Did ex-Treasurer Dillon steer lucrative Detroit bankruptcy contract to future employer?

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Andy Dillon

When Gov. Rick Snyder asked Andy Dillon to serve as state treasurer in the fall of 2010, he declined.

At the time, the former Democratic speaker of the state House said he “was ready to go back to the private sector,” according to his deposition in the Detroit bankruptcy case. But two weeks later, Dillon took the job, though acknowledging he had just “a little bit” of experience improving local governments, which would be his major task as he oversaw the financial takeover of numerous cities and schools.

A little more than three years later, Dillon is back in the private sector and working for Conway MacKenzie, which received a lucrative $19 million contract to serve as consultants in Detroit’s bankruptcy under Dillon’s leadership. What Dillon didn’t reveal was that he’s a longtime friend of the firm’s president and CEO, Van Conway.

Now key lawmakers in the state House and Senate are calling for an “immediate investigation” to determine the extent of the relationship between the Birmingham-based restructuring firm, the governor and Dillon, who resigned on Halloween after we revealed alcohol problems and racially charged text messages sent from his cell phone.

“This latest news raises the obvious question of whether Andy Dillon helped land this lucrative contract for Conway MacKenzie because of his personal relationship with the company’s CEO, because he was angling for a job with the firm down the road, or both,” Sen. Coleman A. Young II said. “This is yet another reason for an investigation into the Department of Treasury, but this now also raises serious ethical questions about the role Dillon played as treasurer steering Detroit into bankruptcy in the first place and then awarding a lucrative contract to a company he now works for.”

Dillon and Conway and MacKenzie have not responded to numerous requests for comment.

A Motor City Muckraker review of records, e-mails and bankruptcy transcripts shows that Dillon played an integral part in getting his friend’s firm hired. The initial $4 million contract has ballooned to a whopping $19.3 million, city records show.

Sen. Democratic leader Gretchen Whitmer and House Democratic leader Tim Greimel also are calling for an investigation.

“Conflicts of interest, corruption and cronyism are all becoming business as usual at Snyder’s Treasury Department, and that’s why we need an immediate investigation,” Lon Johnson, chairman of the Michigan Democratic Party, said. “Dillon used his position of public trust as State Treasurer to line up his next job and feather his own nest with the very firm he was supposed to be monitoring.”

Johnson added: “Rick Snyder may think allowing his former treasurer Andy Dillon to use his position of public trust to secure his next job is business as usual, but it’s not the way Michigan does business. This is an outrageous abuse of public trust and demands an immediate investigation. It’s the very definition of a conflict of interest. Dillon helped this firm land a $20 million contract with the City of Detroit, and then was promptly hired by them.”

Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.

  • Allison MacArthur

    Unfortunately using your position to give jobs to family and friends IS BUSINESS AS USSUAL AT THE DEQ, and probably most of the State Departments.. After I asked the MDEQ Executive Office to correct these corrupt practices, I began to be mercilessly harassed by DEQ Management.. This occurred under Gov. Jennifer Grandholm and her DEQ Director Steven Chester…She should have cleaned house when she had the chance!!

  • Ilene Marsch

    Thanks for the work.

  • Contra Indicator

    Crain’s Business Detroit reported that Dillon met with
    representatives from the firms that received the restructuring contracts in
    early December 2010, before he was in office.
    The story about that meeting is available online
    (http://www.mcteviallc.com/downloads/news_41_3724037272.pdf). It is worth noting a few things: 1) the
    meeting location, 2) all of the firms that were present ultimately received
    lucrative “restructuring” contracts, 3) although only about six
    firms/organizations are named, there were “about 20 business leaders” present
    at the meeting. That probably leaves at
    least a few organizations unaccounted for, even if we assume that there were multiple
    representatives for some of the organizations.
    Van Conway is a member of Turnaround Management Association, and in fact
    if you look at the Cornerstone group of donors for TMA (available at http://www.turnaround.org/About/Cornerstone.aspx
    ) (and please note that this is only for the specific Cornerstone endowment) ,
    you see many of the names associated with the contracts and for the big donors
    you can see one very prominent Bank of America. In any event, Conway has taken
    some heat for this contract but you know, his malpractice from work on
    preparing certain bonds for municipalities did not cause malpractice rates to
    skyrocket as a result of an insurance payout, as was the case for a certain “restructuring”
    firm that dominates the revolving door
    at treasury.

    • muckraker_steve

      Thank you so much for the insightful message. We will be pursuing this. If you have any other tips, feel free to email me at sneavling@gmail.com. Everything will be strictly confidential. Appreciate it.

  • Adaj Parr

    Steve, you are good reporter. But something always smells when break a story. The bias oozes out without shame. The meeting on March 4, 2013 with Andy Dillion, Joanne Watson and Tom Barrow told exactly why Detroit was placed in bankruptcy. Yet, you did not report this information. Now you are easing into this with your current report. Stop being a hired gun and report ethically and honestly. No,,,my friend, you are not an honest reporter. You showed you are not honest and ethical during the mayoral election. What you have done with this story is box yourself into a corner. You can’t go any further with this story unless you talk to the sources. That being Andy Dillion, Joanne Watson and Tom Barrow. Maybe Joanne Watson will talk with you, but not Andy Dillion or Tom Barrow. You burned those bridges. The person you need is Tom Barrow. Why? Because Mr. Barrow told this story in detail to another reporter. You are In a box, Pay back is son-of-a- bitch! And most likely, you will have to reach out to the other reporter to complete the story, otherwise, the story you are presented dies today. The people currently paying you to go after Dillion will not be happy!

    • muckraker_steve

      Adaj, with all due respect, I’ve never needed JoAnne Watson or Tom Barrow for a single story. I work with sources I trust.

  • MrSyn

    Sen. Coleman Young II is a “key lawmaker”? Since when?

    • helzapoppn

      Since he was elected, re-elected and is one of just 12 Democrats in the state Senate.

      Whatever your opinion of Young the Elder, Young the Younger is making his own way. Judge the man, not the name.

      • MrSyn

        I’ve met him I don’t judge him by his name. He is not a “key” lawmaker in my opinion. He may be YOUR key lawmaker, he sure isn’t a powerbroker.

        • helzapoppn

          Understood. If you define “key lawmaker” as a “powerbroker,” then perhaps NO Senate Democrats qualify, since Republicans hold a two-thirds supermajority.

          The article suggests Mr. Neavling has a more inclusive definition, where Sen. Young is a “key” lawmaker because he’s one of the few who represent the City of Detroit in Lansing.

          The bankruptcy directly impacts his constituents, so his is a “key” voice when it comes to concerns about the ethics and legality of a contract negotiated by Andy Dillon before he resigned in disgrace and joined the company he’d just negotiated with.

          There are a lot of outside consultants and law firms making a lot of money from this bankruptcy — TAXPAYER money. Sen. Young and the other Democrats would be wrong NOT to raise legitimate concerns and ask tough questions.

          • MrSyn

            I think we largely agree. You made some very good points. Thanks for the clarification.