Ethics commission: Marathon deal posed potential conflict of interest for 2 JobsOhio directors

The Ohio Ethics Commission has found that a deal struck with Marathon Petroleum Corp. last year posed a potential conflict of interest for two directors of the state's privatized job-creation board, JobsOhio.

The economic-development entity spearheaded by Republican Gov. John Kasich said Wednesday that Marathon CEO Gary Heminger and Steven A. Davis, who served simultaneously on JobsOhio's and Marathon's boards when the deal was struck, successfully averted actual conflict by stepping aside from decision-making.

"It's the kind of information we're actually tracking every day. That's not an overstatement," said JobsOhio general counsel Don Grubbs. "Whenever there's a project coming up, we do a check against the ethics filings and make sure everyone's aware of where the potential conflicts exist."

Heminger and Davis were among dozens of confidential financial-disclosure filers at Ohio public colleges, universities, boards and commissions who were sent ethics warning letters Wednesday. Four JobsOhio directors — including two who have since left — and 20 employees got letters following a routine annual review. Most of the other potential conflicts involved small amounts of common stock that directors and staff held in companies with which JobsOhio has done business.

Grubbs said internal policies put in place by JobsOhio, which is not subject to most state ethics laws, require those with potential conflicts to step out of any deals in which they have personal business interests.

That includes a deal JobsOhio negotiated with Marathon to keep operations of its new distribution subsidiary, MPLX, in Findlay, creating an estimated 150 jobs worth $15 million in new payroll. The deal included an incentive package that extended Marathon's existing 60 percent job-creation tax credit from 10 to 14 years. It began in 2011.

JobsOhio struck the deal and then forwarded it to the Ohio Tax Credit Authority, a state panel, for final approval. The authority approved the deal in January.

ProgressOhio, a liberal policy group critical of JobsOhio, said a lack of transparency prevents outsiders from knowing how directors behaved in recommending hefty tax incentives to Marathon, where Heminger reported owning nearly 925,000 shares of common stock at the end of January and Davis, the CEO of Bob Evans Farms, owns about 1,200.

"An ethics agency says there are potential conflicts, and JobsOhio leaders say, 'Trust us, there are no conflicts'?" said Brian Rothenberg, executive director of ProgressOhio. "Ronald Reagan once said of the Democratic versus Soviet system: 'Trust but verify.' Well, how can taxpayers verify here? They can't by design."

Grubbs said Ohio law may allow internal policy, rather than ethics laws, to dictate activity at JobsOhio, but that's not a free pass.

"Take a look at the letter of our policy. It really does address this," he said. "Anyone with a potential conflict must disclose and then step aside, and we take that very seriously."

JobsOhio spokesman Matt Englehart noted that six of the 20 employees alerted to potential conflicts were not on JobsOhio's payroll in 2013, the year covered in the ethics review. He said Ohio law required them to file retroactively when they were hired