Iowa official says no “hush money” was paid to ex-employees

Iowa Department of Administrative Services denies breaking any laws

Rod Boshart
Published: April 3 2014 | 3:28 pm - Updated: 7 April 2014 | 3:09 pm in

DES MOINES – Director Mike Carroll denied the Iowa Department of Administrative Services paid laid-off employees “hush money” to keep secret their settlements or broke any laws in executing confidentiality agreements that ran afoul of Gov. Terry Branstad’s goals of open and transparent government.

Carroll told members of the Legislature’s Government Oversight Committee on Thursday that he “made a mistake” by allowing confidentiality clauses to be included in employment settlement agreements. He apologized that the provisions – although legal – did not comply with the governor’s transparent government initiatives and pledged “it will not happen again.”

Carroll’s insistence that money was not included in settlement negotiations in exchange for employees’ silence directly contracted testimony offered one day before by ex-DAS workers who insisted they were offered extra payment if they agreed to include a confidentiality clause in the agreement.

After Thursday’s committee hearing, Carol Frank, a laid-off DAS engineer who received a $77,326 settlement that included a confidentiality clause, reiterated her contention that DAS boosted her settlement by $5,000 for her promise to keep the agreement secret.

“It did happen. I remember I was with my husband in Hy-Vee in the checkout line and I get this call,” Frank told reporters. She said the offer was made by a former DAS legal counsel and her agreement and settlement checks were signed by Carroll.

Frank, who listened to the two hours of testimony provided Thursday by Carroll and two other DAS officials, told reporters “I think he’s not being entirely truthful, which is a pattern at DAS.”

However, Carroll was adamant that in the four settlement agreements with confidentiality clauses that he signed, it “never happened” that so-called hush money was part of the deal.

“She was not offered money for a confidentiality clause,” Carroll said of Frank’s settlement. “She was offered money to settlement her grievance that was stated on the face of the agreement itself.” When asked if a DAS official may have added money for a confidentiality clause, he replied “No, sir, that just didn’t happen.”

During his committee testimony, Carroll told lawmakers that employee settlements that arose out of a 2011 department reorganization were not “secret” but were a matter of public record that could be assessed via a Freedom of Information request. He said the confidentiality agreements were lawful,

“The payments made were made out of operating budgets because they did not qualify for payment out of the general fund through the Appeals Board,” he said. “The payments made were not ‘hush’ money, but settlement of specific grievances as evidenced on their face.”

DAS officials had conducted a risk analysis that identified a “walk-away number” for each layoff mediation case with a potential cost of up to $4.3 million, Carroll said, but they never reached that amount.

Under questioning, Carroll said during and after the reorganization up to a dozen DAS hires were made without advertising the positions because state human resources and Department of Management officials classified them as merit exempt or at will jobs that did not have to be posted.

The wide-ranging hearing also dealt with state policies and coding systems regarded state workers who are disqualified for future state employment due to past issues arising from their work performance and private contract agreements that Carroll said could net up to $12 million in savings via streamlined procedures for state construction projects.

“We’re very skeptical as to whether this is actually saving real money,” said Senate Majority Leader Mike Gronstal, D-Council Bluffs.

Gronstal said legislative Democrats planned to continue investigating the confidential employee agreements and issues related to the DAS reorganization until “we get to the bottom of it,” while House Democratic Leader Mark Smith of Marshalltown declared “We are not going to let the House Republicans sweep Branstad scandal under the rug.”

House Speaker Kraig Paulsen, R-Hiawatha, expressed concern, however, that Wednesdays’ Senate-only Oversight meeting had the feel of a “campaign event.”

“It’s becoming very clear that Senate Democrats have launched Jack Hatch’s campaign for governor from Senate floor,” added Senate Minority Leader Bill Dix, R-Shell Rock.

Oversight Committee co-leader Rep. Kevin Koester, R-Ankeny, said he was impressed by Carroll’s candor and the way he apologized for the mistake he admitted making, but his Senate counterpart, Sen. Janet Petersen, D-Des Moines, said unanswered questions lingered after Thursday’s hearing.

“We would like to get to the bottom of who authorized the hush money and I still don’t feel like we’ve got firm answers on that. We’ll follow up and see if we can get an accurate answer on that,” said Petersen, who make seek to schedule more meetings next week.

Thursday’s hearing drew a standing-room crowd.

“It was about like Wal-Mart on the day after Thanksgiving,” Rep. Gary Worthan, R-Storm Lake, said describing the crowd waiting when the doors opened to a Statehouse committee room prior to the second day of hearings on settlements used by some state agencies to keep confidential terms of employees terminations.

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