Questions arise as MDE employees don't receive first quarter bonuses

Osage Million Dollar Elm Casino officials say an independent audit report of its 2009 fiscal year operations gives the entity a “clean bill of health,” which counters the information shared in an Osage Nation congressman’s recent newsletter indicating that casino employees will not receive a first quarter bonus for FY 2010.

In a Jan. 29 letter to casino executive staff, MDE CEO Neil Cornelius said “the fundamental reason for the inability to provide the bonus is a downturn in revenue generated at all locations.” This resulted in the casino not reaching their revenue target which triggers the employee bonuses.

“I believe this to be a temporary setback,” writes Cornelius. “We did not miss our goals by much and had it not been for the weather-related outages we likely would have made our goals. It is important to note we have not changed the bonus process and this was not a reason for not reaching our goals.”

In addition to the recent heavy winter storms, Cornelius lists several factors leading to the bonus target miss including the downturn in the economy which impacts casino customer visits; new gaming amenities offered by competing area tribes last year; ongoing freeway construction which affects Tulsa casino access; and the recent focus on overhauling the casino’s accounting system.

Two days later, Congressman William “Kugee” Supernaw wrote about the casino bonuses’ non-disbursement in his Jan. 31 “Notes to the Nation” e-mail newsletter stating: “Let me tell you that this is disturbing, but not surprising news to this member of Congress.”

In his newsletter, Supernaw refers to prior MDE accounting problems which prompted four Congress members, including him, to visit the Hominy casino in July 2008 to inspect the casino’s financial records. These visits resulted in the congresspersons being investigated by the Gaming Commission for accessing the employees-only areas of the casinos to view the records.

Regarding the Hominy casino visit, Supernaw wrote: “…members of Congress exercised their oversight responsibility and investigated the reports of accounting irregularities… only to be investigated ourselves, blasted in the Osage News and for a time even questioned by others members of Congress. Now, it is obvious to all that our concerns were right on; the fact that the accounting is still having problems indicates that things were even worse than we thought at the time.”

Supernaw also referred to the Congressional Commerce and Economic Committee meeting held on Jan. 27, which included a closed-door discussion with Cornelius and other gaming officials.

“Much of the meeting was in executive session so I can’t talk about all that we were told,” wrote Supernaw, “but I can tell you what we were not told: We were not told that there would be any problem meeting projections, yet two days later the memo (by Cornelius) was delivered. Even though I pressed for information on the revenue projection – during and after the meeting - no hint of a problem was indicated.”

Chief Gray responds to Supernaw’s ‘Notes,’ focuses on MDE’s ‘tremendous progress’

Principal Chief Jim Gray wrote to the entire Congress on Feb. 3, after his office started receiving phone calls regarding the casino employee bonuses, “which were reportedly sparked by misinformation contained in” Supernaw’s newsletter.

“While it is true that Million Dollar Elm Casinos did not hit first quarter revenue targets at the level triggering the bonus award, to overstate and characterize the millions of dollars in revenue that was generated as a sign of business collapse or failure is neither fair nor accurate,” Gray wrote. “Let’s be clear, this is not designated as an entitlement program,” he said of the casino employee bonuses.

“While Congressman Supernaw chose to focus only on the ‘problems’ in his depiction of this matter, I, on the other hand, want to take this opportunity to focus on the tremendous progress,” Gray wrote. He referred Congress to a Jan. 29 letter he received from Gaming Enterprise Board Chairwoman Elizabeth Homer written after Cornelius informed her of the MDE’s financial status.

According to Homer, the Gaming Enterprise “transferred a hefty $7.5 million to the Nation’s Treasury, representing a $1.7 million increase over the $5.8 million distributed for the first quarter of FY 2009.”

Homer said the casino employees will not be eligible for a first quarter bonus, per the Gaming Enterprise’s written bonus policy.

“Doubtlessly, the Enterprise’s employees are disappointed, which is regrettable and certainly understandable, but adherence to the bonus policy is essential to the fiscal discipline needed to ensure the profitability and long-term success” of the casinos, Homer writes. “To the extent that the forbearance may create concerns about the Enterprise’s financial health, rest assured that profitability for the first quarter was strong.”

Also in his Jan. 29 memo, Cornelius noted the casino operations recently received an “unqualified audit,” of its FY 2009 financial statements. “That means all of the work done by our financial staff has resulted in an independent audit firm auditing our operations and giving us a clean bill of health,” he wrote.

REDW The Rogoff Firm, based in Albuquerque, N.M., conducted the audit and issued an unqualified opinion. The company specializes in accounting and business and financial consulting with more than 25 years of experience in working with Native American tribes, its Web site states.

In closing, Homer also writes that “planned purchases of new gaming will increase revenue over time by reducing commissions and fees currently paid to gaming vendors under existing lease agreements. In sum, we anticipate that the Enterprise will meet or exceed the expectations spelled out in the annual plan of operation.”