Quinn OKs pension reform in Blagojevich wake

SPRINGFIELD -- Gov. Pat Quinn approved a state pension system overhaul Friday, a day after a 19-count federal indictment against his predecessor and five others that alleges retirement plan corruption.

But the Democrat was on the defensive about his ties to ex-Gov. Rod Blagojevich and his advisers.

Quinn signed a law Friday that dumps the boards of four pension and investment agencies and adopts tougher ethics rules.

Blagojevich and the others were charged Thursday in the indictment alleging, among other things, that they conspired to skim money from the Teachers Retirement System and profit from a $10 billion deal in 2003 to sell pension bonds.

Quinn served as lieutenant governor for six years, but the man who took the top spot when Blagojevich was impeached and ousted in January said Blagojevich shut him out and he was unaware of any illegalities.

"If I knew of anything wrong, I would follow my ethical duty to report that to law enforcement," Quinn said outside his state Capitol office.

Quinn and legislative leaders hailed the pension reform legislation as the "first step" in government cleanup with more to come.

The governor is promising to "fumigate" state government by reviewing Blagojevich agencies and appointees to make sure everyone's doing his job and following the law.

But Quinn would not answer questions about whether he's talked to or reviewed the performance of longtime friend John Filan, the director of the Illinois Finance Authority.

Filan was Blagojevich's budget director and architect of the 2003 pension bond deal, which borrowed $10 billion at lower interest rates and used the savings to cut the state budget deficit and contribute the state's share to the pension systems.

Prosecutors claim Blagojevich and his co-defendants conspired to steer the pension business to a company whose lobbyist would split with them the proceeds of hundreds of thousands of dollars he'd make on the deal.

"I plan to have my general counsel do what he's already done on several occasions in different parts of state government, look into matters that are very serious," Quinn said when asked whether he'd talked to Filan.

Filan has not been accused of wrongdoing and is not mentioned in the indictment. He did not return a message left with his spokeswoman Friday.

But Quinn defended firing TRS executive director Jon Bauman, whose dismissal is part of the pension legislation. A veteran TRS employee who was in the top job before Blagojevich took office in 2003, he was a friend of one of the defendants but he has not been charged with wrongdoing and has cooperated with investigators.

Quinn would not say whether his office had investigated Bauman's performance.

"The Teachers Retirement System needs a fundamental overhaul," Quinn said. "There was serious wrongdoing, larceny of the highest order, the pension fund was being looted and I think it's important that we roll up our sleeves and clean it up."

Bauman's lawyer declined comment Friday.

Blagojevich and his co-defendants are implicated in the TRS scandal that ensnared former Blagojevich fundraiser Antoin "Tony" Rezko, who was convicted last summer of attempting to squeeze businesses seeking to invest TRS funds for kickbacks to support Blagojevich's political career.