Monday, June 04, 2007

There is an ethics violation.

I'd like to start out this post by thanking BizzyBlog for confirming and clarifying a thought I had about OPERS and the methods they use to select investments. In general, overall return on investment should trump just about anything else. This comes to bear in discussing HB115 and apparently to a justifiably lesser extent in discussing the Ohio Midwest Fund. I appreciate the willingness to share time and expertise with me, so I hope nobody thinks I'm going after Tom's blog.

It's just that in the course of this, I followed some links and visited some other sites from the State of Ohio Blogger Alliance. I usually try to avoid doing this, because I get really irritated really quickly. For instance, there is no "Professor of Pugilistic Ideology" at Iowa State University. That right there should have tipped folks off that any interview of a person with that title was a work of fiction (satire, in this instance). On the other hand, knowledge is power and nobody's perfect, so I try to keep an open mind.

Well, it seems that some folks on the other side of the aisle believe that going after the bonuses paid out by Ken Blackwell at the end of his term is a partisan act, and they're pointing to an article in today's Dispatch. According to "journalist" Mark Niquette, his "research" has found information in the CD's files about "retirement buyouts" made by former Treasurer Withrow before she left to take a position as U.S. Treasurer under Bill Clinton.

Here are some bits of those news reports:

An Ohio Senate committee will review retirement buyouts for 16 employees of former State Treasurer Mary Ellen Withrow to determine whether early retirement guidelines protect taxpayers' interests.

Senate President Stanley J. Aronoff, R-Cincinnati, said yesterday that he is not suggesting any wrongdoing in Withrow's actions. But he said he wants buyout policies reviewed in view of an increasing turnover of state officials, which he said will be accelerated by voter-approved term limits.

''I have the highest regard for Treasurer Withrow, and I believe she was a superb choice for U.S. treasurer,'' Aronoff said.

-Columbus Dispatch, 03/30/1994

Aronoff, R-8, of Cincinnati, said he asked the chairman of the Senate's Education, Retirement and Aging Committee to investigate.

"I don't think it's a question of legality," he said. "But it is a question of timing and what's good and fair for the state."


Maurice Pizzoferrato, who was deputy treasurer to Withrow, said planning for the buyouts started about a year ago, long before Withrow was nominated as U.S. treasurer.

Eight of the jobs were being abolished because of computerization and do not need to be filled. Replacements for the higher-ranking positions should not be as costly because the retiring employees had built up seniority and high salaries, he said.

The buyouts would save between $150,000 and $175,000 this fiscal year, he said.

-Cleveland Plain Dealer, 03/29/1994

So on the face of it, it would appear that the 1994 payments were made, their legality was unquestioned, and it led to a discussion, led by Republicans, of how to handle such situations in the future. 13 years later the 2007 payments were made, an investigation led to a finding that such bonuses were illegal, and the state is pursuing the matter.

On a day when Rep. Jefferson of Louisiana is being indicted, it only seemed like a good idea to check out charges of the pot calling Blackwell a kettle. But there's not much there. Oh well, I expect that from some blogs. What I don't expect is the repeated use of scare quotes by a Dispatch reporter, when there is nothing in the record to warrant them. Using these quotes implies that those 1994 payments were retirement buyouts in name, but something else conceptually. If what he's referring to are, in fact, actually retirement buyouts, the use of scare quotes is unethical at best, outright dishonest at worst.

Perhaps Mr. Niquette's Senior Editor can sit down and have a chat with him.


Paul said...


I'm trying to understand why a self-professed liberal would ever say "overall return on investment should trump everything else." That seems as right-wing as one can get.

I admit to not following this particular debate at all, and so am probably missing some important stuff. But I am struck by the ferocity in which liberals are defending profit over principle.

Note that I'm not saying "you liberals" because as we've discovered, you and I are on the same page on many issues. I refuse to identify myself as either conservative or liberal because both labels carry baggage and incite discord even when there isn't any.

Which is what I think is happening on this thing -- a kind of "we're against it because they're for it" dynamic.


Cajun said...

Why, as you say Paul, Both the name liberal and conservative carry "baggage"?


bonobo said...

You really deserve better responses to your comments than I've had time to give lately. This one is also going to be insufficient but here goes:

I believe in government regulation in large part because I don't want corporations distracting themselves trying to figure out what's in the public interest. I think that CEOs and Boards of Directors should be figuring out ways to maximize shareholder value within the constraints of the market and the laws/regulatory structure of the U.S. We, as citizens, should demand that our servants/representatives place reasonable but firm constraints on the market and entities operating in the market so that the public interest is protected and the common good promoted.

In the case of the divestiture bill, I haven't taken a real stand on it one way or another. I think that the managers of the OPERS investments have a duty to maximize return. If we don't want public retirement money going to Iran, we need instruments like the Mandel/Jones bill. On the other hand, I'm a big fan of OPERS' creation of a fund that invests in Ohio Venture Capital firms, because of what it has the potential to do for Ohio. The problem is that my positions (wait for the legislature to take money out of Iran, go for it on your own when putting $$$ into Ohio) are somewhat contradictory. In both cases, there is an objective beyond merely getting a return on investment. Thus, I was asking questions.

So anyway, you'll find me sounding right-wing sometimes, as I believe that the purpose of corporations is to make money and increase shareholder value, and that demonizing them for doing so is like demonizing a predator for killing. It's their nature, and we rely on it. I'm not really right-wing, because I don't believe in the moral superiority of the market, and I do believe in some levels of re-distribution of accumulated wealth.

BizzyBlog said...

ERISA enshrined the idea that seeking the highest return consistent with investment safety is the ONLY duty of a fund manager.

Although not a sponsor, I distinctly remember it being championed by that well-known conservative Ted Kennedy.

Paul said...

Bonobo: Thanks for taking the time to comment; I understand what you're trying to say.

C: baggage -- by baggage I mean the whole raft of positions that get hung on those labels, rendering them meaningless as far as I'm concerned. They have no more meaning than the name of a sports team in that they name the opposing teams but don't really say anything about them.

Liberals/conservatives, left/right, red/blue -- who knows what they stand for any more? I don't want a label. Ask me how I stand on a particular issue and I'll tell you. You and I may be registered to two different parties, but I bet we agree on a lot of important stuff. But I don't agree with everything either side nails to their platform.

We don't get to vote on policies and programs in our system of government -- we vote for representatives who we are supposed to be able to trust to think and act like we do. The trouble is that getting elected takes money, and the money comes from lobbyists, so in the end the politicians serve the lobbyists, not the people who elected them. In other words, the votes of our elected representives are for sale. As long as that is true, it doesn't matter that much what you and I think.