What's the Matter With Ohio? - New York Times

What's the Matter With Ohio? - New York Times: " By PAUL KRUGMAN | Published: June 17, 2005
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In April, The Blade reported that the [Ohio's Bureau of Workers' Compensation], which provides financial support for workers injured on the job, had invested $50 million in Capital Coin, a rare-coin trading operation run by Tom Noe, an influential Republican fund-raiser.

At first, state officials angrily insisted that this unusual use of state funds was a good investment that had nothing to do with Mr. Noe's political connections. An accounting investigation revealed, however, that Mr. Noe's claims to be running a profitable business were fictitious: he had lost millions, and 121 valuable coins were missing.
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Meanwhile, The Blade uncovered an even bigger story: the Bureau of Workers' Compensation invested $225 million in a hedge fund managed by MDL Capital, whose chairman had strong political connections. When this investment started to go sour, the bureau's chief financial officer told another top agency official that he had been told to "give MDL a break."

By October 2004, state officials knew that MDL had lost almost the entire investment [$225M], but they kept the loss hidden until this month.

How could such things happen? The answer, it has become clear, lies in a web of financial connections between state officials and the businessmen who got to play with state funds.

We're not just talking about campaign contributions, although Mr. Noe's contributions ranged so widely that five of the state's seven Supreme Court justices had to recuse themselves from cases associated with the scandal. (He's also under suspicion of using intermediaries to contribute large sums, illegally, to the Bush campaign.) We're talking about personal payoffs: bargain vacations for the governor's chief of staff at Mr. Noe's Florida home, the fact that MDL Capital employs the daughter of one of the members of the workers' compensation oversight board, and more.
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The message from Ohio is that long-term dominance by a political machine leads to corruption, regardless of the policies that machine follows or the ideology it claims to represent.