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.
