Blackwell defends campaign donations

Firms gave over $1 million to Kenneth Blackwell campaigns.

COLUMBUS - Kenneth Blackwell, a Republican candidate for governor, has accepted more than $1 million in contributions from employees of firms seeking business with the statewide offices he's held over the past 12 years, a Blade investigation shows.

The Blade's analysis also found that financial institutions contributing to the campaigns of Mr. Blackwell, who became secretary of state in 1999 after nearly five years as state treasurer, have given at least $1.34 million to the Ohio Republican Party. In turn, the party has shipped at least $1.29 million to Mr. Blackwell's campaigns.

In addition, firms that have received hundreds of thousands of dollars in business from the secretary of state's office under Mr. Blackwell's watch have been hired to do work for his political campaigns.

Mr. Blackwell said last week that there was nothing wrong with his campaigns accepting money from contractors because the donations were made "within the rules" and with "full disclosure." He said the firms - primarily financial institutions and high-tech companies - received no favors in exchange for their contributions.

The scandal at the Ohio Bureau of Workers' Compensation should not be used to restrict the rights of political contributors, Mr. Blackwell said.

"Because you've had some guys abuse the system and get caught, you are now going to say that those folks who play by the rules, properly disclosed, are somehow unworthy of participation in the system?" Mr. Blackwell said.

"Do I think that folks who violate campaign finance laws should be punished? Yes. Do I think people should play within the rules that are established? A big yes," he said.

Ohio Democratic Party Chairman Chris Redfern said he isn't surprised about the amount of money Mr. Blackwell's campaigns have received from firms vying for government work.

"That's the way business is done in Columbus. Want a contract? Write a check,'' said Mr. Redfern, who is also a state representative from Ottawa County.

In mid-February, Mr. Blackwell's opponent in the Republican primary for governor, Attorney General Jim Petro, pledged that if elected, his first initiative would be to "end political favoritism" by calling for a ban on awarding state contracts to political contributors.

Mr. Petro - plagued by accusations that he was sluggish in reacting to problems with the state's $50 million rare-coin investment controlled by Tom Noe and that he punished attorneys who didn't contribute to his campaign by pulling their state business - urged the General Assembly to "totally prohibit" campaign contributions from vendors, with "no gray areas. No loopholes."

Mr. Blackwell's campaign in late February began to air a TV ad that referred to Gov. Bob Taft's conviction on ethics violations last year and allegations that Mr. Petro traded the state's legal work for campaign contributions.

"Petro's ethics worse than Taft's," Mr. Blackwell's ad said.

Catherine Turcer, legislative director for Ohio Citizen Action, said it was appropriate for Mr. Blackwell's campaign to focus on ethics with the GOP-controlled state government swamped with scandal.

"But they came out swinging and got themselves," Ms. Turcer said.

She referred to Mr. Blackwell's admission on his annual ethics statement filed earlier this month that he mistakenly invested in voting-machines manufacturer Diebold Inc. in 2005 as other companies alleged they had not received a fair chance to vie for contracts.

Mr. Blackwell doesn't support Mr. Petro's proposal and believes the best antidote to corruption is to make contributions and government contracts more transparent through online databases. He said that would let the public "follow the dollars and make determinations about whether or not there are misdoings."

When Mr. Blackwell became the chief elections officer in 2003, he vowed to improve the secretary of state's Internet presence and make more information available online for business and citizens. That meant spending tens of millions of dollars on high-tech consultants, data processors, and equipment.

The employees and lobbyists who sought work from the secretary of state's office often opened their wallets for the Blackwell campaign, records show. Mr. Blackwell said his campaign and contractors adhered to election law and that vendors working for the secretary of state's office win their contracts through competitive bids or requests for proposal, and in many cases, gain approval from a legislative panel that releases state funding.

Nanda Nair is the president and CEO of 3SG, a Dublin, Ohio-based high-tech data processing and business services company that is a vendor for several state agencies, including the secretary of state. Mr. Nair's business has collected more than $3.6 million in fees from the secretary of state's office since Mr. Blackwell took office in 1999.

Employees of 3SG and their lobbyists have contributed $10,400 to Mr. Blackwell's campaigns, but Mr. Nair said he doesn't see a correlation between the donations and contracts. Mr. Nair, who has financially supported several officeholders, said he hasn't faced any pressure to contribute, but he does receive fund-raiser invitations "all the time."

"I think the reason I have gotten any business from any state agency has been based upon the fantastic work that my associates and I have done," said Mr. Nair, adding that about half of his firm's work is in the private sector. "We have provided excellent service."

From 2000 through 2004, Smart Solutions Inc., a computer systems integration, equipment, and networking company with three Ohio offices, received $1.1 million from the secretary of state's office. Since 1999, the company's employees have contributed $24,000 to Mr. Blackwell's campaigns.

"I have been a consistent supporter of Ken Blackwell," said Anand "Bill" Julka, the chief executive and founder of Smart Solutions. "My contributions are not related to any contracts we've gotten."

In addition to the contributions from contractors, Mr. Blackwell has also hired consultants or firms that have worked for the secretary of state's office to also work for his campaigns.

For example, Baesman Printing received about $230,000 from the secretary of state's office from 1999 through 2004 and completed $37,850 in printing and postage work for the Blackwell campaign. New Media Communications and its spin-off, Govtech Solutions, have received about $465,000 from the secretary of state's office, and New Media received $30,335 for its work on the Blackwell campaign.

In addition, Mr. Blackwell's campaign manager, Michael Hernon, has worked as a consultant for the secretary of state's office. And Pierce Communications, which has handled media for Mr. Blackwell dating to his first statewide campaign in 1994, was contracted by the secretary of state's office for a voter-education campaign.

Mr. Redfern characterized the relationships as "seedy," but Carlo LoParo, a spokesman for the Blackwell campaign, said the vendors were probably chosen for the campaign and the official office because of "familiarity" and "quality of work."

In 1994, Republican Gov. George Voinovich appointed Mr. Blackwell as state treasurer to replace Democrat Mary Ellen Withrow, who resigned to accept the post of U.S. treasurer.

During her 11-year tenure as treasurer, Ms. Withrow faced allegations that campaign contributions influenced which banks and investment firms her office hired. One of the charges focused on the lucrative contract that Carnegie Capital Asset Management received to co-administer STAROhio, an investment pool for local governments.

Ms. Withrow denied any connection between contributions and contracts.

In an interview last week, Mr. Blackwell also rejected any link between political contributions and the firms that received work when he was treasurer from 1994 through 1998. Elected in November, 1994, as treasurer, in 1998 he successfully ran for secretary of state. He won re-election in 2002 after scrapping a plan to return to the treasurer's office.

Campaign-finance records show that financial institution executives, political action committees, employees, lobbyists, and lawyers looking to do business with the treasurer's office contributed at least $885,000 directly to Blackwell campaigns.

Employees of financial institutions that supported Mr. Blackwell's candidacy for treasurer and other statewide offices have contributed at least $1.34 million to the Ohio Republican Party. The Ohio GOP has supported Mr. Blackwell's campaigns with more than $1.29 million.

During the summer of 1994, the Ohio GOP bolstered Mr. Blackwell's first statewide campaign with contributions - sometimes within days of large donations from financial institutions to the party.

On June 3, 1994 - after receiving about $16,000 in contributions from executives and PACs of financial institutions, including Carnegie Capital - the Ohio GOP contributed $25,000 to Mr. Blackwell's campaign for treasurer. Carnegie Capital executives declined to comment through their lobbyist.

In 1997, Mr. Blackwell entered the GOP primary for governor against Secretary of State Bob Taft. But Bob Bennett, chairman of the Ohio Republican Party, convinced Mr. Blackwell to run for secretary of state so the GOP would remain in control of the state board that draws legislative boundaries.

During Mr. Blackwell's first bid for secretary of state, the Ohio GOP infused his campaign fund with $350,000 on May 5, 1998, within a day of the party receiving $72,750 from associates of financial institutions.

Mr. LoParo said: "The Ohio Republican Party has contributed to a great extent to Secretary Blackwell's campaigns, as well as all other statewide candidates. That's what they do. They raise money for statewide candidates and provide statewide candidates with the resources to get elected."

Brian Rothenberg, a veteran operative for the Ohio Democratic Party, said: "There's a history of hypocrisy that follows Ken Blackwell's newfound position on campaign-finance rules. It was pretty clear when he was in the treasurer's office that a lot of his donations were coming from a lot of folks that had business before that office. He just has a tendency to point his finger at others but never at himself."

After being appointed treasurer in 1994, Mr. Blackwell set a voluntary limit on campaign contributions from people who did business with his office.

"When I did it, there was no limit. Somebody could have done business with the office who wanted to give $100,000, could have given $100,000," Mr. Blackwell said.

The three-member state Board of Deposit picks banks to hold state money, Mr. Blackwell said. The chairman is the treasurer, and the other two members are the auditor and attorney general. For most of Mr. Blackwell's one term as state treasurer, the two other members were fellow Republicans; Mr. Petro was auditor and Betty Montgomery was attorney general.

Mr. LoParo noted that firms that do business with the state treasurer have also contributed to Mr. Petro and Ms. Montgomery.

Mr. Blackwell said criticism from Democrats about fund-raising tactics simply is "political hogwash."

He said his contributors have "played by the rules ... and now I'm supposed to respond to some wild allegations of Democrats."

Mr. Redfern, the state Democratic leader, said Mr. Blackwell has spoken about transparency in campaign contributions, but he hasn't introduced a proposal to improve the system until his current campaign.

"Ken Blackwell also evidently has an understanding of the New Testament and the Old Testament," Mr. Redfern said. "I can tell you in the Ten Commandments thou shall not bear false witness is one of those commandments. He would do well to remember his past. He has never advocated for significant campaign-finance reform or contractual reform prior to his announcement of running for governor."

Mr. LoParo said Mr. Blackwell outlined several "reform" proposals during his secretary of state campaigns.

Mr. Blackwell said he never has been interested in controlling campaign spending.

"If you are asking me ... 'Am I advocating for campaign spending limits?' No. Never have. Never will, just as I don't believe that public tax dollars should underwrite political campaigns."

Contact Steve Eder at: seder@theblade.com or 419-724-6272.