The Associated Press June 18, 2010, 8:46AM ET

CEO: Ohio pension fund not political on Lehman

The head of an Ohio pension fund whose Lehman Brothers losses have become an issue in the governor's race said Thursday that his staff ignored politics when calculating and distributing loss information.

Ohio Public Employees Retirement System Chief Executive Chris DeRose also said in an Associated Press interview that advice offered through e-mail by a campaign operative for Republican candidate John Kasich to a pension executive was neither solicited nor followed.

Kasich is running against Democratic Gov. Ted Strickland in one of 37 governor's races nationwide. Democrats are seeking to use Kasich's time as a managing director at Lehman Brothers against him in the campaign.

The May 3 e-mail from Kasich campaign spokesman Scott Milburn to pension fund executive Carol Nolan Drake offered suggestions on the best way to explain the losses to reporters.

"He's free to write or respond with anything he wants," DeRose said. "We, of course, ignored it and didn't take his advice. We don't need his advice. Many people on a regular basis are attempting to give us advice, and I think the record shows that no action was taken."

In a subsequent e-mail to Milburn's released Thursday, Drake forwarded his comments to the retirement system's lawyer, Julie Emch Becker, with an "FYI" notation.

Democratic State Rep. Todd Book, who chairs the Ohio Retirement Study Council, which oversees state pension funds, questioned the appropriateness of the e-mail and the potential for it to lead to a "deliberate undervaluing of the fund's losses." DeRose said no one at any political campaign played a role in the loss calculation -- $111 million -- which he said is based on the fund's own financial information. The $59 billion fund is one of the largest in the state and nation, serving tens of thousands of state retirees.

"We're a nonpartisan, independent organization," DeRose said. "We were just trying to put out the numbers."

Milburn said on Wednesday that he intended the message only to urge the pension fund to provide an accurate, thorough picture to reporters who were writing about the losses.

In it, he told Drake: "The media will not get the full picture unless you explain it: not all of this money was lossed as a result of the Lehman bankruptcy."

Book said the pension fund still needs to explain why Democrats' earlier attempts to get loss information were rejected. Becker told the AP on Thursday that a party researcher interpreted the December request as being tied to an outstanding state lawsuit. She said the pension fund consulted with the state attorney general and determined the information fell under attorney-client privilege.

DeRose said Drake called Milburn on the morning of May 3 at the same time other staffers were assigned to call other parties with interest in the loss data about to be released. That included some who had made formal requests and two who had not: Strickland and Kasich.

"We were trying not to play favorites," he said.

DeRose said the fund began working to calculate losses to its Lehman-managed investments in April. The move came after U.S. Rep. Mary Jo Kilroy, a Democrat, released separate loss calculations made by the Democratic state treasurer.

Those figures showed the fund's Lehman investments lost $368 million in market value between 2007 and the end of 2008. The pension fund has not disputed the accuracy of the number.


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