State Audit: Public Company's Dollars Used For "Excessive" Spending

5 years 5 months 3 weeks ago Monday, February 27 2012 Feb 27, 2012 Monday, February 27, 2012 3:06:00 PM CST February 27, 2012 in News
By: Danny Spewak

JEFFERSON CITY - A state audit of Missouri Employers Mutual claimed Monday the public insurance company spent money "excessively" for six-figure executive salaries, trips to Hawaii and thousands of dollars in Democratic campaign contributions. 

Pointing to MEM's approval process by Gov. Jay Nixon for board members, the audit claimed the worker's compensation company acts as a public agency and thus spends recklessly. The audit further expands on that idea, claiming the spending gives MEM an advantage over other insurance companies. State auditor Tom Schweich, a Republican, said the company's expenditures would be questionable even for a private corporation, a sentiment MEM CEO Jim Owen wholeheartedly disagreed with.

"That is very surprising [for Schweich to say that], because like you said, this is the first insurance company the state auditor has ever audited," Owen said. "And [Schweich] admitted that it was unique for the state auditor to ever be in an insurance company. That's highly questionable."

How MEM Spends Money

According to the audit, salaries of top executives at MEM average around $250,000 annually. The company spent more than $300,000 on a vacation to Hawaii in February 2010 called the "President's Trip," aimed to reward top performers in the company. Among thousands of dollars in other expenditures included trips to St. Louis Cardinals games ($17,000) and MU sporting events ($77,000). 

Owen, who described his company as an independent public corporation and not a state agency, defended high salaries and expenditures on vacations and sporting event tickets. He said they are simply used for business purposes to compete in the insurance market. He also said his company has remained in the 50th percentile for expenditures compared to other corporations in the market, with the exception of one year. In 2007, Owen said MEM ranked in the 90th percentile for expenditures, but he explained that spending as a reaction to a strong revenue year. 

"The figures [Schweich] used were comparing us to a state agency. And that's where we differ. Our compensation is based on comparisons with private insurance companies," Owen said. "We are an independent company set up to compete with private insurance companies."

After Schweich accused MEM's spending as "unreasonable" even if it were a private company, he told KOMU he did not actually compare MEM to any other private corporations.

"We have enough experience to know the answer to that question," Schweich said. 

Owen said he would ask Missouri's Democratic party to return his company's campaign contributions. He then said he would not comment further due to an investigation by the FBI.

Approval vs. Appointment

With regards to the approval process, Owen said Nixon has almost no role in the appointments of board members. He said Nixon simply signs off on candidates voted on by policyholders. Thus, according to Owen, MEM is an independent public company with the ability to spend money to keep up with competitors, rather than a public agency responsible to the state. 

Schweich said it is the General Assembly's job to determine whether or not the approval process violates state law. He said the auditor's office does not take an official position on the matter. However, according to Schweich's actual report, "this practice and MEM bylaws conflict with" state law.

When KOMU asked Schweich to explain whether the word "conflict" meant the process violated the law, he said it was a matter of semantics.

"Well, there's two different words," Schweich said. "There's no doubt about that."

The Next Step

Schweich deferred to the General Assembly several times Monday, claiming the legislature must now act to determine whether MEM is a public agency. Sen. Jim Lembke (R-St. Louis) has already introduced a bill to privatize MEM, a move Owen said his company would stand against. 

The bill would require MEM to establish a private "successor" company by January 2014, and it would erase the prior legislation which created the company in 1993. Currently, under that law, MEM does not pay federal taxes and did not need to report expenditures. 

Schweich's office struck a deal with MEM for a one-time audit, though. An MEM spokesperson said the company had already conducted internal audits. Now that he has announced the results, Schweich said the situation is out of his hands. 

"Really, this is an issue that has to be resolved by the General Assembly. Should MEM maintain its tax-exempt status?  That's a policy question," Schweich said. 

More News

Grid
List
CALLAWAY COUNTY - While many people are preparing to look into the sky for the eclipse Monday, one airport is... More >>
3 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 6:01:00 PM CDT August 20, 2017 in News
FERGUSON (AP) — A Missouri lawmaker who temporarily posted a Facebook comment expressing hope that President Donald Trump would be... More >>
6 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 3:51:00 PM CDT August 20, 2017 in News
COLUMBIA - The total solar eclipse is coming on the fifth day of school, and Columbia teachers are trying to... More >>
7 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 2:38:00 PM CDT August 20, 2017 in News
COLUMBIA - Researchers are getting ready for the solar eclipse on Aug. 21. Not only will they be watching the... More >>
8 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 1:22:00 PM CDT August 20, 2017 in News
KANSAS CITY (AP) — Police in Kansas City say a man pushing his disabled car on Interstate 70 was killed... More >>
8 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 1:14:03 PM CDT August 20, 2017 in News
ST. LOUIS (AP) — Police say a man was injured when a St. Louis sidewalk collapsed under the forklift he... More >>
8 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 1:09:41 PM CDT August 20, 2017 in News
FLORISSANT (AP) — The parents of a 4-year-old girl are calling for the closure of a suburban St. Louis day... More >>
9 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 12:37:23 PM CDT August 20, 2017 in News
KANSAS CITY (AP) — Parks officials in Kansas City, Missouri, say an 83-year-old Confederate memorial will be removed after it... More >>
10 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 11:17:00 AM CDT August 20, 2017 in News
ST. LOUIS (AP) — Pastor Henry Price of St. Louis is ready to take your prayer request, and you don't... More >>
11 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 10:42:11 AM CDT August 20, 2017 in News
FERRELVIEW (AP) — A member of a small western Missouri town's governing board is leading an effort to oust the... More >>
11 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 10:20:36 AM CDT August 20, 2017 in News
CUBA (AP) — Democratic Missouri Sen. Claire McCaskill is holding another round of town halls in rural, Republican strongholds as... More >>
12 hours ago Sunday, August 20 2017 Aug 20, 2017 Sunday, August 20, 2017 9:56:21 AM CDT August 20, 2017 in News
JEFFERSON CITY – In preparation for a large number of visitors to Missouri for Monday's solar eclipse, the State Emergency... More >>
22 hours ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 11:49:00 PM CDT August 19, 2017 in News
JEFFERSON CITY - The incoming freshmen at Blair Oaks High School will become the first class to not have a... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 8:59:00 PM CDT August 19, 2017 in News
COLUMBIA – Angela Speck, the director of astronomy at the University of Missouri, gave a presentation titled, "Doing Science in... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 4:36:00 PM CDT August 19, 2017 in News
PIKE COUNTY, Mo. - A man was charged with first degree murder and armed criminal action after Alexander Koch died... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 4:32:00 PM CDT August 19, 2017 in News
COLUMBIA - With mid-Missouri preparing for the upcoming eclipse on Monday, Laws Observatory played host to an event made to... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 3:18:00 PM CDT August 19, 2017 in News
ST. LOUIS (AP) — A former school bus driver in eastern Missouri has been sentenced to 20 years in prison... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 1:58:58 PM CDT August 19, 2017 in News
JEFFERSON CITY - With the eclipse nearly here, crews in Jefferson City were busy preparing for festivities Saturday. On... More >>
1 day ago Saturday, August 19 2017 Aug 19, 2017 Saturday, August 19, 2017 1:19:00 PM CDT August 19, 2017 in Eclipse Planning
Columbia, MO
Broken Clouds 80°
10pm 80°
11pm 79°
12am 77°
1am 76°

Select a station to view its upcoming schedule:

Coming Up Next

8:00p
American Ninja Warrior
10:00p
KOMU 8 News @ 10
10:35p
Sports Extra with Chris Gervino
9:30p
Seinfeld
10:00p
Family Guy
10:30p
Family Guy

Tonight's Schedule

6:00p
Gymnastics
8:00p
American Ninja Warrior
6:00p
Cliffhanger
8:00p
Marvel's Agents of S.H.I.E.L.D.
9:00p
KOMU 8 News @ Nine on The CW
9:30p
Seinfeld