From the Tribune:

Child welfare chief `horrified' about no-bid contract

By Monique Garcia
Tribune staff reporter
Published March 21, 2007

SPRINGFIELD -- The head of the state's child welfare agency told lawmakers Tuesday he was "horrified" by allegations that a Chicago company with a no-bid contract billed the state more than $2 million for drug tests it never conducted.

Acting director Erwin McEwen told a Senate appropriations committee he could not explain why there hadn't been more scrutiny of the contract that K.K. Bio-Science Inc. had since the mid-1990s with the Department of Children and Family Services.

The company and owner Anita K. Mahajan came under government scrutiny last year following Tribune reports that Gov. Rod Blagojevich's wife, Patricia, earned more than $113,000 in commissions from real estate deals involving Mahajan and her banker husband, a major campaign fundraiser for the governor.

Anita Mahajan was charged with theft, fraud and other offenses earlier this month. Her attorney said prosecutors offered no proof to support the allegations.

Cook County prosecutors allege that she acknowledged as much as half the state revenues her company collected since 2002 were obtained by fraudulently billing for tests on DCFS clients that were never performed. Prosecutors estimated the fraud was more than $2 million.

"That's a huge number," Sen. David Syverson (R-Rockford) said during Tuesday's hearing. He told McEwen he was surprised the agency didn't have internal safeguards to protect against potential fraud.

"I am horrified," McEwen said, "but this is both a critical thing and an opportunity ... for us to go back and see where we can go back and do some aggressive monitoring so we can improve our process."

McEwen said he had no knowledge of the firm's prior problems.

In 1995, the firm lost a contract to screen Chicago police and fire employees following allegations it was not licensed by federal authorities to conduct urinalyses. In 1992, federal authorities accused the company of cheating on test results to pass federal licensing examinations.

Sen. Donne Trotter (D-Chicago), the chairman of the appropriations committee, sought to temper questioning, saying the contract started many years ago under former Gov. Jim Edgar's administration.

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