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Regional Transportation Authority Statement on Preliminary Audit of Metra's Decision to Buy Out Alex Clifford's Contract

Regional Transportation Authority Statement on Preliminary Audit of Metra's Decision to Buy Out Alex Clifford's Contract

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Published by Chicagoist
A preliminary audit by the Regional Transportation Authority of Metra’s decision to buy out former CEO Alex Clifford’s remaining contract for $718,000 revealed Metra’s board of directors bungled the entire process and that the agency’s insurance policy could have covered any lawsuit Clifford was threatening, proving once again the rail agency can complicate the simplest matters.
A preliminary audit by the Regional Transportation Authority of Metra’s decision to buy out former CEO Alex Clifford’s remaining contract for $718,000 revealed Metra’s board of directors bungled the entire process and that the agency’s insurance policy could have covered any lawsuit Clifford was threatening, proving once again the rail agency can complicate the simplest matters.

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Published by: Chicagoist on Aug 21, 2013
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10/12/2013

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original

 
 
August
 
20,
 
2013
 
Briefing
 
Document,
 
Preliminary
 
Findings
 
Metra
 
and
 
Former
 
Executive
 
Director
 
Alex
 
Clifford
 
Settlement
 
Agreement
 
RTA
 
Board
 
Chairman
 
John
 
S.
 
Gates,
 
Jr.
 
Statement:
 
The
 
RTA’s
 
audit
 
staff 
 
has
 
determined
 
that
 
the
 
Metra
 
Board’s
 
deliberative
 
process
 
was
 
flawed
 
and
 
their
 
decision
 
to
 
give
 
Mr.
 
Clifford
 
a
 
generous
 
severance
 
package
 
was
 
not
 
a
 
financially
 
prudent.
 
All
 
costs
 
related
 
to
 
the
 
Clifford
 
contract
 
dispute
 
should
 
have
 
been
 
claimed
 
under
 
Metra’s
 
existing
 
insurance
 
policy
 
instead
 
of 
 
being
 
paid
 
from
 
tax
 
payer
 
funds.
 
The
 
RTA
 
auditor’s
 
conclusion
 
supports
 
my
 
belief 
 
that
 
RTA
 
needs
 
stronger
 
tools
 
and
 
authority
 
to
 
prevent
 
situations
 
like
 
this.
 
Current
 
law
 
does
 
not
 
require
 
Metra,
 
CTA
 
or
 
Pace
 
to
 
disclose
 
employment
related
 
settlements
 
to
 
the
 
RTA.
 
Nor
 
does
 
the
 
RTA
 
currently
 
have
 
any
 
legal
 
authority
 
to
 
cancel
 
or
 
modify
 
“golden
 
parachute”
 
agreements.
 
RTA’s
 
discovery
 
of 
 
Metra’s
 
insurance
 
policy,
 
which
 
would
 
have
 
covered
 
the
 
costs
 
of 
 
litigation
 
and
 
settlement,
 
calls
 
into
 
question
 
the
 
reasons
 
behind
 
Metra’s
 
decision
 
to
 
pay
 
Clifford
 
without
 
notifying
 
its
 
insurance
 
carrier.
 
I
 
urge
 
Metra
 
to
 
review
 
its
 
insurance
 
policy
 
and
 
if 
 
it
 
would
 
still
 
be
 
financially
 
prudent,
 
Metra
 
should
 
immediately
 
cancel
 
Clifford’s
 
severance
 
agreement.
 
Objective:
 
Determine
 
financial
 
prudence
 
of 
 
the
 
settlement
 
agreement.
 
Process:
 
RTA
 
Auditors
 
looked
 
at
 
thousands
 
of 
 
pages
 
of 
 
documents
 
and
 
emails;
 
listened
 
to
 
multiple
 
hours
 
of 
 
testimony
 
before
 
RTA
 
Board
 
and
 
the
 
House
 
Mass
 
Transit
 
Committee;
 
listened
 
to
 
audio
 
files
 
of 
 
Metra
 
executive
 
sessions;
 
interviewed
 
certain
 
Metra
 
employees;
 
met
 
with
 
several
 
Metra
 
Board
 
members
 
and
 
Metra’s
 
outside
 
counsel.
 
Focus
 
of 
 
auditor
 
review:
 
 
Actual
 
cost
 
and
 
terms
 
of 
 
the
 
settlement
 
 
Process
 
to
 
arrive
 
at
 
the
 
settlement
 
 
Process
 
used
 
to
 
approve
 
the
 
settlement
 
Status:
 
RTA’s
 
audit
 
is
 
nearly
 
complete;
 
information
 
gathered
 
has
 
been
 
examined/analyzed
 
and
 
needs
 
to
 
be
 
compiled
 
into
 
final
 
form.
 
RTA
 
expects
 
the
 
final
 
work
 
to
 
be
 
complete
 
by
 
the
 
next
 
RTA
 
Board
 
meeting
 
on
 
September
 
13.
 
Highlights
 
of 
 
Preliminary
 
Results:
 
Settlement
 
Agreement
 
process
 
was
 
inadequate
 
and
 
not
 
sufficiently
 
documented.
 
There
 
is
 
a
 
lack
 
of 
 
 justification
 
for
 
the
 
generous
 
post
employment
 
package.
 
Lack
 
of 
 
documentation:
 
No
 
written
 
reports
 
of 
 
internal
 
investigation
 
or
 
12
hour
 
mediation,
 
for
 
which
 
Metra
 
paid
 
$17,000;
 
no
 
written
 
report
 
from
 
former
 
U.S.
 
Attorney
 
Roger
 
Heaton,
 
for
 
which
 
Metra
 
paid
 
$52,000;
 
no
 
overall
 
cost
benefit
 
analysis
 
of 
 
the
 
severance
 
agreement.
 
Insurance
 
Policy
 
Could
 
Have
 
Covered
 
Lawsuit
 
Costs
 
Beyond
 
$150,000:
 
A
 
$98,000
 
Metra
 
Public
 
Official
 
and
 
Employee
 
Practices
 
Liability
 
Policy
 
insurance
 
policy
 
could
 
have
 
covered
 
a
 
Clifford
 
lawsuit
 
beyond
 
 
first
 
$150,000.
 
On
 
July
 
17,
 
2013,
 
RTA
 
Board
 
Member
 
James
 
Buchanan
 
asked
 
then
 
Metra
 
Board
 
Chairman
 
Brad
 
O’Halloran
 
if 
 
Metra
 
had
 
insurance,
 
to
 
which
 
O’Halloran
 
responded
 
that
 
Metra
 
was
 
self 
insured.
 
Throughout
 
this
 
process,
 
Metra
 
stated
 
it
 
was
 
presented
 
a
 
financial
 
choice
 
of 
 
paying
 
the
 
severance
 
agreement
 
or
 
facing
 
$2
 
to
 
$3
 
million
 
in
 
legal
 
fees
 
from
 
a
 
protracted
 
lawsuit.
 
The
 
RTA
 
audit
 
identified
 
the
 
existence
 
of 
 
a
 
third
 
option,
 
the
 
$150,000
 
deductible
 
of 
 
this
 
insurance
 
policy.
 
Outside
 
Attorneys
 
and
 
Consultants
 
Complicated
 
Process
 
In
 
hiring
 
its
 
own
 
outside
 
attorneys
 
and
 
consultants,
 
the
 
Metra
 
Board
 
duplicated
 
efforts
 
that
 
possibly
 
kept
 
Metra
 
staff 
 
and
 
its
 
internal
 
legal
 
team
 
in
 
the
 
dark,
 
creating
 
confusion
 
and
 
increasing
 
costs.
 
Because
 
those
 
individuals
 
reported
 
directly
 
to
 
Board
 
members
 
independent
 
of 
 
the
 
agency,
 
it’s
 
difficult
 
to
 
determine
 
whose
 
interests
 
they
 
were
 
serving.
 
Severance
 
Not
 
Tied
 
to
 
Performance:
 
Some
 
board
 
members
 
had
 
issues
 
with
 
Clifford’s
 
 job
 
performance.
 
Reasons
 
included
 
a
 
drop
 
in
 
ridership
 
numbers;
 
failure
 
to
 
address
 
Metra
 
police
 
overtime
 
issue;
 
and
 
use
 
of 
 
expensive
 
consultants.
 
These
 
issues
 
of 
 
poor
 
performance
 
were
 
generally
 
not
 
communicated
 
to
 
Clifford,
 
who
 
had
 
no
 
formal
 
Performance
 
Evaluation
 
plan.
 
Improving
 
RTA
 
Oversight
 
Tools:
 
How
 
This
 
Could
 
Have
 
Been
 
Avoided
 
The
 
following
 
would
 
allow
 
the
 
RTA
 
to
 
more
 
effectively
 
discharge
 
the
 
responsibilities
 
that
 
have
 
been
 
given
 
to
 
RTA
 
under
 
the
 
law
 
and
 
potentially
 
avoid
 
this
 
type
 
of 
 
situation
 
recurring.
 
Board
 
Members
 
Conflict
 
of 
 
Interest
 
and
 
Revolving
 
Door:
 
Board
 
members
 
should
 
be
 
prohibited
 
from
 
engaging
 
in
 
any
 
business
 
relations
 
with
 
the
 
RTA,
 
any
 
Service
 
Board
 
or
 
appointing
 
authorities
 
during
 
their
 
term
 
of 
 
service
 
or
 
for
 
a
 
two
 
year
 
period
 
following
 
the
 
expiration
 
of 
 
their
 
term.
 
Simplify
 
the
 
Board
 
Member
 
Removal
 
Procedure:
 
Any
 
elected
 
official
 
who
 
is
 
granted
 
the
 
authority
 
to
 
appoint
 
a
 
RTA
 
board
 
member
 
or
 
Service
 
board
 
member
 
should
 
also
 
have
 
the
 
authority
 
to
 
remove
 
that
 
individual
 
from
 
office
 
in
 
cases
 
of 
 
incompetence,
 
neglect
 
of 
 
duty,
 
malfeasance
 
in
 
office,
 
conviction
 
of 
 
a
 
crime,
 
etc.
 
The
 
Governor
 
should
 
also
 
have
 
the
 
authority
 
to
 
remove
 
any
 
Service
 
Board
 
member
 
upon
 
the
 
recommendation
 
of 
 
a
 
supermajority
 
of 
 
the
 
RTA
 
board.
 
Currently,
 
neither
 
the
 
RTA
 
nor
 
the
 
appointing
 
authorities
 
had
 
the
 
ability
 
to
 
take
 
that
 
action.
 
Service
 
Board
 
Members/Fiduciary
 
Duty:
 
By
 
statute,
 
a
 
fiduciary
 
duty
 
should
 
be
 
created
 
for
 
all
 
board
 
members
 
who
 
represent
 
the
 
CTA,
 
Metra
 
and
 
Pace
 
or
 
RTA.
 
This
 
would
 
legally
 
obligate
 
them
 
to
 
act
 
solely
 
in
 
the
 
best
 
interest
 
of 
 
the
 
Northeastern
 
Illinois
 
transit
 
system
 
and
 
riders.
 
Current
 
law
 
makes
 
it
 
difficult
 
for
 
the
 
RTA
 
to
 
mandate
 
that
 
a
 
Service
 
Board’s
 
board
 
members
 
comply
 
with
 
certain
 
RTA
 
requests
 
due
 
to
 
Board
 
member’s
 
potentially
 
conflicting
 
political
 
interests.
 
RTA
 
Review
 
of 
 
Service
 
Board
 
Employment
 
Contracts:
 
The
 
Service
 
Boards
 
should
 
be
 
required
 
to
 
obtain
 
RTA
 
board
 
approval
 
prior
 
to
 
executing
 
or
 
amending
 
employment
 
contracts
 
for
 
non
bargaining
 
unit
 
positions.
 
Under
 
current
 
law,
 
while
 
the
 
RTA
 
has
 
the
 
authority
 
to
 
review
 
and
 
approve
 
budgets,
 
the
 
Service
 
Boards
 
are
 
not
 
required
 
to
 
give
 
notice
 
of 
 
or
 
disclose
 
individual
 
employment
 
contracts
 
to
 
the
 
RTA.
 

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