For much of Mayor Richard M. Daley’s record reign, City Hall operated an illegal hiring scheme, skewing test results so political supporters of the mayor and his allies got jobs and promotions.

Federal prosecutors proved that, with some of Daley’s top aides going to prison, including patronage boss Robert Sorich and Streets and Sanitation Commissioner Al Sanchez. Others faced disciplinary action.

Ald. Harry Osterman never was charged in the scandal, nor was he disciplined, but he played a key role in putting politics first in employment decisions at Streets and Sanitation, a city official told a federal court monitor, according to records obtained by the Chicago Sun-Times.

Osterman’s role was detailed by William M. Mahon — now a $116,000-a-year Streets and San deputy commissioner in Mayor Rahm Emanuel’s administration who in 1997 and 1998 was “personnel liaison” for the city agency under Osterman, then the personnel director.

Mahon was interviewed Dec. 4, 2012, by a monitor appointed by a federal judge to help clean up city hiring. According to the newly obtained records, Mahon described how the names of favored job applicants passed from the mayor’s office to those doing the hiring.

“So did you ever receive names from Harry Osterman?” Mahon was asked.

“Yes,” he responded.

“And would he provide you names of individuals who were preferred candidates?” he was asked.

“Yes,” Mahon said.

Mahon told the monitor he gave those names to the people responsible for interviewing job candidates and that these preferred candidates were then “scored higher than other individuals” and thus more likely to be hired.

“When you would inform the other interview panelists of the preferred names from Harry Osterman, what would you tell them?” the federal monitor asked Mahon.

“I would say here is three candidates that downtown is interested in, and they would conduct interviews,” according to Mahon.

Mahon’s first job at City Hall, in 1989, was working for Osterman’s late mother, former Daley aide Kathy Osterman, who ran the Mayor’s Office of Special Events.

Six years later, Mahon transferred to the Department of Streets and Sanitation, which handles garbage pickup and snow plowing in Chicago and is one of the city’s biggest agencies. He worked in Streets and San’s Bureau of Traffic Services “under the personnel liaison” and in 1997 became the office’s personnel liaison, reporting to Harry Osterman.

At the end of 1998, Mahon got a promotion within the department, no longer reporting to Osterman.

Osterman left the city payroll and took office in 2000 as the state representative for a North Side district that includes Edgewater. He served in the Legislature until 2011, when he was elected alderman, and he’s on the Feb. 26 city ballot, seeking re-election.

Osterman, 51, who on his website describes himself as “a progressive, independent voice committed to serving his community,” declined Sun-Times reporters’ requests to speak with him. Nor would he say whether he was interviewed by federal authorities who prosecuted his former colleagues.

Instead, the alderman responded with a written statement, saying: “In over 30 years of public service I have never been accused by any authority; city, state, or federal; for any wrongdoing of any kind, much less any criminal behavior. I have tried, in every position I have been honored to hold as a public servant, to serve the interests of citizens to the best of my ability.

“Decades-old unsubstantiated allegations, never acted on by any legal authority, can’t change that.”

Noelle Brennan, the attorney appointed by a judge as monitor to enforce anti-patronage court orders, took steps to punish city employees who were identified as having roles in the political hiring schemes but not charged with any crime, among them Mahon.

Brennan wouldn’t discuss Osterman but said, “We didn’t investigate anyone who wasn’t a current employee.”

Mahon’s attorney Thomas Breen wouldn’t comment, other than noting the hiring scandal occurred years ago.

As a result of Brennan’s investigation, Mahon got suspended from his job for 45 days and was barred from being involved in hiring decisions.

Mahon grew up in Bridgeport, where his family was neighbors with the late Mayor Richard J. Daley. He started working at City Hall after the younger Mayor Daley was first elected to that office in 1989.

In 2006, City Hall’s inspector general’s office found that Mahon had “repeatedly engaged in personal activities” while on the clock at City Hall — including attending a White Sox game. The inspector general recommended that Mahon be fired. Instead, the Daley administration handed him a 29-day suspension.

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