Wright State University has suspended payments to economic development consultant Ron Wine while state authorities investigate whether the school’s contract with Wine violated state lobbying laws.
“Wright State asked my firm to stand down during that time so there was no appearance of conflicts of interest,” Wine said in an exclusive interview with the Dayton Daily News.
The contract with Wine came under scrutiny from the Ohio Attorney General’s office after the newspaper revealed that the university had paid him nearly $2 million since 2009. Lobbying contracts that exceed $50,000 during a calendar year require prior approval from the State Controlling Board.
The university and Wine maintain that he is not a lobbyist, though Wine acknowledges he has been present in meetings with legislators and when legislative strategy has been discussed. He says the amount of lobbying work he does is small and falls under the legal threshold that would require him to register with the state.
In addition to any written contract, Wine said he and WSU President David Hopkins had an “informal agreement” that called for Wine’s firm, Ron Wine Consulting Group, to receive a 5 percent cut of contract work he helped land for the university.
Both Wine and Wright State say he was never paid a commission, which is not allowed in certain state and federal contracts.
In a statement released Friday, Wright State said, “At first, Wright State retained the Ron Wine Consulting (RWCG) group at a flat monthly rate. As the scope of the work clearly began to expand, the parties agreed to an hourly rate contract. Ron Wine did propose a payment guide based on a 5% workload level. Subsequent contracts have been based solely on hourly compensation. The firm was not compensated based on percentage commission, nor did President Hopkins authorize it in an informal agreement.”
A July 24, 2015, email from Wine to Hopkins’ personal email account referenced the 5 percent guideline and argued for continuing the arrangement, saying, “It’s worked well for all of us.”
“If we need to discuss doing anything differently with this guideline going forward, please let me know,” Wine wrote in an email the newspaper obtained from the university following a public records request. “I have no desire to put you in a difficult position, but if it ain’t broke, why fix it? It’s worked well for all of us so far and creates an ‘incentive’ for growth and performance that you rarely have in outside consultant relationships.”
Wine’s interview with the newspaper is the first since controversy first arose over his contract. He said the newspaper’s reporting prompted the investigation, and that he has turned over records to investigators from Ohio Attorney General Mike DeWine’s office.
Wright State records show that on Jan. 11 the university informed Wine in writing that he was to cease all work and billing, “effectively immediately.”
Asked why the university suspended the contract, Wine said, “Quite frankly, there is a lot of work to be done and I don’t think they wanted the distraction. So that has been a hardship to me and my company.”
Wine said he will do “whatever I have to do to comply with the investigation.”
Greg Lawson, policy director for the conservative Buckeye Institute, expressed concern about WSU entering into non-written agreements with contractors. This creates a liability for the school if there’s a disagreement about terms, he said.
“The whole point in having a contract is so things are very clear,” he said. “You’re dealing in a situation here where you’re dealing with a good deal of public funds. I think it makes sense if all the t’s are crossed and i’s are dotted.”
$1 million contract
A former director of the Dayton Development Coalition, Wine started his consulting company in 2004 and began advising Wright State in 2009 on economic development issues. Under Wine’s current contract he is expected to garner at least $10 million in state funding each year for the next two years, secure $140 million in federal contracts over the next three years and help the school sustain $100 million in annual research by mid-2018.
Initially, Wright State paid him $6,000 a month but increased the payments as Wine was more successful attracting state, federal and private money to the university. In 2014, a year in which he didn’t have a written contract, the university paid him nearly $1 million.
Last May Wine signed a multi-year agreement that runs through 2019 and allows him to bill Wright State more than $1 million a year.
Wine said the 5 percent was created early on as an incentive to allow his firm to grow along with the success of the university.
“President Hopkins and I sort of generally agreed that he wasn’t going to be able to pay my firm very much money up front,” Wine said. “As the business grew and as the workload grew, it would be reasonable for my firm to expect — if we were doing a good job and meeting their expectations — to get about 5 percent of the workload. So it’s kind of like a workshare.”
In an interview last October, Hopkins said Wine’s compensation was not based on the amount of funding he brought to the university.
“Read the contract. It does not say that,” Hopkins said. “I’m confident it doesn’t say that because that’s not the way we work.”
Wine said he has helped bring in $150 million to the university and created 500 new jobs in the region.
“My understanding with President Hopkins was my firm could expect to get about 5 percent of the business that we generated from the work we were doing as time went on,” he said. “Obviously that 5 percent grew over time. You know when the pie gets bigger, your piece gets bigger.”
WSU Trustee Chairman Michael Bridges said he was not aware of any commission or incentive-based payments in the university’s agreement with Wine.
“There is no place for anything incentive-related in contracts like that,” he said.
‘We’ve been pretty successful’
Wine said his job was to develop a strategy for the university to become a bigger economic driver in the region. Over the years he said he worked on matching university researchers to new initiatives at Wright-Patterson Air Force Base, principally in human performance research where he felt the two institutions could work together.
“It’s been a very busy time. It’s been a very productive time and without patting myself on the back I think we’ve been pretty successful at what we set out to do in terms of making Wright State a more viable economic asset in the Dayton region and, for that matter, in the state of Ohio in the last year or two,” Wine said.
Wine played a key role last year in landing state funding and collaboration from other Ohio universities for the Federal Research Network. The network’s aim is to match Ohio university research to the future initiatives at Wright-Patt and NASA Glenn in Cleveland so that more federal military contracts and jobs come to Ohio.
“I don’t think this has ever been done before, but we went through and got all the universities to map their research capabilities to Wright-Patt research priorities in the future and to NASA Glenn’s research priorities in the future,” Wine said. “And that did not happen from just, you know, sending out an email and a hope and a prayer. There were a lot of meetings and conversations, a lot of research.”
The state budget bill included $25 million in funding for the network over two years.
Wine said launching the Federal Research Network required his firm to work more hours for Wright State than in previous years.
“That’s why the work went from where it was to where it is now,” he said. “There is just a lot of work to be done. And I’m really proud of it, not just personally. I think Wright State has done a great job. I think universities have tried to strap on the challenge of doing more in the economy.”
In its statement Friday, Wright State also touted its success, saying Wine and others helped “create hundreds of new high tech jobs, and dramatically increased human-performance research funding across the region and the state.”
‘Never any quid pro quo’
DeWine’s office is examining whether Wine’s contracts required approval from the state Controlling Board, a bipartisan panel that oversees state spending. Investigators also are looking into whether Wine should have been registered as a Wright State lobbyist because of his work advocating on the university’s behalf with state lawmakers and other officials.
Wine and the university, though, say his interaction with state officials fell below the thresholds that require lobbying registration.
Wine and the university are the focus of a second inquiry ordered this month by Ohio House Speaker Cliff Rosenberger. The Clarksville Republican, a Wright State graduate, asked the Joint Legislative Ethics Committee to examine emails Wine sent to WSU President David Hopkins.
In two messages from Wine to Hopkins in preparation for meetings with Rosenberger, Wine advised Hopkins to both advocate for state funding and offer to organize a political fundraiser.
The Dayton Daily News obtained the emails through a public records request.
“I didn’t expect all of my emails to President Hopkins to become a topic of public conversation,” Wine said. “So there is always that Monday-morning quarterbacking. If you know someone is going to read something, you might write it differently. I was writing something for his personal consumption that was based on a lot of meetings and conversations that we had prior to that. So the context of those emails are sometimes not well understood.”
He added, “There was never any quid pro quo. Listen, Cliff has been great to Wright State. A check one way or another is going to mean absolutely nothing to him. I mean, he is a good legislator. He is well thought of in the Wright State community.”