Jackson: Fallout from scandal hurt minority firms
Some successful investment firms were unfairly terminated, Jackson said.
COLUMBUS (AP) -- The Rev. Jesse Jackson on Thursday criticized a state decision that eliminated some minority-owned investment firms, and Gov. Ted Strickland promised a new investment system open to the best-qualified companies while avoiding any suggestion of quotas.
"What we're talking about here is trying to expand opportunity," Strickland said after a private meeting with Jackson.
Jackson criticized the November 2005 decision by the state insurance fund for injured workers to terminate managers of equity and fixed-income investment funds.
The state Workers' Compensation Oversight Commission fired 69 managers of equity and fixed-income investment funds to allow the agency to shift money to more secure investments while it retooled its financial policies. Equity funds are those that invest primarily in stocks.
The firings came as the Ohio Bureau of Workers' Compensation revamped its operations after a corruption scandal that revealed an unorthodox 50 million investment in rare coins.
Further investigations revealed a questionable hedge fund that lost 215 million. That fund, MDL Capital Management of Pittsburgh, was also a minority-owned firm.
Calls firings unfair
Jackson said successful minority- and women-owned companies were unfairly terminated as a result.
"Ohio had one of the most inclusive pension fund plans in America and some of the best returns by managers, and just unilaterally wiped out the whole program," Jackson said.
He pointed to Chicago-based Ariel Capital Management, which grew its original 150 million investment by more than 100 million before it was fired.
Jackson made public an e-mail from Ariel vice president James Smith describing the positive impact the workers' comp investment program made on minority-owned firms.
"However, since the OBWC manager terminations took place, opportunities for minorities seem to have diminished," Smith said in the e-mail dated Wednesday.
Smith declined to comment and referred calls to company headquarters where a message was left.
The workers' comp bureau said about 12 percent of its 15 billion portfolio was managed by minority-owned companies just prior to the terminations.
Strickland said it was unfortunate that companies not involved in any wrongdoing were caught up in the terminations.
He also said his promised revamping of the insurance fund would take political considerations out of the investment process to focus on hiring the best-qualified companies to help Ohio.
At an informal, half-hour news conference after their meeting, Jackson and Strickland politely but firmly pressed their points on each other.
Addressing Strickland, standing 2 feet away, as "governor," Jackson urged him "to consider convening those pension fund managers who had such great records and consider them again to become managers of capital."
For his part, Strickland tried repeatedly to make the point that the firings grew out of unique occurrences.
"What happened with BWC, reverend," Strickland said at last, "was a set of circumstances that developed because of some very bad behavior on the part of some people who were not following ethical practices."