March 5, 2021

Michigan GOP to probe Whitmer $155K ‘hush money’ deal as new severances emerge

LANSING — Michigan Gov. Gretchen Whitmer is under fire for an expensive separation and confidentiality…

LANSING — Michigan Gov. Gretchen Whitmer is under fire for an expensive separation and confidentiality deal with her former health department director that experts are calling a rare arrangement that may fuel distrust.

It’s “hush money,” according to legislative Republicans, who plan to investigate the $155,506 payout they contend was designed to ensure Robert Gordon will not discuss controversial COVID-19 orders that were developed behind closed doors. 

Gordon announced his abrupt and unexplained resignation on Jan. 22, exactly one month before he signed an agreement with the Democratic administration that paid him the equivalent of nine months salary and extended health benefits. 

The deal prohibits him from discussing the circumstances of his departure “in the interest of protecting deliberations among government officials,” according to the document signed by Gordon and Mark Totten, Whitmer’s chief legal counsel.  

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Former Unemployment Insurance Agency Director Steve Gray also signed a separation agreement with the state when he resigned in November, a spokesperson confirmed Tuesday.

Under Gray’s deal, released through a Freedom of Information Act request, the state paid him a lump sum of $85,872.56 to cover his salary through June 1, which the department said was “end date” of his employment contract. 

The agreement specified that “both parties shall maintain confidentiality regarding Mr. Gray’s employment with and departure from the department” unless disclosure is required by law.

Sarah Esty, who served as a deputy director to Gordon and officially resigned last week, signed an agreement with the state that effectively paid her for one extra month but did not include a confidentiality clause.

While separation agreements and salary payouts can be common at private companies and nonprofits, they are “not the norm” in the public sector, said John Pelissero, a senior scholar in government at Santa Clara University’s Markkula Center for Applied Ethics. 

The confidentiality clause in Gordon’s agreement raises ethical concerns because it does not allow the public “to know why the payout of salary took place,” Pelissero said.  

“These are public tax dollars and the public interest tends to be served better when transparency is present,” he said. “Not disclosing such presents the appearance that something is being hidden from the public.”

Gordon, who presided over the largest department in state government and signed a series of controversial public health measures during the pandemic, has declined multiple interview requests. The deal means he cannot publicly discuss any policy differences or other factors that may have fueled his resignation. 

Dashboard: Michigan coronavirus testing numbers, trends, COVID-19 data

Republicans are moving to prevent Whitmer from making similar payments in the future to “silence departing officials,” said Rep. Annette Glenn, R-Midland. House and Senate oversight committees are also expected to hold public hearings on the Gordon separation agreement.

“This is a public official being bought off with taxpayer dollars,” House Oversight Chairman Steve Johnson, R-Wayland, said during a news conference Tuesday outside the Capitol.

“What I want to know is, what are they hiding?”

Johnson told reporters his committee will “begin an investigation to look at the process of what they’re doing within this administration.” House Republicans are “working with our legal counsel to determine what options we have available” he said, “and if we have to do a subpoena, we will.”

Whitmer’s office did not immediately respond to Bridge Michigan’s questions about whether it had paid severances to other departed officials. Former Budget Director Chris Kolb, who left the administration in December for what he described as a dream job at the University of Michigan, told Bridge he did not sign any sort of separation agreement.

Gordon issued a statement Tuesday afternoon touting the state’s record during the COVID-19 pandemic, but did not directly address his severance.

“I’ve served in government a long time, and I believe that elected chief executives need to make final decisions about policy with confidential advice,” Gordon wrote. “They also need to be comfortable with their agency heads. Since the pandemic began, many leadership changes have happened in other states. It’s no surprise they would happen in Michigan.”

The statement noted that “this has been a grueling time for millions of families, including mine.” Gordon wrote that both his parents contracted COVID-19, and his father recently died, but the statement did not specify the cause.

‘Something funny is going on’

Government ethics experts told Bridge that Gordon’s separation agreement raises the appearance of impropriety, even if there is none. 

It “looks like something funny is going on, and money is changing hands, and the rest of us can’t figure out why,” said John Chamberlain, a professor emeritus at the University of Michigan’s Gerald R. Ford School of public policy. “There may be a good reason for it, but we’re not allowed to ask that, and no one involved is allowed to say anything about it.”

Chamberlain noted that “secrecy in state government is already a problem to begin with, and this is just one more thing on the list.”

Michigan is one of just two states that fully exempts the governor’s office and legislators from public records requests, for example. The state ranked last on ethics and transparency laws in a 2015 review by the Center for Public Integrity and Global Integrity.

Whitmer has supported legislation to expand public records laws but has not voluntarily done so for her own office. In 2019, she announced a series of executive directives she said would make government “open, transparent and accountable to Michigan taxpayers,” including a requirement for state employees to immediately report “any irregularity or discrepancy involving public money.”

As a state senator, Whitmer criticized then-Gov. Rick Snyder, a Republican, for keeping former Treasurer Andy Dillon on the payroll for two months in 2014 after he announced his resignation, a move the administration described as a transition for his successor.  

Whitmer blasted the arrangement after Dillon was seen on a Caribbean cruise during what was supposed to be his last week of taxpayer-funded work. 

“The governor needs to stop trying to cover this up and come clean about the sweetheart deals and cronyism that is rampant in the Department of Treasury,” Whitmer said at the time.

Separation agreements have landed other Michigan government officials in hot water: 

  • Former Lansing Mayor Virg Bernero opted against a re-election campaign in 2017 amid scrutiny over a $160,000 payout to a former city attorney. He had defended the severance as a way to “grease the skids, to get things done so everybody would be happy.”
  • Former Detroit Mayor Kwame Kilpatrick reached a confidentiality agreement with three former police officers in 2007 to keep them from revealing text messages that suggested he had an affair with his chief of staff. The Detroit Free Press sued to obtain the records related to a $8.4 million settlement with the officers, which included the text messages that led to perjury charges against Kilpatrick, who later admitted to lying under oath and resigned.
  • Former Wayne County Executive Robert Ficano lost re-election in 2014 following a federal investigation and public furor over a $200,000 severance package he had approved for a top aide, Turkia Mullin, who voluntarily left for a better job as CEO of Detroit Metro Airport. 

Whitmer, in a Tuesday afternoon press conference, said she could not discuss details of Gordon’s separation agreement because of the confidentiality clause.

But she told reporters that “Gordon and his team “were an incredibly important part of our response” to COVID-19 and said “there were no improprieties” with his work. 

The Democratic governor bristled at GOP claims of “hush money.” She claimed separation agreements are “used often in the public and private sector when someone in a leadership position leaves the organization.”

But former government attorneys told Bridge such separation payouts are rare in the public sector. 

“I don’t recall one during my tenure,” said Steven Liedel, who served as chief legal counsel to former Gov. Jennifer Granholm. However, “there really are no regulations related to it that I’m aware of.”

Cabinet officials like Gordon are not subject to civil service rules that protect other state workers. Instead, they “serve at the pleasure of the governor, and the manner in which they leave is essentially between them and their appointing authority,” Liedel said. 

Confidentiality clauses sometimes occur in government but they aren’t “standard course,” said Steve Delie, a transparency and open government expert at the Mackinac Center for Public Policy, a free market think tank based in Midland.

“It’s important that citizens understand why the changes in these high-profile and very important positions happen, and it’s important to understand the decision making process that led to the change, he said. And when taxpayer funds are used, “taxpayers should be entitled to know what led to that separation.”

Delie had worked as an attorney for small cities and governments and said the deals are primarily because of underlying circumstances” that make them appealing to both parties as a way “assuage their risk.” 

Employers benefit because their former employee agrees not to sue them, he noted. Departing employees in turn benefit from the cash, but the confidentiality agreement could also keep unflattering information from being made public and complicating any future job search. 

‘It just doesn’t appear right’

Michigan Attorney General Dana Nessel’s office declined to say whether it reviewed Gordon’s separation agreement, which was signed and executed by Totten, the governor’s chief legal counsel. 

“We provide legal advice to our clients should they ask for it,” Nessel spokesperson Kelly Rossman-McKinney told Bridge. “Any advice and counsel we provide is considered attorney-client privilege.”

Legislative Republicans have signaled they may try to use the annual budget process to restrict state spending on such deals moving forward. 

“We have to look at prohibiting these in the future, because it just doesn’t appear right,” said state Rep. Matt Hall, R-Marshall, who grilled Gordon last year as chairman of the Legislature’s Joint Select Committee on the COVID-19 Pandemic. 

“I think the public has a right to know what’s so important that Robert Gordon knows to execute a decision like this.”

A former Obama administration official, Gordon began working for Whitmer in 2019.  He became the state’s primary authority for COVID-19 orders in October after the Michigan Supreme Court invalidated an emergency powers law Whitmer had used to issue her own mandates. 

Prior to his departure, GOP lawmakers had pressed Gordon to explain a number of pandemic-related decisions, including a controversial nursing home policy, a contact tracing contract awarded to a political firm but quickly rescinded by Whitmer and the closure of restaurants and other restrictions in mid-November in anticipation of a post-Thanksgiving surge

Sources in and around state government have told Bridge they believe the professional relationship between Gordon and Whitmer had been strained for months prior to his departure, and some were surprised that it took so long to come to a head. 

Gordon appeared to be “a really good public servant” but may have had policy differences with Whitmer in what was a high-pressure environment given the COVID-19 pandemic, said Chamberlain of U-M. 

“This (separation agreement) just gives the Republican members of the House and Senate something to stand up and pound the table about,” he said. 

Pelissero, the government scholar at Santa Clara University, said he is not familiar with Gordon’s tenure, but he noted that “we are operating in unusual times and the pandemic has changed typical government behavior because of the urgency of public health issues.” 

That raises an ethical question, he said: “Was the public interest served by his resignation and the subsequent separation agreement? Or was this a politically-expedient decision by the governor’s office to have him resign?”