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Wednesday, 22 February 2017 14:40

Tribal Council calls chief’s hotel contract into question

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Opponents of Principal Chief Patrick Lambert are crying foul over a $5.6 million contract between the Tribal Casino Gaming Enterprise and the Cherokee Grand Hotel — which Lambert and his wife own — saying that its existence violates tribal ethics laws.

“I told you at some point it would come full circle, and at some point you would have to address that,” Tribal Council Vice Chairman Brandon Jones told Lambert during a Jan. 31 meeting. “I think it’s coming soon.”

The contract, which promises Harrah’s Cherokee Casino 75 of the Cherokee Grand’s rooms per night for overflow reservations at a rate of $51 per night, is for a four-year term from January 2016 to December 2019, a total value of $5.6 million. 

The TCGE board appointed by former Principal Chief Michell Hicks approved the contract on Sept. 17, 2015, after Lambert had been elected chief but before he was sworn into office, with negotiations beginning some time before the election. A request for a record of the vote to approve the contract did not receive a response as of press time, but Angela Kephart, a member of the TCGE board at the time, said she was the only one of the five-member board to vote against the contract. She and Lambert have had a combative history, with Lambert asking for her resignation upon taking office and succeeding in having council shorten her term by a year when attempts to remove her outright following an investigation into alleged wrongdoing were unsuccessful.

The contract is no longer in effect, however, after the TCGE voted to terminate it in the last half of 2016. 

“It’s clearly stated that elected officials cannot contract with the tribe, and the fact that this is in place is very, very concerning,” Jones said in a telephone interview. 

The ordinance Jones referred to, 117-45, is designed to keep tribal officials from using their positions to profit off the tribe. It states, among other things, that no elected official may “participate in the selection or in the award or administration of a contract or grant award from any government agency, if a conflict of interest, real or apparent, shall be involved.”

 

The chief’s response 

Lambert did not shy away from addressing the accusation before council. 

“The opposition to me being in this position seems to think there’s some fodder for their cannon here, which I think it just a tad humorous,” he said. 

Just two days after he said this, Tribal Council would vote 9-3 to begin impeachment proceedings against Lambert, citing the results of an investigation into contract approvals and human resources actions under his administration. Lambert believes that the impeachment vote was retaliation for his ongoing efforts to expose criminal wrongdoing under the previous administration. The FBI is currently investigating the Qualla Housing Authority, which handles $3.2 million annual in grants from the U.S. Department of Housing and Urban Development. Six members of the authority’s seven-member board are on the Tribal Council. 

Lambert, who was director of the Tribal Gaming Commission for 22 years until retiring in January 2015 to run for chief, had never before been eligible to contract with the casino due to his position — even though the hotel he and his wife Cyndi own is practically across the street from Harrah’s. He said the contract was negotiated at “arm’s length” — Cyndi takes the lead on managing the hotel, not her husband — and that, while it was signed after he was elected, he was not yet an “official.” The contract was signed on Sept. 17, and he was sworn in on Oct. 5. 

Moreover, Lambert argued, his $5.6 million contract was actually saving the tribe money. The contract reserves 75 rooms per night at a rate of $51 per room. The average price for an occupied room contracted by the casino was $74 per room. That savings has real implications for the per capita payments tribal members receive from casino profits, he said. 

“I save the tribe $2 million by giving the casino a good deal on the rooms we have available,” he said. “Me and my wife by not being greedy put $120 in your pocket, Mr. Chairman (Bill Taylor), and every member’s pocket.”

A memo that the casino issued regarding the contract dated April 6, 2016, underscores the point. 

According to the memo, the Cherokee Grand Hotel was “specifically excluded from consideration for room night purchases” during Lambert’s time as executive director but with his resignation “an opportunity presented itself.” 

“The Grand property is a preferred property for Casino customers due to quality and proximity and has potential to generate further, unquantified positive financial impacts in the form of enhanced gaming revenues and hotel room cash sales,” the memo reads.

The memo also confirms the numbers Lambert quoted to council regarding pricing. It states that the average annualized cost per occupied room, excluding those contracted at the Cherokee Grand, is $74, which is 45 percent higher than the $51 provided in the Grand’s contract. By contracting with the Cherokee Grand, the memo says, the casino saves $528,000 annually and $2.1 million over the life of the contract, “with 100% of savings realized in Tribal Distribution and Per Capita payments.”

 

Contract cancelled 

However, the TCGE decided last year to terminate the contract early, so it will not remain in effect through the end of 2019. According to the terms of the contract, only the casino, overseen by the TCGE, can terminate the agreement — the hotel does not have that same right.

“I could not cancel that contract without being in legal jeopardy,” Lambert told council. “Only the casino could, and due to political pressure that’s now been done.”

It’s not clear exactly when the TCGE voted to cancel the contract. However, it seems likely that some rooms are still under contract, as the contract requires a six-month written notice to the hotel of intent to terminate the contract and outlines a four-month exit period during which the casino decreases its room block commitment by 25 percent of the original agreement.   

Overflow hotel contracts had been a topic of discussion in Tribal Council before the Jan. 31 conversation took place. During the Jan. 17 budget meeting when a $250 million casino expansion project was approved, some councilmembers had expressed concern as to the number of overflow rooms the casino paid for and how those prices were determined. On a yearly basis, said the casino’s regional director of planning and analysis Jeremiah Wiggins, Harrah’s spends $4 million to $5 million on contracts for 80,000 room nights at outside hotels. However, the casino still turns away about 120,000 room reservations annually due to lack of space, part of the motivation for the expansion project. 

Tribal Council Chairman Bill Taylor questioned the per-night cost for some of those rooms and specifically the variation in pricing for similar rooms. 

“When you go to these hotels, you’re getting the same type of room and some are getting $50 a night and some are making $130 a night,” Taylor said. “You’re not getting an extravagant room. I don’t understand it.”

Tension has been thick between the tribe’s executive and legislative branches over the past year, and discussion of these issues is likely to continue during the Tribal Council’s March meetings — a Budget Council meeting is scheduled for Feb. 28 and a Tribal Council meeting for March 2. Meetings begin at 8:30 a.m. and are live streamed and archived at www.livestream.com/accounts/10717024.

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