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THE HARTFORD COURANE October 5, 1999
Copyright 1999 The Hartford Courant Company
Hartford Courant (Connecticut)
October 5, 1999 Tuesday, STATEWIDE
SECTION: MAIN; Pg. A1
LENGTH: 1212 words
HEADLINE: SILVESTER SAYS DIBELLA WAS DOOR-OPENER;
FORMER TREASURER DESCRIBES DEALS WITH PAINE WEBBER
BYLINE: JON LENDER And MIKE McINTIRE; Courant Staff Writers
Courant Staff Writer Matthew Daly contributed to this story.
BODY:
Joseph Grano may be president of the financial giant Paine Webber Group Inc., but he still
needed an introduction.
His company was looking to do a couple of hundred-million dollars' worth of pension fund
business with the state more than a year ago, but first he needed someone to open the door
to then—state Treasurer Paul J. Silvester.
The door-opener, as it turned out, was none other than his boyhood friend from the South
End of Hartford: former state Sen. William A. DiBella.
At least that's the story that sources say Silvester has told in a secret statement to federal
prosecutors, filed in conjunction with his Sept. 23 guilty plea to racketeering and conspiracy
counts arising from his 17 months as treasurer.
The new allegations by Silvester provide insight into the corrupt official's commitment of
$200 million in state employee pension fund investments to Paine Webber in December
1998, his last full month in office after losing the Nov. 3 election. Around that time, sources
say Silvester was telling friends he expected to get a big job with Paine Webber —- which the
company denies ever promising Silvester.
But the allegations go beyond SiIvester's individual case. They also shine a light on the
shadowy realm in which the smart guys of politics and business get together to play a game
called special access -— in which they make the rules and they almost always win, often at
taxpayers' expense.
And, in DiBella‘s case, the allegations add to his status as a prominent figure in the still-
expanding Silvester corruption scandal.
In his years as the state Senate Democratic leader, DiBella was the sharp-dressed figure at
the state Capitol with the swept—back mane of white. He carried an aura of mystery and an
image as a subtle, behind-the-scenes dealmaker. With one foot in politics and one foot in
business, he always seemed one step ahead of those who questioned the propriety of that
straddling act.
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That straddling act made DiBella a subject of speculation and a target of investigations
during his years at the Capitol -— and, now that he has been retired from office nearly three
years, it continues to place him in investigators' crosshairs.
For one thing, sources already have identified DiBella as one of five unnamed "associates" in
a prosecution document that outlines episodes of irregularities and improprieties to which
Silvester has admitted guilt. Sources say that DiBella is the "Associate B" who Silvester got
a money-management firm to "compensate" in connection with an investment of state
pension funds, according to prosecutors.
DiBella has not commented on that, but his lawyer has said he did nothing wrong.
Now, DiBella plays another prominent role in the case via the new statement that Silvester
has made to prosecutors as part of a plea agreement under which he is cooperating in an
ongoing federal corruption investigation. The secret statement is still under seal, but two
sources familiar with it have shared its contents with The Courant.
Here, according to those sources, is what Silvester has told prosecutors:
* DiBella introduced him to Grano, whom DiBella knew from their upbringing in Hartford's
heavily Italian American South End. Silvester and Grano hit it off, and Grano introduced him
to the chairman of Paine Webber, which is the parent company for the well-known securities
firm PaineWebber Inc. and the money-management firm Mitchell Hutchins. They talked about
possible real estate and private equity deals.
* Some time later, DiBella asked Silvester to go to lunch with Grano and an unidentified real
estate investment executive he had recruited, and they discussed a partnership that
Silvester said he would have his staff check into. The evaluation was positive and they later
began negotiating the deal. Grano asked SiIvester's advice on attracting other pension
funds to the deal, and Silvester said he should hire a professional to worry about that.
Grano asked his recommendation, and Silvester named Potomac Advisors, a Maryland firm
that marketed at least two deals with the treasurer‘s office for fees in recent years.
Representatives of Potomac Advisors could not be reached for comment Monday.
* Grano asked if it would be necessary to pay the agency for the Connecticut deal, and
Silvester said no, adding that there were other good investment—placement agents. Soon
afterward, DiBella called Silvester to relate that Grano did not want to pay him a finder‘s fee
for the Connecticut deal. Some time after that, Silvester said Grano told him he liked DiBella
but was worried that if Paine Webber paid DiBella, it could hurt the company's reputation
because DiBella had been investigated too many times in the past. Grano asked SiIvester's
advice on how to make things right with DiBella, and Silvester told him not to worry about
it.
* Silvester said he asked a representative of another firm, who was familiar with placement
fees, about helping DiBella. But there was no indication in SiIvester's statement that
anything came of it.
Asked for comment Monday, a Paine Webber vice president, Paul R. Marrone, issued a
statement: "Paine Webber does not believe it appropriate to comment on statements
allegedly being attributed to Paul Silvester in the course of a grand jury investigation that,
as a matter of law, is supposed to be secret."
He said that Sept. 24, the day after SiIvester's guilty plea, the company "issued a statement
that Paine Webber did not employ or pay any consultant, finder or placement agent in
connection with investments made by the state of Connecticut at Paine Webber. We add the
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following clarification: Paine Webber at no time suggested or understood that anyone would
be compensated on its behalf, either through an intermediary or otherwise."
Paine Webber has, in the past, used the services of Washington consultant Wayne Berman —-
who hired Silvester in a new business- consulting firm after he left office last Jan. 6 -— but
Marrone said Berman never worked or collected any fees on Paine Webber‘s Connecticut
deals.
SiIvester's successor, Democratic Treasurer Denise L. Nappier, canceled both of the $100-
million commitments Silvester made to Paine Webber companies in December 1998. One of
the companies, Mitchell Hutchins, still manages some state pension funds, though.
DiBella could not be reached for comment Monday night. When his lawyer, Hugh Keefe, was
informed of Silvester's statements, he called it "a nothing story" that The Courant should
not print.
Silvester's statement contains nothing "that remotely smacks of criminality," Keefe said,
adding that "it's defamatory" to print it. "The impression is going to be left here that Bill
DiBella did something criminal," Keefe said. "You're besmirching people's reputations who
don't deserve to be besmirched. That goes for the governor and it goes for DiBella."
SiIvester's new allegations to prosecutors also pointed a finger at Gov. John G. Rowland by
linking at least one treasury investment to a promise of campaign contributions to the
governor. Another investment deal allegedly was to provide a cash payment to a brother of a
Rowland friend. Rowland continued Monday to emphatically deny that he or his aides had
done anything wrong.
GRAPHIC: PHOTOS: (2 B&W) MUGS; PHOTO 1: GRANO; PHOTO 2: DIBELLA
LOAD-DATE: October 5, 1999
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