Lee Zurik Investigation: Payback at the RTA?

RTA general counsel Sundiata Haley
RTA general counsel Sundiata Haley

The eye-popping number shocked one local attorney. "These rates are unreasonable," says Loyola law professor Dane Ciolino.

The New Orleans Regional Transit Authority paid one lawyer a rate of $800 an hour.

Ciolino says, "I can say these are among the highest fees I have ever seen charged to any client in the New Orleans area."

The law firm charging that fee is Proskauer Rose LLP. We detailed the rate in a story last year -- and now we know some of what that firm was working on -- it has to do with the Transit Management of Southeast Louisiana Pension Board.

TMSEL used to have a contract with the RTA to run the buses and streetcars. The company lost that contract after Katrina. Many TMSEL employees still work for the RTA, working for a new company. But the TMSEL public pension system for its former employees still had to be managed. Administrative and union employees make up the oversight board.

The RTA wanted the board to approve a memorandum of understanding. The Proskauer firm worked on it. The MOU would essentially give the RTA control of the board, allowing the RTA to appoint some of its own members.

"It would appear as though they would have the ability to essentially control what happens with the board of trustees of the pension plan," says Richard Goins, general counsel for the TMSEL Pension Board.

So last year, the TMSEL Pension Board met to vote on that MOU; it didn't pass. Five voted for it, five against. Minutes from that meeting show that, following the vote, RTA general counsel Sundiata Haley "stated that each of the board members [trustees] will need to get an attorney."

"My personal recollection was Mr. Haley was certainly not a happy camper after that vote, and Mr. Haley said certain things that one might be able to interpret as a threat of some kind," says Goins.

Goins heard Haley's remark following the vote. "My interpretation of what he was saying, you know, you better watch out for your job," Goins tells us.

Four days after that vote, Haley sent an email to all five people who voted against the MOU. They had been employed by TMSEL but still essentially worked for the RTA -- their employment was switched from TMSEL to the new company, Veolia.

So Haley sent them all an email, writing that "the RTA Board of Commissioners will consider going into executive session on Tuesday, August 23, 2011… to discuss personnel matters." Haley had recommended this session and had proposed a discussion regarding each of the dissenting voters' present position. He wanted to talk about their employment.

Goins says, "He clearly sends and email that, if you take a look at the context of what was happening and the statute, can be interpreted as a threat to their employment."

Goins says that email and the discussion of their employment may have been payback for the no vote.

Goins says, "My interpretation of the facts as they were laid out, is that it was more probable than not that there is a connection between their vote and the email that was sent, which seems to threaten their employment."

Hours after receiving Haley's email, the TMSEL Pension Board called an emergency meeting, and the entire board voted to approve the MOU -- the five members who got the email switched their vote to yes, then resigned from the TMSEL board.

"Putting together all of the facts, it would seem to me, again, more probable than not that, given what was happened and given the fact that they then resigned from the board of trustees, so they would no longer be in the line of fire, it would be safe to assume that it is probable that they were afraid of losing their jobs, and then voted the way they voted in order to keep their jobs and then resigned from the board of trustees, in order to keep their jobs," Goins says.

The board minutes from the RTA meeting show they never discussed the five employees' jobs.

"On its face, I think that it is something that demands further investigation and/or explanation from the RTA as to what they meant," says Metropolitan Crime Commission chief Rafael Goyeneche.

Goyeneche says the facts raise questions. If the employees did have personnel issues that could affect their employment, why was it never discussed once they voted for the memorandum of understanding? Goyeneche wonders whether that is a sign the discussion on their employment had to do with the no vote. And he thinks that, at the very least, the State Bar Association should look into it.

Goyeneche says, "You don't threaten someone that votes against a measure if they're voting with their conscience on that. And to try to intimate with job action is patently wrong."

Goins thinks the vote is illegal. He tells us, "My own personal opinion is that that vote to pass the amendment by the board of trustees is an invalid vote… because it was obtained through what appears to be threats and intimidation. My opinion is that it was obtained through coercion."

Goins says he's not sure exactly why the RTA wanted control of the TMSEL board. But one source for this story told us he thinks the RTA and Haley wanted control of the pension board contracts, such as the ones hiring investment managers and attorneys.

Goins says, "So he does indeed send a couple of emails where he asks for all the professional services contracts."

None of the people who received the email from Haley would talk to us on camera.

"Some of the people on board of trustees… I've had conversations where they specifically, you know… not demanded of me, but expressed to me their hope that they would be vindicated in some respects," says Goins.

It's taken Goins about a year to come forward and do an interview. "It's been a process where I've been hesitant to be extremely assertive where it relates to Mr. Haley," he tells us.

Goins says that's because of Haley's family. Sundiata Haley's mother was a civil rights leader in the city -- she has a street named after her. Goins says making a judgment on the behavior of her son was not easy, but he says what Haley did in this instance is wrong, if not illegal.

"I do respect greatly what it was that his mother was able to accomplish," he says. "I am who I am in some large measure because of those people who came before me… and then I watch her son seem to me to be a proponent of civil wrongs. I mean, it would seem to me that there is a complex dichotomy that's going on there."

We asked Sundiata Haley for an interview. He declined, because issues involving the TMSEL pension plan could result in litigation. Without his comment, it's hard for us to get the RTA's side on this story.

We were able to find out from some documents that the RTA was pushing for the memorandum of understanding because they say a government agency that protects pensions, the Pension Benefit Guaranty Corporation, would terminate the TMSEL plan if the RTA did not have more seats on the board.

We asked the RTA for any documentation that shows the plan would be terminated if not for the passing of the MOU. They said Proskauer had that documentation. They didn't provide us with it.

We also reached out to the Pension Benefit Guaranty Corporation -- they didn't respond to our email.