's transition team when he took office in 2003. The two met when Mr. Rendell was chairman of the Democratic National Committee in 2001.
It isn't unusual for campaign contributors to hold government contracts. It becomes illegal when the contracts are awarded as a result of the contributions.
On his company's Web site, Mr. Rubin said he is "an unabashed supporter of Democratic causes and public figures" and expects to continue making political contributions.
House Republicans used the CDR connection as an opportunity to press for an end to no-bid contracts
"This governor has made a sport of playing around with the rules regarding procurements ... and he's been able to get away with this stuff," said state Rep. Doug Reichley, R-Lehigh, who is leading an effort to pass a package of bills that would change the way contracts are awarded. The Housing Finance Agency provides mortgages for first-time homeowners and developers of residential properties. Most of its funding comes through bond sales.
First Published January 7, 2009 12:00 am