Tom Knox: Outsider with ties to the inside

The mayoral candidate decries politics as usual. He has also benefited from it.

In his barrage of TV ads, Tom Knox is the rebel, the outsider promising to upend City Hall's cozy world of no-bid contracts and favors for political friends.

"Instead of hiring cronies, I'll hire more cops," Knox says in one commercial. "Instead of no-bid contracts, I'll put the money into making our schools safer."

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That barrage is a central reason that polls indicate Knox is leading the May 15 Democratic primary race for mayor of Philadelphia.

To an extent, Knox is indeed the outsider in the five-way race, a businessman pitted against four Democrats with decades of tilling in the party's vineyards and a combined 74 years in public office. Knox spent just 17 months in City Hall as $1-a-year insurance czar to Mayor Ed Rendell.

But Knox's relationship with government is more nuanced than the lonely figure portrayed in his ads.

He has been a major campaign money man, raising funds and writing checks for Rendell, former Gov. Robert P. Casey, and others. The man who said in Saturday's debate, "I'm running to take the big-boss, backroom politics out of city government," gave $50,000 in 1999 to a mayoral candidate who was as big-boss as they come: lawyer Martin J. Weinberg, best known as Frank Rizzo's party chairman.

Nor is Knox a stranger to no-bid contracts; he secured one in the late 1990s from the Convention Center. And though a Knox campaign aide disdained indicted State Sen. Vincent J. Fumo (D., Phila.) as "the epitome of what Tom is running against this time around," candidate Knox paid a friendly visit to Fumo in the fall - a courtesy call, Knox's campaign says.

A self-made millionaire in the health-insurance and banking fields, Knox said he couldn't be bought - he's paying for his own campaign. Of his past campaign donations to others, he said he never got favors in return. "What you do get is access, but you don't get special treatment," Knox said.

"I am an outsider. My definition is I have no political authority at all," he added. "When I left the mayor's office, my clout went with it."

Knox said his meeting in fall with Fumo was no big deal - "all of 15 minutes," not counting the 10 Fumo kept him waiting. Knox said he had sought out Fumo while making contact with a range of political leaders. The pair met at Fumo's South Philadelphia legislative office.

Fumo was by then widely reported to be under FBI scrutiny; he has since been indicted on charges of misusing state money and obstructing justice, and is fighting those charges.

"My understanding is Vince is one of the top operatives in the business. I wanted to meet people," he said. "I asked him about what he thought. He didn't express any help - he said I didn't have a shot, basically."

Fumo declined to comment for this article.

Knox's role as a Democratic campaign donor dates back two decades. By his own account, he was one of Casey's key backers, putting up his own cash and persuading others to pony up as well.

As a consumer-protection move encouraged in the 1970s by then-state Insurance Commissioner Herb Denenberg, the governor gets to choose one Blue Cross board member. In 1988, Casey chose Knox - who in turn rose to become chair of the board's executive committee.

In 1991, Knox's last full year on the board, Blue Cross began using outside brokers, instead of salaried employees, to market its health-care coverage. Knox, who prides himself on his prowess as a salesman, jumped right in.

He was so good at it that Blue Cross awarded him and his wife a free trip to the 1992 Summer Olympics in Barcelona, a prize given to outside brokers who were top performers.

Knox said at the time that his brokerage firm had earned "hundreds of thousands of dollars" in Blue Cross commissions.

The trip raised eyebrows since Knox took it when he was Rendell's deputy mayor for management and productivity - dealing with city health-insurance costs.

Denenberg, now a columnist for the Philadelphia Bulletin, said the governor's pick on the Blue Cross board was supposed to look out for the "broader public interest."

In a recent interview, Denenberg said of Knox's dual role, "He's not really an independent board member if he's out there hustling Blue Cross contracts." For instance, Denenberg said, what if the board had considered how much Blue Cross should pay outside brokers?

"If he represents the public, he might have one view," Denenberg said. "If he is getting commissions, he might have quite another view."

Asked to respond to Denenberg's criticisms, Knox campaign manager Josh Morrow said Knox had been just one of thousands of brokers who had an equal shot at marketing Blue Cross' products. Morrow declined to comment further.

Over the years, Knox has given Rendell $120,000 for his bids for mayor and governor and has persuaded others to give as well. Rendell recently estimated that Knox had raised more than $1 million for his various campaigns.

Knox left Rendell's mayoral administration in 1993. Casey soon tapped him again, to oversee Fidelity Mutual Insurance Co., a firm then on the verge of insolvency that had been taken over by the state Insurance Department.

Industry analysts credited Knox with doing a good job, dumping the company's problem real estate and resolving its debts. Knox said he had won the position on his merits, saying as many as 30 people interviewed for the post, which paid $225,000, according to the Philadelphia Daily News. "I don't think Gov. Casey gave anybody anything unless they were qualified," he said.

In 1995, Knox quit the post after regulators working for Casey's Republican successor, Tom Ridge, complained that Knox had a conflict of interest: He had bought $33,000 in stock in a New York firm that was set to buy Fidelity Mutual.

For his part, Knox said the regulators were Republicans trying to score points against a Democratic appointee.

"I'd like to get rid of the no-bid contracts that are given out to the chosen few," Knox said in Saturday's mayoral debate. But no-bid work was essentially what he sought at the Convention Center in the late 1990s - and got.

Knox called Bob Butera, then the center's chief executive, to ask that his firm, Philadelphia Insurance Associates, be named health-insurance broker for center employees.

By then, Knox had been off Rendell's staff for about four years. Both Knox and Butera said Knox did not mention his service to Rendell during the call.

He didn't have to, Butera said.

A former state House speaker and longtime GOP warhorse, Butera said, he was well aware of Knox's ties.

"He didn't have to say anything; I was somewhat aware of political associations," Butera said in an interview. "I knew he was close to Rendell at the time, and that was important to us because the city funded the Convention Center operations."

In all, Knox's firm was paid $28,000 in commissions as the center's broker until 1998, when Knox and his co-owners sold the firm. The business, which had about 100 clients, went for $1.6 million.

Knox said his pitch to Butera had been just one of many, nearly all to nongovernment customers. "If you're calling 25, 30 people a week, you're bound to come across a public entity," Knox said. "But that doesn't mean I was an insider."


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Contact staff writer Craig R. McCoy at 215-854-4821 or cmccoy@phillynews.com.