W-P contracts stir questions

STEUBENVILLE - An investigation by the Ohio Department of Job and Family Services into a grant used at Wheeling-Pittsburgh Steel Corp. has revealed a possible conflict of interest claim against the former director of the Jefferson County Job and Family Services.

Robert Ferguson, Ohio Department of Job and Family Services chief inspector, has referred the conflict of interest claim to the Ohio Ethics Commission for further review.

The investigation involves Nicholas Balakos, former county Job and Family Services director, and his wife Nicole, who works for the Institute for Career Development.

The Institute for Career Development was established in 1989 by management and union workers to secure funding and provide training to W-P employees.

According to the report, Nicholas Balakos met with W-P and the United Steelworkers of America District 1 and the county commissioners on Sept. 11, 2003, to discuss how to obtain a Workforce Investment Act grant for retraining programs that could help W-P emerge from bankruptcy.

The grant application was submitted on Dec. 12, 2003, for $750,000. Jefferson County was awarded the grant in May 2004.

The county Job and Family Services contracted with the Jefferson County Community Action Council to administer the grant. Job and Family Services also contracts with New Millennium to check grant activities to make sure it complies with state and federal laws.

Nicholas Balakos wrote a letter to New Millennium informing the company that his wife had worked for Institute for Career Development since 1994.

County Job and Family Services obtained a second grant in excess of $1 million.

The CAC made a staffing modification to the grant that removed Nicole Balakos from the grant and added another W-P employee.

Nicholas Balakos retired from the county Job and Family Services on Feb. 29.

There were several other allegations investigated by the chief inspector for the Ohio Job and Family Services Department, and those allegations were dismissed.

Ferguson did find reasonable cause to believe Nicole Balakos was paid wages and fringe benefits from the grant while Nicholas Balakos obtained the grants, thereby creating a potential for a conflict of interest.

Nicole Balakos was paid $55,681 for the first grant but didn't receive any money through the second grant.

After Nicholas Balakos was questioned about the possible conflict of interest by another county Job and Family Services director, he asked and received two opinions from county Prosecutor Thomas Straus. Straus, in his opinions, said Nicole Balakos was hired by W-P's joint labor-management committee. Straus also said Nicholas Balakos did not set out to benefit his spouse nor did he control her selection to the position with the Institute for Career Development.

The Ohio Job and Family Services Department chief inspector said Nicholas Balakos obtained the grant funds from which his wife was paid creating the appearance of a conflict of interest. He also said Nicole Balakos' work hours were not approved by W-P nor were they monitored by the CAC.

Nicholas Balakos denied the allegation his wife's hours were not approved by W-P. He said her hours worked were sent to the company's headquarters in Wheeling for approval before being submitted to the CAC. From there the hours worked were sent on to the Ohio Department of Job and Family Services.

Nicholas Balakos said neither he nor his wife were interviewed by Ferguson for his report.

"Nicole was in her position long before I started working at job and family services," Nicholas Balakos said.

Nicholas Balakos said he asked for three opinions on whether there was a conflict of interest and was told all three times there wasn't a conflict.

Paul Nick, chief investigative counsel for the Ohio Ethics Commission, said the commission will conduct its own investigation, including a review of all the paperwork compiled by the Ohio Department of Job and Family Services, and conduct interviews with Nicholas and Nicole Balakos among others.

Nick said if the Ohio Ethics Commission finds beyond a reasonable doubt that a conflict of interest existed, the matter will be referred to the Jefferson County prosecutor's office for criminal prosecution as either a misdemeanor or felony. The county prosecutor's office then will have to make a determination whether to pursue the matter, he said.

(Law can be contacted at mlaw@heraldstaronline.com.)