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State to rein in lavish travel spending at Citizens

TALLAHASSEE — Looking to repair its battered public image, the board of directors of Citizens Property Insurance Corp. announced Friday that it is clamping down on excessive travel spending by its corporate executives.

Gov. Rick Scott also summoned the state's chief inspector general to pore through Citizens' travel expenses for possible waste, fraud or abuse, Citizens president Barry Gilway said.

The actions being taken at the state's largest insurer comes on the heels of a Tampa Bay Times/Miami Herald series of investigative stories that revealed a pattern of lavish spending by Citizens executives over the past three years.

The newspapers reported that a loosely regulated travel policy led to unbridled spending by several Citizens executives at a time when the company raised insurance rates and slashed coverage under the premise that it was one major hurricane away from financial ruin.

"Whenever taxpayer money is involved, we need to make sure we're holding our government accountable," Scott said in a statement. "The recent reports about Citizens' spending concern me and I am now asking the Inspector General to look into it."

Said Gilway: "We've taken quite a bashing in the press. It is time to take a hard look at what (policies) we have in place today."

Effective immediately, said Gilway, Citizens executives will not be allowed to travel free of the strict spending caps that govern most employees at the company and other state-run agencies. He said the new executive travel policy caps in-state hotel stays at $150 per night, limits meal allowances to $60 per day, and ties international travel costs to predetermined federal rates.

The new rules would prohibit some of the expenditures reported by the Times/Herald series. Among them:

• A $2,031 weekend hotel stay by chief financial officer Sharon Binnun at a $600-a-night "gold" suite in Bermuda in April.

• A $75.80 dinner for Citizens' general counsel Dan Sumner at Tampa's famous Bern's Steak House in May.

• An $889 dinner-and-wine tab for three Citizens executives and their spouses dining in London last year.

Citizens, which was created by the Legislature 10 years ago to be the insurer of last resort, has more than 1.4 million policyholders.

Gilway said he would also look at reforming the company's policy on corporate credit cards. Nearly 250 employees at Citizens have corporate cards — a fifth of the workforce — spending hundreds of thousands of dollars monthly. On several occasions, these cards have been used for personal expenses, the Times/Herald found in its review of three years of travel receipts.

The chief inspector general will be looking at many of those same documents to determine if there is fraud or abuse of power. Citizens executives have routinely spent beyond the state's legal limits on travel and meal expenses.

While Citizens' leaders have said travel costs represent a minuscule line-item within a $2 billion budget, many consumer advocates have pointed out that the executive splurging comes at a time when hard-pressed Floridians are paying higher rates for less coverage.

"Citizens executives clearly don't see the hypocrisy of asking policyholders to pay more while relaxing in four-star hotels and eating at exclusive restaurants," said Sean Shaw, founder of Policyholders of Florida. "Hopefully this investigation will change the culture of indifference rampant at Citizens."

There was some good news Friday for Citizens executives.

Gilway coupled the travel spending crackdown with $2.1 million in new raises for company employees. For high-level employees like Binnun, whose annual salary is $224,000, the raise could amount to as much as $13,000.

"We're still well below the (private) market on compensation," said Gilway, pointing out that Citizens is scaling back its generous employee health care benefits.

Times staff writers Susan Taylor Martin and Jeff Harrington contributed to this report. Toluse Olorunnipa can be reached at tolorunnipa@miamiherald.com.

Citizens' travel:
before and after

Old
travel policy

Spending on travel, meals and hotel had to be "reasonable and appropriate," vague terms that were regularly used to approve lavish expenditures.

New
travel policy

Spending on meals is capped at $60 per day, hotel stays are capped at $150 per night within Florida, and tied to federally approved rates outside of Florida.

State to rein in lavish travel spending at Citizens 09/07/12 [Last modified: Saturday, September 8, 2012 11:04am]
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