Cordray will set traps for Noe-like investments

Friday, September 15, 2006

FOR IMMEDIATE RELEASE SEPTEMBER 13, 2006

STATE TREASURY CANDIDATE PLEDGES TO CREATE FINANCIAL OVERSIGHT “TRAPS” FOR NOE-LIKE TRANSACTIONS

(Cincinnati)--Franklin County Treasurer Richard Cordray, the Democratic candidate for Ohio Treasurer, said that office should be a watchdog for “oddities and irregularities,” and pledged to set up internal processes to do so if elected.

At a meeting here for government finance officials from throughout the state, Cordray said that although the state treasurer doesn’t have a regulatory role, like the attorney general or auditor, the treasurer’s staff handles paperwork and processes that gives them an implicit responsibility to flag transactions that appear “unusual, questionable, or downright screwy,” like the coin investments handled by Tom Noe for the Bureau of Workers Compensation.

“Several warning lights should have flashed when the first transaction for $25 million came through the treasurer’s office in 1998,” Cordray said. “Although the treasurer is not responsible nor empowered to make investment decisions for the BWC or any of the public pension funds in Ohio, it is certainly highly unusual for payments to be made without being secured, as was the case with the Noe coin venture.

“The state treasury should be like a bank, in that irregular transactions automatically trigger a review. If elected, I will immediately conduct an operational review of internal controls and take steps to strengthen them. We will implement a robust system of checks and balances that set off warning signals of transactions that are anywhere from just plain wrong to outright weird.”

Cordray noted that in the Franklin County Treasurer’s office, investments are made using the best practice of delivery versus payment basis, and that some form of collateral is held to protect and secure the investment.

Additionally, Franklin County Treasurer’s office requires that all staff members who handle investments follow an ethics policy, which he would also employ in the state treasurer’s office, Cordray said.

“When the paperwork for the first unsecured $25 million deposit for Tom Noe came through the treasurer’s office to be processed, the only other elected officeholder in the position to question what the administration was doing and to call a time-out was the state treasurer,” Cordray said. “If elected state treasurer, I will halt and question any transaction that is clearly not by the book. At the very least this will give all parties an opportunity to publically provide answers and defend decisions to the satisfaction of the taxpayers.”

As the local officials entrusted with taking care of the day-to-day business of financial management of schools, county and city services, members of the Ohio Government Financial Officers Association understand better than most the importance of stringent standards and controls when handling public funds, Cordray said.

Cordray said local financial officers like those in the audience are the individuals who ultimately protect the public’s trust.

“You are the professionals who catch the first whiff of corruption, giving us time to get rid of something going bad before it contaminates the entire process. Yours is the kind of sensibility that should be in place in the state treasurer’s office, and if elected, I will work to make that happen.”

Cordray was endorsed by the Ohio Society of Certified Public Accountants earlier this month.

-30-