City is looking to sever with Armstrong

THE BALTIMORE SUN

Mayor Martin O'Malley acknowledged yesterday that he initially was unaware that the ousted chief executive of Baltimore's convention bureau was being retained as a paid consultant, and said he has asked his top deputy to determine if the deal can be abandoned.

Several board members of the Baltimore Area Convention and Visitors Association also began distancing themselves from the decision to pay Carroll R. Armstrong $166,753 for consulting services through the year.

Armstrong was forced to resign last month after an outside evaluation of the organization severely criticized him for mismanagement and inflating records to wrongfully show that BACVA was meeting or surpassing its business goals.

He and three other BACVA executives received bonuses based in part on the inflated figures, according to a blistering report by Performance Management Inc.

"The mayor was not aware of the original deal to keep Armstrong around as a consultant," said Raquel Guillory, the mayor's press secretary. "He's not sure if it's appropriate or not to continue doing."

O'Malley, she added, has asked Clarence T. Bishop, the mayor's chief of staff and the chairman of BACVA's board, "to look into possibly restructuring that agreement."

Neither Armstrong nor Bishop could be reached for comment last night. Armstrong's attorney, former Baltimore Mayor Kurt L. Schmoke, did not return telephone calls.

Adrian Harpool, a BACVA board member who is president of 21st Century Group, an advertising and public relations agency, defended Armstrong.

He has "cachet" and "is a man with considerable experience and talent," Harpool said. "We believe he still represents considerable value. The fact that he is willing to play a role [at BACVA] to me speaks to his own integrity in a sense there was no intention on his part in any way to harm the agency."

Added Marshall Murdaugh, BACVA's interim president and chief executive: "This is an industry that's based on personal business relationships. ... Carroll does have some good relationships with meeting planners, travel writers and publishers and editors and tour operators."

If Armstrong helps the city land one convention, Murdaugh said, the consulting arrangement will have been more than worth the price.

William Walsh, a BACVA board member and general manager of the Baltimore Marriott Waterfront, said he regards Armstrong as a consultant in name only.

Walsh, however, left open the option of Armstrong working for BACVA. "To what role and to what extent he will play in consulting will be left up to the board," Walsh said yesterday. The board has felt there was a need to discuss the matter, Walsh said. "If the board feels the need to call Mr. Armstrong ... he is remaining available to us to use in a consulting basis."

One day after the report by Performance Management Inc. was made public, however, pressure mounted on BACVA to sever all ties to Armstrong.

"They ought to just pay him, buy out his contract and say goodbye," said William Donald Schaefer, state comptroller and former Maryland governor and Baltimore mayor. "When you let someone go, you let them go.

"I think its embarrassing to him, and it's certainly embarrassing to the members of the board. I think they're making a mistake. They should let him go now."

"It is inappropriate to have him as any kind of resource," said Cathleen Sullivan, president of RedHawk Communications Inc., a Tinton Falls, N.J., firm that specializes in corporate ethics and compliance. "You would want to think that the organization would want to distance themselves from these deeds. You need to salvage the organization. You need to distance it. You need to convince the public that the ship has been righted."

Baltimore City Councilwoman Catherine E. Pugh, who is co-chair of BACVA's search committee, said Armstrong's work with her group has been completed. "We have no use for his services at this point," she said.

Some board members said yesterday that they were never provided the specifics of the deal with Armstrong.

As the cost for receiving his resignation, effective Feb. 1, BACVA agreed to name Armstrong to its search committee to find his successor as well as to keep him on as a consultant.

Armstrong would be "available" to assist BACVA in its 2003 marketing initiative and find convention prospects, according to a document obtained by The Sun.

Armstrong is to receive health insurance and 11 monthly payments totaling $166,753, ending Dec. 31, according to the document.

Armstrong accepted the consulting arrangement in lieu of a severance package provided for in his contract that would have paid him a total of $272,869 over 18 months.

The deal reportedly was negotiated by Bishop, BACVA's attorney, Armstrong and Schmoke.

Retaining Armstrong in a formal capacity was recommended by Performance Management consultants, several board members said, as a way to save face for Armstrong as well as BACVA.

That strategy of achieving a "soft landing" has failed, though, and left board members scrambling to limit the public relations damage.

"I think it did backfire," said a board member who requested anonymity. "I think they thought this was going away in the sunset, but it didn't."

Wil Brewer, senior partner and chief operating officer of Performance Management of Stamford, Conn., said yesterday that he could not discuss the origin of BACVA's decision to keep Armstrong on the payroll. "We weren't part of the final negotiations," he said. "I cannot comment. I don't want to get drawn into it."

The board of directors approved the settlement with Armstrong during a January meeting in a third-floor conference room at the Baltimore Marriott Waterfront.

Despite the importance of the meeting, only eight or nine members of the 15-member board attended.

Two votes were taken, according to sources close to the board. The first was whether to fire Armstrong. That passed unanimously, although Pugh abstained, those sources said.

The second vote was whether to pay Armstrong a bonus. That was rejected unanimously. Pugh again abstained, sources said.

Also yesterday, Murdaugh indicated that BACVA may seek reimbursement of some of the bonuses paid to Armstrong and others.

"If we find people have been inappropriately compensated based on any kind of faulty numbers, then you can be sure this agency will be made whole in terms of standard business practices and fiduciary responsibilities," he said. "We'll find out if there are any funds that need to be recouped for this agency."

The controversy is proving to be more than just an embarrassment to BACVA. The price tag has already surpassed $300,000 at a time when the organization is struggling to attract conventions and its operating deficit is ballooning.

In addition to paying the consulting fee to Armstrong, BACVA has paid $106,000 to Performance Management for the outside review, $30,000 to Murdaugh's marketing company in Richmond, Va., and it is paying Murdaugh $4,000 a week, plus expenses, to serve as interim chief executive until a successor is hired.

BACVA said the weekly fee to Murdaugh represents a one-third discount of his normal rate.

Most people interviewed yesterday said it is essential that BACVA put the controversy behind it.

"The only thing they are doing is hurting the city," Schaefer said. "I'd say, 'Carroll, we're buying out your contract. We're going to cut ties.'"

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