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Once again last week, Mayor Richard Daley resorted to an increasingly standard response to a scandal in his administration: He said he didn’t know.

Yet even as the mayor raised that familiar shield, some aldermen were saying that they had warned Daley’s lieutenants about Supt. Matt Rodriguez and his friendship with Frank Milito, a felon who also has been questioned about an unsolved homicide.

That left Daley facing other questions: If he didn’t know, why didn’t his aides tell him, and could he have avoided this political embarrassment?

While Rodriguez’s fall seems likely to focus further attention on how Daley runs his administration, it also presents one of his toughest decisions–both as a chief executive who must find a new leader for a troubled department and a politician who knows his choice could alienate some voting blocs.

“It’s a lose-lose situation for the mayor,” said an alderman, who asked to remain anonymous. “If it’s not an African-American, they’re going to say, `There you go again, favoring Hispanics.’ And if he chooses someone other than a Latino, some (Latinos) will be complaining.”

Daley’s quandary is the latest blow in what has been the most politically damaging time in his eight-year administration, with embarrassing disclosures about his friends, confidants and high-ranking staff members and with constant questions about what he knew and when.

Daley’s trusted operative in the City Council, Patrick Huels, resigned last month amid disclosures that he borrowed $1.25 million from a city contractor whom he had helped to win a $1.1 million city subsidy. Meanwhile, Daley has been battered by continuing disclosures that his friends have made millions in no-bid city contracts.

Following disclosures in the Tribune that his friendship with Milito violated a rarely invoked rule that prohibits police officers from socializing with felons, Rodriguez announced his resignation Friday. Milito is a North Side businessman who pleaded guilty in 1986 to mail fraud and tax charges and also has been investigated in connection with three murders.

Ald. William Beavers (7th), speaking after Rodriguez announced his Dec. 1 retirement, said that he provided information about Rodriguez’s association with Milito to two members of Daley’s inner circle about a month ago. But he believes the warning never made it to the mayor.

“I gave it to some trusted people of the mayor who didn’t relay the information to him,” Beavers said. He steadfastly declined to name the two.

Another alderman said that he, too, heard about Rodriguez’s friendship with Milito about the same time that Beavers did. The alderman, who asked not to be named, said he passed the information on to a mayoral confidant, whom he declined to identify.

For his part, Daley has said that he first learned about Rodriguez’s and Milito’s friendship on Thursday, during a conversation with the superintendent. Asked about staff members who were aware of the relationship, Daley replied, “I don’t know who that was.”

While the mayor and his administration squirmed, insiders said Daley would suffer some political damage but likely can weather the political storm.

“It’s a significant blow because it’s the city’s top cop,” said Ald. Ricardo Munoz (22nd). “But when taken into account with his top alderman and everything else that’s happened. It has begun to erode his public persona as this great manager.”

But Ald. Patrick O’Connor (40th), a Daley loyalist, noted that the mayor remained “immensely popular.”

“The things that have occurred are bound to set you back a little bit personally,” he said. “But politically, I think the average Chicagoan looks at how his neighborhood functions and looks at the city and is proud of how things are going.”

The only Daley adversary who has surfaced so far as a potential opponent in the 1999 mayoral race is U.S. Rep. Bobby Rush (D-Ill.). To date, however, his challenges to Daley’s leadership have failed to catch fire with the public.

“You get wounded,” said a sometime Daley adviser. “You can hurt your knee. Someone in the race can stomp you to the ground. But there is no (rival) there now.”

Daley said he would rely on the Police Board to come up with recommendations on who will replace Rodriguez. Publicly, the City Hall line was that the next superintendent should, first and foremost, be a solid cop–race and ethnicity notwithstanding.

But privately, police and City Hall sources agreed that the next superintendent will be an African-American and come from within the department ranks, rather than from another police agency. Daley may also feel pressure to hire a minority because he recently replaced retiring Fire Commissioner Raymond Orozco, a Hispanic, with Edward Altman, who is white.

“I think racial considerations are going to play a tremendous role,” said one white City Council member, who asked not to be named. “Look at the timing of this. You are a little more than a year out from the mayoral election (season).”

On Friday, three African-American police executives surfaced as leading contenders to replace Rodriguez: Terry Hillard, 54, the chief of detectives; Charles Ramsey, 47, deputy superintendent of staff services; and James Whigham, 50, deputy superintendent of technical services.

Hillard may be the most palatable choice. A respected veteran who was shot and wounded in the line of duty 22 years ago, Hillard was a bodyguard for Mayors Harold Washington and Jane Byrne and is said to be respected by both police brass and the rank-and-file. One insider at police headquarters described Hillard as a “policeman’s policeman.”

His low-key and agreeable manner may suit Daley, though Hillard has limited experience dealing with the media and speaking before the public.

Some believe that Ramsey is an obvious choice, given that he is the mastermind behind Daley’s pet project: community policing. Ramsey is equally at ease speaking at community meetings or at academic symposiums on policing methods.

But he is also opinionated and is not afraid to speak his mind, attributes that have endeared him to officers on the street but may worry the Daley administration.

Whigham, like Rodriguez, is considered more a bureaucrat than a street cop. He is reportedly the preferred candidate of Beavers, chairman of the City Council’s Police and Fire Committee.

If Daley is looking for a Hispanic candidate, Deputy Chief Ernest Hernandez, 49, is considered an outside choice. One of the highest ranking Hispanics in the department, Hernandez won kudos for straightening out the Shakespeare District on the West Side and is respected by officers who have worked for him.

Several white police executives are considered long-shot candidates: Ray Risley, 59, chief of organized crime, a previous candidate for superintendent: Michael Malone, 53, deputy superintendent for investigative services; and Charles Roberts, who is credited with revamping the Police Academy.

Rodriguez’s resignation is effective Dec. 1, and it was generally believed that 1st Deputy John Townsend would run the police department until a full-time replacement is named. Townsend, 66, the No. 2 man in the department and a close ally of Daley’s, said he was not interested in being named superintendent.

Most of the potential candidates could not be reached for comment.

“I haven’t given it any thought,” said Ramsey, shortly after leaving Rodriguez’s resignation speech. “You’ve got to wonder if it’s a job you even want. (Rodriguez) shouldn’t have gone out that way, after 38 years. He’s a good man.”