By Richard Wronski and Stacy St. Clair
8:56 PM CDT, August 21, 2013
Metra acted hastily and ill-advisedly when it kicked out its executive director while handing him a severance package now said to be worth potentially as much as $871,000, the Regional Transportation Authority concluded Wednesday.
In the first official report on the propriety of the settlement deal awarded to ousted CEO Alex Clifford, the RTA determined that the process by which Metra's board made its June 21 decision was inadequate and insufficiently documented and produced a settlement that was "not financially prudent."
The report's findings have prompted calls from lawmakers and RTA Chairman John Gates Jr. to rescind the severance package, which is believed to be one of the largest in state history for a public official. That option, however, seemed unlikely Wednesday as Clifford's lawyer suggested that the only way Metra could break the contract is by hiring back Clifford.
If restored to his old post, Clifford would be willing to renegotiate the severance package, attorney Michael Shakman said. A significant portion of the deal, including more than $300,000 due to Clifford if he cannot find a job by the end of 2014, would be canceled automatically if he returned to the agency.
"Mr. Clifford would be happy to sit down and work something out," Shakman said. "His first choice was always to remain at Metra."
Shakman scoffed at the suggestion that Metra would — or even could — try to undo the severance agreement.
In additional to being a valid contract, there's no financial incentive for the agency to do so, he said. The agreement contains a clause that forces the parties into arbitration if Metra tries to sever the agreement, a process that would not be covered by an agency insurance policy.
This means Metra could be responsible for its own legal bills, any Clifford award and Shakman's fees if the matter went to arbitration — the exact expenses officials were trying to avoid by settling with Clifford two months ago.
"They can't just rescind it," Shakman said. "That's not the way it works."
Confirming details reported in Wednesday's Tribune, RTA Deputy Executive Director Michael Zumach said his two-month audit of the decision-making process and negotiations behind Metra's decision found that board members did not conduct a "full vetting" of the cost and options of the settlement.
Instead, the goal seemed to be getting rid of Clifford as quickly as possible and ignoring the fact that a special insurance policy Metra had would have minimized the agency's exposure to a threatened whistle-blower lawsuit, Zumach said in presenting the preliminary results of his audit to RTA officials.
"They were going down a path of settlement with nothing else considered," Zumach said.
In conducting the audit, Zumach said he and his staff scanned thousands of pages of documents and emails; listened to hours of recorded, closed-door Metra board meetings; and interviewed board members, attorneys and staff.
Zumach characterized the severance agreement as "definitely on the generous side." Rather than costing up to $718,000, as Metra has contended, Clifford's package could end up costing as much as $871,000, including payouts of $75,000 for legal fees and $78,000 in relocation costs, Zumach said.
As the Tribune reported, Metra's board did not take advantage of a liability insurance policy that would have provided the agency with up to $10 million worth of coverage against a lawsuit filed by Clifford. At most, Metra would have been liable for $150,000 in deductible costs, Zumach said.
Metra did not consider using the insurance policy instead of settling with Clifford, Zumach said. "Insurance was not discussed by the full board," he said.
Metra staffers were aware of the $98,000-a-year policy, but they were not involved in the discussions and negotiation of the Clifford settlement. Instead, Metra's board was advised by outside legal counsel, Zumach said.
Zumach confirmed what some critics have contended — that now-resigned Chairman Brad O'Halloran was the impetus behind Clifford's ouster. "It's obvious there was a power struggle between two strong-willed individuals," Zumach said.
RTA board member William Coulson, a former federal prosecutor who also presented a 10-page analysis he made of Clifford's claims against Metra, likewise cited O'Halloran's role in the controversy. O'Halloran and former board member Larry Huggins, who were both named in Clifford's April 3 memo in which he outlined allegations of political interference and other charges, should have recused themselves from the settlement vote, Coulson said.
O'Halloran and Huggins "faced real and potential conflicts as a result of (their) activism," said Coulson, the only RTA board member who also is a litigating attorney.
The men could not be reached Wednesday for comment.
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