Maryland Gov. Larry Hogan painted a legal target on the back of his former chief of staff Roy McGrath at his news conference on Thursday. Earlier in the week Hogan released a statement claiming that he “did not approve, recommend, or have any involvement whatsoever” in the decision by the board of directors of the Maryland Environmental Service (MES) on May 28 to award McGrath $233,647 in severance pay upon leaving his position as the director of the agency on May 30 to become Hogan’s chief of staff.
On Thursday, Hogan expanded upon his earlier statement, asserting that he “didn’t know anything about” the severance payment until after it was approved, and McGrath had started working for him. Hogan’s account is inconsistent with allegations by MES board members that McGrath persuaded them to approve the payment by assuring them that Hogan was aware of it and supported it.
The payment of $233,647 was equal to a year’s salary. McGrath began his new job as Hogan’s chief of staff on June 1. The severance payment first was made public in a story in The Baltimore Sun on Aug. 14. McGrath resigned as chief of staff on Aug. 17 as public controversy intensified over his severance package, which also included $55,000 to reimburse him for 18 months’ worth of expenses for various trips, including trips to Italy and Israel, and tuition reimbursement in the amount of $5,250.
It now appears that this matter may be headed to court, where it will be McGrath’s word against the governor’s. Not only the $233,647 but also their credibility and reputations will be on the line.
Testimony before the Joint Committee on Fair Practices and Personnel Oversight
The General Assembly’s Joint Committee on Fair Practices and Personnel Oversight began an inquiry into the practice by MES of giving large bonuses and severance payments to its top executives shortly after McGrath’s severance payment became public. The committee held a hearing last Tuesday and another is scheduled for Wednesday.
Richard Street Jr., Billy Addison, and Joseph Snee were on the MES board when the severance payment was approved. They testified that they voted for the payment despite their reservations about it because they believed, based on McGrath’s representations, that it had the support of the governor.
Street was a member of the board until two weeks ago. He stated that he had “questions and concerns” about the severance but voted for it because he thought that it had the governor’s blessing.
Addison suggested that board members were concerned about repercussions from the governor’s office if they did not approve the severance payment. He testified that the board “was caught between a rock and a hard place. It seemed as though we had no choice as [McGrath] was transferring to a very powerful position that could have a future impact on MES.”
Snee was the chairman of the board’s human resources committee. He said that McGrath approached him about the severance payment. Snee presented the proposal to his committee, which, according to Snee, decided that “the severance payment would not be made unless it was approved by the governor.”
Snee testified that McGrath “assured me that the governor was aware of the proposed severance payment and did not object.” He added: “Had he not assured us that the second floor approved this, we would not have made the severance payment,” referring to the location of Hogan’s office on the second floor of the State House.
The human resources committee met on May 27 to consider the proposed payment. Members of the committee clearly were antsy about the proposal. The pandemic had closed down Maryland’s economy, and McGrath simply was moving from one position in state government to another. MES deputy director Beth Wojton sent a text to McGrath on the date of the meeting that read:
“Hi, the HR committee wants to make sure that the governor would be OK with you receiving severance equal to one year’s pay. They are worried about the optics and don’t want to do anything to make the governor look bad. I told them that I thought that the governor was aware and was okay with it. Correct?”
McGrath responded: “It’s anticipated, yes. Not to mention the precedences [sic].” McGrath presumably meant “precedents,” in reference to severance payments made to other MES executives, including a payment of $256,746 to former director Jim Harkins when he retired in 2016.
Wojton then sent an email to Snee, stating that “Roy says that the ‘Governor anticipates’ a severance equal to one year’s salary.” The human resources committee voted to recommend approval of the payment, and it was approved by the entire board the following day.
Next stop: The courts
The board did not cover itself with glory in the way it handled the matter. First of all, the board has a duty under state law to exercise independent judgment, not rubber-stamp the wishes of the governor. But if the governor’s position on the payment was consequential, then a disinterested member of the board should have reached out directly to the governor rather than rely on McGrath’s representations.
MES is a state agency, established by statute as a “body politic and corporate” and as a “public corporation” that performs “an essential governmental function of the State.” That status confers specific duties and responsibilities on the officers and directors of MES.
For example, the board’s incompetence did not relieve McGrath of his fiduciary responsibilities as an officer of MES, including the duty of candor when communicating with the board. It is worth noting that the duty of candor is violated by the use of ambiguous language or half-truths intended to mislead a board of directors.
Board members allege that McGrath led them to believe that the governor was aware of and supported the severance payment, and it was that belief that induced them to approve it. The governor denies that he was aware of the proposed payment, let alone supported it.
Those allegations are tantamount to accusing McGrath of obtaining the severance payment by deceit. Consequently, Maryland Attorney General Brian Frosh has no choice other than to pursue legal action to recover the $233,647 paid to McGrath.
As head of MES, McGrath was also a public official. The state prosecutor should take a close look to see whether McGrath’s actions constituted misconduct in office. Public officials who have a duty of candor in conducting the public’s business might take it more seriously if the state prosecutor put some teeth behind it.
For his part, McGrath denied misleading the board, and told the Sun last Thursday, “I stand 100% by all statements I have made on this matter.”
He may get a chance to do that in court, where it appears that it will be his word against the governor’s.
— DAVID PLYMYER
The writer is a former county attorney in Anne Arundel County. He can be reached at [email protected]. Twitter: @dplymyer