California has earthquakes. Kansas has tornados. Louisiana has hurricanes. Here in Boston, we have $14.6 billion taxpayer funded highway tunnels. And all of them kill.
The night before this column was written, a couple from Boston was driving through an extension of the heavily traveled Massachusetts Turnpike, on their way to Logan International Airport to pick up a relative. As they were exiting one of the highway system’s tunnels—part of Boston’s “Big Dig” fiasco—a three-ton concrete ceiling panel crashed down on the car, killing Milena Del Valle instantly. Her dazed and bloodied husband, who was at the wheel, somehow crawled out from the vehicle; witnesses had to hold him back from reentering the car, where thousands of pounds of debris had crushed the passenger side, making it impossible to reach his wife.
It was one of the most horrific, gut-wrenching moments in the history of this city.
I’ve driven through that tunnel with my family countless times, and if you’ve visited Boston in the past few years, you’ve probably driven through it too.
The tragedy has triggered a massive crisis in confidence in the Big Dig, which submerged Boston’s formerly above-ground “central artery” highway system, creating a labyrinth of underground tunnels and bridges that comprised the largest public works project in U.S. history. Used by nearly every commuter in Boston, the Big Dig has been plagued by mismanagement, fraud and structural problems. In 1985, the project had a budget of $2.6 billion and a completion date of 1998; nearly $15 billion later, the project is still not completed.
In 2000, a Federal Highway Administration audit concluded that Bechtel/Parsons Brinckerhoff—the joint venture overseeing the project—and state officials caused more than $2 billion in cost overruns, prompting a federal investigation. After subsequent whistleblower lawsuits and exposes of graft, problems became physically apparent. Two years ago, a leak flooded one of the tunnels—some of which are submerged below Boston’s inner harbor—and inspectors later found that more than 150 walls had been shoddily constructed. Nearly 2,000 water leaks have since been discovered in the tunnels, and earlier this year six employees of a Big Dig contractor were indicted on fraud charges for allegedly supplying concrete that failed to meet basic quality standards. Massachusetts Attorney General Thomas Reilly is negotiating a settlement to recover up to $150 million in taxpayer money that was squandered on contractors’ cost overruns.
While the prior problems have been a source of frustration to taxpayers and a major inconvenience to commuters, they haven’t been fatal. Until now.
The latest incident has set off an appalling—yet predictable—political firestorm, with relentless finger-pointing, overlapping investigations, and Reilly’s promise of a probe into criminal charges of negligent manslaughter. His target: federal authorities, state agencies, the Massachusetts Turnpike Authority, and the project managers and administrators who installed and inspected the concrete ceiling. Says he: “We’re treating this as a crime scene, and we’re looking at manslaughter.”
Embattled Turnpike Authority Chairman Matthew Amorello, who was appointed to clean up the Big Dig mess after its design and construction were essentially done, has become the lightning rod of criticism, with Massachusetts Gov. Mitt Romney and Reilly publicly calling for his head. Subpoenas have apparently been sent already to Bechtel/Parsons Brinckerhoff and other contractors.
While I’m not interested in exploring who’s responsible for the tragedy, it does occur to me that there are important leadership lessons here for all public company executives. That became painfully obvious when I listened to Amorello answer questions from the media last night after the disaster. When asked whether he thought the rest of the Big Dig was safe, Amorello emphatically answered, “Yes.”
Let me say that again: When asked whether the Big Dig was safe, Amorello said yes.
With all due respect, Mr. Chairman, your tunnels are killing people. Concrete is falling from the ceilings, water is pouring through thousands of cracks, holes are appearing in walls, and a woman was killed. That’s not safe.
Now, I’m not an expert on national “death by collapsing tunnel” statistics, but I can guess that nowhere else in America has a spanking new three-year-old tunnel costing $15 billion collapsed on anyone.
This is a disgrace, and Amorello’s contention that his tunnels are safe is either delusional or a lie. Either way, it’s proof that Amorello can no longer serve in his current position—nobody believes the tunnels are safe. Even Romney admitted this was a major problem. “I don’t think anyone can feel comfortable today in driving through the tunnels,” he stated.
The latest disaster is a classic crisis management case, and it demonstrates some “worst practices:” namely, how not to plan and manage for crises.
For this list below, I credit in full former Securities and Exchange Commission Chairman and Compliance Week Columnist Harvey Pitt. Over the past few years, his columns have acted as point-by-point studies for managing crises effectively, and they can be viewed by selecting “Harvey Pitt, Columnist,” from the left-hand column of our Web site. Here are a few “Pittisms” for both the Massachusetts Turnpike Authority and any public company executive:
- The starting point for creating an effective ‘tone at the top’ resides with the character of senior corporate managers themselves. Everything cascades down. The Big Dig’s contractors—from Bechtel to Modern Continental to others—were able to rip off taxpayers and produce shoddy work and materials because the state’s managers were conspiring with them. As Pitt writes, “A company must have the right people in leadership positions, leaders who are truthful, transparent, and fair, just as they expect their companies and employees to be.”
- Employees must be empowered. As Pitt has written in the past, employees must feel they are part of a team that values them and encourages them to be ethical. Is it possible that no one at the Big Dig knew there were problems with the bolts and epoxy used to secure the concrete that killed Mrs. Del Valle? According to The Boston Globe, in 1998 the state inspector general reported that there were indeed problems. Did no one speak out? According to Pitt, company leaders must demonstrate just how important it is for employees to “buy in” to the culture of compliance and ethics. That means raising red flags at all available opportunities.
- Believe that others can, and will, sniff out your problems. The Massachusetts Transportation Authority has consistently assumed the same thing that most public companies assume: Our problems are our problems. That’s never the case. Your problems impact your stakeholders, and they’ll find out about them sooner or later.
- There is no such thing as de minimis ethical or compliance breaches. All breaches of standards need to be taken seriously. Too often, accusations of problems and whistleblower complaints at the Massachusetts Transportation Authority were ignored. “The surest way to impair the ‘tone at the top’ is to ignore misconduct,” says Pitt.
- Disclose, disclose, disclose. Meaningful potential events need to be communicated to all relevant stakeholders, and they need to be communicated honestly and early. Failure to do so jeopardizes the credibility of management. After the death of Milena Del Valle, for example, Turnpike Chairman Amorello stated repeatedly that his tunnels were safe, safe, safe. But 24 hours later his team was removing the remaining concrete sections that caused the tragedy, demonstrating a lack of confidence in the structural integrity of the tunnel and others like it. Within two days a complete inspection of the entire Big Dig—including the newly submerged expressway, all bridges, and the highly trafficked Sumner, Callahan, and Ted Williams tunnels—was underway by federal safety officials. Not exactly a vote of confidence in the safety of the infrastructure.
- A friend in need is often very lonely. Don’t wait for problems to become public before discussing with the appropriate parties. Or, as Pitt puts it, “Waiting to interface with regulators until you really need them is a sure-fire prescription for disaster.”
- Beware of the “unk-unks.” As Pitt wrote in a Nov. 29, 2005, column, these are “unknown-unknowns”—those things that can’t be predicted, but for which preparation is still required. Amorello and his team clearly never prepared for a crisis of the magnitude they are now facing. Writes Pitt: “Companies that regularly engage in off-site assessments of potential crisis fodder can avoid or minimize a potential disaster before it occurs.”
- Ensure timely and appropriate follow-through. Sometimes problems that escape an organization’s attention can be rationalized by becoming lost in the commitment to improving shareholder value. But once a problem or potential problem is perceived, “there’s absolutely no rationalization for not dealing with it,” Pitt says. And if you’ve identified it but not dealt with it, regulators and stakeholders will be merciless if the anticipated problem actually comes to pass. Sound about right, Chairman Amorello?
Accountability is critical in crisis management, and surely accountability for the tragedy in Boston will shift from Amorello to Bechtel to others and then back again. How the city works to disclose future problems and cooperates to improve Big Dig safety will be critical to the viability of its investment and future. The same rules apply to public companies, whether they’re investigating stock option backdating or undergoing risk assessments.
This column solely reflects the views of its author, and should not be regarded as legal advice. It is for general information and discussion only, and is not a full analysis of the matters presented.
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