The Herald Bulletin

Afternoon Update

Nation & World

October 9, 2013

Mich. governor testifies about Detroit bankruptcy

DETROIT — Michigan Gov. Rick Snyder was taking questions under oath Wednesday as labor unions and other creditors in Detroit's bankruptcy try to understand why he signed off on the largest public filing in U.S. history.

Three months later, no assets have been divided and no major deals have been struck. In fact, a judge soon will hold a trial to determine if Detroit even is eligible to be in bankruptcy court to restructure at least $18 billion in long-term debt. Snyder's answers during a three-hour deposition that began Wednesday morning can be turned into evidence at the trial.

"It's extraordinarily rare" for a governor anywhere to be interviewed under oath about executive decisions, said Devin Schindler, who teaches constitutional law at Thomas M. Cooley Law School.

Indeed, the attorney general's office tried to keep Snyder on the sideline by invoking executive privilege, a common defense. But that didn't seem to sit well with U.S. Bankruptcy Judge Steven Rhodes, so lawyers for the governor said he would agree to be interviewed. The deposition was conducted in private in Lansing, although a transcript could be released later.

"What I'm going to tell them is the truth and answer their questions honestly and go through that process," the Republican governor recently told reporters. "I think this will help move this process forward."

Snyder has repeatedly said bankruptcy was a last resort for Detroit, which has lost 25 percent of its population since 2000 but continues to bear pension and health care obligations struck in better times. He benched local elected leaders in March when he appointed a bankruptcy specialist, Kevyn Orr, as emergency manager with sweeping powers. The governor approved Orr's plan to take the city into Chapter 9 in July.

But there still are specific hurdles to clear for Detroit to be declared eligible for bankruptcy. Did Orr, for example, do the best he could in first trying to negotiate with unions and other creditors? Snyder likely will be questioned about it.

Michigan Treasurer Andy Dillon will sit for his own deposition this week.

"One of the issues we have is there wasn't enough good-faith bargaining," said Sharon Levine, attorney for a union that represents city workers. Snyder "signed off without any contingencies that could have smoothed out the process. ... We're hoping to learn more about the decision-making."

Schindler doubts that Snyder, a certified public accountant who rarely strays from a cautious style of speaking, will give any fuel to critics who want to derail the bankruptcy case.

"He's a very talented, savvy fellow who understands how the legal system works," Schindler said. "I'm sure he'll be careful, precise and honest in what he says."

Governors and other high-ranking officials generally are protected from testifying in a legal matter. But there are exceptions, especially when the topic is outside their public role. In 1998, President Bill Clinton was on the hot seat when he gave a deposition in a civil lawsuit filed by Paula Jones, who claimed he had sexually harassed her when he was Arkansas governor.

Though unusual, Snyder's willingness to be interviewed under oath probably won't signal a new trend, Schindler predicted.

"The fact that the governor chose to waive the executive privilege doesn't create a legal precedent about what he'll do next time," the law professor said.

 

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