Created on Thursday, 15 August 2013 Written by JULIE CARR SMYTH,AP Statehouse Correspondent
COLUMBUS, Ohio (AP) — Ohio's leading ethics regulator said Thursday that Gov. John Kasich appears to have made a clean break from a corporation whose subsidiaries were granted $619,000 in state tax breaks brokered by JobsOhio.
Ohio Ethics Commission Chairman Merom Brachman said he saw no reason for the panel to investigate the relationship between Kasich and Worthington Industries.
"It's a clean break and clear as a whistle," Brachman said.
Brachman's remarks followed a request by Kasich rival Ed FitzGerald to expand an earlier complaint to include an Associated Press report detailing Kasich's longstanding financial and political ties to the central Ohio steel processor, including board salary and deferred compensation payouts into 2011.
FitzGerald, a Democrat, is seeking to take the governor's seat from Kasich, a Republican, in 2014.
Kasich served a decade on the Worthington Industries board while working in the private sector and was paid more than $611,000 as a board member between 2007 and 2011, the company's federal business filings show.
Kasich quit the board a day after winning the 2010 gubernatorial election but continued to receive deferred payouts for three years, according to his financial disclosure forms. The amount of deferred compensation Kasich collected was not tied to the performance of the company.
Kasich's final payment came less than a year before the Ohio Tax Credit Authority began approving a series of job-creation tax credits for two Worthington subsidiaries, ArtiFlex and Westerman Inc. JobsOhio, the privatized job-creation board appointed by Kasich, had recommended the tax deals to the board.
Brachman said Ohio law gives the commission no power over tax deals brokered by JobsOhio, so that effectively puts the issue to rest.
He said that the commission's only role is to assure Kasich's finances are properly reported — and that those appeared to be in order.
Ahead of publication of the AP's report, Kasich's chief counsel Michael Grodhaus sent a three-page letter to the Ethics Commission's executive director, Paul Nick, closely detailing the governor's payouts from Worthington Industries ahead of Thursday's commission meeting.
Grodhaus said he was writing to dispel "vague suggestions by certain Democrats" that the governor's ties to Worthington Industries pose a conflict of interest for JobsOhio.
"Nothing could be further from the truth," he wrote, adding, "Governor Kasich had no role in approving these tax credits."
Worthington Industries spokeswoman Cathy Lyttle said the company has pursued tax incentives in Ohio and in other states for years, and received $400,000 in state tax incentives under Kasich's predecessor, Democrat Ted Strickland.
Lyttle said the incentives aren't paid unless the company delivers the promised jobs at its 19 facilities statewide.
"Our goal is to create good jobs for those local communities as well as for the state," she said. "We've increased our employment by 30 percent over the past five years, from 2,250 in July 2008 to 3,200 in July 2013."
The company's founder and late chairman, the powerful John H. McConnell, was an architect of Kasich's political rise from state legislator to congressman to governor — joining family members and employees in giving hundreds of thousands to his campaigns and political committees over the years.
The governor had severed all financial ties to and any fiduciary role in the company by the time the tax deals were approved, spokesman Rob Nichols said.
"Those who are politically active have the same right to use job-creation incentives as those who are apolitical, and Ohio's transparency rules exist to give the public confidence that the appropriate rules and processes are followed," Nichols said.
JobsOhio has faced legal and transparency questions nearly from the beginning. Structured to "move at the speed of business," the entity is funded by proceeds from state liquor profits. Ohio's Republican state auditor has subpoenaed its financial records.
Thursday's lack of action appeared to answer questions about what, if any, role the Ethics Commission would have over JobsOhio issues. Besides the Worthington Industries issue, FitzGerald had asked the panel to review alleged conflicts of interest by members of the JobsOhio board that were brought to light by the Dayton Daily News.
But Brachman said FitzGerald has made no actionable allegation or complaint against JobsOhio — because the state law creating the entity largely shielded its actions from ethics and public records laws.
"That is not an issue before us. It's a red herring," said Brachman, a generous Kasich campaign contributor first appointed to the commission decades ago by Democratic Gov. John Gilligan.
Other state laws prohibit someone tied to a business from steering state government benefits to that business and restrict the size and timing of government contracts going to an official's campaign donors.
The Ethics Commission also rejected a records request from Ohio Democrats on Thursday to see financial disclosure forms that under the law must remain confidential. Nick said the commission is in the process of reviewing those forms and any conflicts that are discovered will be made public.
SEE RELATED STORY: Firm that paid governor won tax credits