Monday, June 27, 2005

Ohio workers compensation fund scandal

Whoa nelly...big scandal in Ohio. Sounds a lot like the Manitoba's crocus disaster and pretty much everything Saskatchewan's Crown Investment Corporation does. It's the inevitable result when politics meets economics. Ohio "investments" included a rare coin collection and a failing bagel company, and of course, the stench of corruption is in the air.

Last year, the bureau announced it would move $31 million into seven private equity funds that have said they will loan money to new Ohio companies involved in technology-based industries, biomedical and fuel cell research, and similar advanced fields.

'Helping create jobs'
"This is a solid investment in Ohio's future," Governor Taft proclaimed in a news release touting the investment. Funds selected, he said, "are committed to helping create jobs."

But the purpose of the Workers' Compensation fund is to pay expenses of workers injured on the job, noted Mr. Brainard, of the Retirement Administrators group.

"Such an investment has to be made with the beneficiaries of the plan being the first consideration," he said. "Promoting economic development in Ohio is a worthy objective. But it has to take a back seat to those who rely on these monies."

One of the firms selected for the money, Pittsburgh-based Draper Triangle Ventures, is represented by Brian Hicks, a former top Taft aide who is now a statehouse lobbyist, according to state records.

So far, the firm has drawn $450,000 of $5 million committed by the state in October, according to figures provided by the bureau. Draper Triangle officials were unavailable for comment.

A venture capital firm with links to Ohio University in Athens has drawn $20 million in bureau investments for four separate funds.

Lottery Director Hayes said he had heard of no instances in which the governor or
members of his staff asked officials to invest in a fund for promoting Ohio
companies. But, he said, unlike in the private sector, portfolio managers at the bureau are asked to consider factors such as whether a prospective investment will advance the cause of women and minorities.

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