US attorney denies Reilly killed deal

After the July 10 ceiling collapse inside the Interstate 90 connector, Attorney General Thomas F. Reilly said he personally halted a sweeping deal that would have released Big Dig contractor Bechtel/Parsons Brinckerhoff from most future claims against the firm for shoddy work on the megaproject.

He didn't want to let the contractor off the hook because new problems might be discovered, Reilly said.

But US Attorney Michael J. Sullivan said yesterday that Reilly not only supported a settlement with the contractor, but was pushing federal prosecutors to sign off on the deal. At a meeting in the US attorney's office on June 6, Sullivan said, Reilly and his staff made a presentation outlining the reasons the settlement should be approved.

It was only after he raised strong objections that Reilly backed off the deal, Sullivan said.

``It was presented as a global settlement of claims against Bechtel," Sullivan said in an interview yesterday. ``They needed my sign-off, and I said no."

Sullivan's description of events contradicts the account that Reilly gave the Globe Tuesday, in which the attorney general portrayed himself as the decision-maker who ultimately put the brakes on the deal. Another person involved in the deal, who spoke to the Globe on condition of anonymity, gave the same account as Sullivan's.

Sullivan said he agreed to address the issue after reading Reilly's description of his role, published in the Globe yesterday. Sullivan's remarks represented an unusual break with Reilly, with whom he has worked closely, despite their party differences. Reilly is a Democrat and Sullivan a Republican.

Reilly's settlement discussions with Bechtel/Parsons Brinckerhoff have drawn new attention since concrete ceiling tiles crushed Milena Del Valle, 38, who was a passenger in a car traveling to the airport. They are also likely to be an issue in the governor's race.

A spokesman for Reilly said yesterday that the attorney general stands by his previous comments.

Sullivan said Reilly and members of Reilly's staff requested the June 6 meeting specifically to make the case for the deal, which would have largely relieved Bechtel/Parsons Brinckerhoff of civil liability for mistakes on the $14.6 billion Big Dig. Two people familiar with the deal told the Globe the firm would pay $85 million in exchange for the release.

Sullivan said the Reilly team provided a written summary of the insurance sources that Bechtel/Parsons Brinckerhoff proposed to tap to finance the settlement. Reilly characterized the deal as providing the partnership, the largest contractor on the Big Dig, with more than $2 billion in receipts, a general release of liability, Sullivan said.

Sullivan said that he thought the proposed settlement was too generous and that he had other concerns. He also said he did not believe there was any pressing reason to sign off on a settlement, with a federal investigation into the project ongoing.

``At the end of the meeting, they asked what they should tell" the partnership's lawyers who had negotiated the proposed deal with the attorney general's office, Sullivan said.

``I said they had to make it very clear . . . that the US attorney had refused," he said.

Reilly, in an interview with the Globe on Tuesday, said he was uncomfortable with the deal and blocked it himself.

``In the end . . . I wouldn't sign off," he told the Globe. ``I wasn't going to sign off on a release" of Bechtel/Parsons Brinckerhoff's liability.

When a reporter asked about Sullivan's role during the interview, Reilly said: ``They raised questions. Frankly, I agreed with them."

But Reilly said ``the decision was on our end," not the US attorney's.

Asked last night about the conflicting accounts, a spokesman for Reilly said yesterday in an e-mail, ``The attorney general has great respect for the United States attorney. Our offices are both focused on getting to the bottom of the tragic tunnel collapse that killed Milena Del Valle.

``We stand by the attorney general's previous comments on cost recovery," the statement continued. ``Bottom line, there was no settlement. Cost recovery is the responsibility of the attorney general and not settling with Bechtel was his decision."

In January 2005, Reilly took over the state's efforts to seek compensation for the state from contractors for problems on the Big Dig.

While Reilly has the authority to reach a settlement of the state's claims against Bechtel/Parsons Brinckerhoff, Sullivan also has a role because he represents the federal government, which provided more than 50 percent of the funding of the Big Dig.

Lawyers for Bechtel/Parsons Brinckerhoff have insisted on a global settlement that would include a sign-off from both state and federal authorities, according to interviews with people familiar with the negotiations.

Brian C. Mooney of the Globe Staff contributed to this report.