Ethics panel clears Kasich in JobsOhio tax incentives flap

By Marc Kovac | R-C Capital Bureau Published:

COLUMBUS -- The Ohio Ethics Commission reiterated its limited jurisdiction Thursday over the private nonprofit launched to head the state's economic development efforts and indicated that Gov. John Kasich has complied with required disclosures of income received from a company that was awarded tax incentives.

Executive Director Paul Nick and Chairman Merom Brachman also said state law is clear in relation to the panel's purview over JobsOhio, following repeated requests from Democrats to investigate the nonprofit and Kasich.

"The commission does not want to be put in a position of conducting political theater," Brachman told reporters. "By asking us to look at something that is off limits by statute, this is posing a red herring. Strong word, but it's a red herring."

JobsOhio was created by lawmakers and Kasich to handle behind-the-scenes negotiations with companies seeking financial incentives for expansions.

As a private entity, JobsOhio is not subject to the state's open meetings and records laws, ethics rules or other requirements that generally affect state agencies.

Supporters believe the nonprofit is better positioned to work with businesses, with executives feeling more comfortable discussing such matters outside of the former approval processes that were more open to public review.

But critics say the setup opens the door for wrongdoing with no real means of keeping tabs on whether incentives are being awarded appropriately.

"When this legislature passed House Bill 1 to create JobsOhio, it provided almost no accountability or transparency over how public money is spent and how economic development decisions are made," Rep. Ronald Gerberry (D-Austintown), who has been vocal in his calls for hearings on JobsOhio, said in a released statement. "As a result, no one knows if these payments to Gov. Kasich influenced the state's decision to reward this same company with tax credits."

Kasich and JobsOhio were thrust into the spotlight in recent weeks following news reports by the Dayton Daily News outlining ties between companies that have received state financial incentives and members of the nonprofit board and the governor.

Democrats have subsequently called for an investigation, via press conferences and letters to state ethics officials. Cuyahoga County Executive Ed FitzGerald, who hopes to unseat Kasich in 2014, sent another letter to the ethics commission Thursday after the Associated Press reported that tax breaks were awarded to subsidiaries of a company where he was a board member.

The governor resigned that position after being elected but continued to receive payments for his services, via a deferred compensation plan.

"This whole mess of cronyism and self-dealing at JobsOhio, which now includes Gov. Kasich himself, is clearly unethical, and if it isn't illegal, it ought to be," FitzGerald said in a released statement.

But Kasich called the allegations "politics" and "mudslinging" and said JobsOhio's work and incentives awarded by the state were aboveboard.

"This process is one where JobsOhio looks at places where jobs can be created and where they then make a recommendation to a tax credit authority, of which I don't have anything to do with," Kasich said. "The tax credit authority then goes and approves things."

He added, "Whether it's a friend or whether it's a foe, if they're going to create jobs and the incentives that are necessary to encourage them are within the bounds of reason and reflect the proper return on investment, we want to do it. ... That's really the bottom line."

Kasich's chief legal counsel sent a letter to the ethics commission Wednesday outlining the governor's connections to Worthington Industries, which were earlier disclosed. Kasich severed his ties to the company after being elected governor, though he was paid deferred director fees after taking office.

"The response from the governor's counsel is rather clear in defining that there are no conflicts in the circumstances relating to his work prior to coming to office and whatever was connected to his disclosure," Brachman said.

The ethics commission has not indicated any investigations into Kasich or JobsOhio. Board members of the latter are required to file financial disclosures, which remain confidential unless audits uncover conflicts.

None have been disclosed to date.

"If the staff finds something that indicates potential conflict of interest, that becomes public, we put it in the public record," Brachman said.

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.

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