RTA Board meets after Metra audit of CEO buyout
August 21, 2013 (CHICAGO) (WLS) -- Regional Transportation Authority documents indicate the Metra board's decision to give its former chief executive officer a $718,000 buyout was ''flawed'' and not ''financially prudent.''
An RTA report, released Tuesday, indicates the commuter rail agency had an insurance policy it could have relied on instead of agreeing to give taxpayer funds to Alex Clifford. He resigned June 21, citing the pressure he was under to make political appointments.
Metra officials said they gave Clifford the money to avoid millions in legal fees from a protracted Clifford lawsuit.
The RTA contends the insurance policy could have covered a lawsuit beyond the first $150,000. It has a cap of $10 million.
RTA Chairman John Gates Jr. said Metra should review its insurance policy and, if possible, cancel Clifford's severance agreement.
"There is one important option that was never presented to the board. The board could have terminated Mr. Clifford's employment and waited for a lawsuit to be filed, at which point Metra's employment practices policy would start coverage," said Michael Zumach, RTA deputy executive director, audit.
"My own conclusion is that Mr. Clifford had a reasonably substantial claim. Certainly, a Chicago judge or jury... he could have won the case," said William Coulson, RTA Board member.
On Tuesday, Metra released a statement saying the private law firm hired to represent the railroad in the Clifford matter did not inform Metra of the insurance option. The RTA auditor also said Metra appeared intent to try to settle the case outside a lawsuit. That would have meant that the facts revealed in the case surrounding the politicians would never have been revealed because there also was a confidentiality clause in that contract.
Finally, the auditor said, if you count the legal expenses Metra has insured in this matter, the actual cost of trying to fire Alex Clifford was $871,000, all of that taxpayer money.
Zumach concluded Clifford's severance was three times what it should have been, not to mention additional money for moving-away expenses.
"Paying him more in relocation to leave than the amount we paid him to come here seems pretty unusual," said Zumach.
Clifford told the RTA Board last month he was fired because he would not make railroad personnel decisions based on demands from politicians, including Illinois House Speaker Michael Madigan. Now-resigned Metra Board members Greg O'Halloran and Larry Huggins claimed the severance was cheaper than defending a lawsuit Clifford might file.
"We are saying it was an option that should have been provided to the directors as they were making their decision," said Zumach.
Metra's interim chairman John Partelow wrote, "The board was not made aware of the insurance by attorneys," an outside firm Partelow says has been fired.
"I'm still haunted by the fact that there may still be some other things out here that still may be uncovered," said J.D. Ross, RTA Board member.
Some RTA board members say they need more control:
"I would like the legislature to give the RTA a little more authority to demand documents, line-item vetoes over the budgets, things like that., ability to approve or disapprove these kinds of contracts. We don't have that now," said William Coulson, RTA Board member.
The Associated Press contributed to this report.
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