Mich. governor testifies about Detroit bankruptcy

Oct 9, 2013, 7:29 PM

KTAR.com

LANSING, Mich. (AP) – Michigan Gov. Rick Snyder testified behind closed doors Wednesday about his role taking Detroit into bankruptcy, a rare interview with lawyers for creditors who pressed him about retiree pensions and asked if the city could have done more to avoid the historic filing.

Snyder waived executive privilege and gave a three-hour deposition at his office in Lansing. The testimony can be used as evidence in an upcoming trial that will determine whether Detroit is eligible to shed or restructure at least $18 billion in debt in U.S. Bankruptcy Court.

Snyder, a Republican, didn’t speak to reporters but issued a statement that repeated many of his previous justifications for the largest public bankruptcy in U.S. history.

The “Chapter 9 filing was a difficult but necessary decision, one that clearly was the last and only viable option to resolve the city’s fiscal crisis and restore the greatness of this proud city,” the governor said.

Three months after the filing, no assets have been divided and no major deals have been struck. A judge first must decide whether Detroit has cleared key hurdles that would qualify it for Chapter 9.

“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.

After the deposition, union attorney Sharon Levine complimented Snyder for stepping forward but told reporters that he wasn’t always forthcoming. She said he sometimes couldn’t recall things and at other times refused to answer questions that might reveal advice he got from his own lawyers.

Levine said there doesn’t seem to be a solution for Detroit retirees who could lose pension benefits.

“The fact that we still don’t really fully understand what comes next and if there’s a safety net that’s being thought about for the retirees is still of concern,” Levine said.

She said Snyder seemed satisfied that Detroit emergency manager Kevyn Orr held good-faith negotiations with creditors before recommending bankruptcy to the governor in July. Creditors aren’t so sure.

“We’re still very concerned that there were no proper negotiations going into this process and that if we had more time and better negotiations perhaps there could be have been a different result,” Levine said.

Last month, 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.

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 Orr, a bankruptcy specialist, as emergency manager with sweeping powers.

Schindler doubted that Snyder, a certified public accountant who rarely strays from a cautious style of speaking, would 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.