Crain's Chicago Business



January 30, 1995

The albatross around John J. SERPICO's neck is getting heavier.

Questions are being raised about the politically well connected labor leader's longtime chairmanship of the Illinois International Port District in light of renewed allegations about his connections to organized crime.

Aides say Gov. Jim Edgar is reconsidering his decision last year to appoint Mr. SERPICO to another five-year term at the quasi-governmental agency, which oversees Calumet Harbor marine terminals and hundreds of acres of vacant land on Southeast Side.

Known as a major political fund-raiser and powerful union official, Mr. SERPICO has presided for almost two decades over the Port of Chicago, whose fortunes have ebbed and flowed-mostly ebbed-with the local economy.

While the port district is about to open a 27-hole championship golf course and driving range on the site of an old sludge landfill-at a cost to the district of about $5.4 million-the port's maritime facilities, roads and other infrastructure have been barely funded.

Shipping volume hit a record last year, estimated at about 2.7 million tons, a gain of about 25%. But imports of semifinished steel slabs, the port's fastest-growing cargo, more than doubled at all Great Lakes harbors last year.

The port's last major capital investment was in the late 1970s, when it built a $15-million container-handling facility, Iroquois Landing.

A 1987 report by George Ryan, then lieutenant governor and now Illinois secretary of state, said there was a "history of poor management" and called for a new "blue-ribbon" board to reverse the port's "negative image."

As a result, the port hired a marketing director, Helen Brohl, who was highly regarded in the shipping industry. But no one has been named to replace her since she left for personal reasons in April 1991.

The Edgar administration's review is prompted by recent reports that Mr. SERPICO has been ousted from his high-ranking position at the Laborers International Union of North America in a bid to avoid a federal crackdown on the union's alleged ties to organized crime.

Mr. SERPICO and union officials did not respond to requests for comment.

But law enforcement sources confirm that Mr. SERPICO was suspended on Jan. 18 as an international vice-president of the union and removed from his position as a grievance hearing officer. A union manager for the New York/New Jersey area also was removed from office the same day.

The move came after the union's governing board adopted a tough new ethics code barring any member from "knowingly associating" with members of an organized crime syndicate.

"It raised some concerns here," says Edgar spokesman Mike Lawrence. "It doesn't mean we'll do anything. We're taking a look at it."

But opponents of organized crime are calling on Gov. Edgar to seek Mr. SERPICO's resignation at the port district, which he has chaired since 1976.

"If he's not fit to be a leader of the union, I don't see how he's fit to be a leader of the port district," says Tom Hampson, chairman of the Chicago Crime Commission's Committee on Organized Crime. "I think he ought to get rid of him. He shouldn't have appointed him in the first place."

The U.S. Department of Justice, which has been investigating mob influence in the Laborers union for at least two years, appears to be on the verge of a lawsuit seeking a federal takeover of the union, similar to steps taken with the Teamsters union in 1988.

But union leaders are trying to show they are taking steps to respond to government concerns.

Mr. SERPICO's ties to organized crime were highlighted in his 1985 testimony to the President's Commission on Organized Crime, in which he acknowledged social relationships with several well-known organized crime leaders in Chicago.

He noted that he grew up with Joseph Ferriola, then considered one of the top syndicate leaders in Chicago, and that he saw or called him about once a month.

"I call him because he is a friend," Mr. SERPICO testified. But he denied having anything to do with organized crime.

In a 1986 report on Chicago labor racketeering, the presidential commission said the Laborers union was "a union with clear ties to organized crime." It noted that Mr. SERPICO was a "friend" of top mobsters, but did not allege wrongdoing by him.

Appointed in 1975 by Gov. Dan Walker, Mr. SERPICO was reappointed by Gov. Jim Thompson in 1980, 1984 and 1989, and by Gov. Edgar last year.

"He was already there, and I didn't see any reason to replace him," says Mr. Thompson, a partner and chairman of the executive committee at Chicago-based law firm Winston & Strawn. "He has been a great chairman. It was a sleepy, money-losing place and he turned it around.

"I never knew of any" alleged ties between Mr. SERPICO and organized crime, says Mr. Thompson, a former U.S. attorney in Chicago. "As far as I was concerned, he was one of the guys who grew up in the old neighborhood."

But the Chicago Crime Commission actively tried to block Mr. SERPICO's 1989 reappointment. In letters to the governor and Mayor Richard M. Daley, who is required to agree to the appointment, the commission called attention to Mr. SERPICO's 1985 testimony.

An aide to Gov. Thompson responded in a January 1990 letter that Mr. SERPICO already had been confirmed by the Illinois Senate and, under the Illinois Constitution "cannot be removed from office except" for incompetence, neglect of duty or malfeasance in office.

Mr. Hampson and other leaders of the Chicago Crime Commission say they also would have opposed Gov. Edgar's reappointment of Mr. SERPICO last June, but they were not aware of it until last week.

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