David Ostrowe, Secretary of Digital Transformation and Administration. BEN FELDER/The Frontier
A former CEO who once had no interest in politics, Gov. Kevin Stitt became Oklahoma’s top executive on a promise to run state government more like the corporation he founded 20 years ago in a Tulsa suburb.
That business mindset involved crafting a team of other corporate leaders, many who also lacked government experience but were tasked by Stitt to rethink the way state agencies operate.
But while Stitt stepped away from his business to run for governor, placing his mortgage company in a family trust, many of the businessmen he brought with him have continued their work in the private sector at the same time they are working as public officials.
In a review of hires and appointments by Stitt, The Frontier found at least half of his cabinet secretaries continue to manage a private business, while some agency directors have also pursued additional private sector opportunities.
State employees are legally allowed to operate a private business as long as it does not relate to their state government work and they do not benefit from their state position.
High ranking state employees are no longer required to submit financial disclosure statements following a rule change a few years ago by the Oklahoma Ethics Commission.
Secretary of Budget Mike Mazzei continues to serve as president of Tulsa Wealth Advisors, Secretary of Health and Mental Health Jerome Loughridge co-owns TMG Services, and Secretary of Digital Transformation David Ostrowe owns dozens of fast food franchises.
Stitt has referred to secretaries not serving as agency directors as volunteers but some do receive a salary out of the governor’s budget. Secretary of Public Safety Chip Keating, Secretary of Commerce Sean Kouplen, Secretary of Military and Veterans Affairs Ben Robison and Ostrowe each receive $25,000 annually.
As the state faces a deepening financial crisis due to the coronavirus pandemic some of Stitt’s secretaries are being asked to do more for the state, while at the same time experiencing more demands from their own private company.
Secretary Ostrowe oversees dozens of state agencies and is leading the state’s effort to improve its online system for filing unemployment claims.
At the same time, Ostrowe is navigating how his own company, O&M Restaurant Group, deals with the forced closure of non essential businesses in an effort to slow the spread of COVID-19.
His restaurant group employs nearly 1,000 and while they have not had any layoffs Ostrowe said hours have been significantly cut.
“Sales have been miserable,” Ostrowe said.
Ostrowe said juggling both his state and private sector jobs is a challenge and he compares it to his younger days after college, “when I was working 80 hours a week.”
But he doesn’t believe his commitment to the state has suffered, especially during the current economic crisis.
As the owner of restaurants, Ostrowe said he deals with hundreds of unemployment claims each year, experience he said has come in handy as he currently works to improve the unemployment claim process.
“I understand the entire system. I have the ability from a government perspective to understand how it all works,” Ostrowe said.
Gov. Kevin Stitt inside the state Capitol. BEN FELDER/The Frontier
Kouplen, Stitt’s secretary of commerce and workforce, has also remained in his job as CEO of Regent Bank. Kouplen’s secretary position includes meeting with business owners and serving on the Governor’s Council for Workforce and Economic Development during a time when businesses are reopening after forced closures.
While Kouplen has helped the state navigate its response to record high unemployment, he is also overseeing his bank’s response with new policies to address overdrafted accounts and offering customers an advance on stimulus payments.
In some news reports, Kouplen has been quoted speaking for both the state and his own bank.
“We are offering three or six months no payments, interest-only. We are offering deferrals. We are offering even additional operating capital if we can,” Kouplen said about Regent Bank’s response in a March KTUL article.
Agency directors
Stitt has also hired full time agency directors who not only came from the private sector but continue to manage businesses.
Jerry Winchester, a former oil and gas executive, was picked last year by Stitt to lead the state tourism department. Immediately after becoming director, Winchester hired Gino DeMarco as his deputy director, another former oil and gas executive who had worked with Winchester.
Personal protection equipment (PPE) czar Gino DeMarco speaks during a press conference in Oklahoma City, Okla. on Tuesday, April 7, 2020 where the State of Oklahoma has amassed it stockpile of personal protection equipment and medical supplies for the State’s COVID-19 response. [Chris Landsberger/The Oklahoman]
But while Winchester and DeMarco were leading the Oklahoma Tourism and Recreation Department they were also pursuing private business ventures unrelated to their work at the agency.
In August, four months after becoming deputy director, DeMarco registered a company called Greencat Fuels, LLC, according to state records. The address for Greencat Fuels is a small Oklahoma City warehouse owned by Winchester.
The Frontier reached out to the tourism department requesting an interview with DeMarco and Winchester but was told by Brett Thomas, the department’s general counsel, that the interview was declined because it was “regarding non-state business.”
DeMarco eventually responded to an email from The Frontier and said Greencat Fuels, “was a potential business venture Jerry Winchester and I were investigating that had nothing to do with our positions with the State. The venture never matured into business operations.”
Stitt’s effort to appoint businessmen to some positions has sometimes lacked the necessary statutory requirements. Last year, Stitt nominated Brandt Vawter as secretary for the Commissioners of the Land Office despite the fact that he lacked a required advanced degree.
Vawter, who was a former landman at Chesapeake Energy, launched his open oil and gas development company before Stitt’s nomination. In March, Vawter resigned as acting secretary.
Gary Cox, Stitt’s appointment for commissioner of the Oklahoma State Department of Health who had a background in public health, resigned this month when it became clear he would not receive Senate confirmation.
Energy to do both
Rep. Jon Echols, R-Oklahoma City, said he is fine with secretaries also working in the private sector as long as they are not a full time agency director.
“I think the reason the governor’s system works is they are not agency heads so it can be more of a part time job for them,” Echols said. “But I would have an issue if we had a six digit (salaried) agency head and a six digit (salaried) secretary.”
Secretary of Agency Accountability John Budd works in the state’s COVID-19 command center in Oklahoma City. BEN FELDER/The Frontier
John Budd, Stitt’s chief operating officer and secretary of agency accountability, believes the cabinet has a good mix of government and private sector experience.
“Secretary Ostrowe is managing businesses outside, so when you look at what is happening in the economy right now, what is happening to employees and the challenges that a business owner has to run a business in this pandemic, I think having that perspective gives him a lot of empathy and understanding,” Budd said.
The challenge, Budd believes, is maintaining the energy to do both jobs.
“Nobody has burned out yet but you do worry about that,” Budd said.
