MassMutual Financial Group launched a clandestine probe against its chief executive after his wife complained that he was having an affair with a high-ranking female executive, according to a once-confidential report made public last Friday.
MassMutual fired Robert O’Connell in June 2005. Although the company did not find that its CEO had an inappropriate relationship, it uncovered what it said was evidence that O’Connell made millions through secret stock trades and punished workers who questioned his below-cost purchase of a company condominium, according to the report by a Virginia-based consultant.
However, an arbitration panel ruled in 2006 that O’Connell’s for-cause termination was unjustified and ordered MassMutual to pay him a lump sum three times his annual salary, plus benefits. The Springfield, Mass.-based company is appealing the decision.
The report was unsealed by Connecticut Attorney General Richard Blumenthal Friday after the company decided not to appeal a court decision earlier this week ordering it be released. Blumenthal sought to make the investigator’s report public after receiving a Freedom of Information request from The Hartford Courant.
“The tone set by O’Connell focused almost exclusively on fealty to O’Connell and his chosen acolytes,” the report said. “MassMutual personnel quickly understood that their primary role was to please O’Connell and to permit him to do as he pleased. Any challenge to his dictates was swiftly punished.”
O’Connell’s attorney, Michael Keating, called the release of the report unfortunate.
“The opinion of the (arbitration) panel is a total rejection of the contentions in that report,” Keating said Friday.
The report was triggered by complaints from O’Connell’s wife, Claire, that the CEO was having an affair with a company vice president. Both the executive and O’Connell have denied the allegation, according to the arbitrators’ report, and neither MassMutual investigators nor the arbitrators concluded they had an affair.
MassMutual officials investigated Claire O’Connell’s allegation in 2004. After finding no proof, officials signed a letter with Robert O’Connell that the matter was closed.
But Claire O’Connell complained again late in 2004, prompting one of her husband’s subordinates to begin gathering information again, arbitrators said. A board member then hired a law firm without the knowledge of the board of directors and presented preliminary findings to the board in February 2005. The board agreed to pursue the investigation, and the resulting report was presented to the board in June 2005.
O’Connell was fired the next day.
According to the consultants’ documents released Friday, MassMutual said its investigation showed that O’Connell harmed the company through shadow stock trades in which he bought thousands of stock shares at the previous day’s prices, and accuse him of purchasing a company condominium at a below-market price.
It also accused O’Connell of interfering with disciplinary actions taken against his son and son-in-law, who were accused of discussing confidential information regarding a financial portfolio. The report also accused O’Connell of using the company’s aircraft for personal use in a manner that inconvenienced other MassMutual executives.
While each of the allegations is detailed in the report released Friday, arbitrators last year ruled that there’s no evidence that O’Connell interfered with the discipline or that he used the aircraft improperly, and rejected MassMutual’s contention that his shadow investments or condo purchase hurt the company.
O’Connell’s dismissal sparked investigations by Massachusetts and Connecticut officials. The company has an office in Connecticut.
MassMutual fought in state and federal courts, but a federal judge ruled this week that Blumenthal could release the documents. MassMutual decided on Friday it would not appeal that decision.
“The information makes clear the need for the board’s decisive and unanimous action in terminating Mr. O’Connell,” MassMutual spokesman Mark Cybulski said in a statement Friday. “We had argued to keep the reports confidential because they were provided to the attorney general with the belief they would remain confidential under the applicable regulatory rules and because we wanted to protect the privacy of our employees who came forward regarding Mr. O’Connell’s conduct.”
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