Six of nine members of the JobsOhio board of directors have direct financial ties to companies that have received tax credits and other assistance from state government or JobsOhio since Gov. John Kasich took office in 2011, public records show.
The directors are employed by, sit on the board of or hold stock in companies that have received assistance from either the state of Ohio or JobsOhio, the newly created non-profit established by the Kasich’s administration. JobsOhio also assisted two subsidiaries of Worthington Industries, a Columbus-based company that has contributed heavily to Kasich and where he served as a director between 2001 and 2010.
JobsOhio spokeswoman Laura Jones said the state assistance to the companies came before JobsOhio began operating in July 2011. Still, JobsOhio documents list some of these companies as getting assistance from the non-profit.
“We have a conflict of interest policy that we have in place that we utilize here at JobsOhio,” Jones said. “If there is a conflict, it’ll be brought to the attention (of the full board) and policy will be followed on how to go forward with that.”
Progress Ohio Executive Director Brian Rothenberg, a frequent critic of JobsOhio, said better transparency would result in more taxpayer protections.
“This smacks of self-dealing in a country club atmosphere of doling out the public’s money,” he said.
Until Kasich took office, the Ohio Department of Development managed the state’s economic development and job creation efforts. Kasich argued that the state needed to be more nimble and rely on experts with business experience to get better results.
With cooperation from the General Assembly, he replaced the department with the Development Services Agency, created JobsOhio and funded the new non-profit with bond proceeds, state money and private donations. Eight of the board members are appointed by Kasich; the board then appointed the chief investment officer, John Minor, who is the ninth director.
JobsOhio is in charge of marketing the state as a good place to do business and helping arrange loans, grants and tax breaks for companies creating jobs. JobsOhio said in its 2012 annual report that JobsOhio and its partners helped 277 companies that committed to creating or retaining 75,612 jobs and invest $5.8 billion in the state. The group is exempt from state audits, public records laws and some ethics laws.
Matt Mayer, president of Opportunity Ohio, a conservative think tank, said government assistance going to businesses connected to JobsOhio directors “smells badly and it smacks of corporate cronyism.”
“This is why in some cases economic development entities are not private or quasi-private,” he said, arguing that public entities have more transparency.
Jones said the JobsOhio board, although “very engaged,” does not weigh in on what incentive packages companies should get. Instead, JobsOhio managers make recommendations on business tax breaks to the state Development Services Agency. The DSA considers the recommendations and goes through a public approval process, she said.
But a spokesman for the Democratic Party said the process provides too little public scrutiny.
“Those who have worried from the outset that the JobsOhio model invites scandal have been vindicated today,” said Matt McGrath, Ohio Democratic Party spokesman.
The JobsOhio board includes a host of prominent names, including former Ohio State University President E. Gordon Gee and Bob Evans Farms Chief Executive Steven Davis, both of whom sit on the Bob Evans board of directors.
In March 2011, shortly before JobsOhio began operations, Kasich announced an $11 million package of loans and grants for Bob Evans to move its corporate headquarters from south Columbus to New Albany, an upscale suburb 25 miles away. JobsOhio’s 2012 annual report also lists Kettle Creations, a Bob Evans subsidiary, as having received undisclosed assistance from the JobsOhio Network, or the group of regional economic development agencies that partner with JobsOhio.
Jones said Kettle Creations did not avail itself of the approved state assistance, which was offered before the company was acquired by Bob Evans.
As a Bob Evans director, Gee has been paid $156,700 in cash and stock worth $533,074 over the past three years, according to filings with the federal Securities and Exchange Commission. Davis has led Bob Evans since 2006, a job that has paid him $19 million in salary, bonus and benefits over the years, SEC records show.
State ethics law and JobsOhio policy require JobsOhio directors to disclose potential conflicts of interest and then the disinterested directors determine whether a conflict exists. No such conflicts have been raised, Jones said.
The chairman of the JobsOhio board is James C. Boland, who also sits on the board of directors for Sherwin-Williams Co., the Cleveland-based paint company.
JobsOhio helped Sherwin-Williams secure a $5.8 million tax credit in September 2011 from the state, according to JobsOhio records and the state’s tax incentive database. Jones said JobsOhio helped out on the tail end of the project, but most of the details had already been worked out.
Boland, who has been on the Sherwin-Williams board since 1998, has been paid $1.2 million in director fees by the paint company over the past six years and in 2011 was awarded company stock now worth $2.5 million, according to SEC filings.
Gary Heminger, chief executive of Marathon Petroleum Co., also serves on the JobsOhio board. In 2011, the Ohio Department of Development awarded Marathon job tax credits worth $78 million — one of the largest incentive packages put together by the Kasich administration.
Manta Media Inc. Chief Executive Pamela Springer also serves on the JobsOhio board. Her company landed a job creation tax credit from the state in June 2011 worth $1.31 million.
Minor, the chief investment officer, disclosed on state ethics filings in 2011 and 2012 that he holds stock in Cincinnati-based Procter & Gamble. The state provided $243,311 in tax credits to P&G and JobsOhio reported that it provided assistance to the consumer products giant in 2011.
The threshold in state law for an interest in a public contract is when an investor owns 5 percent or more of the company involved, according to Ohio Ethics Commission Director Paul Nick.
Jones said it’s doubtful that Minor owns more than 5 percent of P&G. Minor was not available for comment.
Although JobsOhio is a private entity, it has close ties with state government: many of its employees used to work for the state; it has a contract with the state Development Services Agency to negotiate incentive packages; and Kasich is its biggest supporter. JobsOhio’s 58-page 2012 annual report mentions Kasich’s 11 times and displays five photos of him.
JobsOhio helped line up tax credits for two subsidiaries of Worthington Industries, a steel-processing company that paid Kasich more than $600,000 in director fees between 2001 and 2010. Kasich’s state ethics disclosures also indicate he received a deferred compensation payout from the company in 2012.
Employees and managers of Worthington Industries have been supporters of the Ohio GOP and Kasich’s political career, contributing more than $62,000 to the Kasich-Taylor campaign committee – including $10,000 from Chief Executive John McConnell just a week after a Worthington Industries subsidiary, Artiflex Manufacturing, received approval for a $109,863 state tax break. McConnell and his now late father contributed $512,000 to the Ohio Republican Party between 2004 and 2012, state records show.
Kasich spokesman Rob Nichols said Kasich had divested himself of Worthington Industries before taking office, but delayed paperwork resulted in the last deferred compensation payment coming in 2012.
Nichols said the Kasich administration wanted to stock JobsOhio with experienced, successful business leaders and investors.
“It is working. JobsOhio, in part, is responsible for 162,000 private sector jobs,” he said. “The old way of having people with no business experience resulted in the loss of 400,000 jobs.”