The Ohio state insurance fund for injured workers announced it is looking for a new outside consultant to review its investments, according to the Associated Press.
The Ohio Bureau of Workers Compensation said it won’t renew its contract with San Francisco-based Callan Associates, which has served as the agency’s investment consultant since 1996.
The agency last year asked Callan to investigate losses of $215 million from a hedge fund managed by Pittsburgh-based MDL Capital Management.
The losses were discovered in November 2004 but not reported until last month. Gov. Bob Taft says he was not informed of the extent of the loss and demoted a top business aide for failing to pass along the information.
In January, Callan told the bureau in a four-page report that almost all the bureau’s $215 million loss was caused by MDL’s handling of the investment. That report was released last month as part of a public records request by The Associated Press and other news organizations.
A Cleveland consultant reviewing all the agency’s investments criticized Callan’s work on behalf of the bureau earlier this week.
Callan did not independently verify investment return information supplied by fund managers, Richard Ennis, principal partner in Ennis Knupp, told the agency’s oversight commission.
The bureau’s fund managers figured their returns and reported them to bureau staff, who submitted the data to Callan.
Callan then simply parroted the data in its reports to the bureau, Ennis said. Usually, the outside consultant would try to verify the rates of return using figures from the investment bank that holds the account, he said.
The announcement “is not a reflection of Callan Associates,” said Tina Kielmeyer, the bureau’s interim administrator. “Instead, it indicates our preference to evaluate all options toward finding a consultant that will help us responsibly manage the monies of Ohio’s employers and injured workers.”
Callan is welcome to submit its own proposal, said bureau spokesman Jeremy Jackson. The agency has paid Callan $1.3 million in fees since 1996.
Messages were left with Callan seeking comment.
Also, Taft named Michael Koetters, a retired business executive from suburban Cincinnati, to replace George Forbes on the bureau’s oversight commission.
Forbes, director of the Cleveland chapter of the National Association for the Advancement of Colored People, resigned in June when it was revealed his daughter works for MDL.
Koetters, of Glendale, recently retired as vice president and chief investment officer of Indianapolis-based health care company Wellpoint Inc.
As losses from investments approved by the board reached $300 million, lawmakers critical of the oversight committee’s role agreed to add two investment experts. Those officials have not yet been appointed.
Taft emphasized the bureau is in good financial condition, with a surplus over $700 million and the ability to pay worker claims.
“The bureau has had many successful investments,” Taft said. “Obviously they have had a significant number of problem investments.”
He also repeated that he will release documents regarding golf outings he took as governor but failed to disclose to the Ohio Ethics Commission as soon as possible.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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