Saturday, June 18, 2005

What's the Matter With Ohio?
What's the Matter With Ohio?


The Toledo Blade's
reports on Coingate - the unfolding tale of how Ohio's Bureau of
Workers' Compensation misused funds - deserve much more national
attention than they have received so far. For one thing, it's an
entertaining story that seems to get weirder by the week. More
important, it's an object lesson in what happens when you have
one-party rule untrammeled by any quaint notions of independent

In April, The Blade reported that the bureau, which provides financial
support for workers injured on the job, had invested $50 million in
Capital Coin, a rare-coin trading operation run by Tom Noe, an
influential Republican fund-raiser.

At first, state officials angrily insisted that this unusual use of
state funds was a good investment that had nothing to do with Mr. Noe's
political connections. An accounting investigation revealed, however,
that Mr. Noe's claims to be running a profitable business were
fictitious: he had lost millions, and 121 valuable coins were missing.

On June 3, police raided the Colorado home of Michael Storeim, Mr.
Noe's business associate, and seized hundreds of rare coins. After
changing the locks, they left 3,500 bottles of wine, valued at several
hundred thousand dollars, in the home's basement.

On Monday, Mr. Storeim told police that someone had broken into his
house over the weekend and stolen much of the wine, along with artwork,
guns, jewelry and cars. As I said, this story keeps getting weirder.

Meanwhile, The Blade uncovered an even bigger story
50614002>: the Bureau of Workers' Compensation invested $225 million in
a hedge fund managed by MDL Capital, whose chairman had strong
political connections. When this investment started to go sour, the
bureau's chief financial officer told another top agency official that
he had been told to "give MDL a break."

By October 2004, state officials knew that MDL had lost almost the
entire investment, but they kept the loss hidden until this month.

How could such things happen? The answer, it has become clear, lies in
a web of financial connections between state officials and the
businessmen who got to play with state funds.

We're not just talking about campaign contributions, although Mr. Noe's
contributions ranged so widely that five of the state's seven Supreme
Court justices had to recuse themselves from cases associated with the
scandal. (He's also under suspicion of using intermediaries to
contribute large sums, illegally, to the Bush campaign.) We're talking
about personal payoffs: bargain vacations for the governor's chief of
staff at Mr. Noe's Florida home, the fact that MDL Capital employs the
daughter of one of the members of the workers' compensation oversight
board, and more.

Now, politicians and businessmen are always in a position to do each
other lucrative favors. Government is relatively clean when politicians
are sufficiently afraid of scandal to resist temptation. But when a
political machine controls all branches of government, and those
officials charged with oversight are also reliably partisan,
politicians feel safe from investigation. Their inhibitions dissolve,
and they take full advantage of their position, until the scandals
become too big to hide.

In other words, Ohio's state government today is a lot like Boss
Tweed's New York. Unfortunately, a lot of other state governments look
similar - and so does Washington.

Since their 1994 takeover of Congress, and even more so since the 2000
election, Republican leaders have sought to make their political
dominance permanent. They redistricted Texas to lock in their control
of the House. Through the "K Street Project" they have put lobbying
firms under partisan control, starving the Democrats of campaign funds.
And they are, of course, trying to pack the courts with partisan

In effect, they're trying to turn America into a giant version of the
elder Richard Daley's Chicago.

These efforts have already created an environment in which politicians
from the right party and businessmen with the right connections
believe, with good reason, that they have immunity.

And politicians who feel that they can exploit their position tend to
do just that. It's a likely bet that the scandals we already know
about, from Coingate to Tom DeLay's dealings with the lobbyist Jack
Abramoff, are just the tip of the iceberg.

The message from Ohio is that long-term dominance by a political
machine leads to corruption, regardless of the policies that machine
follows or the ideology it claims to represent.