toledoblade.com -- Dann calls for ending Ohio 'pay to play'

COLUMBUS — The movement to block state officials from awarding investment contracts to campaign contributors intensified yesterday on the heels of the scandal that has rocked the Ohio Bureau of Workers’ Compensation.

Sen. Marc Dann, a Democrat from suburban Youngstown and a leading critic of the coin investment, yesterday asked a Senate committee to hear his proposal that would throw a wrench into what Democrats have dubbed the bureau’s “pay-to-play” system.

“The connection between campaign contribution giving and contract receiving is troubling,” Mr. Dann wrote in his letter to Sen. Jay Hottinger (R, Newark), the chairman of the Insurance, Commerce, & Labor Committee.

“As we have seen with Thomas Noe and MDL Investments, not only is the relationship between contributions and contracts disconcerting, but harmful to Ohio’s employers and injured workers.”

Attorneys for Mr. Noe, who operated a $50 million rare coin venture for the bureau, have acknowledged that up to $12 mil-lion in assets are missing from the fund. Mr. Noe and his wife, Bernadette, contributed more than $200,000 to state and federal candidates, political parties, and political action committees during the last 15 years.

Mark D. Lay, the chairman and chief executive of MDL Capital Management, and his employees, have also given thousands of dollars to political candidates. The bureau lost $215 million in a risky investment with the money manager.

Bill Burga, a 10-year member of the bureau’s oversight commission, said yesterday he intends to push for the bureau to move to a contribution policy that mirrors New Jersey law, which prohibits firms handling state pension funds from contributing to statewide candidates and political parties.

His hope is the policy would eventually be applied to all state agencies.

“The New Jersey policy recognized what has become all too obvious in Ohio — the state’s riches flow to those who shower financial gifts on elected officials,” Mr. Burga, president of the Ohio AFL-CIO, said in a statement.

Secretary of State J. Kenneth Blackwell, who is seeking the Republican nomination for governor, said the lack of oversight in the workers’ comp bureau is the true culprit — not campaign contributions.

“The situation at the Bureau of Workers’ Compensation is not a campaign finance issue, but an issue of poor oversight by the public officials and bureaucrats entrusted with the investments at the bureau,” said Carlo LoParo, a spokesman for Mr. Blackwell, who has pushed for broader contribution disclosure laws and to place bureau investments under the control of the state treasurer’s office.

“This is a situation where those entrusted with the investment were asleep at the switch,” Mr. LoParo said.

Attorney General Jim Petro, who also is seeking the GOP nomination for governor, pushed for a series of reforms in a letter earlier this month to House Speaker Jon Husted (R., Kettering) and Senate President Bill Harris (R., Ashland), including a new policy prohibiting any person who contributed more than $1,000 to any gubernatorial candidate in a single election cycle from obtaining a state investment contract.

The three-member panel appointed by Gov. Bob Taft to examine the bureau’s investment portfolio also is expected to call on the state to clamp down on contributions from investment contractors.

Tom Hayes, the leader of the panel, who is in the midst of preparing a report due next month on bureau investments, said he expects to report back to the state with the message: “If you give, you don’t get.”

“When you are dealing with an organization that is going through what BWC is going through, part of the whole process is dealing with perception — what do people think?” said Mr. Hayes, the director of the Ohio Lottery Commission. “You still have this perception or suspicion that other issues are motivating the decisions that are made.”

Mr. Hayes said his panel is looking specifically at a policy that addresses controlling the “perception of influence on the awarding of contracts to investment managers.”

Columbus Mayor Michael Coleman, a Democratic candidate for governor, would support a ban on contributions from investment managers if the legislature tackled the proposal, spokesman Dan Trevas said.

But, Mr. Trevas said, the real issue is “the creation of a culture of corruption by the current leadership.”

“They manufactured a system for gaining political contributions in exchange for contracts and allowing these contractors to break the rules,” he said.

Catherine Turcer, legislative director of Ohio Citizen Action, a statewide consumer and environmental group, said legislators need to eliminate contributions from people who do business with the state, and then move on to fix other parts of the system to regain public trust.

For example, she said there needs to be a clearinghouse for voters to see electronic lists of all state money managers.

“Do I think it is realistic to put a roadblock between investment managers and campaign contributors?” she said. “I think we have enough ammunition to make that a done deal for the state of Ohio.”

Contact Steve Eder at:seder@theblade.com or 419-724-6728.

Permanent Link