Tuesday, April 19, 2011

E-Mails Showed Daniels Worried That Union Was Flooding Call Center With Calls To Sabotage Privatization Effort

IBM is engaged in contentious litigation with the state's Family & Social Services Administration over the decision made by the Daniels' administration to terminate the company's continued role in the privatization of Indiana's welfare services. Lawyers for IBM want to depose Gov. Mitch Daniels and his chief of staff, who they contend were key players in the decision-making process. Attorneys for the state contend state law exempts high-ranking officials, including the governor, from having to testify or otherwise directly participating in litigation involving state agencies. Surprisingly, discovery has shown more than 900 e-mails sent or received by Daniels related to the ongoing privatization effort. To emphasize the governor's close participation in the project, IBM lawyers cited one e-mail in which Daniels suggested a high volume of calls to the troubled call center may have been the work of a state employees union that opposed the privatization effort. Shortly after becoming governor, Daniels signed an executive order that ended the state's collective bargaining agreement with AFSCME that had been entered into by executive order by his Democratic predecessors. The union opposed the privatization move. The AP reports:

Gov. Mitch Daniels had such a keen interest in the state's $1.37 billion contract with IBM Corp. to automate welfare intake in Indiana that he asked an aide if an unexpectedly high number of telephone calls to a call center was a ploy by a state employees union, an IBM attorney said Monday.

IBM wants to depose Daniels soon because it's concerned he will announce he's running for president and would be too busy on the campaign trail to give a deposition, said IBM attorney Steven McCormick, who also wants to depose Daniels' chief of staff.


Daniels has said he won't decide on a White House run until after the General Assembly adjourns later this month . . .

The oral arguments lasting more than two hours revealed the level of Daniels' involvement in one of the biggest outsourcing contracts in state history. McCormick displayed on the IBM attorney's table four thick binders containing what he said were 930 email messages to and from Daniels that the state has surrendered so far.


"They're here to illustrate the cradle to grave, preconception to afterlife" level of Daniels involvement in the deal, McCormick said.

Daniels received detailed reports on the number of calls welfare clients made to a call center created with IBM technology, and after one report showed an unusually large number of calls, he asked an aide if it was a union ploy, McCormick said. McCormick didn't identify the union, but a state employees union, the American Federation of State, County and Municipal Employees, vociferously opposed the outsourcing deal.

Another e-mail message instructed recipients "the governor was to be familiarized with all aspects of modernization," McCormick said, using the term the state used for the IBM project.

"The governor was not only the chief decider, he was the chief cook, he was the chief bottle washer," McCormick said.

"He made the key decisions all the way," McCormick said. "We're concerned that any delay will be met with, 'Well, now it's too late.'"
The story lays out the legal argument one of the state's attorneys, Peter Rusthoven of Barnes & Thornburg, makes to shield the governor from being deposed.

However, Peter Rusthoven, an attorney for the state, said a state law exempts certain high-level state officials including the governor, from court subpoenas and that other current and former state officials who are expected to testify will provide the same information Daniels and chief of staff Earl Goode were privy to . . .

Rusthoven said the level of Daniels' interest in the project did not trump a state law dating to the 1900s that protects the governor and certain other state officials from answering subpoenas. Rusthoven said it protects them from depositions as well, so well that there has never been an exception.


"It's never happened. The governor has never been called to testify," Rusthoven said.

IBM set out to depose Daniels on his knowledge of the deal before it had deposed anyone else in the case, Rusthoven said.

"There's been no attempt to get it by less intrusive means," Rusthoven said.
The state's ongoing litigation with IBM is a lose-lose proposition for Daniels. Critics questioned the deal from the beginning, even from within Daniels' own administration as I laid out in great detail Carl Moldthan's efforts to get Daniels to reconsider the ill-fated plan. Because the state retained the services of ACS after firing IBM, it raises the specter that IBM was nothing more than a placeholder for the Daniels administration to put ACS in charge of the deal. Daniels' former FSSA Secretary, Mitch Roob, who spearheaded the privatization effort is a former ACS executive. Critics believe it was Roob's intention all along to privatize in order to create a business opportunity for his former employer. Critics have also questioned the use of Barnes & Thornburg to represent the state's interests in the litigation. The firm has long represented ACS in its state and local lobbying efforts in Indiana. Indeed, the engagement letter with the firm acknowledged the firm's potential conflict of interest as ACS' attorney as well.

11 comments:

Cato said...

Daniels' secretive conduct here is an advance warning of the type of hunkered-down, walled-off tyrant he would be as president.

Advance Indiana said...

And Barry is not like that?

Paul K. Ogden said...

I remember in the late 1980s at the AG's office when Governor Orr was subpoened to testify on a matter he knew nothing about. We lost that....that Governor got deposted. So I don't kow what Rusthoven is talking about. It has happened.

I doubt that law would have any legal effect as it interferes with separation of powers. Courts have the power to compel witnesses as part of discovey and legal proceedings. I don't think a legislative body could take that away. It's a pretty gray area.

Paul K. Ogden said...

It's not clear from your paragraph. ACS was on the deal from the beginning...but in a subcontractor role.

In the contract the state has with B&T, B&T acknowledges it may have to sue ACS, a current client that it also represents, but provides assurances that ACS has waived the conflict and B&T would wall off the ACS B&T attorneys from the B&T attorneys that would be suing ACS.

Not all conflicts can be waived. Under the disciplinary rules, that is a nonwaivable conflict and the attorneys involved should be disciplined.

Advance Indiana said...

That's what I meant by "retained", Paul. Some people believe IBM was only put in the lead role originally in order for ACS to get its foot in the door to guard against complaints that Roob was steering the contract to ACS. Roob did eventually recuse himself from the project after this blog raised the issue, followed by other news reports.

You don't recall what the litigation involved in which Orr was deposed? I remember there was some kind of a blow up over his wife having state workers copy the architectural design for the bird-cage like gazebo in Lafayette Park across from the White House so an identical one could be built on the grounds of the governor's residence. As I recall, there was a lawsuit filed against the state over that by the person who owned the rights for the design.

Paul K. Ogden said...

Actually I think it might have been an emindent domain case...my section but not my case. That's why I remember it. Orr had no idea about the circumstances as to that taking.

Cato said...

"Barry?" Didn't picking on a guy's name go out in 4th grade?

He or his family americanized his name to placate small-minded xenophobes who might cause trouble for him, and some use his school days' gesture against him?

When you can attack from both sides, you don't have a legitimate complaint.

Find a better argument against Obama than his name.

And, yes, Mitch would be a disaster compared to Obama. It would be the return of the darkest days and people of Bush II. This time, the Port of Long Beach would actually be sold.

Advance Indiana said...

Uuhh, Barry is the name he has gone by for most of his life to those who know him best. Obviously, you haven't read much on the guy or you would know that. No different than calling William Clinton by Bill, Gerald Ford by Jerry or Richard Nixon by Dick. If I called him by his actual name, Barack Hussein Obama, you would accuse me of being an anti-Muslim bigot. Don't recall liberals complaining when people in the media chose to refer to Dan Quayle and J. Danforth Quayle or Ronald Reagan as Ronnie.

Cato said...

Don't be fatuous. John's friends called him "Jack," and he freely allowed that name to be publicly known. You're not Obama's friend, and I don't ever recall the President inviting the general public to call him by anything other than "Barack."

Yes, if you did use his full name, it would be problematic, unless your convention was only to use everyone's full name, which you clearly do not. Further, Obama does not openly use his three names, a la, Ronnie James Dio, so using names other than those which the person uses is suspect.

Of course, nobody on the left complained about Quayle referring to himself as "Dan." That's the name under which he ran for office. Quayle chose it to cover his blueblood heredity. People were obligated to respect that name, even though it was not a natural nickname for "J." or "Danforth."

"Bill," "Dick," and "Gerry" are all natural nicknames and require no permission. Indeed, "Bill," "Dick," and "Gerry" each campaigned under their respective nicknames.

You know all this. You just like getting in your digs at Obama's parentage.

You are free to call him "Barack" or "Obama." You're even entitled to have some fun with that by calling him the malodorous "B.O." These are the insults which every public figure is obligated to endure. Dipping your toe into the racial pool goes too far and is a non sequitur to the argument.

Advance Indiana said...

I'll consider taking advice from you, Cato, when you man up and use your real name instead of an alias to express your screed on the Internet. His school records in Indonesia clearly state his name is "Barry Soetoro, an Indonesian citizen who is the son of Lolo Soetoro." Sorry if you can't accept the truth that doesn't quite fit the fabricated narrative produced in Hollywood by the "Tail Wagging The Dogs" folks that an uninformed American electorate fell for in 2008.

Cato said...

The "real name" canard? Really? Have you sunk to this? If you found an anonymous book of poetry in the London Library, would you refrain from reading it until authorship could be established? Would you? Quit this embarrassing non sequitur.

As for Obama's name on Indionesian school records, how do these documents refute my point? Obama had no hand in creating these records, and he is not today publicly known by "Barry" or "Soetoro," so it's poor manners to refer to him with names that he has not invited us to use.

It is more permissible to call me "Cato" than it is for you to call the President "Barry," since I've openly and publicly identified myself as Cato.

If I overhear you refer to your wife in an endearing erotic term, or if I learn her childhood nickname that she has long since rejected, I don't have permission to use or broadcast those terms.

Again, calling him "Barry" is nothing but a backhanded insult and does not strengthen your arguments.kin