| Senecas hire counsel to probe casino funds |
The Seneca Nation has hired a high-powered Washington law firm to investigate how its casinos were financed and built, looking for signs of criminal or civil wrongdoing.
The independent counsel investigation was approved in November after Barry Snyder was elected president and is scheduled to submit its findings in February. The probe is designed to provide an independent, definitive answer to questions that have long been raised by Seneca Nation critics.
Was borrowing $80 million from a Malaysian billionaire at 30 percent interest - allowing him to reap more than $90 million - an honest deal? Was raising $300 million more in a bond sale done properly?
The first transaction helped the Senecas transform the former Niagara Falls Convention and Civic Center into the Seneca Niagara Casino. The bond sale is fueling its Salamanca casino and its 26-story Niagara Falls hotel, which will cost about $200 million.
With a new administration taking over, it makes sense to have a thorough review of the nation's $500 million business, said Robert Odawi Porter, a Seneca Nation attorney.
"We need to know the truth about what happened and someone of the highest level of integrity and competence to assess it for us," Porter said Thursday.
The nation chose Washington, D.C., attorney Roscoe C. Howard Jr., the District of Columbia's former U.S. attorney, to investigate. The Seneca Council unanimously voted Nov. 17 to hire Howard, a nationally known white-collar crime expert and veteran of special prosecutor cases from the Washington law firm of Sheppard Mullin Richter & Hampton.
The council's decision specifically directs investigators to follow procedures that would allow interviews and other materials gathered to be used in criminal prosecutions, if required.
"An internal audit of this type is a responsible step for this council to take," Porter said. "I hope future councils do the same, to safeguard the interests of the Nation and its people."
President-elect Snyder made financial accountability a central theme in his campaign.
"I'll open the books, and the Seneca people will know exactly what the casinos are doing management-wise and financially," Snyder said in October. He could not be reached Thursday.
The measure directs investigators to determine whether all the financial transactions were conducted in the best interests of the nation, in keeping with the companies' fiduciary duties to the Nation, free of conflicts of interest and according to state, federal and tribal law.
The independent counsel also was given the right to subpoena documents from the Nation and its companies.
Seneca Niagara Falls Gaming Chief Executive Officer Mickey Brown declined to comment.
Brown has been a lightning rod for Seneca dissent. During the presidential campaign, Snyder said he would like to replace Brown, who is not a Seneca, with a member of the Nation.
The measure appointing an independent counsel - a copy of which The Buffalo News obtained this week - cites the "significant influence of non-Seneca entities and individuals" as one of its motivations. Brown helped arrange the initial financing with Malaysian billionaire Lim Kok Thay.
Brown had worked with Thay's family before, in arranging financing for Connecticut's Mashantucket Pequot Foxwoods Casino, the world's largest. The Foxwoods loans were on even more costly terms - nearly 10 percent of the casino's adjusted gross income until 2016, plus interest on the initial sum.
Commercial banks refused to loan money for projects on sovereign land, which can't be foreclosed on, Mashantucket officials said then.
When Seneca Nation officials approved the high-interest loan in 2002, they echoed the Mashantuckets, saying that conventional financing wasn't available.
By this May, Wall Street was ready to take the Seneca Nation seriously. Seneca Gaming initially had entered the bond market hoping to sell $225 million in notes, but interest in the offering convinced the corporation to increase the volume.
The $300 million in investment was secured by cash flow and carried a 7.25 percent interest rate.
Those debt transactions will be reviewed by a second law firm hired in November. Attorney Russell A. Brien of Stinson Morrison Hecker in Kansas City, Mo., will review the debt taken on by the Seneca Nation, according to the council's resolution.
News reporter Jerry Zremski contributed to this story.
Source: The Buffalo News
Friday, 31 December 2004
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