Sunday, August 13, 2006

Hat's Off to Hennigan

Gregg Hennigan rightfully dominates the front page of the Sunday Gazette (August 13) with his investigatve piece, "Money Matters; Questions Loom Over Riverside Casino Foundation," The Gazette, August 13 (requires subscription; also available here).

I often complain about the extent to which the mainstream media substitutes "repeating" for "reporting" -- often when major advertisers' or other powerful local individuals or institutions are involoved -- functioning essentially as a conduit for whatever public relations (or even marketing) message the organization wishes to have spread throughout the community (without having to pay for advertising space). (See, e.g., Nicholas Johnson, "Mr. Editor, tear down this wall!" August 8, 2006.)

The story is not only significant as (a) journalism, (b) important insight into the issues surrounding the Riverside casino and the rain forest, but it's also (c) an interesting bit of sociological insight regarding how "the good old boys -- and girls" work their will in a small county, and town, in Iowa (and presumably elsewhere as well).

Hennigan is not reporting a news conference. He's been digging around in Riverside, exploring conflicts of interest between the "independent," non-profit Washington County Riverboat Foundation that holds the license to the gambling casino, and the casino's for-profit owner, Dan Kehl.

Kehl, who's never before expressed much interest in rain forests, whether real or fake, has become a fan of this project in search of a site. He's even pledged $2 million of his parents' money to the project. Perhaps he thinks that the parents who bring their kids to see the rain forest will take their kids, and whatever remaining money they may have, and leave one or both at the casino. Anyhow, he's on board.

The rain forest's David Oman, and Kehl, represent that Riverside "has met or exceeded" Oman's demand that $25 million be raised locally and given to him for the project. Their numbers don't add up to $25 million -- even if they got everything they're claiming (including debt, and money that may or may not come to the project 10 years from now). But the problem Gregg Hennigan set out to explore is how Kehl, who is supposed to keep his hands off the Foundation, can include in that $25 million an $8 million contribution (albeit over 10 years) from the Foundation.

It turns out the Foundation's chair, Timothy Putney, who stands to become the favored banker for both the casino and the Foundation, is also a member of "the Riverside Environmental Group, which the casino formed to woo the rain forest project." He concedes that "relatives of other board members [i.e., in addition to Patty Koller, see below], including his own, also are casino investors" (emphasis supplied).

And Robert Koller, the husband of the Foundation's vice-chair, Patty Koller, is one of 800 local investors in the casino, a member of its board, and serves as secretary of the board.

Confronted with the suggestion that when the wind's from the south you can smell these conflicts of interest all the way to Iowa City, the defense says, "What conflict of interest? That's not my investment. Besides, 'What's good for General Motors' . . . I mean, what's good for the casino is good for the Foundation."

Hennigan quotes Iowa Racing and Gaming Commission administrator Jack Ketterer as saying "I'm not seeing a conflict." And in a sidebar story, Gregg Hennigan, "How Other Casino Foundations Operate," The Gazette, August 13, 2006, Hennigan refers to Jerry Mathiasen, with the Iowa West Racing Association in Council Bluffs, and writes, "The association's conflict-of-interest policy, like most other gaming non-profits, comes into play most often when a member has a relationship with a grant applicant."

Frankly, if the purpose of the Iowa law is to keep gambling in the hands of non-profits as licensees, separate and apart from those operating casinos, I think it would be a lot cleaner if the non-profit's board members -- along with their family members, business partners, and so forth -- had no financial interest, whether investments or business relationships, with their casino.

But put that aside, and re-read Jerry Mathiasen's analysis, above. Even if you adopt that loose interpretation of the law -- that a potential conflict could only arise when a Foundation board member "has a relationship with a grant applicant" -- it seems to me that, in the unique case of the Riverside casino, that standard has been violated.

How? If the rain forest were not in the picture, the Mathiasen standard would not prohibit even the Foundation board member, let alone their spouse, from holding stock in the casino. It would only prohibit their having an interest, say, sitting on the board, of a non-profit applicant for a Foundation grant.

In this case, however, the rain forest, as an applicant for a grant, is not an independent organization. Just because a Foundation board member has no financial interest in the rain forest in the conventional sense (and, as a non-profit, it simply has no stock to sell) doesn't mean they have no conflict of interest.

The ties between Dan Kehl, David Oman, and Timothy Putney are such, the relationship between the rain forest's financial success in Riverside and the interest in Kehl's personal profits (as well as that of all other casino stockholders), the assertions of Kehl and Oman that they are counting $8 million from the Foundation as part of the $25 million (before even filing an application, let alone a meeting of the Foundation ), that the rain forest is not "just another grant applicant."

I don't think we've heard the end of this story, but meanwhile "Hat's off to Hennigan" for a great job of investigative journalism and digging out the details.

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