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RTA Audit Concludes Metra Didn't Need To Buy Out Ex-CEO's Contract, Misled Public

By Chuck Sudo in News on Aug 21, 2013 2:00PM

Former Metra CEO Alex Clifford
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 an insurance policy taken out by the agency could have covered any lawsuit Clifford was threatening, proving once again the rail agency can complicate the simplest matters.

RTA board chairman John Gates said in a statement the $718,000 buyout of Clifford’s contract was not “financially prudent” and the discovery of Metra’s insurance policy “calls into question the reasons behind Metra’s decision to pay Clifford without notifying its insurance carrier.” RTA board member James Buchanan asked former Metra board chairman Brad O’Halloran during testimony last month if Metra had insurance. “O’Halloran responded that Metra was self-insured,” meaning they would have to pick up the legal tab for a lawsuit.

In fact, Metra paid $98,000 for a Public Official and Employee Practices Liability Policy with a $10 million cap that could have covered the costs of any lawsuit Clifford may have filed against the agency beyond the first $150,000. The policy specifically covers whistle-blower and employment-retaliation lawsuits.

“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 statement continued. “The RTA audit identified the existence of a third option, the $150,000 deductible of this insurance policy.”

Additionally, RTA revised the actual value of Clifford’s settlement to $871,000. Had the board simply accepted Clifford’s resignation under the terms of the contract he signed in 2011, Clifford would have walked away with nothing.

RTA’s audit accuses Metra’s board of duplicating efforts and keeping its internal legal team “in the dark” by hiring outside attorneys and consultants who answered directly to the board. “Because those individuals reported directly to Board members independent of the agency, it’s difficult to determine whose interests they were serving.”

RTA also noted that Clifford’s severance package was not tied to performance, despite several board members having issues with Clifford’s job performance and how he handled declining ridership, police overtime costs and hiring costly consultants. (Like the ones the board hired?) These issues were not communicated to Clifford, according to the report and no formal performance evaluation plan was in place to grade him.

There are two things to take from the preliminary audit's findings, First, Metra’s board screwed up its oversight throughout the entire process. If they had reason to doubt Clifford’s performance they could have taken the steps to remove him. Second, the settlement of Clifford's contract was hush money.

Acting Metra Chairman Jack Partelow told the Tribune they have nothing to hide and the agency plans to fire the outside consultants who recommended the settlement.

"Nobody is trying to mislead anybody," Partelow said. "We didn't get (advice on the insurance policy) from the people we paid pretty good money to tell us what to do."

Gates proposed another option. “I urge Metra to review its insurance policy and if it would still be financially prudent, Metra should immediately cancel Clifford’s severance agreement,” he said.

Regional Transportation Authority Statement on Preliminary Audit of Metra's Decision to Buy Out Alex Cliff... by Chicagoist