Kielmeyer seeks to steer BWC beyond controversyWritten by Matt Zapotosky | | email@example.com
COLUMBUS — With weary eyes and a tired smile, Tina Kielmeyer laughed as she moved a Christmas tree from behind a chair in her office.
Kielmeyer, the recently appointed interim administrator of the Ohio Bureau of Worker’s Compensation, did not want her mom to see in a newspaper photograph that she had yet to take down Christmas decorations. But in recent weeks, Kielmeyer has simply not had time to put away the tree.
“In the past two weeks, it’s just been non-stop working with the attorney general, working with the inspector general, working with the auditor’s office and at the same time, I’ve got to keep my 2,600 employees focused on BWC,” Kielmeyer said. “Taking over the bureau on a good day is a tremendous task, I mean, huge shoes to fill. Taking it over during at a time where we’re going through a situation like this … is an absolutely phenomenal task.”
Kielmeyer was appointed administrator of the bureau June 3 after former administrator James Conrad resigned in the midst of a growing controversy involving the bureau’s investment portfolio.
The bureau has admitted to losing $215 million in a Bermuda hedge fund managed by MDL Capital Management of Pittsburgh and $4.8 million in two American Express Asset Management funds.
The bureau is also being investigated by several state agencies for investing $50 million in two rare coin funds managed by local coin dealer Tom Noe. Noe’s lawyer has said that up to $12 million is missing from the funds.
But for Kielmeyer, who has been with the bureau for 23 years, the controversy and negative publicity is nothing new.
She said the recent controversy reminds her of controversy 10 years ago, when the bureau was constantly derided in the media for being unable to pay providers or for paying providers too much.
“I was here back in the days when BWC was on the front page and it was never a good thing,” she said. “We had constant changes of administrators. We did not have a good business model for sure. We were not focused on our customers … when we were in the newspaper, it was because we couldn’t pay providers or everyone remembers the time we paid everybody twice and made USA Today.”
However, Kielmeyer’s experience in the bureau has raised doubts among some officials about her ability to assume control of the bureau and about her involvement in the investment losses.
Ohio Senator Teresa Fedor, D-Toledo, said she questions Kielmeyer’s ability to do her job because Kielmeyer served in the bureau when all the money was lost.
“I don’t have confidence in her leadership at the helm,” Fedor said. “I consider Jim Conrad the gatekeeper of corruption, and now we have the assistant gatekeeper of corruption.”
Kielmeyer had been serving as chief operating officer of the bureau and assistant administrator to Conrad since April 2004, and she was one of the first high-level bureau employees to be informed about the MDL loss.
Kielmeyer said one of her employees came to her with information about the MDL loss after having a conversation with other low-level bureau employees in the investment department.
“The nurse called me I believe the same day she learned about it and she told me that little bit of information, and she said, ‘I don’t know who I should’ve told,’” Kielmeyer said. “So I called Mr. Conrad and I left him the message … I think that once I contacted Mr. Conrad, he took all appropriate and responsible steps to get special counsel [and] begin the investigations.”
But Kielmeyer said as chief operating officer, she handled more day-to-day operational concerns and insurance claims and was not involved in the bureau’s investment department.
“This investment problem is in one part of BWC,” Kielmeyer said. “It does not impact our operations. It does not impact our insurance business. I have never overseen the investment department. Like most employees at BWC, I hear the updates of how the portfolio is performing when they give it to the oversight commission and that’s probably the extent of my involvement.”
Since Conrad’s resignation, Ohio Attorney General Jim Petro filed a lawsuit against MDL Chairman Mark Lay to recover the lost $215 million on the grounds the hedge-fund contract was fraudulent and evaluated exclusively by Terrence Gasper, the former chief investment officer of the bureau who was forced to resign because of the loss.
The bureau is being investigated by several state agencies for its investments with Noe.
Though some have questioned Kielmeyer’s appointment, the former bureau COO is not without her supporters.
Tom Hayes, director of the governor’s management review team, a group put together by Governor Bob Taft to investigate all of the bureau’s investments, said he has been impressed with Kielmeyer’s ability to handle a “very difficult situation.” Hayes has worked closely with Kielmeyer in recent weeks to look into the bureau’s investments.
“Tina has shown a remarkable ability to come into a very difficult situation and get things done,” Hayes said. “She’s kind of in the middle of the pinball machine.”
Hayes’ team will be instrumental in selecting a permanent bureau administrator. Hayes said after a search is conducted, his team will interview all the candidates and present a recommendation to the governor, who will appoint the next administrator. Hayes said the scope of the search was not yet determined, but an independent search firm might be hired to aid in the process.
Hayes said Kielmeyer would have to express interest in being the permanent administrator if she wanted to be considered.
Kielmeyer would not say whether she was interested in removing her interim status, but she said she would give “thoughtful consideration” to keeping the job if it was offered to her.
“I’m focused on what I need to do to help address this investment situation but also to keep BWC’s insurance operations focused and moving in the direction our customers need it to move,” she said.
Kielmeyer’s main task in the coming weeks will be to handle intense scrutiny from the media and from government and independent organizations.
All of the bureau’s investments are being evaluated by Governor Taft’s three-person management review team and Ohio Inspector General Tom Charles. The bureau has also hired Ennis Knupp & Associates, an independent investment consulting firm from Chicago, to look into its investment portfolio. The management review team is scheduled to present its initial findings to the Governor on July 18, and Ennis Knupp will complete its analysis sometime after that.
Additionally, Democratic legislators are proposing a bipartisan committee be formed to look into the bureau’s operations. Fedor and Representative Peter Ujvagi, D-Toledo, said they support the creation of such a committee.
Kielmeyer said she would support a bipartisan committee.
“BWC welcomes the scrutiny that it’s getting right now, and we welcome the recommendations that can be made,” she said. “We will implement those that the General Assembly and the Governor feel are appropriate.”
Senator Jeff Wagoner, D-Sycamore, said he does not feel forming another committee to investigate the bureau is necessary.
“As far as another committee, let’s see what the Inspector General finds when it’s all said and done,” Wagoner said. “The Inspector General is doing his job, so let’s let him do his job and let the chips fall as they may.”
The ‘lion’s mouth’
With multiple investigations proceeding and public records requests by media still pending, Kielmeyer said more losses might be discovered. She said until she receives a final report from Ennis Knupp on the status of the bureau’s investments, she cannot say all the lost money has been discovered.
“When I receive that information, that is when I’ll be able to tell you with 100 percent certainty that there are no other situations,” she said.
Hayes, who has been looking into the investment situation in preparation for Ennis Knupp’s analysis, said he expects the controversy to die down in the next couple weeks, though media investigations might reveal losses in contracts previously terminated by the bureau.
“As far as active accounts, we’re confident that we’ve identified at least most of it,” he said.
In any case, Kielmeyer remains a busy woman thrust into the spotlight. And the Christmas tree remains in her office.
“[Kielmeyer is] a solid person; she does a great job,” Hayes said. “She’s stuck her head in the lion’s mouth and hopefully she’ll be able to withdraw it.”