Commerce Bank, George Norcross, Steve Sweeney, and No-Bid Contracts

The following article was written for the North Jersey Media Group (northjersey.com) in May of 2003. It has been cut down from 13 pages to include just those paragraphs of most interest to Gloucester County residents. Lines will indicate places where text has been removed.

Please read the other articles on this blog. There is an index on the right side of the page.



Banking on your money: Commerce counts on political ties

Wednesday, May 21, 2003

By CLINT RILEY
STAFF WRITER


With help from taxpayers and government deregulation, Commerce Bancorp has expanded into one of the nation's fastest-growing suppliers of financial services - and New Jersey's most impressive political benefactor since the Pennsylvania Railroad controlled politicians and public policy a century ago.

Few of the thousands of new customers flocking to Commerce's big red C realize that this $17.7 billion-a-year financial powerhouse is run by a corporate syndicate whose members wield an astonishing breadth of influence over New Jersey's elected officials, the public policy they make, and the taxpayer dollars they spend.

No other bank, bond underwriter, or insurance broker operating in New Jersey has doled out more campaign cash, received more no-bid government contracts, or employed more of the state's politically connected figures in the last five years.

At least five county political bosses, a former acting governor, two former state Senate presidents, and dozens of state and local public officials have received both personal income and campaign contributions from Commerce Bancorp.

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In New Jersey counties and municipalities where party bosses and local political leaders have financial ties to the bank, Commerce obtains a sizable portion of government banking, underwriting, and financial advisory work without formal competitive bidding.

Last year, two-thirds of all long-term bonds underwritten primarily by Commerce were not put out for bid, compared with less than half of those handled by its nearest competitor, Wachovia Securities. Commerce was the primary underwriter in 64 negotiated bond deals (out of 94 deals), a total more than four times the 15 no-bid deals underwritten by Wachovia (out of 33 deals). The Commerce no-bid deals were worth $1.5 billion; Wachovia's were worth $392 million.

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Hill says Commerce is just doing what its many governmental customers want.

"It's not our choice whether the municipalities go competitive or non-competitive,'' he says. "It's theirs.''

Whoever makes the call, taxpayers typically end up paying higher fees in no-bid deals, especially when the contracts go to suppliers that make political contributions, says Robert B. Lamb, a professor at New York University's Stern School of Business.

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Today, George Norcross, 47, and Buckelew, 74, sit on Commerce Bancorp's main 13-member board of directors and are two of the company's largest stockholders. Norcross is also chief executive officer of Commerce Insurance Services, and a top adviser to McGreevey and other prominent state Democrats. Buckelew, a major Republican fund-raiser, is president of the bank's Shore division.

The 1996 purchase of George Norcross' and Buckelew's insurance companies - and the installation of the two political heavyweights in Hill's executive suites - gave Commerce an immediate one-two political punch. Overall spending by Compac NJ exploded, to almost $654,000 last year from $72,000 in 1996.

Compac NJ's donations, however, are only a fraction of the campaign dollars connected to Commerce. Since 1997, bank executives, board members, lobbyists, and consultants on Commerce's payroll have conservatively helped raise an additional $10 million for New Jersey politicians through dozens of political funds.

An example is First Jersey PAC, headed by George Norcross. In one recent 18-month period, First Jersey PAC gave $408,500 to county parties and candidates and $489,400 to candidates running for the Assembly and state Senate.

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Indeed, Commerce's expansion has run on a parallel track to the bank's political donations. Since 1997, Commerce's total assets have grown from $2.9 billion to $17.7 billion by the end of 2002. Its overall government deposits have risen from less than $500 million to more than $2.5 billion.

More than $1.8 billion of those government deposits belong to New Jersey taxpayers.

Public business, private business

The foundation of Commerce's power is capital - both the monetary and political varieties - and the ability to grant access to it.

Simply put, Commerce and its leaders have what others crave. Politicians want campaign dollars, lawyers need billable hours, and developers seek financing and subsidies for the sewers and highway ramps that will help their projects sell.

Commerce's extraordinary reach allows its executives and board members to bring politicians, lawyers, and developers together for mutual benefit.

For watchdog groups, however, the interlocking political and financial relationships between policymakers and Commerce executives and board members, including private business deals, raise a vital question: Can officeholders with ties to both the bank and the public be counted on to make decisions on behalf of the people they represent, rather than to benefit those who supply them with campaign cash and personal income?

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In his successful 2001 campaign for state Senate, Democrat Stephen Sweeney - already director of the Gloucester County Board of Freeholders - raised $1.8 million, a state record for a legislative race. His opponent, incumbent Raymond Zane, raised just under $711,000.

The man behind much of Sweeney's money was his boyhood friend, George Norcross.

In February 2002, barely four months after Sweeney's victory, Gloucester County and the Gloucester County Utilities Authority each completed no-bid agreements with Commerce Capital Markets to refinance bond debts of $11 million and $4.7 million, respectively.

On the county bond issue, Commerce shared a $68,000 underwriting fee with Salomon Smith Barney. It made approximately $30,000 on the utilities authority's bond.
The same month, Compac NJ contributed $9,250 to the Gloucester County Executive Committee.

Furthermore, each bond deal was legally blessed by a law firm with close allegiances to Commerce. Parker, McCay & Criscuolo - whose lead bond lawyer, Philip Norcross, is Commerce's campaign finance lawyer - made $26,500 on the county deal. Blank Rome LLP, Commerce's corporate counsel, made $40,000 on the utilities authority deal.

Both law firms contributed heavily to political funds benefiting county Democrats and Sweeney. From 1998 through 2002, Parker, McCay gave $52,500 to the Gloucester County Democratic Committee, and Blank Rome gave $41,500. Parker, McCay gave $9,800 to Sweeney's 2001 campaign, and Blank Rome contributed $7,500.

Sweeney did not return a reporter's call seeking comment.

Zane, the man Sweeney defeated, was not shy when drawing conclusions about his opponent's backers. In an interview after his loss, Zane said, "This business of raising a million dollars for a $49,000 legislative seat is nonsense. This was a major investment by people who look to gain personally."