John Damschroder: Celebrating and litigating
Damschroder: Celebrating and litigating
John Damschroder, Columnist
July 7, 2021
July Fourth always has been a special holiday to me. First as the birthday of my grandfather, Wayne A. Root, founder of Root’s Poultry and the friendliest fellow ever to wear shirts monogrammed with WAR. The same irony holds for my laid-back brother with the initials MAD.
The parade, fireworks and concert celebrating Independence Day I attended in Fremont was a chance to show gratitude for the freedom that makes possible my frequently harsh criticism of powerful government officials and institutions. We all have this power thanks to constitutional guarantees protecting freedom of speech and freedom of the press, among the many benefits of American citizenship in the Bill of Rights.
I have said in this space Gov. Mike DeWine took FirstEnergy campaign money and did its bidding in the Davis-Besse bailout scandal. I have said the governor’s appointment of FirstEnergy consultant Sam Randazzo as PUCO chairman, despite a warning of massive conflict of interest, put service to his campaign contributors above duty to Ohioans.
These are thoughts, if expressed, which would bring imprisonment in a nation like China. The ability to say Columbus is a capital of corruption is why our nation’s birthday is worthy of patriotic fervor. A newly released book by the late Neil Clark, the super-lobbyist charged in the FirstEnergy bribery scandal, who died by suicide in March, is making full use of the freedom I celebrate.
According to media accounts, Clark claims DeWine pledged to support FirstEnergy’s billion-dollar bailout in return for $5 million in campaign contributions. The governor says this is absurd, but in federal regulatory filings, FirstEnergy has admitted Randazzo took action on its behalf because of $4.3 million paid to him shortly before the DeWine appointment.
'Absurd' to believe DeWine 'unwittingly' facilitated scandal
That would be a bribe. Clark and the rest of the FirstEnergy 5 were indicted on racketeering charges to facilitate bribery. I say it is absurd to believe DeWine unwittingly facilitated to biggest scandal in Ohio history. I want to hear the governor in court, under oath, in addition to FirstEnergy executives, detailing why $500,000 went from First Energy to the Republican Governors Association to the DeWine campaign, one day after an October 2018 meeting.
One reason I want to see Mike DeWine in court as a witness is his total failure as attorney general to ensure the legally required fiduciary and actuarial audits of Ohio’s public pension funds were performed by his client the Ohio Retirement Study Council. Abdication of duty by both Mike DeWine and the ORSC is protected from consequence by sovereign immunity.
There is a lawsuit in Pennsylvania that offers a clue on how to hold someone responsible for the unaddressed conflicts of interest behind the COLA freeze that has cost Ohio teachers thousands of dollars. The Pennsylvania School Employees Retirement System-PSERS, like the State Teachers Retirement System of Ohio-STRS, has failed to earn the annual assumed rate of return due to under performance by high fee alternative investments.
Like Ohio STRS, PSERS relies on consultants to advise on which alternative funds to select. A PSERS member now forced to make extra payroll contributions to the pension because of the insufficient investment returns alleges Aon Investments and Hamilton Lane Advisers are liable for damages.
Fremont native and STRS Board member Wade Steen asserts similar investments have cost STRS $4.1 billion in lost earnings over the last 10 years. Moreover, while STRS has been racked with large losses on investments like the Panda Fund, consultants have been enabled to take payment from both STRS and firms receiving the Ohio investment, despite a 2006 fiduciary audit finding as the required safeguards are ignored.
Since STRS retirees have been injured by lost COLA, they have standing to sue someone, but STRS has sovereign immunity. Following the PSERS example, there are Ohio lawyers looking to test the fiduciary duty of STRS investment advisers, despite the fact that both Callan and Cliffwater, the firms in question, keep their business liability insurance low to make suits more expensive than they’re worth.
But people are angry and they want to hold someone accountable, even if the lawyers get most of the money. Between First Energy and STRS, the legal fireworks will be better than July 4th.
John Damschroder, a Fremont native who worked in Gov. George Voinovich’s administration, writes about business and economic development in Ohio.
posted by Kathie Bracy at 7:34 PM
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