Meghna Chakrabarti and Kathleen McNerney reported last week about the rather sketchy “turnaround” record of Luis Ramirez, Charlie Baker’s and Stephanie Pollack’s choice for T chief. It gets worse, a lot worse: His former company, Global Power LLC, may have to declare bankruptcy, pretty much as a direct result of those earnings misstatements made under his leadership. Immediately after Ramirez’s departure, they company had to re-file several earnings reports: down — way, way, down. And as a result they lost their line of credit to make short-term commitments, like payroll. As anyone who has run a banana stand can tell you, that’s a tricky position to be in — and it may lead the company straight into bankruptcy.
Global Power lost access to that critical credit line in May 2015, immediately after the company announced that its former financial statements could “no longer be relied upon.” With that admission, the company was no longer in compliance with the terms of its loan from Wells Fargo Bank, its former creditor. The bank also took control of some of Global Power’s accounts.
Unable to access credit for daily operations, “we have … funded our operations from our net cash flows from operating activities,” Global Power wrote in a 2017 report. “That is not sustainable,” the company said.
Well, what do we have here? What hand is Baker trying to play?
With a typically Republican skepticism towards the public sector, Baker has chosen the old “reform before revenue” path, with no realistic plans whatsoever for investing in a re-imagining and modernization of the T. We are supposed to view the Governor as just the person to bring modern management accountability and distinctly private sector know-how to a bloated, rusting, public bureaucracy — the MBTA’s Sir Topham Hatt. (The clichés write themselves.) We are told that we don’t need a T chief with public sector or public transit experience, just one that has turned around private sector corporate divisions.
To put it mildly, this is already a very narrow path. It represents a pretty aggressive disregard of the most obvious qualifications and approaches. The one resource for Baker’s team is credibility — the ability to show the public that their daily transit experience will improve through better management alone …
… Except that their choice for the T’s “turnaround” seems to have recently led his company to the brink of bankruptcy. And that doesn’t seem to trouble Team Baker at all:
On Tuesday, after days of repeated questions, Governor Charlie Baker defended Ramirez’s hiring, saying he was “quite confident” in the new GM’s ability to succeed. “I have no doubt that when we have this discussion a year from now, most other people will agree with me,” Baker said.
It sounds like Baker has started to believe his own hype. But this is plainly the most obvious and avoidable blunder of his administration, on probably the highest-profile reform project that was forced upon him. You can call partisanship on this one from me; but my family and I ride the bus, subway or commuter rail practically every day. This is personal. I am skeptical about Baker’s methods, but along with the rest of Greater Boston, I am heartily rooting for Baker, Pollack, the T control board, T employees — anyone — to make this thing work better. But you really have to wonder about the internal decision-making process that led to Ramirez’s hiring.
This just won’t do. We can’t afford to “have this discussion a year from now.” They must rescind the offer to Ramirez and try again.