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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Government Reform and Oversight. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/reform]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.
47–527 CC
1998
THE DEPARTMENT OF THE INTERIOR'S DENIAL
OF THE WISCONSIN CHIPPEWA'S CASINO
APPLICATIONS
VOLUME 1
HEARINGS
before the
COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
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SECOND SESSION
JANUARY 21, 22, 28, AND 29, 1998
Serial No. 105–92
Printed for the use of the Committee on Government Reform and Oversight
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York
J. DENNIS HASTERT, Illinois
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut
STEVEN SCHIFF, New Mexico
CHRISTOPHER COX, California
ILEANA ROS-LEHTINEN, Florida
JOHN M. MCHUGH, New York
STEPHEN HORN, California
JOHN L. MICA, Florida
THOMAS M. DAVIS, Virginia
DAVID M. MCINTOSH, Indiana
MARK E. SOUDER, Indiana
JOE SCARBOROUGH, Florida
JOHN B. SHADEGG, Arizona
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STEVEN C. LATOURETTE, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
JOHN E. SUNUNU, New Hampshire
PETE SESSIONS, Texas
MICHAEL PAPPAS, New Jersey
VINCE SNOWBARGER, Kansas
BOB BARR, Georgia
DAN MILLER, Florida
HENRY A. WAXMAN, California
TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
MAJOR R. OWENS, New York
EDOLPHUS TOWNS, New York
PAUL E. KANJORSKI, Pennsylvania
GARY A. CONDIT, California
CAROLYN B. MALONEY, New York
THOMAS M. BARRETT, Wisconsin
ELEANOR HOLMES NORTON, Washington, DC
CHAKA FATTAH, Pennsylvania
ELIJAH E. CUMMINGS, Maryland
DENNIS J. KUCINICH, Ohio
ROD R. BLAGOJEVICH, Illinois
DANNY K. DAVIS, Illinois
JOHN F. TIERNEY, Massachusetts
JIM TURNER, Texas
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THOMAS H. ALLEN, Maine
HAROLD E. FORD, Jr., Tennessee
———
BERNARD SANDERS, Vermont (Independent)
KEVIN BINGER, Staff Director
RICHARD D. BENNETT, Chief Counsel
WILLIAM MOSCHELLA, Deputy Counsel and Parliamentarian
JUDITH MCCOY, Chief Clerk
PHIL SCHILIRO, Minority Staff Director
C O N T E N T S
Hearings held on:
January 21, 1998
January 22, 1998
January 28, 1998
January 29, 1998
Statement of:
Anderson, Michael, Deputy Assistant Secretary, Bureau of Indian Affairs; Thomas H. Hartman, Financial Analyst, Indian Gaming Management Staff; and Robert R. Jaeger, Superintendent, Bureau of Indian Affairs, Great Lakes Agency
Babbitt, Bruce, Secretary, Department of the Interior
Bieraugel, Nancy, resident, Hudson, WI; and Sandra Berg, resident, Hudson, WI
Duffy, John J., attorney, Steptoe and Johnson; and Thomas C. Collier, attorney, Steptoe and Johnson
Gaiashkibos, chairman, Lac Courte Oreilles Band of Lake Superior Chippewa Indians; Arlyn Ackley, Sr., chairman, Mole Lake-Sokaogon Band of Lake Superior Chippewa Indians; and George Newago, chairman, Red Cliff Band of Lake Superior Chippewa Indians
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Havenick, Fred, Southwest Florida Enterprises
O'Connor, Patrick, attorney and lobbyist, O'Connor & Hannan
Skibine, George, Director, Indian Gaming Management Staff
Letters, statements, etc., submitted for the record by:
Ackley, Arlyn, Sr., chairman, Mole Lake-Sokaogon Band of Lake Superior Chippewa Indians, prepared statement of
Anderson, Michael, Deputy Assistant Secretary, Bureau of Indian Affairs, prepared statement of
Babbitt, Bruce, Secretary, Department of the Interior, prepared statement of
Barr, Hon. Bob, a Representative in Congress from the State of Georgia:
Exhibit C–104
Exhibit 304
Exhibit 386
F.Supp. 1276
Barrett, Hon. Thomas M., a Representative in Congress from the State of Wisconsin:
Exhibits 302A–7 amd 302A–8
Letter dated February 3, 1995
Letter dated January 23, 1992
Letter dated January 26, 1998
Wisconsin State Journal article dated January 23, 1998
Bennett, Richard, chief counsel, Committee on Government Reform and Oversight:
Exhibit 297B
Exhibit 298
Exhibit 299
Exhibit 302
L 64, 214
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Exhibits 304 and 305
Exhibit 312
Exhibit 317
Exhibit 317A
Exhibit 321
Exhibit 322
Exhibit 323
Exhibit 328
Exhibit 331
Exhibit 332
Exhibit 350
Exhibit 351
Exhibit 352
Exhibits 354–1, 354–2, and 354–3
Exhibit 356
Exhibit 357
Quote from Judge Barbara Crabb
Bieraugel, Nancy, resident, Hudson, WI, prepared statement of
Burton, Hon. Dan, a Representative in Congress from the State of Indiana:
Chart concerning Judge Barbara Crabb's comments
Declarations
Exhibit 310
Exhibit 312
Exhibits 323 and 317A
Exhibit 324
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Exhibit 326A–1
Exhibits 328 and 356–45
Exhibit 334
Exhibit 337
L 381, 707, 792
Exhibit 345
Followup questions and answers
Hudson facts
Leon Panetta's responses to interrogatories
Letters between the committee and White House, and a CRS opinion
Cummings, Hon. Elijah E., a Representative in Congress from the State of Maryland, affidavits of Paula Hart and Troy M. Woodward
Duffy, John J., attorney, Steptoe and Johnson, prepared statement of
Gaiashkibos, chairman, Lac Courte Oreilles Band of Lake Superior Chippewa Indians, prepared statement of
Hartman, Thomas H., Financial Analyst, Indian Gaming Management Staff, prepared statement of
Hastert, Hon. J. Dennis, a Representative in Congress from the State of Illinois:
Exhibit C–104
Exhibit C–113
Havenick, Fred, Southwest Florida Enterprises, prepared statement of
Horn, Hon. Stephen, a Representative in Congress from the State of California:
Exhibit 314
Exhibit 363
Jaeger, Robert R., Superintendent, Bureau of Indian Affairs, Great Lakes Agency, prepared statement of
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Kanjorski, Hon. Paul E., a Representative in Congress from the State of Pennsylvania:
National Indian Gaming Commission press release
Prepared statement of
Mica, Hon. John L., a Representative in Congress from the State of Florida:
Department of the Interior document production
List of Members of Congress who supported Indian gaming legislation
O'Connor, Patrick, attorney and lobbyist, O'Connor & Hannan, prepared statement of
Shadegg, Hon. John, a Representative in Congress from the State of Arizona:
Exhibit 296A
Exhibit 305
Exhibit 311
Exhibit 311A
Exhibits 326 and 327
Skibine, George, Director, Indian Gaming Management Staff, prepared statement of
Snowbarger, Hon. Vince, a Representative in Congress from the State of Kansas, letter dated March 2, 1995
Souder, Hon. Mark E., a Representative in Congress from the State of Indiana:
Chart on access/influence on Hudson decision
Exhibit 297A
Exhibit 335
February 10, 1994, Hudson Star-Observer article
Sununu, Hon. John E., a Representative in Congress from the State of New Hampshire:
Exhibit 303
Exhibit 303A 1–24
Exhibit 316
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Exhibits 316 and 320
Exhibit 324
Exhibit 385
Towns, Hon. Edolphus, a Representative in Congress from the State of New York, prepared statement of
Waxman, Hon. Henbry A., a Representative in Congress from the State of California:
Letter dated August 18, 1992
Map of Hudson, WI
Tobacco facts
L 167, 410
Wilson, James C., senior investigative counsel, Committee on Government Reform and Oversight:
Exhibit 317
Exhibit 317A
Exhibit 335–1
Exhibit 376
Exhibit 383
THE DEPARTMENT OF THE INTERIOR'S DENIAL OF THE WISCONSIN CHIPPEWA'S CASINO APPLICATIONS
WEDNESDAY, JANUARY 21, 1998
House of Representatives,
Committee on Government Reform and Oversight,
Washington, DC.
The committee met, pursuant to notice, at 10:20 a.m., in room 2154, Rayburn House Office Building, Hon. Dan Burton (chairman of the committee) presiding.
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Present: Representatives Burton, Hastert, Morella, Cox, Mica, Davis of Virginia, Souder, Shadegg, Sununu, Pappas, Snowbarger, Waxman, Lantos, Kanjorski, Barrett, Norton, Fattah, Cummings, and Kucinich.
Staff present: Kevin Binger, staff director; Richard Bennett, chief counsel; Judith McCoy, chief clerk; Teresa Austin, assistant clerk/calendar clerk; William Moschella, deputy counsel and parliamentarian; Will Dwyer, director of communications; Ashley Williams, deputy director of communications; Dudley Hodgson, chief investigator; Barbara Comstock, chief investigative counsel; Dave Bossie, oversight coordinator; James C. Wilson, Robert Rohrbaugh, and Uttam Dhillon, senior investigative counsels; Kristi Remington and Bill Hanka, investigative counsels; Robert Dold and E. Edward Eynon, investigative attorneys; Robin Butler, office manager; Carolyn Pritts, Tom Bossert, and Barrett Davie, investigative staff assistants; Phil Schiliro, minority staff director; Phil Barnett, minority chief counsel; Kenneth Ballen, minority chief investigative counsel; Michael Raphael, David Sadkin, Michael Yang, and Michael Yeager, minority counsels; Harry Gossett and Rick Jauert, minority professional staff members; Ellen Rayner, minority chief clerk; and Jean Gosa and Andrew Su, minority staff assistants.
Mr. BURTON. The committee will come to order.
Good morning. Before I make any comments, I would like to ask my colleague, Mr. Waxman, if he is going into the wallpapering business. That is the biggest display I have seen. Perhaps in the future we could make them a little smaller, but we won't take too much issue with that. It is very colorful.
Mr. WAXMAN. Mr. Chairman, perhaps in the course of the hearing we could allow the people who have brought that exhibit to be able to present their side to us. I think it is appropriate, and I am going to make a point of that in my opening statement. We are hearing only one side of the story, and I think we ought to be able to hear all sides of the story since there is more than one involved.
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Mr. BURTON. At the proper time we will entertain your comments and statements regarding that.
Good morning. A quorum being present, the Committee on Government Reform and Oversight will come to order. Before Mr. Waxman and I deliver our opening statements, we will dispose of some procedural issues first.
I ask unanimous consent that all Members' and witness' statements be included in the record. Without objection, so ordered.
I ask unanimous consent that all exhibits, articles, and extraneous or tabular material referred to during this hearing be included in the record. And without objection, so ordered.
I ask unanimous consent that the following depositions be included in the record: Michael Anderson, Loretta Avent, Michael Chapman, Tom Corcoran, Ada Deer, Franklin Ducheneaux, Tom Hartman, Robin Jaeger, Hilda Manuel, Kevin Meisner, Patrick O'Donnell, Mike Schmidt, Tom Schneider, Heather Sibbison, George Skibine, and Jennifer O'Connor. And without objection, so ordered.
[NOTE.—The depositions of Michael Anderson, Loretta Avent, Michael Chapman, Tom Corcoran, Ada Deer, Franklin Ducheneaux, Tom Hartman, and Robin Jaeger may be found in Volume 2 of this hearing. The depositions of Hilda Manuel, Kevin Meisner, Patrick O'Donnell, Mike Schmidt, Tom Schneider, Heather Sibbison, George Skibine, and Jennifer O'Connor may be found in Volume 3 of this hearing.]
Mr. BURTON. I ask unanimous consent that Leon Panetta's responses to interrogatories be included in the record. Without objection, so ordered.
[The information referred to follows:]
INSERT OFFSET FOLIOS 56 TO 57 HERE
[The official committee record contains additional material here.]
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Mr. BURTON. I ask unanimous consent that questioning in the matter under consideration proceed under clause 2(j)(2) of House rule XI and committee rule 14 in which the chairman and ranking minority member allocate time to committee counsel as they deem appropriate for extended questioning, not to exceed 60 minutes, equally divided between the majority and minority. Without objection, so ordered.
I would like to welcome everyone to our first hearings on campaign fund-raising abuses of the new year, and I would like to wish all of my colleagues who are here today a happy new year since we weren't here in the new year, and I hope everyone had a good break.
Today, we will begin 2 weeks of hearings into alleged political interference in a decision by the Interior Department to deny a permit for an Indian gambling facility in Wisconsin. Specifically, did the prospect of DNC contributions, Democratic National Committee contributions, sway the outcome of this application?
Up until this point, our hearings have focused primarily on illegal foreign money. At the conclusion of this set of hearings, I expect to return our focus to that subject. However, the allegations that have been raised are of such importance that I believe it is essential that we review them.
While we have begun a new year, I expect that this investigation will continue to face many of the same old obstacles. Twenty-four witnesses have either fled the country or refused to return for questioning. Forty-six witnesses have taken the fifth amendment. This is a total of 70 people, some of them very close friends and appointees of the President, who have refused to cooperate with this investigation. I think that fact is just astonishing.
At the same time, the White House and the Democratic National Committee continue to drag their feet on producing documents. We requested all of the relevant documents from the White House over a year ago. They were subpoenaed last March. Yet important White House documents continue to dribble in—some just arrived last weekend.
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DNC Chairman Roy Romer recently told the press that he would no longer comply with congressional subpoenas. That is a fine example for a prominent public figure to set.
The President recently complained about all of the investigations pending against his administration. He said it was all partisan politics. But let's examine the record: President Clinton vowed in 1992, to have, quote, the most ethical administration, end quote, in history. But look at the facts: Six current or former Cabinet Secretaries have had their conduct examined under the Independent Counsel statute; four independent counsels have been appointed to investigate the Clinton administration, including the Whitewater Independent Counsel which is investigating business partners of the President and the First Lady; two former Clinton Cabinet Secretaries have been indicted by independent counsels; Independent Counsel Ken Starr has secured 14 convictions, including those of Associate Attorney General Webster Hubbell and then-sitting Governor of Arkansas, Jim Guy Tucker; Independent Counsel Smaltz, who testified before our committee a few weeks ago, has obtained 20 convictions relating to events during Secretary Espy's tenure at the Agriculture Department, and has recently indicted former Secretary Espy himself; Independent Counsel Barrett has secured an indictment against former Housing and Urban Development Secretary Henry Cisneros. Others connected with the investigation have pled guilty; and the President and Vice President underwent a preliminary investigation under the Independent Counsel Act, and the task force investigation continues to include an examination of actions by senior White House and administration officials.
This is not a ringing endorsement of what President Clinton said would be the most ethical administration in U.S. history.
We recently learned in the realm of foreign money that New York District Attorney Robert Morgenthau forwarded information to the Justice Department about a large series of contributions to the DNC in the 1992 campaign from Venezuelan sources. Again, the Justice Department took a pass. However, Mr. Morgenthau has worked with us to unseal evidence of this foreign money being funneled into the DNC coffers in 1992, and we intend to further review this matter.
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We have seen an amazing pattern of foreign money flowing into the Democratic campaign coffers from many sources: South America, Hong Kong, Thailand, Macau, Indonesia, and the Middle East. If these were a few isolated instances, one could believe that they happened without the knowledge of the Clinton administration or DNC campaign officials. But the accumulated weight of the evidence is overwhelming. It is hard to believe that so much money could have come into the DNC from so many countries without someone being aware of it.
Now, let me turn my attention to the topic of today's hearings. I am not going to recite the entire history of the events that are now the subject of a preliminary inquiry by the Justice Department. I think the basic facts are well-known. The Department of the Interior rejected an application for a casino submitted by three very poor Indian tribes in Wisconsin after a fierce lobbying campaign waged by several very wealthy tribes from Minnesota.
The wealthy tribes later turned around and contributed over $350,000 to the Democratic National Committee. Two of Secretary Babbitt's senior staff, his chief of staff and counsel, left the Interior Department and gained lucrative jobs representing the Shakopees, the wealthiest opponent of the application. Under the Ethics in Government Act, this would normally be illegal. However, there is an exception in the law that allows Federal employees to leave their Government jobs and immediately represent Native American tribes for their former agencies. Secretary Babbitt's former chief of staff, Mr. Collier, who was involved in the decisionmaking process and left the Department shortly thereafter, personally delivered either a $50,000 or $100,000 check to the DNC from his clients, the Shakopees, who benefited from the decision according to previous testimony.
One thing I would like to do today is respond to a few of the statements Secretary Babbitt has been making over the last couple of weeks. He has been on a media offensive. He has made a number of statements that don't hold water, and I want to respond to a few of them. He even has a web site now to put his own personal spin on this issue.
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Secretary Babbitt has alleged that all of the investigations, including the investigation into his activities and the Interior Department, are only partisan. This has become a familiar line for the Clinton administration officials under investigation. But let me say this: I didn't make these allegations against Secretary Babbitt. This committee did not make these allegations. Senator Thompson didn't make these allegations against the Secretary. These allegations were made by his own lifelong friend, his law partner, his former campaign manager, Mr. Paul Eckstein.
Mr. Eckstein testified that Secretary Babbitt told him that he has been instructed by Harold Ickes to make the decision on the casino that day. Mr. Eckstein said Secretary Babbitt also asked him if he knew how much money these people had raised.
Secretary Babbitt initially reacted by denying that he ever had said any of these things to Mr. Eckstein. A year later when he changed his story, he said he did make the comments about Ickes but that he was lying to his old friend to get him out of the office. Which of these stories is true and which is false? When did he tell the truth and when did he lie?
After hearing Secretary Babbitt change his story so dramatically, is it conceivable that Congress would not launch a thorough investigation into this entire matter? Would we be responsible if we did not ask Secretary Babbitt to testify?
I want to respond to another statement that Secretary Babbitt made. He told the Star Tribune and a few other newspapers that we want the facts out; the more the facts are out, the faster the better.
That has not been our experience with the Interior Department. It has taken months and months to extract the relevant documents from them. I first requested all of the documents about this casino application from the Interior Department in August of last year. We did not receive the first documents until October, 2 months later. We didn't receive the bulk of the documents, six boxes, until January, after we had begun taking depositions. This is not cooperation. This is inexcusable. We are still receiving documents bit by bit. We have received two more files of documents over the weekend, this past weekend, 5 months after we requested them.
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These are not the actions of a group of people who want to get the facts out. If Secretary Babbitt is going to tell the press that he wants to get all the facts out as fast as possible, he should check his record first. And Secretary Babbitt might consider having his staff spend less time on a spin web site and more time complying with this committee's subpoenas.
There is one more statement that the Secretary has been making that I want to comment on. Here is what he told the Minneapolis newspaper, quote: Basically you had 8 or 10 people, all of whom agreed that the application was going to be denied or did not disagree with the emerging solution—not a single one of them, end quote.
The documents seem to tell a different story. I have no doubt that when we hear from a number of Interior Department employees tomorrow, they will all say that they supported the July 14, 1995, decision. The documents, which came to us only after a subpoena had been issued, seem to tell a different story. The Interior Department had always followed one set of rules and then changed in midstream. The Interior Department turned over several lengthy, detailed reports prepared by career Interior Department staff, all of which supported the application. As late as June 1995, 1 month before the application was rejected, the Indian Gaming Management Staff wrote a 22-page memo in support of the application. It stated that, quote, the proposed acquisition would not be detrimental to the surrounding community, end quote.
The Interior Department could not produce one single memo laying out substantive reasons for rejecting the application of the three tribes. Is it any wonder that this whole matter has wound up in court? The Interior Department is supposed to serve Indian tribes. Here the tribes were left in the dark.
What emerges from the entire record of documents and depositions is disturbing. The Interior Department had a standard set of procedures that they had used whenever they reviewed an application for off-reservation gambling. They were following these procedures when Patrick O'Connor, a lobbyist for the wealthy tribes and former DNC treasurer and DNC trustee, started contacting the President, Vice President Gore, the chairman of the DNC, Don Fowler, Clinton/Gore Finance Director Terry McAuliffe and Secretary Babbitt's staff and the landscape started to change. Patrick O'Connor personally spoke with the President at an April 24, 1996, fund-raiser in Minneapolis about this matter and the President immediately asked his senior aide, Bruce Lindsey, to respond to Mr. O'Connor. Mr. Lindsey called the White House from Air Force One that very day, and despite the warnings of White House Indian Affairs aide Loretta Avent that this was a hot potato, too hot to touch, Harold Ickes called O'Connor.
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Conveniently, Mr. Ickes does not recall much of anything about the contacts in this matter. Much of what has been asked of Mr. Ickes he simply doesn't recall. Mr. O'Connor's partner and longtime friend of the President, Tom Schneider, held a fund-raiser which raised $420,000 on the night before the July 14, 1995, decision was made. Mr. Schneider does recall talking with Harold Ickes and asking him to followup on O'Connor's requests in May 1995. Mr. Schneider has previously testified that he and Ickes had a relationship such that, quote, if he said he was going to do something, he would do it, end quote.
So is it any surprise that the three applicant tribes were never given any chance to address any deficiencies in their proposal? This is required by law. Why weren't they allowed to fix any of the problems in their application? Five different reviews of this proposal by the career staff failed to find specific, quote, detriment to the surrounding community, end quote. This is a key test of the law.
The e-mails going back and forth among the staff in the summer of 1995, made it clear that under the Indian Gaming Regulatory Act, this application should not be rejected so they went hunting for another basis. Secretary Babbitt's people had made up their mind that this application was going to be rejected; they just had to come up with the right justification.
It was well-established Department of the Interior policy that opposition to gambling in the local community was not enough to reject an application. However, that is exactly the grounds on which they rejected it. They flaunted their own policies.
It is not just me saying that. There is a lawsuit pending in Federal court in Wisconsin. The losing tribes have sued the Interior Department. This is what Judge Barbara Crabb said last March: ''There is considerable evidence that suggests that improper political pressure may have influenced agency decisionmaking.'' This is a judge who was appointed by President Carter.
The Justice Department is defending the Interior Department in this lawsuit. We have received a copy of a memo written by one of the career U.S. attorneys working on the case. After reviewing the same record we have just reviewed, that lawyer raised serious concerns with how the Department followed their own procedures.
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So you have a judge appointed by a Democratic President and a lawyer in the Clinton Justice Department acknowledging that the Interior Department's actions are suspect due to possible political interference.
It is clear that there was local opposition to this casino, as there often is in these cases. You will hear my friends on the other side of the aisle say that the local Congressman, a Republican, Steve Gunderson, opposed the casino, and this is true. Sincere, committed local citizens opposed the casino, and some of them are here. An equal number of sincere, committed local citizens supported it. In a 1992 referendum in Hudson, the casino was approved by a vote of 51 1/2 percent to 48 1/2 percent. But that is not what is at issue. The Department's own guidelines state that local opposition by itself is not sufficient to justify rejecting a casino, as was expressed in other new Department records that we have received.
I am not an advocate of expanded gambling. I have frequently opposed legalized gambling. However, these hearings are not about gambling.
Tomorrow, we are going to allow one of the local opponents of the casino to testify. Probably tomorrow evening, or I think—tomorrow afternoon. However, in all honesty, this is not about whether or not there should be a casino in Hudson, WI; it is about whether Federal agencies are going to allow their decisions to be based on political influence and contributions. That is the bottom line.
I want to address one final issue before I yield to my friend, Mr. Waxman, for his opening statement. Yesterday Mr. Waxman and I received a briefing from the Justice Department on the Freeh memo to the Attorney General, which we heard about in our previous hearing. As you will recall from our final hearings of 1997, Director Freeh wrote a 22-page memo to Attorney General Reno urging her to seek an independent counsel. We have agreed not to discuss the contents of this memo, but I think that I can fairly say after having received the briefing that I believe Director Freeh was right in making his recommendation. The memo supports what we learned in last month's hearings when Director Freeh testified about his recommendation.
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The Independent Counsel statute requires specific information from a credible source that high-ranking Government officials may have violated the law. When that exists or when the Attorney General has a personal, financial, or political conflict of interest, the law calls for her to apply for an independent counsel. The briefing given to Congressman Waxman and myself yesterday confirmed that, in fact, Director Freeh's recommendation relied on these two reasons.
I now yield to my colleague for his opening statements.
Mr. WAXMAN. Thank you very much, Mr. Chairman.
As we begin a new year of hearings, it is an appropriate time to reflect on where this committee has been, where we are, and where we are going. For 2 years, our committee has focused nearly all of its attention investigating the real and imagined scandals relating to President Clinton. In 1996, the committee held a series of hearings relating to the White House Travel Office and the FBI file fiasco.
Although those hearings uncovered no illegal activity, they launched a barrage of unsubstantiated accusations; the most colorful, that the White House kept an enemies list, that it used the IRS to punish political enemies, and that the White House was a haven for hard drug users.
These were all widely reported. All were completely false. And the accusers never backed up their accusations with proof. But because of the way these things seem to work, that was never reported.
Our committee has been the leader in creating a new species of congressional oversight. The basis for an accusation is no longer limited to whether something actually happened; the new standard is that it could have happened. Then the burden shifts to the accused to disprove it.
Last year yielded a bumper crop of sensational theories and banner headlines. The White House was accused of altering its videotapes by our chairman and selling burial plots at Arlington National Cemetery for campaign contributions. Former Energy Secretary Hazel O'Leary was accused of demanding charitable contributions from Johnny Chung. Maggie Williams was accused of soliciting campaign contributions in the White House. All are completely untrue, but, again, it was a smear not the truth, that captured the headlines.
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Campaign finance violations should be investigated by Congress, and it is indisputable that both Republicans and Democrats abused the system in 1996. I think Senator Thompson's investigation clearly demonstrated that and the value of uncovering wrongdoing. But our committee has failed in every way to pursue a credible investigation. To date, Chairman Burton has issued 813 subpoenas and information requests. Only 10 have been sent to Republican targets. We have received over 1 million pages of documents; 98 percent of that total comes from Democratic sources.
The roots for this type of congressional oversight date back to the strategy devised by a fellow named Joe Gaylord, Speaker Gingrich's top advisor. He urged congressional Republicans to try to, quote, ''Indict the Clinton administration and get the Clinton administration under special prosecutor problems.''
This message was reinforced in the infamous Ginni Thomas memo. The 1996 directive instructed all Republican committee chairmen to focus their attention on any ethical lapses in the Clinton administration so that the Republican leadership could determine an agenda.
Which brings us to today. The first question is, why a hearing today, during a recess and days before the President's State of the Union address? The explanation is hard to miss. On December 18, 1997, a front page story in Roll Call, a newspaper here on Capitol Hill, was entitled, ''Burton Slates Pre-State of the Union Hearings to Tweak Clinton.''
This newspaper, under that headline, reported the following:
House Government Reform and Oversight Chairman Dan Burton's campaign finance hearings will resume on January 20, 1998—just in time to embarrass President Clinton on the eve of his State of the Union address.
Now, as the chairman is fond of saying, that isn't me saying that.
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Two Republican committee sources said the timing of the next round of hearings . . . was meant to turn up the heat on the President before his January 27th speech.
''Obviously this is a political strategy,'' said one GOP committee aide. ''We won't let Clinton stand up and say all is sunny when he has done everything he can to block this investigation.''
In other words, this hearing isn't a search for truth, it is part of a deliberate strategy to score partisan points.
Now, along those lines, the chairman attacked Secretary Babbitt for talking to the press and even having a web site. Well, the chairman has been speaking to the press for over a year, and he has a web site. The chairman attacked Mr. Ickes, but he didn't even bother to invite Mr. Ickes to come and testify or to give a deposition or to tell his side of the story. Evidently it is easy to attack people when they are not around. You would like your target to be defenseless, so he objects when they put up a defense.
In an effort to make sure that the hearings had balance, I asked the chairman to invite eight witnesses. I included George Skibine and Mike Anderson, both from the Interior Department, because it seemed obvious that they were, indeed in any hearing on this matter—they were instrumental in the Hudson Casino decision and are essential to understanding what happened. And I applaud the chairman for including them. Unfortunately, the chairman did not grant my request to include Hilda Manuel, who is the Bureau of Indian Affairs Deputy Commissioner and the most senior career employee involved in this issue.
I also requested Wisconsin's Governor Tommy Thompson, former Representative Steve Gunderson, State representative Sheila Hars-dorf and County Board Supervisor Nancy Bieraugel. They are all Republicans and locally elected officials who oppose the casino and would be invaluable in providing a complete picture to our committee on this matter.
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Although Chairman Burton initially refused my request, yesterday he belatedly invited Supervisor Bieraugel to testify, but he insisted that she appear at the end of tomorrow's hearing. That makes no sense. She is here today. She should testify with the witnesses today to give some balance, and the other four Government officials should also appear.
The chairman opened this hearing by commenting on an exhibit on the wall. I didn't bring that exhibit. Citizens from Hudson, WI, brought that exhibit, and they are here today because they want to tell their side of the story. But they haven't been permitted to testify, and their one representative is being put on at the end of tomorrow when maybe the press won't be paying so much attention, and it further inconveniences her because she has to be back home by tomorrow night.
Well, the chairman and his staff seem to have their own rule of political correctness. Today they want to tell a story. Their story is that three Indian tribes, today's first panel, were victims in the casino decision and were abused by the White House and Democratic party politics. Because this is a story and not fact, any information that contradicts this theory isn't permitted, so we can't hear from Governor Thompson who could explain why he opposed the casino, or former Representative Gunderson who led the congressional fight against the casino, because what they have to say doesn't fit in with the story.
If Congressman Gunderson testified, it would be immediately apparent that his views were thoughtful, reasonable, and compelling. Because he represented Hudson in Congress, he has a deep knowledge of this controversy. His motives are unquestioned, and he reached exactly the same conclusion as the Interior Department. If he testified, it would be nearly impossible for the chairman to impugn the administration.
The chairman subjects potential witnesses to a very clear litmus test: If your information helps the theory of the day, you are in. If it hurts, you are out.
If Representative Gunderson or the others testified, we would learn that the story of the Hudson Casino does not begin with our first witnesses, and this isn't a case of impoverished, naive Indian tribes versus wealthy, politically sophisticated Indian tribes. If they testified, we would learn that this is all a fiction and that this fiction can only be sustained by ignoring the record.
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We would learn that the real beginning of the story isn't with the tribes, but with a man by the name of Fred Havenick and an organization called Southwest Florida Enterprises. Fred Havenick and Southwest Florida Enterprises are the engine behind the story. It was Mr. Havenick's company that surmounted local opposition and successfully pushed through new zoning rules so that his dog track could be located in Hudson, WI. And when that dog track lost money, as everyone seemed to know it would, it was Mr. Havenick who conceived of the idea of a Las Vegas style casino right there on the premises, but because that wasn't permitted under Wisconsin law, he had to find a loophole, so he began shopping around for an Indian tribe. The tribe was essential because if it acted as a front, he could exploit a Federal exception that permits Indian gaming. That loophole would allow Southwest Florida Enterprises to circumvent the local opposition and the State law prohibiting casinos. So much for the Republican idea that local people ought to make these decisions.
We would have heard that view articulated by some very prominent Republicans like the Governor of the State and the former Representative of the area, Congressman Gunderson.
Now when local opposition intensified and Mr. Havenick found this first tribe to front for him, that tribe backed out, so he went shopping again, and on this trip he found three tribes that comprise our first panel.
When all the facts are in, I believe we will see that the decision in this matter was made by career Department of the Interior officials on the merits and without political interference.
In other hearings I have been critical of the easy access Johnny Chung enjoyed and for the White House's long delay in getting us the fund-raising videotapes. I will be critical when it's appropriate, even of this White House and this President. But the record in this case doesn't justify criticizing the White House or the Interior Department. We have taken the depositions of numerous Interior employees, including the career employees most involved in the decision, and none indicated any political interference or improper conduct.
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I sympathize with the casino tribes and their economic plight. They and Mr. Havenick have raised a legitimate question as to whether every procedural step was executed properly, and, in fact, they are suing the Interior Department on exactly this basis. And I don't claim to be an expert in this area, but my reading of the record indicates that there could be some deficiencies. Whether those are major problems or insignificant technicalities is for the courts, not the Congress, to decide.
But that is an entirely different issue, however, than political corruption, which is the focus of this hearing. And I have seen nothing in the record that provides any support for believing that campaign contributions determined the Hudson casino decision.
The tale of the Hudson casino is rich with two of Washington's most enduring traditions. We have lobbyists taking credit for the morning sun, and a decisionmaker who doesn't want to be blamed when he says no to a friend. But the entire Capitol would have to shut down if that starts qualifying as criminal behavior.
Mr. Chairman, at the conclusion of my statement, I am going to make two motions. The first is a motion to call Governor Thompson, Congressman Gunderson, State Representative Harsdorf and Hilda Manuel as witnesses. These hearings have little credibility if they are not included.
Second, for over 6 months, I have requested that you investigate the $50 billion tax breaks Speaker Gingrich and Senate Majority Leader Lott sponsored for the tobacco industry in last year's budget bill. As you know from my letters, Haley Barbour, the former chairman of the Republican National Committee, lobbied this issue for the industry, and the cigarette companies were the No. 1 contributors to the Republican party.
When you rejected this request in the past, your rationale was that no foreign money was involved in that scandal, and you were focusing our hearings on foreign money. But the fact is, Mr. Chairman, there is no foreign money involved in the Hudson casino issue. Your rationale for this hearing is that corruption, the selling of public policy for campaign contributions, took place.
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I believe that that same rationale should lead us to get the facts about the tobacco industry, its contributions to the Republicans, and the subsequent action to sneak in a $50 billion tax break for the tobacco industry by two Republican leaders in a budget bill when no one ever knew what they were doing.
The $50 billion giveaway to the tobacco industry is indistinguishable from today's hearing. In fact, the only difference in the matter is the industry's contributions and the benefit they received dwarf today's subject. Accordingly I will have a motion to subpoena information from the Republican National Committee, RJR Tobacco, the Philip Morris Co., Haley Barbour, Speaker Gingrich and Majority Leader Lott regarding that matter.
Mr. Chairman, you closed your comments by reporting about a confidential briefing that both of us received regarding the memo that FBI Director Freeh had submitted to the Attorney General. I was at that briefing yesterday, and that briefing was about a memo that involves Mr. Freeh's interpretation of the law. His interpretation of the law was different than other people in the Justice Department's interpretation, and his interpretation was not the one accepted by the Attorney General, Janet Reno.
What we have is a difference of opinion on the law. I heard nothing other than the fact that the FBI Director thought that, based on his reading of the law, there should have been an independent investigator. That was his reading, and as the Attorney General testified and has said to the press on several occasions, she listened to his views, but it was her decision, and she made her decision on what she thought the law specified.
Mr. Chairman, I have before us a motion that I have indicated to you, and I would like to move at this time that the committee subpoena or at least invite Governor Thompson, former Representative Gunderson, State Representative Harsdorf and Hilda Manuel as witnesses so that we can have a complete picture in the 4 days in which you are going to hold hearings on this issue from those who have something to say that I think is very important.
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And I offer a second motion that we subpoena information from the Republican National Committee, RJR Tobacco, the Philip Morris Co., Haley Barbour, Speaker Gingrich and Majority Leader Lott with respect to the $50 billion giveaway to the tobacco industry that they all promoted, and I ask for consideration of these motions.
Mr. BURTON. I have been informed by our counsel, Mr. Waxman, that the only subpoenas or requests that can be made are those that are relevant to the hearings that are currently under way. So the latter motion would be out of order.
Mr. WAXMAN. Mr. Chairman, on that point, I accept your ruling on it. I do want to, however, publicly call upon you to issue those subpoenas and to follow that inquiry, which I think is as important as anything this committee has pursued.
Mr. BURTON. The Chair will take that under advisement.
Now, Mr. Waxman, you have the right under clause 2(k)(6) of House rule XI to propose subpoenas of additional witnesses. Under House rules the committee must dispose of those requests. The committee will receive the requests completing the names of the proposed witnesses and the dates for their appearance. I will, before this hearing—which spans 4 days—schedule a vote for those requests consistent with the rules. I don't think we will do that right now. We will do it later on.
Mr. WAXMAN. Mr. Chairman, I want to point out that I think it is important that we have these witnesses, and I also want to point out with regard to the tobacco issue, I am going to press that issue every time we hold a hearing until we get that issue brought before us. It is an important one. It is relevant to campaign finance abuses, and I don't think that it ought to be swept under the rug if this committee's investigation is to have any credibility as being a fair inquiry into campaign finance matters.
Mr. LANTOS. Parliamentary inquiry.
Mr. BURTON. The gentleman will state it.
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Mr. LANTOS. Mr. Chairman, I want to be sure I understand your ruling. Mr. Waxman moved to invite Governor Thompson, former colleague Congressman Steve Gunderson, and two other individuals. You indicated that you will put this motion to the committee before the conclusion of the 4 days of hearings that are scheduled on this matter.
Now, it is self-evident that unless you do so at this stage, it is very unlikely that these four individuals could testify before the committee, assuming that the motion passes. So I would like to inquire at what point you intend to put the motion to the committee?
Mr. BURTON. Mr. Lantos, the Chair retains the right of recognition under the rules. The request made by Mr. Waxman is not privileged. Issues regarding recognition are not applicable. That has been the rule of the House since 1881. We will, as I said, vote on this issue at the proper time, and in the opinion of the Chair, this is not the time to do that.
Mr. LANTOS. Mr. Chairman.
Mr. BURTON. The gentleman has a point of order he would like to make?
Mr. LANTOS. I do have a parliamentary inquiry.
Mr. BURTON. The gentleman will state it.
Mr. LANTOS. The ranking member of this committee put a motion proposing to invite four public officials, including the Republican Governor of the State in question, and the former Republican colleague in whose district this gambling casino is, to testify. You have indicated that you will not now put the motion to the committee.
My question, respectfully, is at what point do you intend to do so? This is a democratic body. I am asking a proper question in a proper fashion. And I think it is your responsibility as the chairman of this committee to give a respectful and meaningful answer.
Mr. BURTON. I thought I did. And the answer is that we will vote on this motion, but we will not vote on this motion at the present time.
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Mr. LANTOS. But, continuing my parliamentary inquiry, Mr. Chairman, as I understand it, you have scheduled hearings on this matter today and tomorrow and next week on Wednesday and Thursday. May I inquire on which of those 4 days you intend to have this motion voted on?
Mr. BURTON. I am not going to give a definite time right now. All I will tell you is that we will vote on this motion after all members of the committee have been informed. We don't have all the Members here right now. I want to make sure that everybody is apprised of the motions and the ramifications of these motions. And so the Chair reserves its right to have the vote at a proper time, and this is not the proper time.
Mr. BARRETT. Mr. Chairman, I have a parliamentary inquiry. Parliamentary inquiry, Mr. Chairman?
Mr. WAXMAN. Mr. Chairman, may I be recognized on this point?
Mr. BURTON. Well, does the gentleman have a parliamentary inquiry?
Mr. WAXMAN. I would like to see if we can resolve this issue amicably, and I would like to be recognized in that attempt.
Mr. BURTON. The gentleman will state his position.
Mr. WAXMAN. It would be a joke if we waited to the fourth day of our hearings before you brought this motion up, because then it is going to be too late to ever include them in the hearing. If you are trying to make sure that the Members have a chance to understand the matter, and you get more Republican Members so you can outvote us, I respect that.
Now, you at least ought to put this to a vote today, and if you will agree to do that, then I will understand and not push the matter to be considered at this moment, respecting the chairman's desire. Can we have that understanding?
Mr. COX. Mr. Chairman. Mr. Chairman.
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Mr. BURTON. Does the gentleman have an inquiry he would like to make?
Mr. COX. Yes. I understand that the courtesy was extended to the ranking member to address briefly the wisdom of conducting a vote at the present time, and I wish just to make a brief point in the same vein.
Mr. BURTON. The gentleman will state his point.
Mr. COX. There are a group of people, I take it, from Wisconsin who have joined us today who oppose the dog track and the gambling operations in Wisconsin. I checked with friends and relatives of my own who live in the area, and they opposed the track as well. I take it that if I were making the decision with a view to vindicating the interests of the community that I represented, I might have gone the same way. I might have said no dog track. But if we turn this hearing into a relitigation of the wisdom of a dog track in Hudson, WI, I think, frankly, we are getting very far afield from the purpose of our committee as well as the specific purpose of this investigation, and, therefore, I think today we should not take advantage of the presence of our witnesses on the first panel who represent one of the competing interests in that decision because we are not here to ask them about the wisdom of putting a dog track in Hudson, WI.
If we have the other side come up and tell us that there should not be a dog track in Hudson, WI, then we have reduced this committee to the level of the career bureaucrats in Interior who are supposed to have made this decision in the first place. The only purpose for conducting this hearing, as I understand it, is to determine whether or not the third of a million dollars in money that flowed from one of the interests in this was on the level; whether or not the Secretary of the Interior lied to the Senate of the United States; whether or not the President of the United States, Bruce Lindsey, Harold Ickes and the chairman of the Democratic National Committee were somehow involved in a dog track.
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When I worked in the White House in the counsel's office, I can tell you we didn't do dog tracks, so there is a way for us to investigate this that doesn't get us into the merits, and I think we make a serious mistake in the conduct of this inquiry if we bring on witnesses who are going to testify to the merits of the decision whether to have a dog track in Hudson, WI.
Mr. WAXMAN. Will the gentleman yield to me?
Mr. BARRETT. Parliamentary inquiry, Mr. Chairman.
Mr. BURTON. Just 1 second. We will vote, Mr. Waxman, we will vote today or tomorrow on your motion regarding the subpoenas so that if your motion prevails, there will be time enough for those additional witnesses to testify. So we will do that in a timely fashion.
Regarding the people from Hudson who are here, I was advised by my counsel that we didn't know they were coming and that he met with them for over an hour, and discussed this issue with them.
Because we already had our panel set, we didn't want to muddy the waters, so to speak, by bringing these additional panelists before us. However, let me just say this: I said that we would bring—I believe the lady's name is Nancy Bieraugel. We would allow her to testify at the conclusion of the hearings tomorrow. But in order to accommodate the people from Hudson, we will allow her to testify at the conclusion of the hearings today so you can catch your plane if you need to go back. Now, I think that is being about as fair as we can be, because we didn't know they were coming.
I understand their opposition, but I want to state once more that this series of hearings is not about whether or not gambling should be allowed, whether or not there should be a casino in Hudson, whether or not there should be a dog track in Hudson. I personally opposed legalized gambling when I was a State legislator in Indiana, and I still have that same feeling. These hearings are not about that. They are about whether or not political influence or campaign contributions altered the decisionmaking process. That is what it is about. But in deference to the folks from Hudson who have come here this long way, we will allow them to have Ms. Bieraugel testify later on this afternoon.
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Mr. WAXMAN. Mr. Chairman, if you would yield to me just on your time?
Mr. BURTON. I will yield to you.
Mr. WAXMAN. I want to express my appreciation to you. I think this is a fair resolution of the matter. I do want to point out that we wrote to you over a week ago asking that these people be invited to give their point of view. The witnesses we have today have no knowledge about what went on in Department of the Interior. They have strong feelings that they should have had the decision go their way. Now we will hear from people who have strong feelings that it should have gone the other way.
You can't divorce the decision by Interior with the merits, both pro and con, because they had to make a decision on this very issue. That is what goes on all the time. So I disagree with Mr. Cox, and I agree with the chairman that we ought to have both sides presented to us on the question of whether there should have been a casino right there in Hudson, WI, and whether the local people's wishes should have been ignored.
So I thank you for that resolution. I think it is a fair one. I look forward to having the vote. I hope we can get it today, but if you want to put it off until tomorrow, as long as we have a chance in the course of our hearings to have these other witnesses included. I would hope the Members would support our motion at the time the vote is put to them, so that we can get even a more complete hearing on the matter. Thank you.
Mr. BURTON. Our first panel today is individuals from the affected tribes. We have Chairman Gaiashkibos, with us; Chairman Arlyn Ackley, Sr.; and George Newago. Would you gentlemen please rise and raise your right hands?
[Witnesses sworn.]
Mr. BURTON. On behalf of the committee, we want to welcome you here today. You are recognized to make opening statements. If you have longer statements than 5 minutes, would you please submit those for the record.
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We will start with you, Chairman Gaiashkibos.
STATEMENTS OF GAIASHKIBOS, CHAIRMAN, LAC COURTE OREILLES BAND OF LAKE SUPERIOR CHIPPEWA INDIANS; ARLYN ACKLEY, SR., CHAIRMAN, MOLE LAKE-SOKAOGON BAND OF LAKE SUPERIOR CHIPPEWA INDIANS; AND GEORGE NEWAGO, CHAIRMAN, RED CLIFF BAND OF LAKE SUPERIOR CHIPPEWA INDIANS
Chairman GAIASHKIBOS. Chairman Burton, Congressman Waxman, distinguished congressional committee members, ladies and gentlemen, my name is Gaiashkibos. I am chair of the Lac Courte Oreilles Band of the Lake Superior Chippewa Indians. Lac Courte Oreilles is located in rural northern Wisconsin. We have a membership of 5,250 enrolled tribal members. Over half live off the reservation, largely because of lack of employment opportunities. Following the treaties of 1837, 1842, and 1854, we were left with a reservation land base of 79,000 acres. Now most of that is lost, with land ownership within our reservation being checkerboarded.
I have been privileged to serve my tribe as chairman of our tribal governing board during 8 terms of office preceding my current term.
I served two terms of office during the years of 1991 and 1995 as the elected president of the National Congress of American Indians, the Nation's largest intertribal organization. NCAI counts as its members most of the Native American nations within the United States and Alaska. In that capacity I played an ongoing role in the development of national tribal gaming policy, and became quite familiar with the applicable policies and procedures.
I want to see this work for all tribes. Improvement of economic conditions with tools for self-development is the principle behind the Indian Gaming Regulatory Act, or IGRA. I want to see the benefits of IGRA principles achievable by our tribe and the two small tribes, also of the Chippewa or Ojibwa Nation, we have allied ourselves with as to the development of the proposed Hudson project. I have learned, however, that politics is not only the development of sound policies, but diligence in seeing that they are not abused.
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Four Feathers was formed in 1993 in order to acquire a dog track facility near Hudson, WI, and convert the facility to tribal economic development featuring a casino. Three of the Four Feathers partners are Indian tribes, Mole Lake-Sokaogon, Lac Courte Oreilles, and Red Cliff Bands of the Lake Superior Chippewa Indians of Wisconsin. The fourth partner is the current owner of the dog track, Croixland Properties, which would transfer the facility, along with surrounding real property, to the tribes and further provide initial capital financing to the partnership.
Lac Courte Oreilles was the first of 11 Wisconsin tribes to sign a Class III Gaming Compact with the State of Wisconsin under the Indian Gaming and Regulatory Act of 1988. Immediately after signing and resulting approval of the Gaming Compact between Lac Courte Oreilles and the State of Wisconsin in 1991, we conformed our modest casino within our small community to Compact terms, and commenced the search for a suitable second location site to conduct a Class III gaming casino outside of the exterior boundaries of the reservation. Lac Courte Oreilles was diligent to include language in the Compact that addressed the need for an additional site to meet the financial needs of the tribe.
Page 3 of the Gaming Compact with the State of Wisconsin, section 3, defines ''tribal lands'' as ''All lands within the State of Wisconsin which may be acquired in trust by the United States for the benefit of the Lac Courte Oreilles Band of Lake Superior Chippewa Indians after October 17, 1988, over which the Tribe exercises governmental power, and which meet the requirements of section 20, of the Act, 25 United States Code section 2719.''
Lac Courte Oreilles is located in rural northern Wisconsin. The entire region is economically depressed. Duluth/Superior is located approximately 100 miles northwest of Lac Courte Oreilles. St. Paul is approximately 150 miles southwest of Lac Courte Oreilles. The major industry in Sawyer County and the areas surrounding Lac Courte Oreilles are logging and tourism.
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Lac Courte Oreilles is not adjacent to any large metropolitan area. Much of the available work is seasonal. Lac Courte Oreilles' unemployment rate fluctuates from 45 percent in the summer months to over 65 percent in the winter months. Employment for our tribal members and economic development for Lac Courte Oreilles is a high priority for our tribe. With the decrease in Federal and State grant dollars, the tribe must become more self-sufficient in order to meet the needs of its members.
There are approximately 2,025 tribal members that have relocated, primarily to seek employment and develop a better standard of living, and now reside elsewhere. This migration appears to have accelerated in light of the strict welfare rules and reforms that are in place in Wisconsin. Lac Courte Oreilles, due to decades of Federal cutbacks, has had to do more with less to develop a growing tribal economy.
Currently Lac Courte Oreilles has a real shortage of safe, decent housing. Homelessness, with three or more single adults living together in order to make ends meet, is common practice in our reservation communities. There is no housing for single adults. The waiting list for tribal members desiring 1 to 3 bedroom homes is well over 100 families. It is estimated a cost over $5 million is needed to provide decent housing for our members.
Education is a top priority for our tribe. Children of the Lac Courte Oreilles attend either the Hayward public school system or the Lac Courte Oreilles Ojibwa K through 12 school system. Over 450 students or 23 percent of Lac Courte Oreilles youth attend the public schools. The LOC school has a student population of 306 students. In 1995, the BIA condemned the portable elementary classrooms necessitated because of outdated facilities. Yet it did not provide adequate funds to construct a new elementary K–6 facility; $2 million was provided and construction was started in 1997. However the building sits vacant with no funds to complete the project.
Mr. BURTON. We want to stick as close to the 5 minute rule as possible. We will try to give you some additional time from our side when we get into the questions and answers, so we will get back to you to finish your statement in just a moment.
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Chairman GAIASHKIBOS. Thank you, Mr. Chairman.
[The prepared statement of Chairman Gaiashkibos follows:]
INSERT OFFSET FOLIOS 1 TO 7 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. Good morning, Mr. Chairman and members of the committee. My name is Arlyn Ackley. I am tribal chairman for the Sokaogon Chippewa tribe in Mole Lake, WI.
I was debating here this morning whether I should read my statement or not. In previous testimony in other committees and of the House Appropriations, I have submitted my comments to the committee and they accepted them for the record. I would like to do that also here this morning, if I may, Mr. Chairman.
Mr. BURTON. Without objection. You may speak extemporaneously if you like.
Chairman ACKLEY. Thank you very much, sir.
I was listening to the debate here this morning. It strikes me sometimes as a tribal leader, with the partisan politics I have seen over the years, that as a native person we have to deal with whoever's party is in power, so we do not have the privilege at times to look at what we can or cannot do, and what is happening with the acts of Congress. We try to implement in good faith the rules and regulations that are handed down through the different agencies. We try to comply with all the different Federal laws that are out there and spelled out for us.
When we got involved as a tribal community to look at the Hudson proposal that was presented to the governing body by Mr. Havenick, and the surrounding tribes, I personally contacted the other tribal leaders and asked if there was going to be any objection to my tribe participating in the acquisition of this dog track for the benefit of our tribal members, so we could have some kind of economic relief.
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In my statement that I submitted, I noted that our tribe has grown by leaps and bounds. We have a huge population of youth growing there. We do not have adequate funds to fill all the basic needs that our tribal community needs, since it is growing that way. Several times I have come in the last few years and asked for governmental support for a continuation of our housing program and needs that we have to meet those basic needs of our tribal membership on the reservation.
A lot of our tribal members on all reservations have returned back from the bigger cities after the relocation act failed, and people come back demanding jobs and different services from our tribal governing bodies. We just cannot meet those kinds of needs without adequate support from Congress, and the support of the treaties that our governments have signed over the years. We need all the help that we can get.
Gaming was going to be an avenue that Congress had supplied for us to look into being self-sufficient. Unfortunately for our tribes in the northern part of Wisconsin, that reality has not come there yet. We have substantial unemployment from the previous years where we have been depressed, and we need a lot of work and a lot of help.
I am listening to you gentlemen's debate, and I appreciate your concern. Over the years we have come to rely on Congress quite a bit. Hopefully the questions and answers that go on in this hearing today will give you some light as to what happened to us in our application for this Hudson project. I don't know if I can be of any assistance to either party, but I feel somehow that by participating here, and with your committee staff members having come to us in Wisconsin on what happened to us, I wanted to cooperate fully.
I was a little shocked and disturbed when my attorney called me at home Friday and told me I was going to get subpoenaed to come here. As a tribal member, any time Congress would call me as a tribal leader I would come willingly, openly, without being subpoenaed. So it kind of frightens me, that I have to look at the resources I have. I have to have an attorney representing me because I don't know exactly what will happen to me by appearing here in front of a committee.
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So I would like to express my concerns that way, and hope you understand what I am saying. As a tribal leader, any time any one of you gentlemen want to ask me a question, I will be happy to openly and honestly talk with you. I believe as a true government-to-government relationship, I believe we need to do that. So I am here today to cooperate in any way I can with both parties, to see if I can help you understand what happened with us.
I understand that there are people here from Hudson who oppose the expansion of what they consider gaming in their respective communities. We have not addressed all those concerns, but we have met with the elected leadership there in the city. When we talked with them, we understood we could proceed. So we are trying to cooperate every way we can.
I have watched this application go from the agency area here to Washington, DC central, to come to know that we got rejected, for whatever reason. I think it is all within these documents here. But I have never, as a tribal leader, seen the central office overrule the area director after they thoroughly investigated the application.
Denise Homer, the area director at the time in Minneapolis, came and visited my reservation personally. She and the area superintendent toured my facilities. They said that they would consider the application process. They looked at what we needed financially and they said they would try to give a favorable recommendation. They did that. They were the people there with the hands-on experience in the local area. The people from Washington, DC, after we were rejected, some of the people finally came to our area to look and see what Hudson was all about. The economic benefits from the Indian Gaming Regulatory Act would have helped our people.
With that, Mr. Chairman, I appreciate your time this morning, and if there is anything I can do for you, just feel free.
[The prepared statement of Chairman Ackley follows:]
INSERT OFFSET FOLIOS 8 TO 14 HERE
[The official committee record contains additional material here.]
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Mr. BURTON. We will get to the questioning in a moment. Just let me say, Chairman Ackley, that you or any of the panels have nothing to fear as long as you are truthful with us. The reason we sent the subpoena is to make sure that the panelists did appear. You were not being selected. You have nothing to fear.
Chairman ACKLEY. I understand, sir.
Mr. BURTON. Chairman Newago.
Chairman NEWAGO. Yes. Good morning. I came to this committee with a lot of the concerns, and not truly understanding what anybody would like to hear, but I am here to talk about the truth that I know and the involvement that I have had.
Congressman Waxman talked about where this all began in this process, and that it began with Mr. Havenick in Miami, FL. I don't believe that that is the case. This whole issue began when people from this Congress or a part of this Congress voted and passed this law, and the Senate voted on and passed this law, and provided Indian tribes the opportunity to step out beyond their reservation boundaries and put land in the trust for the purpose of gaming. I believe even the Supreme Court ruled on that particular issue. That is where this began.
I think that we viewed this as an opportunity that Congress had provided to us, and we took it upon ourselves to see the possibilities of economic prosperity that other tribes had experienced in the State of Wisconsin and other places that you all have the opportunity to see quite regularly.
I am the chairman of one of the poorest tribes, if not the poorest tribe in the State of Wisconsin. I don't have the opportunity to fly to Washington, DC, to shake your hand or your aide's hand or anybody in your office. I don't have that luxury. I don't have that opportunity. But this process began a long time ago, when you provided that opportunity.
And I want to mention that it is my understanding that it is a trust responsibility, that this Government has to native people, one of which I am. The agencies that work on behalf of whatever administration is in power have that responsibility to me as a native person. And they are required to look out for the best interests of me, at times.
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It is kind of humorous, as I was talking to these gentlemen this morning, that I have 15,000 acres of land on the reservation. I have to get permission from the Bureau of Indian Affairs to cut trees down on my land. That is the responsibility of the Bureau of Indian Affairs, that the Bureau of Indian Affairs has for me.
And we went through this process. We took the steps that this agency laid out and that Congress laid out. We followed the steps, we followed the rules. In fact, we were planning to open a casino in Hudson, WI. We were led to believe that our application was sound and it was good, and that we were going to enjoy some of the benefits of gaming.
I sit in my office day after day and I have tribal members that come into my office. They ask me for my assistance. A lot of times they—a lot of people think, because we have a casino, we are making multimillions of dollars. I will guarantee the Members that the Red Cliff Tribe is not making millions of dollars. We employ 100 people. That is what our casino does.
But I have these people come in with genuine concerns, medical issues that they want to get addressed and need help with. As a matter of fact, I had my cousin come in to me. He said, ''George, I need some help. My little girl needs to get corrective surgery on her legs. Can you help me out and give me some money so I can go with her?'' I said, ''Gee, I can't do that. But I will tell you what I can do, I can offer you a volunteer bingo. You can have a volunteer bingo.'' We did that, and he got his family together and they had a little bingo, and they raised themselves a couple hundred dollars so he could go with his daughter and be by her when she had this operation.
My health needs are not being met through this trust responsibility that this Government has for me. Our contract through HHS over-expended $277,000. I have no way of getting it. When I go up to the region and talk to the people up there to help me out, they are not providing me any of the assistance. This was an opportunity that you gave to me so I could access some of the revenue of gaming. I was hoping I was going to partake in that.
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The other comment I want to make is that there are thousands and thousands of pages of documents, and anybody can extract one sentence out of these thousands of pages and make it say what they want it to say. But when we look at this packet—and I hope that everybody truly does look at it in its entirety to find out whether or not there is truly, truth being given here, because we as citizens a lot of times put everybody up on this moral plateau and think that they should do no wrong. There is some wrong that is being done.
I come here, being engulfed in this whole process. I am so removed from my element right now that it is a bit frightening. I get a bit shaky. But I am here to cooperate in any manner that I can, and I appreciate it.
Mr. BURTON. Thank you for your statement.
We will now go to the questioning. I will recognize my chief counsel, Mr. Bennett, for 30 minutes.
Mr. BENNETT. Thank you, Mr. Chairman.
Chairman Gaiashkibos, Chairman Ackley, and Chairman Newago, to the extent that you want to make additional statements, I will certainly yield a portion of my time to allow you to do it, Chairman Gaiashkibos, in a few minutes, if we can.
I think it is fair to state, in terms of Chairman Newago's comments and the statements that you all have submitted, that clearly the issues of unemployment and alcoholism and drug abuse have been rampant in your communities. Is that correct, essentially, for all three of you?
Chairman GAIASHKIBOS. Yes, that's correct.
Mr. BENNETT. Chairman Ackley, in terms of our obligation as chief counsel for the committee to make sure there is full disclosure of all members, you, sir, at one point in time had your own problem with alcohol or substance abuse, is that correct?
Chairman ACKLEY. Yes, sir, that's correct.
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Mr. BENNETT. In fact, in 1989 you sold two ounces of cocaine to an undercover agent. Is that correct, sir?
Chairman ACKLEY. Yes, sir. I am a recovering alcoholic and a drug addict.
Mr. BENNETT. I don't say that to embarrass you in any way at all, but just in terms of obligation to all Members of this committee to understand the background of all witnesses who appear before it.
Chairman Newago, sir, I would also note that because you all are under subpoena, this committee pays for your travel expenses, so we have been able to assume your costs for coming here today. That is one of the reasons that we wanted to make sure that you were under subpoena. All three of you are present with your attorneys. If at any point in time you feel you have the need to refer to your counsel, please let me know.
Let me again, Chairman Gaiashkibos, before we get into a more detailed statement by you of some of the other points you wanted to raise, let me ask, have any of you gentlemen ever been politically active?
Chairman GAIASHKIBOS. Yes, counsel. I have been politically active in the State party system and also the national party.
Mr. BENNETT. In fact, you at one time were the Republican candidate for the Wisconsin State Senate; is that correct?
Chairman GAIASHKIBOS. Yes, that's correct.
Mr. BENNETT. You still are a registered Republican.
Chairman GAIASHKIBOS. No, I am not. I got so disillusioned with both parties, with the exception of one Independent Member that serves on this committee, I am currently an Independent, a fence-sitter.
Mr. BENNETT. Chairman Newago, you in fact are a Democrat, is that correct?
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Chairman NEWAGO. That's correct.
Mr. BENNETT. Chairman Ackley, what is your political affiliation, sir?
Chairman ACKLEY. It is hard enough to be politically active on the Mole Lake Indian reservation at this time, but before my conviction I was a practicing Democrat.
Mr. BENNETT. With respect to the undertakings as to seeking to have casino gambling in conjunction with the dog track already at Hudson, WI, what studies were initially conducted, both in Ashland, WI, and also by the Minneapolis, MN, offices, with respect to any impact on the community? And all three of you can feel free to speak.
Chairman Gaiashkibos, let me start with you, sir. What studies were conducted?
Chairman GAIASHKIBOS. The partnership looked at doing the very best we could, because this was going to set a standard. This would be the first ever. We wanted to do a thorough job, so we employed the services of an economist, Dr. Murray, and also an Arthur Andersen study. I would hope that the committee has that so they could refer to that.
Mr. BENNETT. Had any of you ever dealt with any of the people within the Department of the Interior who ultimately came to be involved in this entire process, specifically with respect to Mr. Michael Anderson, who ultimately signed the rejection letter on July 14, 1995? We will go through the chronology in a minute.
Chairman Newago, had you ever had contact with Mr. Anderson before?
Chairman NEWAGO. No.
Mr. BENNETT. Did you know Mr. Anderson?
Chairman NEWAGO. No.
Mr. BENNETT. Chairman Ackley, did you know Mr. Anderson?
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Chairman ACKLEY. I didn't personally know him. I was aware of his position as a member of the National Congress for American Indians. Our tribe has been a member in good standing for a number of years.
Mr. BENNETT. Chairman Gaiashkibos, did you know Mr. Anderson?
Chairman GAIASHKIBOS. Yes, counsel. Michael Anderson——
Mr. BENNETT. I am referring to the Department of the Interior individual appointed to a political position by the President, who ultimately signed the rejection letter on July 14, 1997.
With respect to that individual, what interaction did you have with him in previous years, sir? Chairman Gaiashkibos.
Chairman GAIASHKIBOS. Michael Anderson, when I was president of the National Congress of American Indians from 1991 to 1995, Michael Anderson was employed and worked directly under my leadership here in Washington, DC, in an office housed by the National Congress. He was employed as the executive director from March 1992 through May 1993, when he accepted a solicitor's position within the Bureau of Indian Affairs.
Mr. BENNETT. With the Clinton administration?
Chairman GAIASHKIBOS. That's correct.
Mr. BENNETT. Would you define Mr. Anderson as having been a friend of yours?
Chairman GAIASHKIBOS. An associate. I worked professionally with Mr. Anderson, and he headed up our office here, and he worked very diligently on many issues. Probably—I think the only major contention I had with Mr. Anderson was in 1992, when then-Governor Clinton was running as a candidate for President of the United States, and Mr. Anderson was faxing out—and I was active in the Republican party at that time—fliers on the Democratic meetings throughout the country, and faxing it over the National Congress' fax lines.
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And I basically called him to task and asked him, stated to him that to be fair, I think he should also fax out Republican fliers or information on the Republican party, so that the tribal membership could make an informed decision and choice on the candidates.
Mr. BENNETT. The bottom line is, you had a little bit of a dispute with Mr. Anderson, again in terms of full disclosure to members of the committee, prior to the matter of the Hudson Dog Track?
Chairman GAIASHKIBOS. That's correct.
Mr. BENNETT. I believe you at one time applied for a position with the Clinton administration, with the Bureau of Indian Affairs; is that correct?
Chairman GAIASHKIBOS. That's correct, counsel.
Mr. BENNETT. Were you given that position?
Chairman GAIASHKIBOS. I was notified in July 1996 of eight candidates I was the No. 1 candidate, and I was selected as the Minneapolis area director for the Bureau of Indian Affairs. And 30 days after that I was told that because of political pressure coming from Congressman Obey and others to Secretary Babbitt, and my political affiliation with the Republican party, that I was no longer a candidate as a Senior Executive Service employee.
Mr. BENNETT. Have you had any further interaction with Mr. Anderson politically, other than those events?
Chairman GAIASHKIBOS. I met him several times occasionally, casually. That was it.
Mr. BENNETT. Returning to the matter, then, of the dog track and the proposed casino, even prior to the Four Feathers partnership with your three tribes and Mr. Fred Havenick, who will testify this afternoon and was a witness requested by Congressman Waxman, in fact, there already was a dog track facility in Hudson, WI; is that correct?
Chairman GAIASHKIBOS. That's correct.
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Mr. BENNETT. There is one as we speak. There is a dog track facility.
Chairman GAIASHKIBOS. That is correct.
Mr. BENNETT. There is gambling that goes on at that facility.
Chairman GAIASHKIBOS. That's correct, counsel.
Mr. BENNETT. The question here is in terms of adding a casino in terms of gambling to a facility that is already engaged in gambling at the Hudson Dog Track; is that correct?
Chairman GAIASHKIBOS. That's correct.
Mr. BENNETT. In terms of the initial application, when did your tribes initially apply to get the Class III permits so that you could add casino gambling to the dog track facility? Chairman Ackley or Chairman Newago, whichever one of you thinks you have the best knowledge of this, what would the date have been?
Chairman ACKLEY. I don't remember right now. I would have to look it up.
Mr. BENNETT. I believe that the court file, in terms of the opinion of Judge Barbara Crabb to which Chairman Burton made reference earlier, referred that it started in October 1993; is that correct?
Chairman GAIASHKIBOS. Yes, that's correct, sir.
Mr. BENNETT. I know we have some opponents of casino gambling who are here today and will be accorded an opportunity to speak, and I believe we also have some proponents who are going to come forward to speak. With respect to the matter of adding casino gambling or not, I gather there were supporters and opponents of this particular issue. It was a local issue; is that correct, sir?
Chairman GAIASHKIBOS. That's correct, counsel.
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Mr. BENNETT. With respect to this local issue, exactly how did the resolution of this issue play out on a local level in terms of whether or not you were going to be able to add casino gambling to the Hudson Dog Track? There was indeed a referendum, was there not, to which the chairman made reference?
Chairman GAIASHKIBOS. Yes.
Mr. BENNETT. Let me ask you this: The referendum was a close one with the cities of Troy and Epson, WI, ultimately resulting in a vote in favor of casino gambling, is that correct, Chairman Gaiashkibos?
Chairman GAIASHKIBOS. Yes, that is correct, counsel.
Mr. BENNETT. By the same token, again in terms of fairness, the Hudson city council, the members of the city council, had voted 4 to 2 against the matter of casino gambling, had it not?
Chairman GAIASHKIBOS. After a change in the elected leadership, the mayor and the composition of the city council.
Mr. BENNETT. What had been the position of the mayor of Hudson, WI, with respect to casino gambling?
Chairman GAIASHKIBOS. During this time the mayor, I believe Mayor Reeder, was very supportive of the casino in Hudson.
Mr. BENNETT. Once you weathered that political storm in terms of opposition and/or support in the referendum, what steps did you take with respect to regulations with the Bureau of Indian Affairs to apply? And again, Mr. Gaiashkibos, if you want to make reference to your statement now in terms of the process you undertook, which steps were taken to accord with all Federal, State, and local regulations?
Chairman GAIASHKIBOS. Well, according to IGRA——
Mr. BENNETT. First, did you speak with the local agency office of the Bureau of Indian Affairs, specifically Mr. Jaeger in Ashland, WI?
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Chairman GAIASHKIBOS. Yes, counsel. If I could just refer to my testimony on this, I would just like to read a paragraph from there, if I could.
Mr. BENNETT. Go ahead, sir.
Chairman GAIASHKIBOS [quoting].
First, the Secretary of the Interior must determine that gaming on a particular site is appropriate under 25 U.S.C. Section 2719, which prohibits off-reservation gaming unless the Secretary, after consultation with the applying Indian Tribe and appropriate State, and local officials, including the officials of nearby Indian tribes, determines that a gaming establishment on newly acquired lands would be in the best interest of the Indian Tribe and its members, and would not be detrimental to the surrounding community, but only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary's determination . . .
and emphasis added there.
We followed the steps, and the first step in that process was to put this application together. It was a very long, grueling process, just three tribal governments here, and I look at the composition of your committee, trying to work out details. Three tribal governments also had to work out numerous details along with the non-Indian partner, and that was a very long, grueling process.
But when, yes, when we submitted the application it went to the agency level, to the superintendent, Robin Jaeger. I believe there was a timeframe, 30 to 60 days to respond. From Mr. Jaeger I think it was submitted down to the area office, who also under timeframes had time to respond.
Mr. BENNETT. That was in Minneapolis; is that correct?
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Chairman GAIASHKIBOS. Yes.
Mr. BENNETT. The person there, I believe, was a Ms. Denise Homer; is that correct?
Chairman GAIASHKIBOS. That's correct, counsel.
Mr. BENNETT. Again, a career Department of the Interior employee?
Chairman GAIASHKIBOS. That's correct.
Mr. BENNETT. Did Ms. Homer reach the same determination in terms of approving your application?
Chairman GAIASHKIBOS. It sat there about a year because of the conditions and concerns that were raised, and the partnership had to address those concerns. Maybe Mr. Ackley can address those, because I was so busy during that time representing Indian country, but I was informed of many of the issues that were coming up. But I remember—was it the environmental issue that was one of the major hurdles?
Chairman ACKLEY. Right.
Mr. BENNETT. You dealt with those issues with the Department of the Interior officials both in Ashland as well as Minneapolis?
Chairman ACKLEY. We tried to as best we could with our staffs. I was coordinating the tribal planning department from the three reservations, and tried to meet their questions and concerns they had from the agencies, sometimes from the area director's office, and we would follow that when it got here to Washington, DC, that same scenario. I was coordinating the other tribes and their attorneys, and communicating with Mr. Havenick and seeing if we could help coordinate any information anybody along the process had, that we could try to answer at the time.
Mr. BENNETT. Incidentally, in terms of proponents for and people against the casino, Chairman Burton and Congressman Waxman received a letter recently from State Representative Barbara Linton.
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Mr. Chairman, I believe by reference to exhibit 352, and I don't want to violate my agreement with Congressman Lantos with regard to these exhibits, but I believe we could have this be an exhibit. Exhibit 352 was a letter from a State Representative, Chairman Ackley, who I believe indicated support for the casino; is that correct?
Mr. BURTON. I will submit that for the record.
[Exhibit 352 follows:]
INSERT OFFSET FOLIOS 15 TO 16 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. I met with Representative Linton a few times.
Mr. BARRETT. Could we have a copy of that letter?
Mr. BENNETT. I believe it is already in the file, Congressman. I believe it already is.
In terms of the particular agreement with the city of Hudson, if we could have exhibit 351 placed on the screen here in the hearing room, and perhaps, Chairman Gaiashkibos, if you could address for the members of the committee the matter of this service agreement, specifically as to the benefits that were going to accrue to the city of Hudson, WI, as a result of casino gambling being placed into and in conjunction with the dog track.
Essentially, your three tribes were in fact to give a portion of the gambling receipts to the city of Hudson, WI, to make up for any tax loss by placing that property in trust to the Federal Government pursuant to the laws passed by Congress, thereby resulting in a tax loss to the community. To offset that, you would provide a profit to the city of Hudson, WI. There was to be money to go to the city from the proceeds; is that correct, chairman?
[Exhibit 351 follows:]
INSERT OFFSET FOLIOS 17 TO 26 HERE
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[The official committee record contains additional material here.]
Chairman GAIASHKIBOS. Yes, that is correct. We signed a service agreement that in lieu of taxes we were going to provide the city of Hudson and the county approximately $1.1 million annually, with a 5 percent increase, through 1999.
Mr. BENNETT. What was the approximate tax loss going to be to Hudson, WI, as a result of taking this property off the tax rolls and placing it in trust to the Federal Government pursuant to the Indian Gaming Regulatory Act?
Chairman GAIASHKIBOS. Counsel, I am going to guesstimate here. I believe Mr. Havenick would have the exact figures. It was somewhere around $600,000 annually, and with the $1.1 million we were going to pay the city and county around a half a million dollars, in addition, over and above the lost tax revenue.
Mr. BENNETT. Directing your attention to the chronology in 1995, up to early 1995, up to February 1995, were any of you advised of any problems with respect to the process of applying to have a casino here at the Hudson Dog Track?
Chairman GAIASHKIBOS. Counsel, from Lac Courte Oreilles, we were never notified during this process.
Mr. BENNETT. We will get into the events in early 1997, but up to February 8, 1995, Chairman Ackley, was there any indication to you that there was a problem that this was going to be rejected in any way?
Chairman ACKLEY. Not that I was aware of.
Mr. BENNETT. Chairman Newago, as to you, sir?
Chairman NEWAGO. No.
Mr. BENNETT. Directing your attention to early 1995, were you, any of you aware of a meeting held on February 8, 1995, with the Minnesota congressional delegation and with Minnesota Indian tribes opposing your effort for economic reasons, attended by Mr. George Skibine, who is due to testify here tomorrow, as well as Mr. Duffy from Secretary Babbitt's office? Were any of you aware of that meeting?
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Chairman ACKLEY. I was made aware of that after the meeting was over.
Mr. BENNETT. Let me direct your attention to some exhibits here that might assist you in that regard, Chairman Ackley. I will show you exhibit 298, if we can, on the projection screen in the hearing room.
That is a letter which you addressed to Secretary Babbitt sometime after March 3, 1995; is that correct?
[Exhibit 298 follows:]
INSERT OFFSET FOLIOS 27 TO 28 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. Yes, sir.
Mr. BENNETT. In that letter, do you address the fact that you at some point in time learned about—by the way, I note that letter was not dated, but it was clearly sometime after March 3, because you made reference to your appearance here in Washington. Do you address the question of not having been advised of such a meeting with Secretary Babbitt?
Chairman ACKLEY. Yes. I was pretty angry at the time.
Mr. BENNETT. I think that this letter also makes reference to the Presidential order, and I would ask that exhibit 350 be placed on the projection screen as well. These are all in the exhibit packets, Mr. Chairman, for the Members.
With respect to the requirement as set forth in President Clinton's directive of April 29, 1994, you note in your letter to Secretary Babbitt that that order of President Clinton specifically provides that the executive department shall consult, to the greatest extent possible, with tribal governments prior to taking actions adverse to them.
Are you aware of that provision as set forth in President Clinton's directive, Chairman Ackley?
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[Exhibit 350 follows:]
INSERT OFFSET FOLIOS 29 TO 30 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. Yes, sir.
Mr. BENNETT. Did you get any response from Secretary Babbitt in terms of clearly his failure to comply with that directive of the President?
Chairman ACKLEY. No.
Mr. BENNETT. Let me, if I can, specifically direct your attention to exhibit 302, again on the projection screen in the hearing room. That letter is from John Duffy, counsel to Secretary Babbitt, produced pursuant to subpoenas issued by this committee.
Looking at that letter dated March 27, there is reference to, ''As you may know, on February 8, 1995,'' and then there is a discussion about a meeting with opposing tribes, as well as members of the congressional delegation of Minnesota, in terms of your application. There was apparently—and I believe Judge Barbara Crabb in the Federal litigation, Mr. Chairman, in Wisconsin, has made reference to this 6 weeks' delay before you were notified.
Chairman Ackley, did you have any knowledge of the meeting with the Minnesota delegation and Mr. Skibine and Mr. Duffy and tribes opposing your efforts for economic reasons, for a period of 6 weeks? When did you finally find out that there had been this February 8 meeting?
[Exhibit 302 follows:]
INSERT OFFSET FOLIOS 31 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. I actually watched some of the tribal leaders in Washington, DC. I was present here. It brings back my memory a little bit by looking at the letter. At the time I was looking at the places in the tribal leadership, and I recognized them in the State of Minnesota and also from Wisconsin, who were present here in Washington, DC. I was concerned, and I still am, about the meeting they had with respect to Mr. Skibine.
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I had met with him twice during this process. Mr. Skibine informed me when he just got appointed as the director for the Gaming Management Staff, and I met him after he got settled in. I was also present at a meeting when he informed me he had just left Mr. Duffy's office to extend the comment period, and I was pretty angry about that also.
Mr. BENNETT. When you expressed that anger, did you ask Mr. Skibine why for a period of 6 weeks nobody had notified you about this meeting?
Chairman ACKLEY. I was back and forth to Washington, DC, I was trying to get information, I was looking for help, what was going on, why was I not consulted with.
Mr. BENNETT. Was there ever any explanation to tell you, apart from not even being invited to the meeting, why you were not even notified? Was there ever an explanation of that?
Chairman ACKLEY. No.
Mr. BENNETT. At any time, did anyone from the Department of the Interior accord any of these three tribes who you gentlemen represent any opportunity to cure any problems that may have arisen with respect to this February 8 meeting?
Chairman ACKLEY. Mr. Bennett, I was made aware with Mr. Skibine's staff that the problem to place the land in trust was going to become an issue from his observation of the application; that the parcel of land that was going to be placed in trust might be landlocked, and that he wanted to guarantee the tribes had access to the highway; and that there was a parking lot on the north side of the dog track, I believe, and he wanted to guarantee that if the land was going to be placed in trust, then we needed to have access to the property. Otherwise it would not be done properly and it would not do any credit to the tribes, and he wanted to make sure of that. That is the only concern that I recollect that he had.
Mr. BENNETT. Is that consistent with your recollection as well, Chairman Gaiashkibos?
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Chairman GAIASHKIBOS. Yes, that's correct. When I was notified of this by Mr. Ackley and others involved in the project, I was quite disheartened to learn, that there was a closed meeting, but that the process was reopened again and we were never notified so we could submit additional comments as well.
Mr. BENNETT. Secretary Babbitt has made a comment to the press recently that he was—I think his words were ''out of the loop'' with respect to the Hudson Dog Track question. But in fact I think, Chairman Ackley, you attended a meeting on or about April 8, 1995, when Secretary Babbitt was in Wisconsin, in Green Bay, WI, at the Radisson Hotel, where the specific issue of the Hudson Dog Track was discussed; isn't that correct?
Chairman ACKLEY. Yes, with the other tribal leaders of the area, right.
Mr. BENNETT. Secretary Babbitt was part of that conversation?
Chairman ACKLEY. Yes.
Mr. BURTON. Let me just try to illuminate the issue a little bit. At that meeting that we are talking about, there were lobbyists, there were people from the opposing tribes, there were people from the Department of the Interior, and you were excluded. You were the petitioning group of Indians that wanted to have the casino approved. Is that correct that you were weren't informed?
Chairman ACKLEY. Yes. No, we weren't.
Mr. BURTON. The opponents were informed and were at the meeting, but you weren't.
Chairman ACKLEY. Until it was over with, right.
Mr. BURTON. Let me ask you this: Up until that time, did you have any indication that your application was going to be rejected, or did you have an indication that it was moving along properly and was going to be accepted?
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Chairman ACKLEY. The indication was it was moving along and would be accepted.
Mr. BURTON. Was there any indication that you knew prior to that meeting that it was going to be rejected?
Chairman ACKLEY. No.
Mr. BURTON. Mr. Bennett.
Mr. BENNETT. Yes. Continuing along with that, during the 6 weeks delay before you even knew about the meeting, and then directing your attention up to around April 8, 1995, when Secretary Babbitt was personally in Wisconsin at a meeting at the Radisson Hotel and discussed this matter, again, continuing with the chairman's questions, was there any indication to you at that point in time that your application for the casino was going to be rejected?
Chairman ACKLEY. No. He was quite clear that he wanted to steer away from discussing the application until it went through the Gaming Management staff personnel, to make sure that he was talking from the knowledge that he had gained from those people overseeing the application.
Mr. BENNETT. With respect to in terms of trying to define what we will hear about later, in terms of a standard set by Congress in terms of whether there is detriment to the community, were any other defects in your application at any point in time—were any of the three of you advised that there was any particular defect in your application or a detriment to the community that you were given an opportunity to cure and correct, any problems? Were any of the three of you ever so notified prior to July 14, 1995? Chairman Newago.
Chairman NEWAGO. No.
Mr. BENNETT. Chairman Ackley.
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Chairman ACKLEY. No.
Mr. BENNETT. Chairman Gaiashkibos.
Chairman GAIASHKIBOS. No.
Mr. BENNETT. Directing your attention to the trips I think that you made reference to, Chairman Ackley, in Washington, I believe that this reference first of all to July 14, 1995, the rejection letter signed by Mr. Michael Anderson, did any of you receive any advance notice prior to actually receiving that rejection letter?
Chairman GAIASHKIBOS. No.
Mr. BENNETT. Any of you?
Chairman GAIASHKIBOS. No. From Lac Courte Oreilles, no.
Mr. BENNETT. Chairman Ackley.
Chairman ACKLEY. No.
Mr. BENNETT. Chairman Newago.
Chairman NEWAGO. No.
Mr. BENNETT. Basically, after that rejection letter of July 14, Chairman Ackley, you took some offensive to find out what happened, didn't you?
Chairman ACKLEY. Yes.
Mr. BENNETT. Exactly what did you do, sir?
Chairman ACKLEY. Well, I contacted Loretta Avent at the White House to see if she could give me some kind of explanation of why we were not consulted with in the first place. Can I make a statement?
Mr. BENNETT. Certainly, sir, go right ahead.
Chairman ACKLEY. I got elected as a tribal leader first in 1983. I felt very privileged and honored to be invited to the White House and listen to President Bill Clinton give us a replica medal on the South Lawn, to give us a speech about the consultation process, because prior to us receiving that invitation, as a tribal leader I had never been invited to the White House before. I have been to Washington, DC, a few times. So we finally got to come to the Old Executive Building and talk with somebody, and Loretta Avent was the person in the Indian Office, and we had access finally.
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After I got the letter I wanted to use that access to find out what was happening within the administration, so I went there to find out if somebody could give me an explanation on why I wasn't consulted with. After reading the letter, and knowing that the Bureau of Indian Affairs was assisting us in the finding of no significant impact—it was called a FONSI—we learned that there were problems with the environmental concerns with our application, without having the opportunity to correct them.
Mr. BENNETT. No one ever notified you of that fact or gave you an opportunity to correct any alleged problems, correct?
Chairman ACKLEY. I didn't know that, sir, until I got the letter.
Mr. BENNETT. Directing your attention, if I can, on the exhibit screen in the hearing room, to exhibit 331 that is in the exhibit book, as well as—first of all, as to 331, this is a memorandum that you sent to Ms. Loretta Avent on August 3, 3 weeks after the rejection, essentially noting the problems that you have just addressed here today; isn't that correct, Chairman Ackley?
[Exhibit 331 follows:]
INSERT OFFSET FOLIOS 32 TO 33 HERE
[The official committee record contains additional material here.]
Chairman ACKLEY. Yes.
Mr. BENNETT. And then I will show you a document you may or may not have seen, exhibit 332, if we could have that on the screen here in the hearing room. That is a memorandum for Ms. Avent that we received from the Executive Office of the President pursuant to a subpoena issued by the committee.
If you would take a minute to look at that, Chairman Ackley, have you seen that document before, sir?
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[Exhibit 332 follows:]
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[The official committee record contains additional material here.]
Chairman ACKLEY. No.
Mr. BENNETT. Essentially it notes her trying to address the concerns which you have raised in August.
Chairman ACKLEY. Right.
Mr. BENNETT. Let me ask you this, Mr. Ackley: Ultimately you had further interaction, didn't you, in terms of talking or meeting with Mr. George Skibine, the director of the Indian Gaming Management Office, who in fact is going to testify before this committee tomorrow morning? Were you at a meeting which he attended in December 1996?
Chairman ACKLEY. Yes.
Mr. BENNETT. At that point in time, did Mr. Skibine offer any explanation as to why, with no notice to your tribes, with no indication of any defect in the application, suddenly at the last minute on July 14, 1995, the applications of all three tribes were rejected? Did Mr. Skibine indicate to you any explanation of that?
Chairman ACKLEY. The explanation was it was out of his hands, it was people above him. It got too political for him to be involved with anymore.
Mr. BENNETT. Specifically in terms of ''it got too political for him to be involved,'' what did Mr. Skibine say with respect to political influence in Washington affecting this decision?
Chairman ACKLEY. I think what he was telling me is it was coming out of John Duffy's office, because that is where he came from when he came back to talk with me.
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Mr. BENNETT. Did Mr. Skibine make direct reference to political pressure?
Chairman ACKLEY. Oh, yes.
Mr. BENNETT. No further questions, Mr. Chairman.
Mr. BURTON. Thank you.
Mr. Waxman.
Mr. WAXMAN. Thank you, Mr. Chairman.
I appreciate the three of you being here. I was the chairman, when the Democrats were in control of Congress, of a subcommittee on health and environment, so I have a lot of personal knowledge about Indian affairs when it comes to health issues. I was the primary author of the Indian Health Improvement Act, the sponsor of the law on alcohol and drug abuse issues with respect to the Indian tribes, as well as environmental issues that gave tribal sovereignty clear recognition.
When I was the chairman of a subcommittee, we didn't issue subpoenas. We always asked people if they would come.
Chairman ACKLEY. Right.
Mr. WAXMAN. Only when they said they wouldn't come would we compel them to come with a subpoena. So I can understand, Chairman Ackley, your concern at having gotten a subpoena served upon you.
I also want to say that Mr. Bennett raised some personal issues about you. I don't see what relevance they have to anything we are discussing today. I don't know why it was even brought up.
While I share your concerns about the situation with your tribes and how you would be economically benefited if you would have been allowed to have your application approved for a casino, I do want to raise the question that you were not trying to build a Las Vegas style casino on your reservation. You were trying to do this some 80 to 200 miles away in a small Wisconsin community that evidently did not want that casino in their midst, because this is an off-reservation project, not an on-reservation project, and your economic interests needed to be balanced against the views of the local community.
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I have a map over there that I want to draw your attention to. This map shows Hudson, WI, in the western part of the State, and I think it also shows the potential economic value of the Hudson site. As you can see, Hudson is very close to a major metropolitan area, Minneapolis. As I understand it, if the dog track in Hudson were converted to a casino, it would be very valuable property because it would be so close to Minneapolis; isn't that right? Isn't one of the appeals of the location that it would draw people from Minneapolis?
[The map referred to follows:]
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Chairman ACKLEY. Sure.
Mr. WAXMAN. The map also shows where you are located. I think it makes the point that your tribes are not near the proposed gambling site. Chairman Gaiashkibos, I believe your tribe is the closest of the three. As I understand it, your tribe is located over 80 miles away; is that accurate?
Chairman GAIASHKIBOS. That's correct, Congressman, with the exception that we do have some trust land that is probably about 40 miles away from there also, as well. But the main reservation is 80 miles away, correct.
Mr. WAXMAN. Chairman Ackley and Chairman Newago, I understand that your tribes are located much further away. In fact, Chairman Ackley, I understand your tribe is nearly 200 miles away; is that accurate?
Chairman ACKLEY. Yes.
Mr. WAXMAN. Chairman Newago.
Chairman NEWAGO. 185 miles.
Mr. WAXMAN. Now, off-reservation gambling is different than on-reservation gambling, and it poses a lot of issues not present when you have an on-the-reservation gambling proposal.
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First, you get local opposition. If the Department of the Interior approves the application for off-reservation gambling, it must take the land into a Federal trust. In other words, this means that the local people no longer have control over that land anymore. It is now Federal land, as if it were a reservation, and the Federal Government decides all the issues for that instead of that community deciding what they would permit. In other words, the Federal Government can force a casino on a community that didn't want a casino by saying, ''It is no longer under your control, it is under the Federal Government's control.'' A lot of people in Hudson didn't like that.
You knew about that, Chairman Ackley, didn't you?
Chairman ACKLEY. I view it a little bit different. The process could be explained that easy, but there has to be a lot of concurrence with the Governor, and there is opportunity for the Chippewa Nations to get some of their land back. My grandfather signed a treaty in Prairie du Chien, about 100 miles south of that area.
We recently participated in the Mole Lake's decision in the State of Minnesota, six Chippewa tribes in Wisconsin, to exercise an off-reservation site for fishing rights. So that map does a little justice, but it doesn't include that in the State of Michigan that the Chippewa Nations can freely go within the State boundaries and exercise hunting and fishing rights.
So we are a little different, when it comes to other tribes, when it comes to the perspective we feel we are comfortable with. We are not a conquered people, and we freely go to the other reservations and practice our religion and feel comfortable doing so.
Mr. WAXMAN. So you disagree with the idea that there ought to be consideration for what the local population might think because your tribe once occupied that territory, and therefore you have a right to locate a casino if you wish it? Would that be your view?
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Chairman ACKLEY. No. I participated with the local politicians in looking at a service agreement for services that were going to place the land in trust to offset the loss of the taxes relating to the dog track. That was part of the Indian Gaming Act, looking at self-sufficiency and allowing us to communicate with other units of government.
Mr. WAXMAN. Whenever you get an off-reservation site, you get a lot of concerns from the local people, but also concern by other tribes with gambling because it is competition for gambling that may be taking place on a reservation nearby. So sometimes one Indian tribe will object to an off site situation for gambling because they have got their own on-reservation gambling.
In fact, this problem also confronted your proposal. The map shows that the St. Croix Tribe is much closer to Hudson than any of the other three tribes, as you can see on that map. This tribe opposed the project, and in fact they paid for a lobbying campaign against it because they feared that competition would——
Chairman NEWAGO. Congressman, if I might point out, the St. Croix Tribe's facility in Turtle Lake, WI, is the off-reservation site that started out with an application process as a Class II gaming facility in which they were going to have bingo, and miraculously it turned into a Class III facility as the process moved forward, without consultation to my colleague Gaiashkibos, chairman of the tribe located near that site.
Mr. WAXMAN. So you fear that their fear of competition was for their off-reservation site, not——
Chairman NEWAGO. That's correct. The criteria we were to meet with respect to the 50-mile radius that the Bureau had imposed as part of the application process encompassed the Turtle Lake site, which is an off-reservation site. That land is put in trust.
Mr. WAXMAN. Whether it is an on-reservation site or off-reservation site, what you have is somebody who has gambling going and somebody new wants to come in and compete, and sometimes people that have the clear avenue for customers don't want to share their customers.
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Now, Chairman Gaiashkibos, I understand you have been on both sides of this issue. In this case you are supporting the off-reservation gambling, but isn't it true that in 1992 you opposed an off-reservation gambling proposal by the St. Croix Tribe for many of the same reasons that I just described?
Chairman GAIASHKIBOS. I have no recollection of opposing anything in St. Croix. I do know that St. Croix, many of our members are intermarried with St. Croix members. In fact, we have St. Croix members residing on our reservation. The only thing that I ever pointed out to St. Croix, when they opposed this, Lac Courte Oreilles never went on record opposing them when they placed the Turtle Lake site into trust.
Mr. WAXMAN. I have a copy of an August 18, 1992, letter you wrote to Governor Tommy Thompson of Wisconsin. In this letter you write that your tribe adamantly opposes an off-reservation gaming facility that the St. Croix Tribe proposed at Spooner, WI. And according to this letter, you opposed this facility for two reasons.
First, you said, and I quote, ''The Spooner gaming facility is located too far from the St. Croix Reservation to have any beneficial impact on the tribal community.'' And second, you were worried about the effect on your tribe's gaming facilities because you thought the region was becoming saturated.
I will just quote from the letter.
In reviewing the 1988 Indian Gaming Regulatory Act and our Lac Courte Oreilles - State of Wisconsin compact, along with the recommendations of the State of Wisconsin Task Force on Gaming, Lac Courte Oreilles should be protected by the 50-mile radius of which Spooner falls within. Lac Courte Oreilles feels strongly that you as Governor of Wisconsin, should protect Lac Courte Oreilles . . . from this clear case of saturation.
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Now, isn't it true that your proposal for a gaming facility in Hudson was similar in important respects to the Spooner proposal, except the roles were reversed? In the Hudson case you were trying to site a gaming facility within 50 miles of the St. Croix Tribe, and then vice versa? What do you say?
[The letter referred to follows:]
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Chairman GAIASHKIBOS. I believe at that time, and I don't have a copy of that letter here to see that, but——
Mr. WAXMAN. You do have a copy right in front of you.
Chairman GAIASHKIBOS. Congressman, the older I get, the more blurred these faxes get, with all due respect. But yes, I did write this letter. I believe that at this same time St. Croix already impacted us with the Turtle Lake site, because they were drawing the same customers. They were busing customers up from Eau Claire, Chippewa Falls, and some of the other southern small towns and villages. What they wanted to do was basically cut us off, because Spooner was on the opposite side of Turtle Lake, so that would virtually dry up that market. So that is correct, I did do that.
Mr. WAXMAN. My point essentially is this: When you get off-reservation gaming sites it poses a very different issue than on-reservation gaming sites. I think your letter makes a very good point where these off-reservation cases need to be carefully scrutinized and why they often, in some cases, anyway, should not be approved.
As I studied the Hudson issues, I have learned that one of the misconceptions many people have is that this issue is really about and between two groups of tribes. In fact, it is a lot more complex. It is probably more a battle between Mr. Havenick, the Florida gambling person who owns the dog track, and the community of Hudson, than it was a battle between the tribes. Who first had the idea to turn the Hudson Dog Track into a Las Vegas style casino? Mr. Havenick or you all?
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Chairman NEWAGO. Congressman, if I could take a step back, in your earlier comments with respect to Chairman Gaiashkibos's position with regard to the proposed operation by St. Croix in Spooner, WI, I would like to note—and I don't have the documentation but I can get it and provide it—since that time, since the time of this application, two of the opponent tribes in the State of Wisconsin have since changed their opposition to support with respect to off-reservation sites. And I can provide that documentation. We do have the information.
Mr. WAXMAN. I appreciate that. I would like to see that.
Chairman NEWAGO. St. Croix is one of those tribes.
Mr. WAXMAN. We will put that in the record. I want to ask you a question, Chairman Newago. Did you have the idea of turning this dog track owned by Mr. Havenick into a Las Vegas casino, or did he have the idea to approach you?
Chairman NEWAGO. I did not have the idea. I believe that originally, yes, there was an opportunity that presented itself, and Mr. Havenick, through Bill Cadotte, contacted the tribe.
Mr. WAXMAN. Mr. Havenick owned this dog track. He thought it was an opportunity to turn it into Las Vegas gambling. He owned the dog track and he planned the casino, and he thought it would be a good idea to include your tribes in the deal, and he approached you and you saw an economic benefit for your tribes. Is that a correct statement?
Chairman NEWAGO. For Red Cliff, yes, it was an opportunity to gain some economic benefit.
Mr. WAXMAN. Your side on this issue had a powerful lobbyist in Washington working on the matter. You had Paul Eckstein, who was Secretary Babbitt's former law partner, working for you. You had Jim Moody, the former Congressman, lobbying for you. Who paid for these lobbyists? Did your tribes pay for it or did Mr. Havenick pay for it, for their services?
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Chairman NEWAGO. I know that Red Cliff did not pay for any lobbyists.
Mr. WAXMAN. Mr. Ackley, did you pay or did Mr. Havenick pay for these lobbyist?
Chairman ACKLEY. We did not pay, no.
Chairman GAIASHKIBOS. I have no knowledge, Mr. Congressman. I left office in 1995, and just returned here in 1997, so I have no knowledge about these lobbyists. It happened after the letter was submitted by Michael Anderson.
Mr. WAXMAN. Well, you would have knowledge whether you paid for those lobbyist services. Did you pay for them?
Chairman GAIASHKIBOS. No, we didn't. Not to my knowledge.
Mr. WAXMAN. And you were involved in litigation. Who is funding the litigation you are now bringing against the Department of Interior, you or Mr. Havenick?
Chairman NEWAGO. From Red Cliff's respect, Mr. Havenick is financially supporting the litigation for Red Cliff.
Mr. WAXMAN. Mr. Havenick testified that he is funding these lawsuits. Do either of you disagree with that?
Chairman GAIASHKIBOS. Lac Courte Oreilles doesn't disagree with it. LCO is paying for our legal counsel. Mr. Leventhal, who is here with us, or with me right now, that's the attorney, the counsel that I'm paying for.
Chairman NEWAGO. I think one point, Congressman, that I want to make at this time with respect to the direction you're heading with this issue is that, you know, this whole issue certainly would have been brushed under the carpet had not I had a friend like Mr. Havenick to support me and truly take concern with respect to this issue and have the capital to be able to afford the litigation procedure.
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Otherwise, I would have been sitting at home in Wisconsin, and nobody would have knew where George Newago was from or who he was, and I wouldn't be sitting before this committee. So I'm very appreciative of Mr. Havenick's financial ability.
Mr. WAXMAN. I'm not criticizing him in any way. He's a businessman. He saw an opportunity to make some money. He had a dog track that was losing a lot of money. He thought maybe he could rescue his investment by turning it into a Las Vegas casino. But he couldn't do it because the local people wouldn't allow it.
But there was a loophole. If he can get this declared Indian land, off-reservation Indian land, by the Department of Interior, then he could go on with this gambling operation. And he tried to take advantage of the fact that there are off-reservation gambling sites. They have to be approved. They have to be approved within the Department of Interior as well as at the local level.
Chairman NEWAGO. And we followed all those procedures and steps, sir.
Mr. WAXMAN. I understand that you feel you did and you're not happy with the result. But do any of you claim to be experts about all the processes within the Department of Interior in evaluating these decisions?
Chairman ACKLEY. Experts. I would like to answer the question about——
Mr. WAXMAN. That's not your area, is it?
Chairman ACKLEY. No.
Mr. WAXMAN. Your area or your concern is, you wanted to have this gambling casino because it would have, as you saw it, benefited you, even though your tribes were far away.
Chairman NEWAGO. Congressman, the frustrating thing for me as an Indian leader is that here we've got——
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Mr. WAXMAN. Wait, wait, wait. Just a minute. Let me finish my sentence, and then I'm going to let you say something. It's hard to imagine if people are 200 miles away they're necessarily going to get the jobs in those casinos. But, nevertheless, you had an economic relationship with Mr. Havenick. You would have benefited from it, and therefore you went with Mr. Havenick and submitted this application.
And I interrupted you. So, please, did you want to——
Chairman NEWAGO. No. Go ahead.
Mr. WAXMAN. OK. Now, those are the points that I want to make. And what we have is a half-hour on each side, and I have Members on the Democratic side who want to ask questions. So I'm going to recognize first Mr. Lantos for—well, I'm going to recognize him for 4 minutes.
Mr. LANTOS. I want to use my time with a reality check. We presumably are dealing with three Indian tribes, but in fact what we are dealing with are the machinations and shenanigans of a super-rich Florida gambling mogul who owns a complex conglomerate of gambling enterprises in a number of States, including Florida, Texas, and Wisconsin.
This gambling mogul made a horrendously stupid decision. He put $40 million into a racetrack, a dog racetrack, which immediately started losing money. Every year since it opened, it lost millions and millions of dollars. The top amount was $7 million a year.
As a matter of fact, the enterprise, from an economic point of view, was so disastrous that the mogul requested that, for property tax purposes, this $40 million complex be valued at $2 million. Then they found a loophole, the Indian tribes.
And having read the whole document, I think it would have been criminal for the Department of the Interior to approve this project. And I tell you why. There is just one provision in this agreement which the tribes apparently were ready to sign for reasons that I find utterly incomprehensible.
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Under the proposal, the casino was not going to hold the parking lot near the casino itself, it was going to lease the parking lot from the mogul. Now, the tribes had the right to gambling only until 1999, with a possible extension of 5 years. But the parking lot contract, noncancelable, ran for 25 years. So presumably the tribes agreed to pay about $1 million a year for 25 years even though the gambling operation could stop by 1999.
Now, if I had reviewed as a professional within the Department of the Interior this proposal, I would have turned it down so fast that you couldn't say your name fast enough. Now, this is a standard operating procedure in——
Chairman NEWAGO. Congressman.
Mr. LANTOS. No. Please don't interrupt me. This is a standard operating procedure in such relationships. Let me read to you from the Inspector General's report which specifically examined lease payments made by six Wisconsin tribes for gaming machines.
Let me tell you what the Inspector General concludes. In 1992, these 6 tribes paid $28.7 million for machines that they could have purchased for $2.6 million. Now let me put this in sort of real terms that people relate to. This is like being able to buy an automobile for $20,000 but leasing it for a year for a quarter-million dollars. Well, you have to be out of your mind if you can buy a car for $20,000 to pay a single annual lease payment of a quarter-million. That's what these six tribes did. I'll give you the figures one more time.
My time is up?
I am convinced, having studied the record, that the decision to turn down this application on the parking lot scandal alone was the only rational decision that the Department of Interior professionals could have reached.
Mr. WAXMAN. Mr. Kanjorski, for 4 minutes.
Mr. KANJORSKI. Thank you, Mr. Chairman.
I'm going to follow along with what Mr. Lantos said, but I want to ask you, gentlemen, were you represented by counsel or professionals when you engaged in these transactions? Yes or no.
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Chairman GAIASHKIBOS. Yes. But I would like to address Mr. Congressman Lantos'——
Mr. KANJORSKI. This is my time. You were represented.
Are those representatives of you here today that negotiated this deal for these three tribes?
Chairman GAIASHKIBOS. Yes. And it's a fine agreement.
Mr. KANJORSKI. What was that?
Chairman GAIASHKIBOS. Yes. And it's a fine agreement. And I would like it to——
Mr. KANJORSKI. It is a fine agreement.
Chairman GAIASHKIBOS [continuing]. Take exception to Congressman Lantos.
Mr. KANJORSKI. Well, you're not going to answer him; you're going to answer me. You think it's worthwhile to pay a rental fee of $1 million a year for a piece of land. If you look at the picture over there, I don't think that land can park 800 to 1,000 cars, that the purpose of that land itself at that rate, at 10 percent return on your investment, would set the value of that parking lot alone at $10 million.
Chairman GAIASHKIBOS. If you're not going to let me respond——
Mr. KANJORSKI. Then you continue to make that commitment and put your tribes at risk for 25 years even though you have no certainty and the State at any time can discontinue within 4 years the license if it had been granted. Do you think that is a reasonable agreement to enter into in a fiduciary capacity representing you and three tribes?
Chairman NEWAGO. The partnership was all-encompassing. We were partners with respect to the parking lot agreement as well. There was four partners involved in this entire negotiation.
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Mr. KANJORSKI. Now, wait a second. As I understand, the lease was made with this gambling interest from Florida that opened this lot.
Chairman NEWAGO. No.
Mr. KANJORSKI. Who owned it then?
Chairman ACKLEY. We did.
Chairman NEWAGO. The partnership.
Mr. KANJORSKI. What partnership?
Chairman NEWAGO. Four Feathers.
Mr. KANJORSKI. Four Feathers was purchasing the parking lot?
Chairman GAIASHKIBOS. The whole thing.
Mr. KANJORSKI. I understand now, gentleman, from what I understand in the briefing that I've received, that for $39 million, Four Feathers was purchasing a part of this raceway, not including the dog portion and not including the parking lot. The parking lot was an additional rental that was going to reside with the original owners for $1 million to Four Feathers.
Chairman ACKLEY. That's wrong.
Chairman GAIASHKIBOS. That's wrong.
Mr. KANJORSKI. Well, what is the deal?
Chairman GAIASHKIBOS. And it's not criminal and it's not a scandal. The way the trust property works, you cannot mortgage a piece of trust property, Mr. Congressman. What we did was, we transferred—we transferred all of the mortgage over on to a piece of property, and that is the parking lot, that the bank at the day of execution was going to be transferred to the parking lot, and all of that mortgage was to be placed on that parking lot. Otherwise, we would have no access into the casino.
Mr. KANJORSKI. Why did you buy the entire parcel—just buy the entire parcel?
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Chairman GAIASHKIBOS. We didn't have the proceeds to do that. We had to keep——
Mr. KANJORSKI. What investment were you making in this? You mean the tribe was now coming up with equity, where you had money, tribal money?
Chairman GAIASHKIBOS. No. We didn't have equity.
Mr. KANJORSKI. Who was putting the money in this deal?
Chairman GAIASHKIBOS. All of us, as a partner, once the money was generated.
Mr. KANJORSKI. Now, wait. There is no money. Somebody is going to front the money for Four Feathers. Did your tribes put that money up? Did you put any money into this deal?
Chairman GAIASHKIBOS. It was already built. It was already there.
Mr. KANJORSKI. You're making the purchase, aren't you? Who's paying for the purchase to the original owners of that property? Four Feathers; is that correct?
Chairman ACKLEY. The purchase was $1.
Mr. KANJORSKI. I just want to go on record. I've looked over the facts, too. I think Mr. Lantos is absolutely correct. And all I can say is, if this represents what this opportunity for gaming to the Indian tribes of this Nation is going to come down to, that a fast-track operator from Florida can come up and pick a strawman up to work a deal, it's incredible. The Congress of the United States and this committee ought to be spending its time going around finding out how many more rip-offs in this country have occurred.
Mr. WAXMAN. Mr. Barrett, I want to yield to you the rest of our time.
Mr. BARRETT. Thank you. I appreciate that. I come from a unique perspective.
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Mr. BURTON. I do not want to take time away from the minority. You certainly will get the remainder of your time. But I think it's only fair for the tribal leaders to respond to this series of questions.
Mr. WAXMAN. Point of order.
Mr. BURTON. I'm going to allow them to respond briefly, and then you will be able to continue your time.
Mr. WAXMAN. Can we have our time added to?
Mr. BURTON. There will be no time taken away from your questioning. Go ahead.
Mr. BARRETT. How much time will he be given, Mr. Chairman?
Mr. BURTON. We'll give them 4 minutes. But we'll give you the remaining time.
Mr. FATTAH. Mr. Chairman.
Mr. BURTON. You may respond.
Chairman ACKLEY. Mr. Chairman, I don't really appreciate looking at the contracts that we as tribal leaders have worked out. I do take some offense that the Congressmen who are sitting here today could help us by recovering the funds that have been mismanaged by the Bureau of Indian Affairs for the lands that we sold the U.S. Government.
So we've made some bad deals before in our time by signing treaties with the United States and ceased—selling over 20 million acres of land to the U.S. Government and never receiving full payment for those lands that we sold. So there's a lot of bad deals going on in the Congress, not only from the tribal perspective.
But what I would like to say is that the contract that you referred to needs approval from the National Indian Gaming Commission. We were negotiating with that organization to try to work those things out similar to the application process with the Bureau of Indian Affairs. We weren't done yet. What you—you can say, do whatever you want to or how you interpret that, but if you're going to make comments to us without a response, well, then you can have it your way. But I understand what's happening here today.
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I would just like to make those remarks a little bit, what my ancestors have looked like when it comes to signing the treaties with the United States. And there's been a lot of mismanagement of the Bureau of Funds, and we would like to get our money back. And I don't know how the Congress plans on settling that, but we're still waiting for some kind of answer.
Thank you.
Chairman GAIASHKIBOS. Yes, Chairman Burton. I just want to make a comment to Congressman Waxman. Early in his remarks, I never had a chance to respond that, you know, he's portraying this as, the city and the county didn't want this, this project. That might be the case right now in 1998, but you have to take a look at the frame of—at the time when this application was submitted. Just like Members of Congress, if you won by a 51 1/2 percent margin to get sent to Congress, you're going to be sitting here. If you lost by a 48 1/2 percent of margin, you're going to be out there. And that vote was a binding vote. We entered into a service agreement that is a binding contract with the city of Hudson and the county of—and St. Croix and Troy.
Mr. WAXMAN. Let me interrupt you by saying that vote wasn't on your proposal at all. It was on the St. Croix proposal when Mr. Havenick had St. Croix as his partner. And the people approved that in Hudson by a narrow margin, although Troy voted on it as well and voted it down. But there was not a vote on your proposal as such; isn't that correct?
Chairman GAIASHKIBOS. Partially. It was not a vote for St. Croix. It was an Indian tribe.
Mr. WAXMAN. But it was a different proposal than your proposal.
Chairman GAIASHKIBOS. But it was at an Indian tribe casino.
Mr. WAXMAN. And does the vote decide the issue, or does the Department of Interior still have jurisdiction over it?
Chairman GAIASHKIBOS. If they follow the standards, the Department of Interior, Mr. Congressman.
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Mr. BURTON. Have you concluded your remarks?
Mr. Waxman, you have the remainder of the time. I think you have 4 minutes remaining.
Mr. WAXMAN. I yield to Mr. Barrett.
Mr. BARRETT. Thank you. I appreciate that.
I come from the State of Wisconsin, and, in fact, I wrote a letter in opposition to expanding this dog track to include Las Vegas style gambling. I opposed that expansion just as I opposed dog track betting when I was in the State legislature, just as I oppose casino gambling and just as I opposed the expansion within my own district of a bingo hall to include casino gambling.
But that's not the issue here. And I am sympathetic to all three of you. Frankly, if I were in your shoes and someone came to me and offered me a deal where I could make money for the people that I represent and wouldn't have to put any money up front, it would look very attractive if I was representing poor people, as all three of you do.
So I am not here to disparage any of you. I think that, in the position that you hold, that you were trying to do what was best for the people that you represent.
But there's more here than just that, and I think all of us recognize that. And I think when we look at this issue, it is important to see what the people in the State of Wisconsin want and what the position was and what the impact would have been on the surrounding community. And that's something that we haven't spent a lot of time on, and I do think that that's important.
And let's start with the Governor of the State of Wisconsin. The Governor of the State of Wisconsin was quoted as saying, I don't know of any reason whatsoever—he said in referring to this—to permit this; I don't know of anybody who wants it. His spokesman—and this was in October 1994—said that he—quote, ''He's completely shut the door.'' So the Governor of the State of Wisconsin stated publicly several times, in addition, in a letter dated June 9, 1995, my position continues to be clear: I do not support an expansion of Indian gaming in Wisconsin.
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No one accuses Governor Tommy Thompson of being in bed with the Democratic National Committee. So I would say that he's coming to this issue from a different perspective. And he was strongly opposed to it. But it's not even the Governor, because one could make the argument that the Governor is speaking for a political—that he really doesn't speak for the people.
The best way to check what the people want is to ask the people themselves. And that's exactly what happened in the State of Wisconsin on April 6, 1993, when there was a constitutional amendment on our ballot that dealt with, not just the issue of gaming, but the issue of video poker, the issue of Lake Superior, Lake Michigan casino boats. And in each case, the people of the State of Wisconsin spoke, and they spoke quite loudly.
And the reason that this was on the ballot was the confusion that existed in the State of Wisconsin following the enactment in the 1980's of the lottery and the dog track when we got the decisions from the Federal Government that, once you started opening that door, you couldn't close that door when it came to Indian gaming. I think that all of us from Wisconsin are familiar with that.
Because of the concern of the proliferation of gambling, there were six questions put to the people of the State of Wisconsin, and I have looked at those, because I think they're instructive. I think they're instructive for the State, and I think they're instructive for this area, and two of them in particular.
Question No. 2: Do you favor a constitutional amendment that would restrict gambling casinos in the State? The entire State: Yes, 61 percent; no, 39 percent. The St. Croix County: Yes, 65 percent; no, 35 percent. That's a constitutional amendment—that wasn't. That was an advisory, but we get to the constitutional amendment.
Interestingly, because of all this talk about political influence, one of the strongest political groups in the State of Wisconsin is the Tavern League. And a hot issue at that time, as all of you know, was whether taverns should be allowed to have video poker and other businesses be allowed to have video poker. So that question was on the ballot: Do you favor a law that would allow video poker and other forms of video gambling in the State? Entire State: Yes, 34; no, 66. St. Croix County: Yes, 34 percent; no, 66 percent.
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The reason I use those two is because I think underlying this, a concern that I have, I don't want this to be an issue about anti-Indian. That, to me, is an invalid reason totally for any opposition to this.
I found it very interesting that there is actually greater opposition to video poker in the State of Wisconsin, something that the Tavern League wants, than to Indian gaming. Again, both overwhelmingly rejected in this area.
But what that goes to is the vast opposition in this area. Politician after politician came out against this. Now there may be reasons that—different reasons for people doing it. I, as I stated, am against gambling. But the point is, in this discussion, I think we're making a huge mistake if we ignore for one reason—I'll conclude very briefly.
If the Federal Government had approved this, you would have had Republican after Republican and Democrat after Democrat howling to the Moon about how unresponsive the Federal Government was on this issue, because they were all against it. But here's an instance where the Federal Government went along with the community desires.
And I yield back the balance of my time.
Mr. BURTON. The gentleman's time has expired.
For the Members, we will go till 1 o'clock, and then we'll break for about 45 minutes so everyone can have some lunch.
Did you want to briefly respond?
Chairman GAIASHKIBOS. Yes, if I could, Mr. Chairman.
Mr. BURTON. OK. Briefly.
Chairman GAIASHKIBOS. First of all, I would just like to say that I find a real contradiction in your remarks, Congressman Barrett. First of all, the U.S. Congress passes IGRA. It outlines how Indian tribes can place land into trust and how we enter into a compact with our State, in this particular case, the State of Wisconsin, which we did. Tommy Thompson signed an agreement. It provides for additional site. The referendum that you're referring to is absolutely correct. However, under the current compact, the amendment doesn't cutoff a second site and the proposal that we're putting forth.
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And also let me just say this: I might be naive in your politics out here, but let me assure you, I wouldn't have moved forward with this in my meetings with the Governor if he said, there's no chance in hell I'm going to sign this.
Mr. BARRETT. I'm reading from the June 9, 1995, letter. Quote: ''My position continues to be clear. I do not support an expansion of Indian gaming in Wisconsin.''
Mr. BURTON. The gentleman's time has expired.
Mr. BARRETT. Thank you, Mr. Chairman.
Mr. BURTON. Mr. Mica.
Mr. MICA. Thank you, Mr. Chairman.
Mr. BURTON. Do you want to go next?
Mr. MICA. Yes.
Mr. BURTON. Mr. Mica.
Mr. MICA. Thank you.
Chairman Newago, you, I think, stated at some point that basically Congress had really set the stage for allowing Indians to gamble; is that correct?
Chairman NEWAGO. Yes, that's correct.
Mr. MICA. And I guess that was the law passed in 1988, which I've got a copy of that. I guess it was Indian gaming legislation introduced by Mr. Udall and I think some members of this panel like Mr. Waxman and Mr. Lantos and Mr. Kanjorski. I think even Mr. Burton voted for that legislation. So those are the individuals that set basically the law and parameters by which Indians could undertake certain types of gambling and betting on the reservations. Is that correct?
Chairman NEWAGO. Yes.
Mr. MICA. Mr. Chairman, I would like to have this made a part of the record, if I can. This is the—those Members of Congress who supported that legislation.
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Mr. BURTON. Without objection.
[The information referred to follows:]
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[The official committee record contains additional material here.]
Mr. MICA. So basically they—the Congress set up the law, and then rules were made. And I believe all of the chairmen of the tribes that are sitting here felt that they were abiding by the rules and regulations that were set up. Is that correct?
Chairman ACKLEY. Yes.
Chairman GAIASHKIBOS. Yes, that is correct.
Mr. MICA. And you weren't experts in how to proceed, but you hired expertise and engaged expertise; is that correct?
Chairman ACKLEY. Yes.
Chairman GAIASHKIBOS. That's correct.
Mr. MICA. And I guess the reason that you did this is, the per-capita income of your tribal members is about $6,000 or $7,000 a year; is that correct?
Chairman NEWAGO. For Red Cliff, yes.
Mr. MICA. And one of the competitors, I guess, who didn't want you to have this, this new gambling enterprise, was the—is it Shakopees?
Chairman ACKLEY. Yes.
Chairman NEWAGO. That's correct.
Mr. MICA. And their per-member income was around $390,000 per member? Is that somewhere in the range?
Chairman ACKLEY. That's where I heard. Anywhere up to $450,000.
Mr. MICA. And would that be some reason that they might oppose your gaining this ability to conduct this additional gambling on a gambling site? Is that correct?
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Chairman ACKLEY. Yes.
Mr. MICA. Well, you tried to play the game pretty fair. What was your reaction when you found out that two people in the Secretary of Interior's Office who were driving decisions left the Department and got lucrative contracts with the tribes that fought you on this application? How did you feel then?
Chairmen, we can just go right down, if you would respond.
Chairman GAIASHKIBOS. Well, I felt really—you know, I felt slighted by this, that—as an elected tribal leader, that I was not consulted beforehand and that the—the special interest group and influence played a role in this process.
Mr. MICA. Mr. Ackley.
Chairman ACKLEY. I felt somewhat hurt, but I've also known that Mr. Duffy was in charge of the trust fund, too; that he, the Bureau of Indian Affairs, misappropriated; so it doesn't surprise me too much.
Mr. MICA. Chairman Newago.
Chairman NEWAGO. I think, as my colleagues have mentioned, I felt slighted. And I felt surprised in—and I felt victimized by this whole process.
Mr. MICA. And each of you testified that you had no indication that you—or had any reason from anyone in the Department to indicate that your application was going to be rejected; is that correct?
Chairman ACKLEY. Right.
Chairman GAIASHKIBOS. That's correct.
Chairman ACKLEY. Correct.
Mr. MICA. And I'm not sure if you know this, but under the Ethics in Government Act, what was done by Mr. Collier, Tom Collier, and John Duffy is prohibited except for one loophole, which there is an exception in the law that allows Federal employees to leave their Government job and immediately represent Native American tribes before their former agencies. Are you aware of that loophole?
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Chairman ACKLEY. I wasn't made aware of that until today.
Chairman GAIASHKIBOS. No, I'm not aware of that.
Mr. MICA. Don't you feel that that should be a change? Do you think that that's right, for folks to step right out of Government and then into a position of conflict?
Chairman GAIASHKIBOS. Yes, I agree with that.
Chairman ACKLEY. Yes, I agree with that, too.
Chairman NEWAGO. Uh-huh.
Mr. MICA. So this isn't all being driven by some Florida mongol who is trying to make a huge amount of profit.
Chairman ACKLEY. I felt that it was. It all depends from what State you came from. If you come from Connecticut, it's OK. But if you come from Wisconsin, Minnesota can get involved in your politics. That's how I felt.
Mr. BURTON. The gentleman's time has expired.
Is the mongol in the room? I think he meant mogul.
Mr. MICA. Mogul.
Mr. BURTON. Who's next on your side? Mr. Barrett.
Mr. BARRETT. Thank you, Mr. Chairman.
Maybe I could followup on that point, because I think one of the issues here that we talked about—Mr. Ackley, you just referred to Connecticut. Connecticut was a situation where the land was contiguous to the trust land; is that correct?
Chairman ACKLEY. I don't believe so.
Mr. BARRETT. I believe so. I believe so. We can check on that. And you would agree, wouldn't you, that there is a difference between these applications when the land is contiguous to the land that's in trust and when it is, say, 200 miles from the reservation land?
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Chairman ACKLEY. Yeah, but there was a lot of local people objecting to the casino being developed there.
Mr. BARRETT. But the test, the legal test that the Department undertakes, my understanding, is a difference. But, again, I think that there is a—there's a difference here between the two. And I want to get back, because I think Mr.—I'm sorry if I mispronounce your name.
Chairman GAIASHKIBOS. Gaiashkibos.
Mr. BARRETT. You stated that in the preparation for this, that you hired some accountants; is that correct? Or someone to do a feasible study; is that correct?
Chairman ACKLEY. Arthur Andersen.
Chairman GAIASHKIBOS. An economist, Dr. Murphy.
Mr. BARRETT. Is that someone that the tribe hired, or is that someone that someone else hired? Who hired that person?
Chairman GAIASHKIBOS. The partnership hired.
Mr. BARRETT. OK. So that was—none of the tribe put up that money for that; is that correct?
Chairman GAIASHKIBOS. Well, if you read the partnership, the way this is going—there is operational costs that were going to be deducted from the actual, you know, once the casinos operate——
Mr. BARRETT. I understand that.
Chairman GAIASHKIBOS. Right.
Mr. BARRETT. But your tribe never wrote any check to Arthur Andersen.
Chairman GAIASHKIBOS. I don't believe so.
Mr. BARRETT. Mr. Ackley.
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Chairman ACKLEY. No. But, Mr. Barrett, my tribe and I personally have looked at the Kaukauna Dog Track in the eastern part of the State to look at acquiring that site for a casino conversion dog track, also. So Hudson is not just something that came to me in a whim in the middle of the night.
Mr. BARRETT. Believe me, that was crucial in my desire to write a letter, because we have five dog tracks in the State of Wisconsin, most, if not all, having financial problems. And I think that the scenario that could be seen in the State of Wisconsin is that five dog tracks that had promised the Moon and were failing would now all want to become Las Vegas style casinos.
So even though my district is not contiguous or even within 100 miles or 200 miles of this location, the scenario that I think some of us had was, OK, here's the first one; then we go to the second one, the third one, the fourth one, the fifth one.
And again, as Mr. Waxman pointed out, you have a situation here where there is a loophole that exists. And it's there to protect and encourage economic development for the Indians. But I think that there comes a point when the wishes of the people in the State of Wisconsin also come into play. And that's something that I want to make reference to Representative Gunderson's letter, because he was the Congressman from this area.
And he states in his letter, dated April 24, 1995: The proposed casino dog track in Hudson is nothing more than an attempt to save a failing pre-existing greyhound track. The non-Indian track owners see Indian gaming as a potential source of revenue for themselves. He also goes on to talk about this being essentially a precedent setting case; and I think all of us would agree with that.
This is an unusual case. Wouldn't you agree with that, that this is an unusual case?
Chairman GAIASHKIBOS. First ever, yes.
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Mr. BARRETT. First ever. No precedent whatsoever, nothing to draw on, because this is the first time that we've attempted to push the envelope this far.
So, again, I understand your frustration, but when we start talking about other decisions that were made involving Indian gaming, they really are comparing apples to oranges, because this is such a different type of application. And, again, I think that that's something that has to be said for the record. This was not a run-of-the-mill application.
And I fully agree with what you have said that, yes, opposing tribes—there were tribes that were opposed to this. And the Department met with them. But if you look at the statute, under the statute, the Secretary—and I'm quoting now from 2719, section (b)(1)(a), ''that the Secretary, after consultation with the Indian tribe and appropriate State and local officials, including officials of other nearby tribes, determines that a gaming'' and it goes on.
So the Secretary had an obligation, I think, under the statute, to meet with the other tribes.
Now, again, I'm not going to get involved in the Federal lawsuit as to whether there were mistakes made by the Department of Interior. But I think that the Department, frankly, would not have been doing its job if it did not consult, as the statute requires them to, to meet with other tribes.
Mr. WAXMAN. Would the gentleman yield?
Mr. BARRETT. I would yield.
Mr. WAXMAN. Why were you surprised—since this is the first ever application for this kind of casino, why were you surprised that your application was subjected to scrutiny, and you were shocked that it was turned down? It just seems to me this thing reeks with controversy. You might have been convinced of your merits and that it was a good—you know, you should have gotten it approved, but, nevertheless, you should have had some suspicions, when the Governor, Republican Governor, lines up, your Republican Congressman is against it, the community is up in arms. Why are you surprised that you possibly ran into a roadblock?
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Chairman NEWAGO. If I may respond to that.
Mr. BURTON. The gentleman may respond. The gentleman's time has expired. You may respond.
Chairman NEWAGO. Thank you.
With respect to the issue, I think it needs to be made clear that although this particular application may have had its own individuality, the—this has been done in the past, off-reservation sites. We have one in Milwaukee, WI. Potawatomie site is off reservation. We have the Turtle Lake site that we mentioned earlier. We have a casino in Duluth, MN, run by the Fond du Lac Tribe. So there has been the precedence established, but this did have some individuality.
Chairman ACKLEY. And there is also the Maru Tribe in Detroit.
Mr. BURTON. Mr. Souder.
Mr. SOUDER. I would like to say for the record right off the bat, I'm tired of people covering up for political payoffs.
Mr. BURTON. Would you pull your mic a little closer?
Mr. SOUDER. I would like to see some cooperation like there was in Watergate and other types of hearings from the minority to try to learn the truth rather than trying to constantly cover up, for instance, in this case, the Secretary of Interior, who's admitted that he's lied. We have a chief of staff and counsel who had then taken a job afterwards with the very tribes that are most affected and then laundered money—or directly gave money, didn't even bother to launder it. Some may have come in through other directions, but money into the campaign. And it's shocking.
And what really amazes me is that the party that claims constantly and beats us up for caring about the poor, takes the poor Indian tribes and, through connections, to try to exclude people out of that process and then today tries to distort information.
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I want to say up front, I believe gambling is a mortal sin, and I believe you're wrong to pursue the casinos. And I would have not voted for the bill that Mr. Waxman, Mr. Lantos, and Mr. Kanjorski voted for. And I don't like this manipulation of going off the reservations. For example, when I was in Duluth last year—and let me ask some questions here—there's a casino in downtown, a long way from the reservations; is that not true?
Chairman ACKLEY. Yes.
Mr. SOUDER. I lived in the western suburbs of Minneapolis, and I visited Shakopee, and there is the Mall of America there, and there are plenty of other things. I don't recall that land really being mostly given to Indian tribes in that area. That is a high-traffic, high-density area that's very lucrative, and that's why that tribe is getting $400,000. Is that not correct?
Chairman ACKLEY. That's what I think, too.
Mr. SOUDER. Do you believe that in this case, and do people in your tribes believe that basically the law at BIA and the law in this Government is one law for poor people and one law for people who have clout and money and are willing to do payoffs? Is that part of the impression that's certainly circulating? Because when you go through the events with this, that's what it looks like to an outsider.
Chairman GAIASHKIBOS. That's absolutely correct. In 1994, there was a dinner with the—with some Indian tribes, and the investment—some of the wealthier tribes that could afford $100-, $1,000-a-plate dinner with the Vice President, and the smaller tribes could not afford that type of a dinner and access. And so the question arises to me is, there are tribes with large sovereignty and there are tribes with small sovereignty, and the small sovereignty is meaningless? So you're absolutely correct.
Mr. SOUDER. Because the problem is with this law. And as I understand the law, because in Indiana we've had a fight about the Potawatomies putting in a casino in northern Indiana. The Governor of a State has an automatic power to block this. And, in fact, you said that you wouldn't have gone ahead if you had gotten a veto threat from Governor Thompson, because isn't it true that U.S. tribes—which I don't agree with, but you have rights to put a certain number of casinos in. And Governor Thompson's position was, he wanted a net reduction in gambling, and you were willing to make some agreements that would have potentially resulted in less casinos had you gotten this one? Is that not correct?
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And can you explain that, because there seems to be contradictory statements on the record. I have a headline here, and I would like to insert this article into the record: ''Thompson says 'he won't stop' casino at dog track.''
[The information referred to follows:]
INSERT OFFSET FOLIOS 40 HERE
[The official committee record contains additional material here.]
Mr. SOUDER. There are different things here, because at any point he could have said forthrightly, as the Governor of Indiana does, it won't happen here, and it would have been over; you wouldn't have spent your money or your time.
Chairman GAIASHKIBOS. That's absolutely correct. In fact, the Governor—again, I have my compact with me. If the committee would like a copy of it, I could make that available to you and look at Lac Courte Oreilles compact signed by Governor Thompson. The Governor, in fact, encouraged one or more tribes to get into an off-reservation sites—rather than have 11 tribes in Wisconsin, have 11 off-reservation sites, he encouraged tribes to consolidate. And these three poor tribes right here consolidated.
Mr. SOUDER. Was the opposition to your doing this casino in Hudson predominantly coming from the St. Croix Tribe or predominantly coming from the wealthier tribes in Minnesota?
Chairman ACKLEY. Minnesota.
Mr. SOUDER. By predominantly, would you say that most of the contributions going into the administration, most of the lobbying, were certainly coming from law firms and people who were from Minneapolis, that the whole Wisconsin thing is really here kind of a diversion and it's an issue many of us feel strongly about, gambling, but really there is a question of political payoff and influence because, in fact, the local community had certainly—one other thing for the record: The dog track vote was not—it was a Hudson dog track casino vote even if the tribe initially proposing it was different, is that not correct, and that's what you were trying to explain for the record?
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Chairman ACKLEY. Right.
Mr. SOUDER. And that, in fact, early on indications were from the local community. It was only later on, after the political contributions started, and after the political manipulations started, that local opinion in fact triumphed in a local election. And that's why, in fact, in the early documents, in the draft documents, all the indications were that the administration was going to approve it, and you were going along that direction and the Governor was going to approve it. Otherwise, why would you, as a poor tribe, have wasted your time with this location? It doesn't make sense.
Chairman ACKLEY. Correct.
Mr. SOUDER. Thank you.
Mr. BURTON. The gentleman's time has expired. Is Mr. Lantos next?
Mr. Lantos.
Mr. LANTOS. Thank you, Mr. Chairman.
Mr. FATTAH. Excuse me.
Mr. BURTON. Mr. Fattah, I was going to recognize you. I don't know—your 30 minutes you allocated to different minutes.
Mr. WAXMAN. We're under the 5-minute rule.
Mr. BURTON. Under the 5-minute rule, I think Mr. Lantos is next.
Mr. FATTAH. Thank you, Mr. Chairman.
Mr. BURTON. But I think you're a wonderful guy anyhow.
Mr. Lantos.
Mr. LANTOS. Mr. Chairman, since my friend from Indiana made some observations which I do not think are accurate, and since we haven't paid the courtesy to the visitors from Wisconsin to be heard, I want to be their voice. We will hear from one of them later today, but I want to give you an inkling of what they are saying.
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Colleen Maloney, would you raise your hand?
She's a mother, health care professional, member of the Hudson Housing Authority, and an active participant in the petition drive against the casino in Hudson. She wants to live with her family in a wholesome community free of gambling.
Tom Irwin. Tom, will you—one of Hudson's representatives on the St. Croix County Board of Supervisors. He's president of the Hudson Library Board. He opposes casino gambling because it doesn't promote a healthy family and community environment.
Mary Hawksford. Mary. She's a stay-at-home mother of four young children. Her husband commutes daily right in front of the dog track, as she does on her way to schools, grocers, and the other activities of the day. Hudson is presently a very tranquil, beautiful, family oriented community, she says. She feels that a casino will bring crime, congestion, and temporary visitors that don't care about the community where she lives.
Lori Peper. Lori has been a resident for 22 years. She's one of a large extended family living in the city of Hudson, who love their community and do not wish to see it affected adversely by the introduction of Nevada-style casino gambling. She's the mother of three young children. She's a church musician. She's also taking a moral stand against gambling and the proposed expansion of casino gambling in her State.
Tim and Wendy Hood. They're both professionals working in an international corporation in the Twin Cities. They moved to Hudson because they like the quiet, small town, rural atmosphere close to the Twin Cities. They would never have chosen to live in a town with casino gambling.
Don Jordan. He's not here. He's a professional at a Fortune 500 company. He's opposing casino gambling.
Michael Madden. Michael. He's in the investment business in Minneapolis. He has a 32-mile, one-way commute every day from his home in rural Hudson. The road in front of his home goes right past the dog track. They moved to this location 8 years ago looking for rural contentment. The traffic generated by casino development would seriously impact the traffic traveling past his home. He's also a board member of a YMCA camp which is located right across the road from the dog track, which would clearly be incompatible with Nevada-style casino gambling.
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Mark Rieland. Mark is director of human resources for Phillips Plastics Corp. Phillips employs 1,500 people with two facilities in Hudson. He's committed not to expand into communities that have casinos or gambling.
I would like to—since there's been some question about the Governor's statement, I would like to show a tape of the Republican Governor's statement on this issue.
[Videotape shown.]
Mr. LANTOS. That's it.
Now, to have our colleagues on the other side, with overwhelming community opposition, the Republican Governor's opposition, the Republican Congressmen's opposition, claim that there is something wrong in the Department of Interior turning down a preposterously exploitative contract. That contract concerning the parking lot should be taught in business school as how not to agree to a pattern of exploitation running for a quarter century.
You are victims, the Indian tribes are victims, in this case, not of the Department of the Interior, but of a greedy, wealthy, Florida gambling operation which took advantage of a loophole, or tried to take advantage of a loophole, in the law but, fortunately, failed.
Mr. SOUDER. Parliamentary point, Mr. Chairman.
Mr. BURTON. The gentleman's time has expired. The gentleman will state his parliamentary inquiry.
Mr. SOUDER. It's a parliamentary point. The Governor of Wisconsin did not come out against the casino. What he said was, he wanted a net reduction in gambling, which in fact, depending on the agreement, it would have occurred. And that should be clarified for the record.
Mr. WAXMAN. Point of parliamentary——
Mr. BARRETT. I have a letter here. Again, if you would like me to read it, I'll read it for the third time.
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Mr. BURTON. Well, the gentleman will suspend. We've seen newspaper articles saying one thing and the Governor mentioning what was just mentioned by my colleague from Indiana. I think that speaks for itself. We'll let the media go through all of that.
Mr. WAXMAN. Point of parliamentary procedure.
Mr. BURTON. The gentleman will state his point.
Mr. WAXMAN. If the gentleman from Indiana and the other members of the committee vote for my request that the Governor be invited to this hearing, we could get his views directly on the record.
Mr. BURTON. That's not a proper parliamentary inquiry. We will stand in recess for 45 minutes.
[Whereupon, at 1:02 p.m., the committee was recessed for 45 minutes.]
Mr. BURTON. The committee will come to order. I think when we left we had just had the minority have their 5 minutes. Representative Sununu, you are recognized for 5 minutes.
Mr. SUNUNU. Thank you very much, Mr. Chairman.
This morning we heard a line of questioning by the minority that I think established a few somewhat insightful points. They established that gambling is a business but that, like any business, it involves competing interests. They established that there are well-intentioned people supporting these endeavors and very many well-intending people opposing them and many members of this committee that have serious questions about the moral and social implications of gambling on a local community.
These may be interesting points, but the fact is it is not news, nor is it really pertinent to what we need to be talking about here today, because what we need to be talking about is the process, the process that is supposed to be fair and open in making decisions through the gaming legislation and the Bureau of Indian Affairs, and to ensure that that process, is not circumvented by White House staff, that these lines of decisionmaking are not influenced by political contributions to the Democratic National Committee, and that false and misleading testimony is simply not allowed to be made before Congress. Those are the issues at hand as to whether or not there is improper activity in the decisionmaking process.
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Now, in focusing on the process, I want to highlight three pieces of law and legislation and formal agreement. One is the compact that has been mentioned, a legally binding document between the State and the chairman and the various tribes that I fully believe the Governor has every intention of abiding by; second, we have the strong recommendation at the local level from the Interior Department in support of this application; and third, obviously, we have the rights of the individuals to hear the concerns that might be put forward by the Interior Department, to address those concerns, and to provide cures to these defects. And I think that as we look at each of these three parts of the process, we find some very serious questions about what transpired.
Let me focus on the second for just a moment, and that is the very strong recommendation that came from the local level.
I think it was Chairman Ackley, you mentioned the FONSI, the Finding Of No Significant Impact. Can you elaborate a little bit on that, exactly what that meant?
Chairman ACKLEY. What we were told was there were—environmental concerns had to be updated and addressed in the conversion for the dog track compared to the casino. In other words, there's definite rules and regulations that the tribal interests have to be protected and upheld. The Bureau of Indian Affairs suggested that we update that and have our environmental people go through the process and the property and make sure there's no contaminants in the property that were required to be put in trust.
Mr. SUNUNU. And you did so early in the process?
Chairman ACKLEY. Yes.
Mr. SUNUNU. Is that what led to the finding, September 14, 1994, coming out of the Ashland office in Wisconsin? I have a quote here: ''It has been determined that the proposed action will not have a significant impact on the quality of human or the natural environment and the preparation of an environmental impact statement will not be necessary.''
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You are familiar with that finding?
Chairman ACKLEY. Yes.
Mr. SUNUNU. Did anyone at any time subsequent to that ever request that you prepare an environmental impact study?
Chairman ACKLEY. Not that I'm aware of, no.
Mr. SUNUNU. Was there any indication that there were strong environmental concerns at any time between that date and the ultimate rejection on August 14, 1995?
Chairman ACKLEY. No.
Mr. SUNUNU. No correspondence to you that this might be an issue?
Chairman ACKLEY. No.
Mr. SUNUNU. In the rejection letter, however, wasn't there some mention that there were perhaps concerns about the environmental impact?
Chairman ACKLEY. Yes.
Mr. SUNUNU. Any reason in your mind that they might have included that in the letter after all of the findings that there would be no impact?
Chairman ACKLEY. Not clearly, no.
Mr. SUNUNU. Were you given any opportunity to address defects between the original approval from the area office, which was on November 15, 1994, and the final rejection letter?
Chairman ACKLEY. No. That's what concerned me and confused me from the bureaucratic process of not following the Presidential directive of consulting with the tribes.
Mr. SUNUNU. Chairman Gaiashkibos, in April 1995, Pat O'Connor, lobbyist for the opposition, met with Mr. Don Fowler, chairman of the DNC, with the opponents of this project over at the DNC. What do you think they talked about in that meeting at the DNC?
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Chairman GAIASHKIBOS. I can only speculate on that question. But I assume, if I can use this example, that with myself, if someone came to me and said, ''Mr. Chairman, we have a problem here with this matter,'' and that happens numerous occasions in tribal politics, and I'm a busy person, I tell someone, ''you take care of this matter for me and look into this matter and get back to me,'' and I assume that's the process that was occurring.
Mr. SUNUNU. Given that it was the Democratic National Committee, the fund-raising organization, do you think they talked about raising money through political contributions?
Chairman GAIASHKIBOS. Yes, in my opinion, that's why they put money in, to be able to have access to the movers and shakers.
Mr. SUNUNU. You certainly weren't made aware of that meeting; were you?
Chairman GAIASHKIBOS. No, I wasn't.
Mr. SUNUNU. Thank you very much, Mr. Chairman. Thank you, Mr. Chairman.
Mr. BURTON. The gentleman's time has expired.
Mr. Kanjorski.
Mr. KANJORSKI. Thank you very much, Mr. Chairman.
This original deal did not involve your three tribes. It involved another tribe originally. And that fell apart and they withdrew from the operation, and then your three tribes got involved.
What period of time did that originally occur? When was the first contact made with your three tribes?
Chairman ACKLEY. Congressman, I was the last tribe talked to about the venture and I don't know exactly when they contacted the Lac Courte Oreilles tribe. I think they were first and then Red Cliff.
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Mr. KANJORSKI. And do you know what approximate date that was?
Chairman ACKLEY. I want to say in the latter part of 1993, when I was first contacted.
Mr. KANJORSKI. Now, at that point, were you asked to put any funds into this venture or were you just told that we need you to participate in this venture in order to pursue this application for the off site gambling location?
Chairman ACKLEY. I was informed that the Governor's proposal for the tribes to form the group would show favorable light on his approval of the casino from the dog track venture.
Mr. KANJORSKI. So you were told by someone that it was Governor Thompson's desire that the three tribes get together and form this joint venture with Mr. Havenick?
Chairman ACKLEY. Right, because it would be a reduction of existing sites on a reservation.
Mr. KANJORSKI. Do you recall who told you that?
Chairman ACKLEY. I want to say the other tribal leaders that we had a meeting with. And I think it was Chairlady Bieraugel, along with Chairman Molson from Lac Du Flambeau, I think.
Mr. KANJORSKI. So would it be fair to say it was your understanding that this was a done deal, that if the three got together and formed Four Feathers, the application was going to get the support of the State, the Governor, and was going to move through and accomplish——
Chairman ACKLEY. The directive was to get Federal approval first.
Mr. KANJORSKI. But that if you got Federal approval, the Governor would approve?
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Chairman ACKLEY. Yes.
Mr. KANJORSKI. And so, we have heard some statements made by the Governor, letters written and everything, and that is not representative in your opinion of what you were led to believe would be the Governor's position?
Chairman ACKLEY. I've known the Governor for a long time, and it is always a play on words. There is no expansion if there is a reduction. And we're talking off-reservation. If the Federal approval happened, the land would be held in trust for the benefit of the tribe; it would no longer be a public fee simple land, it would be a trust land and the casino could go ahead then.
Mr. KANJORSKI. Do you have any other casinos that the three tribes are involved in, or is this the only investment?
Chairman ACKLEY. No, just our own casinos.
Mr. KANJORSKI. Do any of the others? Do you have any?
Chairman GAIASHKIBOS. The Lac Courte Oreilles has one site and that's on-reservation.
Mr. KANJORSKI. Does that involve Mr. Havenick or his group at all?
Chairman GAIASHKIBOS. No, not at all.
Mr. KANJORSKI. Is it completely Indian run, or is it——
Chairman GAIASHKIBOS. Yes. We have no management company running our operation.
Mr. KANJORSKI. Why did you think in this instance, then, you should make a deal with an outside management company? If you had some experience running an outside gaming operation, why couldn't you just put the three tribes together and make the application to expand your casino operations on this dog track site?
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Chairman GAIASHKIBOS. First of all, let me just clarify Mr. Havenick's company is not a management company. It is currently a Class III operation. The facility is there as a Class III operation, and it was basically an opportunity for us without the resources to invest $20 to $40 million to construct a new casino site with a 7-year compact window that we had with the State.
Mr. KANJORSKI. Before that opportunity, he was going to benefit to the extent of 25 to 30 percent of the profits. If in fact you are putting this venture together, you are going to be responsible for it, if you are financing it, what is the benefit of having this fourth party involved?
Chairman GAIASHKIBOS. We're all going to benefit based on the studies by Arthur Andersen.
Mr. KANJORSKI. I understand. The three of you are clearly going to benefit and clearly Mr. Havenick is going to benefit. But if you already have a gambling casino and you now want to extend it outside of that limit and a new site, why couldn't just the three of you have gotten together if you had an indication that the Governor was going to be supportive?
Chairman GAIASHKIBOS. We don't have those resources, the financial resources to do that, Mr. Congressman.
Mr. KANJORSKI. Well, that is understandable. Did you reach out to see whether you could get those financial resources?
Chairman GAIASHKIBOS. You should see after we signed our compact. We had people approaching us constantly to provide an operation. And we're very diligent. We don't want to have people with questionable backgrounds, be affiliated with people with questionable backgrounds.
Mr. KANJORSKI. I understand that. Someone here said they felt Mr. Havenick was their friend. Is that correct?
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Chairman GAIASHKIBOS. Yes, Mr. Havenick is our friend.
Mr. KANJORSKI. Are you aware of the fact that the National Indian Gaming Commission felt that the terms of this agreement were not acceptable under the regulations and under the law?
Chairman GAIASHKIBOS. They never responded to the Lac Courte Oreilles that way.
Mr. KANJORSKI. So you are not aware of the fact that your contract did not comport with the standards set by the Department of Interior and by the regulatory bureau that succeeded what would be acceptable in a contract? None of you were aware of that? This is the first time that you are aware of what I am telling you?
Chairman NEWAGO. Mr. Congressman, it never got to that point. We were never given the opportunity to get to that step in this process. We followed the procedures and the steps that we needed to and never got to that process.
The other thing is——
Mr. KANJORSKI. It has been reviewed by the commission, and the commission——
Chairman NEWAGO. We have not gotten into that discussion with them.
The other thing is that concurrence from the Governor was never given the opportunity because we never got to that step in the process.
Mr. BURTON. The gentleman's time has expired.
Since the other Member who wants to ask questions is not yet here, would you put up on the screen the facts. I would like for all my——
[The information referred to follows:]
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[The official committee record contains additional material here.]
Mr. BARRETT. Mr. Chairman, is this the second round?
Mr. BURTON. No. I have not had a round yet. This is my first.
Mr. BARRETT. OK. Fine.
Mr. BURTON. I think we need to not lose sight of the facts of this case as I see it.
First of all, the law requires consultation with tribes that are applying for a license for a casino. The law of the Interior Department's policies clearly states that local opposition cannot kill an application. There has to be concrete detriments.
The law also says that if the Department believes there are problems with an application, they must—they don't have any latitude—they must consult with the applicant tribes.
Now, in this case, they did not consult with the applicant tribes. What happened was the rich tribes, who were making $400,000 per person, every man, woman and child, hired a very powerful lobbyist, Mr. O'Connor. Mr. O'Connor and others, including the tribal leaders of the rich tribes, did meet with the Department of Interior officials. The tribes in question, even though the law required that they be consulted, were not consulted. But the tribes that had a vested interest in keeping them from getting their license were consulted because Mr. O'Connor, by my reading, had access to the President, the Vice President, and a lot of other people at the DNC. And because of that, he arranged this meeting or they arranged this meeting and the tribal leaders did meet with the people at the Department of Interior.
Now $350,000, at least, was given by the rich tribes after this application was turned down, even though this application moved up the food chain. As soon as this was completed, two very top officials at the Department of Interior, the counsel to Mr. Babbitt and his chief of staff, Mr. Duffy and Mr. Collier, left the Interior Department to work for the rich tribes.
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It has nothing to do with whether or not you are for gambling. The fact of the matter is they arranged this meeting, the lobbyists did, the rich tribes were there; the ones that were supposed to be included were not included, were not even informed about it; and then $350,000 was given, which appears to be a political payoff; and then after that Mr. Duffy and Mr. Collier, two top executives at the Interior, go to work for the rich tribe. And then after that, Mr. Collier carries a $50 to $100,000 check to the DNC from the Shakopees.
Now, I don't know how anybody, even if they are blind, could not see these facts. Now, whether or not you are for gambling is irrelevant as far as this is concerned. What we are talking about is whether or not the law was not complied with, No. 1, whether or not campaign contributions were used to exert influence on people in the White House and at the Department of the Interior to kill this project. I think it is pretty clear, at least from my perspective it is pretty clear, that that's what happened and that we intend to make that case as we get further along into our hearings today and later on, and I thought that we should lay that out very clearly because the questioning kind of muddies up the waters as we go through it. So I wanted to take my 5 minutes to lay that out as I see it.
With that, I yield to Mr. Cox. Would you like the rest of my time? I yield to Mr. Cox the remainder of my time.
Mr. COX. I thank the chairman, and I would like to thank our witnesses and thank my colleagues for their attention to this matter.
I mentioned earlier that the question of whether or not your application ought to have been approved is an important one, divisive one, and one that is frankly of no interest to this committee in its oversight role just now, because we are, instead, charged with looking at violations of law in connection with political fund-raising and money and gifts and so on to Government officials in the 1996 and prior election cycles.
The New York Times, among many other papers, has outlined some of the facts in connection with this matter which have led most people to predict that an independent counsel will be required to investigate whether or not the Secretary of the Interior, Bruce Babbitt, in fact lied under oath when he testified last year before the U.S. Senate. The subject of that testimony, the subject of the potential independent counsel investigation, the subject of the Justice Department investigation thus far is not whether or not there should have been casino gambling or a dog track in Hudson, WI, but rather whether a third of a million dollars that was contributed in the process, was given to the Democratic National Committee and to the election effort of President Clinton, was on the level; whether or not the President's involvement in this—and the President, as you understand, was involved—was ordinary and normal; whether or not Bruce Lindsey's involvement was ordinary and normal; whether or not Harold Ickes's involvement was ordinary and normal.
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And so, while I understand that none of you worked at the Democratic National Committee, none of you worked in the White House, I want to ask each of you now under oath whether or not you know either personally, or as a result of information that has come to your attention in the course of this, whether or not you know anything at all about the involvement of the President or Bruce Lindsey, who worked for the President in the White House, or Harold Ickes, who worked for the President in the White House, or Chairman Fowler at the Democratic National Committee, do any of you know anything that would lead you to believe that those people were involved in the decision in this matter?
Mr. BURTON. My time has expired. Mr. Cox is recognized for 5 minutes.
Mr. COX. All right. I thank the chairman. And I start with Chairman Gaiashkibos.
Chairman GAIASHKIBOS. I have no personal knowledge of that, Mr. Congressman. However, in discovery, what the attorneys have found, they found internal memorandums and perhaps a phone call made from Air Force One to the White House and also a personal memo that was drafted by the President. I don't have that here at my disposal, but I believe that there was a memo by the President inquiring about what's happening with these Indian tribes, something of that nature. And that's the only knowledge I have of that.
Mr. COX. And do you have any knowledge with respect to the others that I mentioned, either Mr. Lindsey, Mr. Ickes or Mr. Fowler?
Chairman GAIASHKIBOS. No, I don't.
Mr. COX. Mr. Ackley.
Chairman ACKLEY. Mr. Congressman, I have to echo the same sentiment. I don't have any personal knowledge of all those things that occurred, no.
Mr. COX. Do you have any knowledge of any kind? That is to say, has somebody told you of these things?
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Chairman ACKLEY. No. I tried to find out things on my own by going to Loretta Avent and following the procedures, and going back to the Department of Interior, and finally having a meeting with Duffy. And as a tribal leader, not having any meetings with the Secretary, I still feel slighted by that somewhat. I think, as Secretary of the Department, he needs to meet with the elected leadership of the Nation of all the tribes and throughout the country. I think that's something that he should be doing at all times.
Mr. COX. And Chairman Newago.
And I should have referred to you as Chairman Ackley. I apologize.
Chairman NEWAGO. We'll forgive you.
I don't have any personal knowledge of these meetings that took place other than the fact that the record speaks for itself with regard to the litigation that we have going on. It is well-documented that there are certain things that took place. As I said, I don't have the personal knowledge, but it is on the record with regard to depositions and other documentations of memos and such that these meetings did occur.
Mr. COX. The New York Times on January 11th, in its recounting of the events that led to this decision, states that ''a pivotal day in the process was May 17, 1995. On that morning the Chippewa, seeking casino approval, met with Interior officials, and those Interior officials,'' according to the New York Times, ''never raised any concerns about the application. Afterward, Mr. Eckstein, who also attended the meeting, told his clients that he thought Interior approval was almost assured.''
What is your understanding of what happened on May 17, 1995, at that stage in the process? And I just go in the same order that I did before, starting with Chairman Gaiashkibos.
Chairman GAIASHKIBOS. Again, I have no recollection of that or any knowledge on that, perhaps because Arlyn Ackley, Chairman Ackley, at that time was basically the point person for the partnership along with some of his people, staff, that was working on this project.
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Mr. COX. Chairman Ackley.
Chairman ACKLEY. Yeah, I was trying to coordinate the information. And I know the conversations we had with the people in Interior Gaming, when they asked me about clearing up the parking lot for the land and trust issue so we weren't landlocked, that gave me an indication that the process was going forward and that they were going to approve the application. Why else would they talk about putting land in trust on behalf of the tribes? My personal thought was they were indicating that they were going to approve it. That's where I left it.
Mr. COX. Chairman Newago.
Chairman NEWAGO. I was checking. On May 17th, I participated in that meeting with John Duffy, and to be perfectly honest with you, I don't even know who exactly was all in that meeting. I do know that I became rather frustrated because of the types of conversation and the flow of the conversation that we were receiving from the Department people. And I could only relate a childhood experience at that time that I shared with John Duffy, and shortly after that we left the meeting. But I don't recall the specific content of the meeting, but I know that I did become very frustrated.
Mr. COX. As a result of not knowing up until that pivotal stage in the process that there was, in fact, a problem with the application, is it your sense that you were essentially denied an opportunity to remedy any defect in the application?
Chairman GAIASHKIBOS. Yes, that's correct. We weren't notified. At this point we were assuming that everything was on track and that we expected a decision any day that would be favorable. If there was a problem, then we assumed that we would be notified of that problem so that we could work on making the corrections and providing additional information, and that didn't occur.
Mr. COX. And at any time after that stage, were you apprised of the problem so that you could remedy defects?
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Chairman GAIASHKIBOS. No.
Mr. COX. Chairman Ackley.
Chairman ACKLEY. The only problem I could see was Duffy standing in the way of us getting to the Secretary. And like I said, my personal feelings is that that still concerns me that the Secretary didn't want to meet with us, and they were giving me indications that there was something else in play, that Duffy was talking on his behalf, and that what Chairman Newago refers to, getting frustrated. We were all frustrated because we didn't know if our message was getting through to the Secretary or not. And as tribal leaders, we were demanding an audience with the Secretary, not with Mr. Duffy, and that's the frustration that we had at that time.
Mr. COX. Chairman Newago.
Chairman NEWAGO. I was unaware of any problems. As I stated a few times earlier, we were preparing to open the casino. That was our belief. We went as far as having a job fair in Hudson, WI. We had continual meetings. We had floor plans drawn up. We were in the process of opening up a casino in Hudson, WI, and that was our belief.
Mr. COX. I see that my time has expired. I thank the chairman.
Mr. BURTON. The gentleman's time has expired. We are about to conclude with this first panel. I believe you would like 5-minutes more?
Mr. BARRETT. If I could. Thank you, Mr. Chairman.
This has been very enlightening for me and actually very helpful, because, frankly, my view of this, reading through the file, was that it was in many ways a moot argument, because to me at least, it seems clear that Governor Thompson was going to reject this, that it didn't make any difference what the Feds did. And as all of us know, it is a two-step process under IGRA. The first step is for the Department of Interior to make a decision, and then the Governor has the final say.
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That is why, as I have read several times now, I thought the Governor's position was clear that he was opposed to the expansion of gambling. And that to me, as I read this letter and watched the tape, although I have a question about the tape, was that there was nothing that could happen.
From what you are saying, you are saying that the Governor's position wasn't that clear; is that right? What is going on here? Because I think that you would agree with me that if you were the Department—if you were Secretary Babbitt and you read this letter, ''My position continues to be clear. I do not support an expansion of Indian gaming in Wisconsin,'' that seems like a pretty clear statement, and that when the Governor is opposed to it, that is the end of the discussion. What is going on under the surface here that made you optimistic that you were going to get this notwithstanding the Governor's public comments?
Chairman GAIASHKIBOS. Congressman Barrett, the political reality today is there is 30,000 Indians in Wisconsin. You, as elected official, realize that with 30,000 voters out there, the Governor is not going to play to the Indian constituents, he is going to play to the major constituents in Milwaukee and Madison and the large metropolitan areas in Wisconsin. And he's saying—what you've seen on this video was a debate during the last term of office that he ran for. And so, anytime the Governor is going to be confronted with that, of course he is going to deny that there is no further expansion of gaming. And if you look at Hudson, that's not a further expansion of gaming. It is currently a Class III facility.
Mr. BARRETT. But again, he was talking about in this letter, Indian gaming off-reservation. Again, ''Thank you for your recent letter regarding the expansion of Indian gaming to off-reservation sites in Wisconsin.'' So even the statement that you could have closed a reservation site in order to open this seems to be foreclosed by this letter.
But my question—and I agree with you that politically, and that was the point I was trying to make in my first round, that the majority of the people in the State of Wisconsin have stated their opposition. But you also stated that you are not a naive man, or words to that effect, and that you would not have been spending the time and effort that you did unless you had reason to believe, reason to be optimistic.
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I am asking you that in light of these what seem to me to be unequivocal statements from the Governor, there must have been some reason that you thought there is something going on here, and I am asking you did you have conversations with the Governor or the Governor's staff?
Chairman GAIASHKIBOS. I met with the Governor on several occasions in confidence, and the Governor's indication to me was, yes, you're absolutely correct. It had to go through the hurdles that it had to go through. And when it reached that point, if it was approved by the Feds, meaning the Bureau of Indiana Affairs, Interior, that he would not stand in the way.
Mr. BARRETT. So you are saying that this letter, then, is false?
Chairman GAIASHKIBOS. I'm saying—I'm not saying the letter is false. I'm saying that the Governor has been very wishy-washy on this issue all along. But let me just say this: We would not have had to close down our reservation site, because in our compact we have the opportunity for two sites.
Mr. BARRETT. Right. But when I read this letter, I thought, OK, maybe what is going on here if he was trying to be clever is to say an expansion of gambling, there would not be an expansion of gambling if one site was closed and another one was opened. Do you know what I am saying?
Chairman GAIASHKIBOS. Yes.
Mr. BARRETT. And you are saying that that is not even the case?
Chairman GAIASHKIBOS. That's not the case.
Chairman ACKLEY. Congressman, the Governor was aware that we made application for the conversion of the dog track into a casino. Once the land is put into trust status, then the Indian casino can go ahead, but it needs the concurrence of the Governor to object to that or not.
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Mr. BARRETT. But let me ask you this question: If you were the Department of Interior and you had this letter that I read from several times, what would you conclude the Governor's position to be?
Chairman ACKLEY. That he doesn't want any expansion of gaming.
Mr. BARRETT. Mr. Gaiashkibos.
Chairman GAIASHKIBOS. And if you read the press, I think you're going to get a whole different picture, because just as the chairman put on the screen, the Governor at one time said he's in favor of this. In fact, it was the Governor that pushed this proposal on us because the Lac Courte Oreilles wanted to open an additional site early on in Bayfield County, and the Governor said, I'll never support that unless there's two or three tribes in consortium to do this.
Mr. BARRETT. My time is running out. One final question. Much has been said about the meeting with the Department of Interior officials and members of other tribes, representatives of other tribes. Did you have any meetings with the Governor or Governor's people without opponents of Indian gaming being present?
Chairman GAIASHKIBOS. When it's tough to get an audience with the Governor myself and the Governor not returning phone calls to me, I assume if I'm going to meet with the Governor, it is his privilege and right to meet wherever he wants to.
Mr. BARRETT. I am not trying to impugn your integrity or anything. I just want to make the point that, yes, they met with some people. It is not unusual that you are not going to meet with the different factions at the same time.
Chairman GAIASHKIBOS. Perhaps he did unbeknownst to me.
Chairman NEWAGO. Mr. Chairman, if I may respond to some of these questions?
Mr. BURTON. The gentleman may respond.
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Chairman NEWAGO. I guess getting back to the point is that we never got to the point where we were going to ask the Governor whether he concurred or not. The application took a quick downslide, and we never got to that.
Mr. BARRETT. But his letter is dated June 9th.
Chairman NEWAGO. But we never got to that point of whether the Governor was going to concur with it or not.
Mr. BARRETT. I think my time has expired.
Mr. BURTON. The gentleman's time has expired. Unless Members wish to continue questioning, I think we are through with the panel.
Mr. CUMMINGS. Mr. Chairman.
Mr. BURTON. Representative Cummings.
Mr. CUMMINGS. Thank you very much, Mr. Chairman.
I want to take a moment to thank the gentlemen for being here this morning. In my district, I represent a lot of poor people, and I certainly can understand your efforts to try to lift their lives up. I really do. I have always been against gambling, but I understand what you are trying to do.
I also want to compliment our friends here from Hudson. The mere fact that you have taken your own money to come down here today, take up time to be with us to provide whatever you could in the way of testimony, we really do appreciate it. I thank you on behalf of all of us for being here.
Around this Congress, I might tell you that we hear a lot about family values. And I have always believed that if we are going to have family values, we must value families. That is so important. And I think that, as listening to some summaries a little bit earlier about who you are and the fact that you want your community to stay the wonderful community that it apparently is, we certainly understand that. We also value the fact that you value a wonderful family life, and so we thank you for being here.
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I just have one question for our witnesses. You know, when you have wonderful people like the group here from Hudson, and I know you must have known, and based upon a number of the things that Mr. Barrett has asked, you must have known that you were going to have stiff opposition to this. And I am just wondering, this wasn't a surprise to you; was it? Hello. Somebody speak up.
Chairman ACKLEY. Not to me it wasn't.
Mr. CUMMINGS. The opposition, you weren't surprised at it at all; were you?
Chairman ACKLEY. No.
Mr. CUMMINGS. So it is just interesting to see you there and to see them here and the fact that nobody subpoenaed them I don't think. They came here because they care. And so, I would imagine that when you have people that care that much to come here to Washington from Wisconsin and take a day or two off from work and to pay that airplane fare or however they came, that is very, very significant. And so, I can understand why perhaps Governor Thompson stated the things that he said in the letter that my colleague, Congressman Barrett, talked about. And I can certainly understand why this proposal went down the tubes.
Mr. Chairman, I will yield to my colleague, Mr. Kucinich.
Mr. KUCINICH. Thank you very much, Congressman Cummings, and to my colleagues.
The concerns that we hear today, as addressed by the chairman at the beginning of this committee meeting, had to do with whether or not there was any, essentially, plausibility for the rejection by the Department of the Interior of the application or if, in fact, the decision was made as a result of sharper political considerations.
I think that as we consider those issues and debate in this committee there are a few things that can be said without coming to any conclusions, and that is, first of all, when you have representatives here of Indian tribes who have described the conditions which exist on those reservations, we have to do something in this country to make sure that people are able to survive without resorting to casino gambling as a possible way of sustaining their economic livelihood; we have to do more for American Indians across this country. And I want this acknowledged here today in this forum.
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Furthermore, the concerns that the Department of Interior had to address, whether or not there were political motivations behind them, they had to be something plausible, first of all, that there was community concerns and objections. Hudson apparently made a very strong case why there should not be a casino in their area.
I am a former city councilman and a former mayor of a city, and I understand what it means when people of a neighborhood really don't want something in their community or anywhere near it. So I can understand why they would be very strong in their objections to a casino or any kind of gambling in their area. That should not be taken personally by the members of the Indian tribe, because I am sure they would object to that if it was sponsored by anyone. However, the fact that it is coming from a group that is economically disadvantaged to begin with certainly raises concerns for your plight.
Furthermore, I think that when we look at whether or not the Interior Department made the right decision, we have to see if there is any plausibility in their rejection. And if they have concerns of the contract that was laid out, which you so ably would contest, or the concerns of the community as part of their rejection, I think we have to give that some credibility, and then we are going to listen later to evidence as to whether or not it has been political. But I certainly want to congratulate you on bringing forward the plight of Indians.
In Cleveland, we have an active movement. I am familiar with Dennis Banks and Russell Means and others from 25 years ago, when they were stating the concerns about economic viability. So while this hearing will pass away at some point, your concerns have to continue to be articulated. And you didn't get the gambling outlet you were seeking, but you sure better get some economic assistance in that area, and I support you in that.
Chairman NEWAGO. Mr. Chairman, if I may respond?
Mr. BURTON. The gentleman may respond. We are about to wrap this up, so go ahead.
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Chairman NEWAGO. OK. It is very difficult for me to sit here and hear about objection. When I sit in northern Wisconsin and look at the situation in Connecticut, and for the most part the entire State opposed and objected the annexation that the Pequots presented, and the Department of Interior approved that. And it is in litigation yet I believe. So for objection, it is difficult for me to understand that.
The other point I want to make is that the trust responsibility is an obligation that this agency has to me, a Native American. And a lot of people don't like to hear that.
And Congressman Cummings was talking about opposition. As a man of color, we understand opposition. My children understand opposition. I can remember when we were in the middle of our treaties in a battle we had in Wisconsin, young Indian women at a basketball game were being ridiculed and picked on because of the color of their skin. We understand opposition and we understand the rippling effect that takes place.
And we talk about morality in this community of Hudson. I've got cousins that live in Minneapolis, MN. Every Sunday afternoon they drive to Hudson, WI, and they drive over because they can buy beer over there. That's what they do. Every Sunday that bridge is full of Minnesota plates going across there.
So we talk about moral issues. We dealt with the opposition. We follow the procedures that this Congress has put before us and that agency, the Bureau of Indian Affairs. And something is not right with the picture. We talk about family and we talk about all the good things. But something is not right with the picture.
And I don't want to be involved in this debate with the Republicans and the Democrats and who did what. Because you're probably right, maybe on the other side there is something over there. I don't want to be a part of that. What I want to know is, if we want to get to the truth, let's get to the truth.
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I've got a bunch of documents that I continue to look at here that tell me that something is not right with the picture. It is frustrating for me because I'd certainly like to see someone stand up and say, hey, let's take a look at this. That's why I'm here.
Chairman GAIASHKIBOS. Mr. Chairman, I believe that early on I was going to be afforded a few closing remarks, if I could, please.
Mr. BURTON. OK, quickly.
Chairman GAIASHKIBOS. Thank you.
I, too, as Chairman Newago, I want to state emphatically I'm not here to get into a partisan fight. I'm here to tell the story on behalf of my people at Lac Courte Oreilles as a tribal leader. I fought for both the Democrats and Republicans and the one Independent that serves on this committee as a Marine Sergeant in Vietnam. And my battle here today is on behalf of my people.
Statistics have proven, in Sawyer County, where I reside, where my reservation is, that there was a—that our friends from Hudson stated there is more crime where there is gaming. There is crime throughout this country. I'm afraid to come to this Nation's Capital because of the crime. But I want to point out that we found out that the opposite is true. When you provide opportunities for all people for jobs, there is less crime in the communities because people are working.
And I, too, feel strongly on the moral grounds that Minnesota is a dry State on Sundays and people travel back and forth from Minnesota and Wisconsin, and I don't see a great outpouring to stop that alcohol flow and the carnage on the highways that we see today with drunk drivers.
In conclusion, I just want to remind you that I feel it ironic that a mid-level official within the Bureau of Indiana Affairs, Michael Anderson, would make a monumental decision on behalf of the Department of the Interior when it is clearly the Secretary's position to make that.
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And in closing, I'd like to invite you out to the Lac Courte Oreilles on a fact-finding mission, and throughout Indian country, and see for yourself the economic hardships that our people face today. I just want to say that Mr. Havenick and his family are very honorable people, and I want to thank them for their support in this project, and I feel strongly that we put a lot of work and effort into this and we're not some dumb Indians that are sitting out in Indian country being taken advantage of.
Mr. BURTON. Let me just end up by saying that the Interior Committee Chairman Don Young and Subcommittee Chairman Richard Pombo will be looking into some of the problems that you alluded to today. I talked to Mr. Pombo about this last week. So I am sure that he will be looking into some of the other aspects of the problems that you face.
With that, I want to thank you all very much for being with us today. I think you acquitted yourselves very well.
Chairman GAIASHKIBOS. I thank you, with all due respect of all the members of the committee. Be good.
Mr. BURTON. Our next panelist is Mr. Fred Havenick. Mr. Havenick, if you would come forward at this time.
Mr. Havenick, would you remain standing so you could be sworn in, please.
[Witness sworn.]
Mr. BURTON. I now recognize the committee's chief counsel, Mr. Richard Bennett, for 30 minutes. Excuse me. Mr. Havenick, do you have an opening statement?
Mr. HAVENICK. I've been sitting here all morning and hoping that I would get my opportunity.
Mr. BURTON. Well, then, you will get a 5-minute opening statement, and if it is longer than that, you may submit it for the record.
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STATEMENT OF FRED HAVENICK, SOUTHWEST FLORIDA ENTERPRISES
Mr. HAVENICK. Thank you.
Chairman Burton and distinguished members of this committee, my name is Fred Havenick, and I reside in Miami, FL. Along with other members of my family, I am engaged in a variety of business activities in Florida and other parts of the country, including ownership of dog tracks in Florida, Texas, and Wisconsin. I would like to give you a short overview of how we got here today.
In 1987, the voters of Wisconsin endorsed the establishment of gambling in their State by popular vote. Our company, along with numerous others, submitted proposals to open dog tracks there, and in 1989, we were granted a license for such a facility in Hudson, WI, which is just outside Minneapolis, St. Paul.
One of the requirements for licensure was approval to build the track by the local city council, which we had received the previous year. It took more than 2 years from the time of licensure to the opening of the facility. Among the reasons for this long period of time was that we were required to build a new interchange on Interstate 94 and a four-lane highway to the track site. We also had to construct a major earth and berm, and to comply with various other State-required environmental safeguards.
Virtually the same month we opened, in 1991, Indian casinos began operating near us in both Wisconsin and Minnesota. A Federal judge had ruled earlier that year that when the lottery had passed in Wisconsin all games of chance were permitted. From that very first day, the track lost money.
It quickly became clear that we could not compete with Indian casinos. At the same time, some Indian tribes found that they themselves were competing on an uneven playing field. Those with reservations in remote areas of the State were not generating meaningful revenues at their casinos, while tribes lucky enough to be located near big cities were getting very rich.
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By early in 1992, it became apparent to us and some of the Indians that we both had what the other needed. Each had one-half of the molecule. We had one of only five Class III gaming facilities, located on a prime site near a heavily populated area, and they had a product that was much more attractive to the public than ours.
All business deals are marriages of convenience. In 1992, we were approached by the St. Croix Chippewa to turn the dog track into an Indian casino. As part of that effort, a plebescite was held on a snowy day in December 1992, in which the voters of Hudson endorsed our proposal by a simple majority. However, our partnership attempts with the St. Croix fell through and we began working with other Chippewa tribes located in far northern Wisconsin. This arrangement was finalized in the fall of 1993.
This business arrangement, negotiated jointly by our attorneys and attorneys for the three tribes, was quite simple. We would turn the track over to the tribes once an application to place the land in trust was approved by the Federal and State governments but would continue to be the sole guarantor of the mortgage. A management company, consisting of the three tribes and myself, would be formed to operate the casino and split the profits four equal ways. The existing debt on the track, about $40 million, would be paid by the partnership. In addition, that same partnership would own and operate the parking lot, though this land would not be put in trust. The parking lot would also be used as security for the mortgage on the track.
Our partnership was unique in many respects. First, the land going into trust had already been approved by and was operating as a Class III gaming location in Wisconsin. It has continued to do this to the present time. Second, the compacts, as previously described, had envisioned and permitted off-reservation gaming.
Third, this was a fair and equal four-way partnership between three Indian tribes and a non-Indian company. Each of the partners had two representatives on what would be a board of directors. From the beginning, the tribes would have six of the eight votes. A simple majority governed the operations. Management responsibility was divided equally, not dominated by the non-Indian group. Since the dog track and most of the other facilities were already built, financing was already in place. Any and all guarantees would be solely our responsibility. There was never to be any liability on the part of the tribes.
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It is important to stress that while we had financial responsibility for the casino building and the parking lot, all decisions on management would be controlled by the tribes. They would have three-fourths of the votes on all matters. We would not profit in any way from the transfer of the building to the tribes, we would only receive one-fourth of the profits from the operating casino.
It took over 1 year for the partnership agreement to be written. Numerous meetings were held between us and our lawyers and the tribes and their lawyers. In late 1993, the tribes began the application process to place the land in trust. At that time we recognized that taking the land off the tax rolls could be detrimental to the interests of the city and other governments. We entered into negotiations with the city, county, and school board to develop a payment-for-services contract based on needs that were calculated by the local governments themselves. This agreement was finalized and overwhelmingly ratified by all parties in the spring of 1994. This included the city of Hudson, St. Croix County, and the Hudson School Board.
The remainder of the story has been well documented. The tribes received unqualified approvals for the casino application from the BIA offices in Wisconsin and Minneapolis, and their approvals were sent to Washington late in 1994.
While we were told the confirmation process there would take about 30 days, we heard nothing for months. We now know that soon after the Minneapolis office approval was announced, an intense lobbying and propaganda campaign began against us. We finally learned that lobbyists from opposing tribes intervened and delayed the process.
Delay was expensive for all of us concerned. For my business, delay meant continuing to pour millions of dollars into the track in Hudson so it could keep operating. For the tribes, delay meant continuation of life in poverty for thousands of tribal members.
In late April, we engaged the services of Paul Eckstein whom we knew to have access to Secretary Babbitt. Paul's job was not to sell the casino project but to find out what we could do to get the application back on track. As we again found out later, there was nothing he or anyone else could do.
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Two incidents that took place following the turndown of the application perhaps tell the story best. The first was on August 15, 1995, just a month after the rejection. I was at a fund-raising event in Florida where I ran into Terry McAuliffe, chairman of the finance committee for the President's re-election campaign. After the meeting, I went to say hello to Terry. I've known Terry for quite some time, mostly through his political activities. At the same time, Terry approached me with a large smile on his face and said, what's doing in doggiedom? I said that we were having an enormous problem with an Indian gaming project in northern Wisconsin. He said, oh, I know all about that; to which I responded, come into my office, a private corner of the meeting room.
I recall that Terry said, I took care of that problem for you. I was baffled and asked him what he meant. I recall that he said, I got Delaware North's Indian casino project killed, the one that would have competed with you. I set up the meeting with Fowler and others and turned it around.
I told Terry that was my project and I was the one who owns the track in Hudson. His face dropped. He was clearly in shock and said little else.
The second incident took place on December 3, 1996, at the reservation of one of our partners, the——
Mr. COX [presiding]. I am sorry, Mr. Havenick. Could I interrupt you? What was the date of that conversation?
Mr. HAVENICK. August 15, 1995.
Mr. COX. Thank you.
Mr. HAVENICK. The second incident took place on December 3, 1996, at the reservation of one of our partners, the Lac Courte Oreilles in Wisconsin. There was a meeting attended by all three partners, myself, and officials of the BIA, including George Skibine. During the meeting, there was much complaining about the turndown of the Hudson casino application. Finally, Mr. Skibine said, look, don't blame me; we would have given it to you; it was the political people who turned it down.
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I am the main reason we are all sitting here today discussing the Hudson casino. I was the one who absorbed Mr. Eckstein's costs that led to Mr. Babbitt's damning statements. And after the rejection, I funded the lawsuit that uncovered the evidence of political improprieties in the decision. I believe I was the factor never considered by Heather Sibbison when she told the White House in a moment of callous hubris that they were going to turn the tribes down without much explanation. ''Without much explanation,'' I believe that is a direct quote.
I believe the Department never thought that they would have to explain their actions because, after all, this was just a bunch of poor Indians who would never be able to fight back. They could have a major project turned down without much explanation because no one would ever come forward and ask for one. But these tribes had a partner who had much to lose as well as to gain and who, fortunately for them, had the resources and the will needed to tear at the fabric of the Department's cover story and to continue the fight.
A grievous wrong had occurred. These tribes had spent years putting this agreement together. They successfully negotiated in good faith with the local community. They obtained a favorable recommendation from the local and regional BIA offices. We all played by the rules.
The Secretary of the Interior violated his fiduciary responsibilities to these tribes when he claims that he blindly accepted the city of Hudson's 11th-hour change of direction without requiring any explanation or attempting to resolve any identifiable problem with the project.
These tribes and their 10,000 members were simply sold out. The Secretary of the Interior decided to protect the gaming monopolies of extremely rich tribes.
Unlike the tribal members, I am a businessman with other ventures to rely upon. But even to me the downturn of Hudson has been devastating. If at end of the day this project fails, I can go on to other matters; I do have other resources. My partners, however, have no other matters to go on to. They are poor, and they will remain poor. They have one chance for their day in the sun, and that chance is in Hudson, WI.
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Before I take your questions, I want to set the record straight on the claims that there is thunderous local opposition to this project. This project and property historically was a farm in rural St. Croix County. There's a picture of the track and the parking lot to my right. It was only annexed into the city of Hudson to obtain city sewer and water services.
St. Croix County is by far the largest local governmental unit that took an official position on this project. The county has a population of 54,500, contains over 900 square miles, and is governed by a 31-member county board of supervisors representing all areas of the county, including the city of Hudson and the town of Troy. The city of Hudson has a population of 7,000, the town of Troy a population of 3,000.
Counties in Wisconsin have significant governmental responsibilities, including law enforcement, the courts, health services, social services, welfare service, protective service, mental health service, and highway maintenance. The St. Croix County Board of Supervisors overwhelmingly supported our proposal in 1994. And despite intense 11th-hour lobbying, they affirmatively refused to back the Hudson City Council's last minute 4 to 2 vote reversing the city's position.
The county's position is not surprising. Outside the city of Hudson and the town of Troy, there is a substantial desire for economic development and good-paying jobs. Not everyone is as rich as the people who live in Hudson. This project would create over 2,000 jobs for St. Croix County residents. In addition, the dog track has been the catalyst for a number of new local businesses such as Wal-Mart, K-Mart, a Fairfield Inn, and a Menard's Home Improvement Center. Everyone understood that this project would produce significant new business and employment opportunities. That is why the broader local community of St. Croix County never changed its position that the project would not be detrimental to the surrounding community.
[The prepared statement of Mr. Havenick follows:]
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INSERT OFFSET FOLIOS 42 TO 46 HERE
[The official committee record contains additional material here.]
Mr. COX. Mr. Havenick, thank you very much for your testimony.
I am next going to recognize the senior investigative counsel, James Wilson, for 30 minutes. Before I do so, I would like to ask you to go over as plainly as possible one element of your testimony.
In preparing for this hearing, I have reviewed scores of Government documents and a mountain of press clips and I have not heard before from any source what you have recounted, the explicit statements made by Terry McAuliffe which you told me were made on August 15, 1995. Could you tell me as plainly as possible what happened and what he said?
Mr. HAVENICK. Yes. I was at a fund-raiser in Miami and I——
Mr. COX. A fund-raiser for whom?
Mr. HAVENICK. A fund-raiser for the Clinton/Gore Re-election Campaign.
Mr. COX. To which you were a donor?
Mr. HAVENICK. To which I was an attendee and a donor.
Over the years—I know Terry McAuliffe because Miami is a hotbed of political activity and many of our—my personal friends are very involved with the Democratic party and the Republican party.
In the middle 1980's, I also became involved in a lot of the political happenings, in part because of what was happening in Miami in the early 1980's, when it had been overrun and it was kind of paradise lost. So there was a tremendous interest in bringing the attention of the national Government, the Federal Government, to the plight of what was happening in Dade County.
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Through a friend of mine, Jerry Berlin, I met Terry McAuliffe and at that time and for years after was a fair contributor to the Democratic party. I've also contributed to the Republican party, but during that time I was a member—he was a member of the Democratic Senatorial Campaign Committee, and he was involved in various other fund-raising events, one of which was held at Barbara Streisand's house, and I met various political figures, both Democrats and Republicans, but primarily Democrats, and it was interesting to hear what was happening in the rest of the world and to tell them what was happening in Dade County.
That's the background of my knowledge of Terry. At the meeting on August 15th, I hadn't spoken to Terry McAuliffe probably in 3 years, and he was the one who ran the meeting. He was describing the efforts to run the President's re-election campaign, and one of the primary goals was to raise a sufficient amount of money that there would not be any primary fight over the nomination. And I was sitting there and listening, and I was a potential contributor.
After the meeting, I walked up with one of my friends to say hello to him, and he recognized me and said to me, you know, how are you doing? What's happening in doggiedom? ''Doggiedom'' was our reference to the world of dog racing. And we started the conversation. And I said, things are really not going all that well in northern Wisconsin, where we have a track. And he said, oh, I know all about that. And I was surprised.
And there were a lot of people standing around, so I said to him, you know, please come into my office, meaning a quiet corner of the room. And when I was in that corner of the room, we had the discussion which involved his involvement with Fowler and getting the meeting set up.
Mr. COX. This is particularly the part of your testimony I'm interested in. Could you recount that as explicitly as you could recall it?
Mr. HAVENICK. Yes. We went into the corner, and he said to me—I said, we are having tremendous problems with an Indian casino in Hudson, WI. And he said to me, I know all about that. And I said, what do you know? And he said, I was instrumental in getting that proposition turned down; I worked with Chairman Fowler and others to get that Delaware North proposition turned down, and you will not have them as competition. And I said, that's not—that track is not Delaware North, that track is us, and that was my project that was killed. And he was—he was startled by that. That was the extent of that conversation.
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Mr. COX. Thank you, Mr. Havenick.
And I now recognize counsel. The time that you have just taken will come out of my time, and I recognize counsel, James Wilson, senior investigative counsel, for 30 minutes.
Mr. WILSON. Mr. Havenick, good afternoon. We very much appreciate your coming here today. Representative Waxman requested that you appear today, and we are very pleased that you were able to come.
I know the Hudson Dog Track has been a long ordeal for you, and we really do appreciate the candor of your opening statement, and I certainly would like to followup on a number of issues that you have raised during the statement.
But before getting into some of the substantive issues, I wanted to ask you about the Department of Justice investigation of this matter. Has anyone from the Department of Justice ever spoken with you about the Hudson Dog Track?
Mr. HAVENICK. No, they have not.
Mr. WILSON. You have been to Wisconsin and have met with tribal chairmen on a number of occasions, haven't you?
Mr. HAVENICK. Yes, I have.
Mr. WILSON. And you have met with numerous Department of the Interior decisionmakers; isn't that correct?
Mr. HAVENICK. Yes, I have.
Mr. WILSON. You also met with the Governor of the State of Wisconsin; have you not?
Mr. HAVENICK. Yes, I have.
Mr. WILSON. And you do have a considerable knowledge about the community support and opposition to this particular application; is that correct?
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Mr. HAVENICK. Yes, I do. That is correct.
Mr. WILSON. Overall, would it be fair to say that you are one of the people who knows the most about the entire Hudson Dog Track matter; is that correct?
Mr. HAVENICK. That would be correct.
Mr. WILSON. You also met with a number of fund-raisers and contributors, and you just recounted a story about a meeting with Terry McAuliffe, and you've discussed the Hudson Dog Track matter with those individuals; is that correct?
Mr. HAVENICK. I never discussed the Hudson Dog Track matter with anyone at a fund-raiser prior to the turndown in July 1995, no.
Mr. WILSON. Now, you did mention two things in your opening statement that really caught our attention. One was the meeting you have just recounted with Mr. McAuliffe. I believe at the time he was the chief fund-raiser for the Clinton/Gore 1996 Re-election Campaign.
You also mentioned a meeting with Mr. George Skibine, who is a witness scheduled to appear tomorrow, and you discussed a meeting you had with him, and I'd like to ask you questions about that later. But I'll ask you again, notwithstanding your involvement with this matter, you've never been contacted by the Department of Justice; is that correct?
Mr. HAVENICK. I have never been contacted by the Department of Justice.
Mr. WILSON. Thank you.
Now, I'd like to followup a little bit with the meeting that you mentioned that took place at the Lac Courte Oreilles Reservation in Wisconsin. It was a meeting in your opening statement that you indicated George Skibine attended. Do you recall what the purpose of that meeting was?
Mr. HAVENICK. Yes. The purpose of that meeting was to go over ways in which we could correct the situation on our application. It was to go over a review of where we were in the application process, even though it had been turned down.
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Mr. WILSON. And is it fair to say you were there to participate in that review of the Hudson Dog Track application to that point?
Mr. HAVENICK. Yes, it is.
Mr. WILSON. How did the subject of the Hudson Dog Track rejection come up at that meeting?
Mr. HAVENICK. The meeting was—was held in the bingo hall of the Lac Courte Oreilles, which is a fairly large room, and there were a number of questions that were asked. But the main question that was on the minds of both the three tribes and myself was what happened in Hudson, and it just naturally came up among the first questions that were asked.
Mr. WILSON. And was that a question asked directly of Mr. Skibine?
Mr. HAVENICK. Yes, it was.
Mr. WILSON. And what did Mr. Skibine say when he was asked what happened with the application?
Mr. HAVENICK. At first Mr. Skibine started answering the question in political terms, but when he was pressed after about the third or fourth question, he said it was kind of a mea culpa. He said, listen, we would have approved it or we approved it. When it got upstairs, politics took over.
So I got the impression that he was trying to justify to the tribes that he was not the person who was involved in the final decision, because I had always felt that he was in favor of this decision, that he was extremely sympathetic to the plight of the tribes.
Mr. WILSON. So knowing what you knew about Mr. Skibine's involvement, did he appear—when he finally gave an explanation, did he appear to mean what he said?
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Mr. HAVENICK. Yes.
Mr. BURTON [presiding]. Would counsel let me interrupt just for a moment?
Were there other witnesses there when Mr. Skibine said that?
Mr. HAVENICK. Yes, there were.
Mr. BURTON. Could you enumerate or give us the names of some of the people that were there?
Mr. HAVENICK. Yes, Rose Gurnoe from the Red Cliff Tribe was there. Chairman Ackley was there. Bill Cadotte from the Lac Courte Oreilles was there. Margaret Diamond from Lac Courte Oreilles was there. Al Trepania from Lac Courte Oreilles was there. And there were probably another 10 people from the tribes—at least 10 people who were there. And there were also people from the—from the Bureau of Indian Affairs who were there.
Mr. BURTON. We may not have all of those names. I'd like for you, to the best of your knowledge, give us a list of those, because we are going to have not only you under oath but Mr. Skibine and others, and we want to make sure that we get the correct answers on these questions.
And, once again, you say that he said that he was in favor of it, but it was kicked upstairs and it was turned down by people upstairs because of political pressure, or words to that effect?
Mr. HAVENICK. We were not against the proposal; we were in favor of it. It was when it got upstairs that politics took over.
Mr. BURTON. OK. Thank you.
Mr. WILSON. Were you surprised by Mr. Skibine's answer?
Mr. HAVENICK. No. Actually, I had really always thought that Mr. Skibine was very sensitive to the needs of the tribes and sympathetic to the project.
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Almost everyone we had met at the Bureau of Indian Affairs thought that this was an excellent project, because what was happening in this deal was that you were taking three Indian tribes and putting them together in a business proposition which had really never happened before, and you were throwing into the mix a non-Indian group of people, and they felt that each of the groups could learn from the others and that there was a certain degree of business acumen that the non-Indian group would bring to the table and there was a certain knowledge of the Wisconsin area that would be brought together by the Native Americans.
So everyone who ever heard of this idea, until we were turned down, to the best of our knowledge, thought it was terrific. They also thought it was terrific because it was taking land that the State had already designated as Class III gaming land. The dog track is there. The dog track exists, and people could argue for the next 18 years over whether or not there should be a dog track or whether they have to drive past the dog track, but the dog track is a fact of life; it's there and it exists.
And it was taking that dog track, which had a terrific location, but we were precluded from going into that business—and I think someone made reference to the fact that we couldn't get local approval so we went to the tribes as our way of getting the casino. You cannot get local approval in Wisconsin, because casino gambling is not legal for anyone but Indian tribes under IGRA.
Under the compacts of the tribes, there are three ways the tribes can have gambling. No. 1 is on their reservations; No. 2 is on land taken into trust prior to 1988, which was prior to the enactment of IGRA; and the third is land subsequently taken into trust, which is what this fell under.
So we always believed that the State and the Governor who signed the compact contemplated that there would be off-reservation gambling in Wisconsin or they never would have signed the compacts as they were.
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Mr. WILSON. You brought up an interesting issue there, and it was the one that we have discussed a little bit with the previous panel, and it was the one involving expansion of casinos in the State of Wisconsin, and I'd like to take just a second and try and get as far as we can with that.
A statement was played on one of the monitors here, and it was a campaign statement by Governor Thompson that indicated that he was against the expansion of gambling in Wisconsin. In your view, was the proposal, the application to take land into trust, an expansion of gambling in Wisconsin?
Mr. HAVENICK. No. In our view, off-reservation gambling was permitted under the compacts so long as the total number did not exceed the total number that were permitted under the existing compacts. And every time Governor Thompson—and he is very careful about his use of words in gambling and expansion—we do not feel that this constitutes an expansion of gambling, we feel that it actually is a contraction of gambling, because instead of having a Class III dog track and three more Indian casinos, there would just be one instead of the potential for four.
Mr. WILSON. Let me just ask you a question, because I think some simplification is in order here. Under the current compacts in the State of Wisconsin, the three tribes that are participants in the dog track application—the Lac Courte Oreilles, Red Cliff, and the Mole Lake-Sokaogon—how many casinos are they allowed under the current compacts?
Mr. HAVENICK. Under the current compacts, each one of the tribes is allowed to have two casinos, so they can have a total of six among the three tribes.
Mr. WILSON. And there is already the existing dog track, so that could be seven gambling facilities in the State of Wisconsin.
Now my understanding is that if the application had been approved, the tribes would have foregone the right to a second casino, which would have meant that they would have each had potentially one casino and the dog track application, so instead of seven total facilities, there would have been a total of four gambling facilities in Wisconsin; is that correct?
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Mr. HAVENICK. That is exactly correct.
Mr. WILSON. So just trying to characterize this whole discussion we've had so far, is it fair to say that there would literally have been a fairly significant reduction in the number of casinos in the State of Wisconsin if this application had been approved?
Mr. HAVENICK. Yes, if you wanted to say that you were against the expansion of gambling, there are currently 17 casinos operating in Wisconsin. This really would have reduced that number by 3—17 operating. There would be more permitted, but it would be almost a 20 percent reduction in the total number of casinos, yes. And I don't think that would be construed to be an expansion.
Mr. WILSON. And I was going to ask you, that seems to be very consistent with not only Governor Thompson's statements but with the intent of the statements as well. He seems to have indicated he doesn't want more casinos in Wisconsin.
Mr. HAVENICK. That is correct.
Mr. WILSON. I'd like to return for just a moment or two to the points you raised about Terry McAuliffe, because there were some things brought up there that may not be understood by everybody.
I have a copy of your prepared statement here. And you mentioned here a term, ''Delaware North.'' It says—you put in quotes, ''I got Delaware North's Indian casino project killed, the one that would have competed with you.'' Do you have an understanding of what the reference to Delaware North is?
Mr. HAVENICK. Yes, I do.
Mr. WILSON. If you could, just given your hindsight; explain the significance of Delaware North in the Hudson Dog Track application.
Mr. HAVENICK. Delaware North had a significance in the campaign. What had happened was that in November 1994, we received the approval from the Department of the—the Bureau of Indian Affairs in Minneapolis that the land be taken into trust.
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We called the BIA—we, someone in my office—and were told that it generally takes 30 days to get an approval once you have gotten the approval out of the regional office. Also, to the best of our knowledge, and the person on the phone from BIA, there had never been an overturning of a regional office recommendation on this subject.
So what had happened was, a gigantic propaganda and lobbying campaign was begun against us by the tribes that did not want the additional competition. And this lobbying campaign included disparaging us by calling us other names and alluding to other things that we may have done. It extended to everyone; it extended to the Federal Government, it extended to the local government of Hudson, because we got the O'Connor letter, which I think will probably come up at some point, from the Freedom of Information Act, by requesting the city of Hudson to turn over all of the documents they had involving this to us.
And we found, through that, that there was direct involvement and collusion of the St. Croix Chippewa with the Hudson City Council and it was coming in over the Hudson City Council's fax machine. And I don't think that's government in the sunshine, but that was what, in fact, was being done.
Mr. WILSON. Is it fair to say then, from your perspective, there were a great many misrepresentations made about the proposal at the time of the consideration in 1995?
Mr. HAVENICK. Yes, there were. And I believe Terry McAuliffe was misled by the people who were making the misrepresentations.
Mr. WILSON. And in many respects it seems that some of the opposition that perhaps was stated at the time might have been influenced by a number of the misleading statements made. Is that your understanding of what happened?
Mr. HAVENICK. That is my understanding and belief, because we filed the application in October 1993, and it took until November 1994 to get the approval from the Minneapolis office.
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We had gone through every rule and every hoop and every procedure that the BIA had for an IGRA application. During that time, there was opposition from local people. It was read, it was digested by the BIA, and it was discounted.
And I'd like to point out one other thing just as an aside. Secretary Babbitt said in his testimony in the Senate that Governor Thompson was irrelevant as far as his reaching his decision. So I think I'd just like to clear up the record on that.
But we have followed every rule, and these people had had 14 months in which to object or make any economic studies or whatever they needed done, and nothing had come up that the BIA found to be not insurmountable. It was after the approval from Minneapolis that we were just hit with this firestorm of lobbying and political innuendo and everything else.
Mr. WILSON. Just finishing up on the matter of your conversation with Mr. McAuliffe, prior to your seeing him at the fund-raiser you described, did you have any reason to believe or did you know whether Mr. McAuliffe had any involvement in the Hudson Dog Track matter?
Mr. HAVENICK. I had no reason to believe that he did. And up until really almost the end, we felt that the merits of our case were so strong that this whole thing would be decided on its merits and that politics would never get involved in it.
Mr. WILSON. So it sounds like it's fair to say that his candid statement came as a great surprise to you.
Mr. HAVENICK. A very great surprise, yes. Hearing that, I knew the person responsible was very surprising.
Mr. WILSON. I'd like to put up, if we can, an exhibit. It's in the book in front of you exhibit 317. It is a memorandum to Jennifer O'Connor from David Myers.
[Exhibit 317 follows:]
INSERT OFFSET FOLIOS 47 HERE
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[The official committee record contains additional material here.]
Mr. HAVENICK. What number is it?
Mr. WILSON. It's exhibit 317. It takes me a long time to leaf through these things as well. I'm lucky I have one pulled out. This is a memorandum from Jennifer O'Connor to David Myers dated June 6, 1995, regarding Wisconsin Dog Track.
Now, just by way of information, Jennifer O'Connor and David Myers both work for then-Deputy White House Chief of Staff, Harold Ickes. And I wanted to turn your attention to the second paragraph, but before I do that I'll say the second reads: ''At that time they are 95 percent certain that the application will be turned down.'' And then in the second paragraph it reads: ''Nonetheless, she stated that they will probably decline without offering much explanation because of their discretion in this matter.''
I wanted to get your sense of the declining without much explanation. Have you ever seen this memo before?
Mr. HAVENICK. Yes, I did.
Mr. WILSON. When did you first see the memo?
Mr. HAVENICK. I saw it about 3 months ago. On one of the documents—we have a lawsuit against the Bureau—the Department of the Interior that is currently going on in Madison, WI. And the Department is very slow in getting documents to us. I don't think this committee would understand that you don't get documents when you ask for them, but we have a tremendously difficult time getting any documents.
Mr. WILSON. I don't mean to cutoff anybody but we've got some experience in slow receipt of documents, but please continue.
Mr. HAVENICK. As they dribble out—and the White House is particularly slow in producing documents in the lawsuit. But as these—as these—and I know you have no experience in that but I'll just tell you that as an expert witness. I did see this though, about 3 months ago. It was one of the documents that was produced under a request that we had made. Probably fourth request, but yes.
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Mr. WILSON. And when you saw this sentence, ''They will probably decline without offering much explanation,'' how did you feel?
Mr. HAVENICK. I felt that they really understood what had happened. I felt that they really understood that the current local opposition, that means opposition that was existing at this time in 1995, was manufactured by the opposition. The local opposition was manufactured by them, the Federal opposition was being manufactured by them. Because prior to November 1994, no one really seemed to care much about what was happening with this application. Not people in Wisconsin or—other than some of the local people and that they understood that this was all part of this bigger campaign. But nonetheless they were going to turn it down anyway. They were not going to do what was right.
Mr. WILSON. Now, the memo that we have or that we are looking at right now is from one member of Harold Ickes' staff to another member of Harold Ickes' staff, and it states at the very beginning, that there had been a conversation with Heather Sibbison and that's how the information was transmitted to Harold Ickes' office. Were you surprised to see that Heather Sibbison, who worked in Secretary Babbitt's office, was telling people in Deputy Chief of Staff Harold Ickes' office that they will decline without offering much explanation.
Mr. HAVENICK. At the time that I saw this memo, which was 3 months ago, I was not surprised to see that because I—I have no proof myself, but I believe that politics was the reason that we were turned down.
But I would have been very surprised to have seen this memo at the time that it was written. I felt the merits of our case were so strong and that the Department of the Interior was really above political type things and that this would never enter into anyone's consideration.
Mr. WILSON. I'd like to turn from that memo and if we could put up on the board a Presidential directive. It's marked exhibit 350–1 in the book of exhibits in front of you, Mr. Havenick, if you could please turn your attention to that.
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[Note.—The exhibit referred to may be found on p. 61.]
Mr. HAVENICK. Could I get that number once more?
Mr. WILSON. Yes it is exhibit 350–1. 350.
Mr. HAVENICK. Yes.
Mr. WILSON. This is a memorandum. It's titled ''Government-to-Government Relations with Native American Tribal Governments,'' dated April 29, 1994. And I'd like to turn your attention to section B in this memorandum, and I'll read it for clarity in the record.
It states, ''Each executive department and agency shall consult, to the greatest extent practicable and to the extent permitted by law, with tribal governments prior to taking actions that affect federally recognized tribal governments. All such consultations are to be open and candid so that all interested parties may evaluate for themselves the potential impact of relevant proposals.''
Now, bearing in mind you're not a tribal government or associated with one but you're a close observer of the whole Hudson Dog Track application process, did what you saw in that process have any bearing or relation to this Presidential directive that we've just looked at?
Mr. HAVENICK. What we saw in that process was 180 degrees opposed to the directive.
Mr. WILSON. And how so?
Mr. HAVENICK. There was never any consultation with the tribes. There was never any attempt to resolve whatever may have been a problem with the application. As late as early June, we were told by the Department people, George Skibine and Mr. Hartman, that the application was proceeding along and that there may be a couple of questions, one of which was the parking lot, which we'll get into later, but that those economic issues really are handled by the National Indian Gaming Commission. And the economic issues are not normally handled by the Department of the Interior and that if there were any problems, we would be notified. And none of us was ever notified as to any deficiencies in the application.
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Mr. BURTON. Would the counsel yield? I just want to make sure I understand that. You were told that you would be notified if there were any problems?
Mr. HAVENICK. Yes, we were.
Mr. BURTON. And there was no notification ever forthcoming?
Mr. HAVENICK. No, sir. The first communication that we got that there was a problem was the July 14th letter.
Mr. BURTON. Thank you.
Mr. WILSON. Just referring again to the memorandum in Harold Ickes' office with information communicated by Ms. Sibbison that they will probably decline without offering much explanation, how does that square, if at all, with the Presidential directive that we were discussing?
Mr. HAVENICK. I would think that is diametrically opposed to the Presidential directive. And that would show an utter disregard—in my opinion it shows an utter disregard on her part, and the other people who were a part of that communication, to the essence of what is asked for in this directive.
Mr. WILSON. The memo that we were looking at the June 6th memo, was drafted about 6 weeks before the application was ultimately denied. At that time had anybody from the Department of the Interior ever identified anything that would be considered a potentially fatal defect in the application?
Mr. HAVENICK. No, they had not.
Mr. WILSON. To your knowledge, had anybody ever told the chairman of the Lac Courte Oreilles, the Red Cliff, the Mole Lake-Sokaogon or any of their representatives that if you don't fix problem X by date Y, we are going to reject your application?
Mr. HAVENICK. No, they had not.
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Mr. WILSON. On the other side of this question had the Department of the Interior ever sent the opposite signal, had they ever communicated that the application was going to be approved?
Mr. HAVENICK. Yes, they had.
Mr. WILSON. And if you could very briefly, and I stress briefly, provide a couple of highlights of what you know about what was communicated to you as far as approval.
Mr. HAVENICK. Yes. On May 17th, there had been a meeting with Mr. Duffy and the tribes and I was there and Paul Eckstein was there. After that meeting we went down to Mr. Skibine's office and Mr. Skibine and Mr. Hartman were there. And we had just gone over the general precepts of what was involved in the application and they told us that there was nothing—nothing in it that was fatal and everything was moving along smoothly.
And we then had another meeting, I believe on May—either at the end of May or beginning of June, with Mr. Skibine and Mr. Hartman again, at which time there was a question about the parking lot and there was a question about a few other things. There was a question about some land that had made it appear as though the property were landlocked, but what in effect had happened was that we had given land to St. Croix County to build that four-lane highway and the deed was not shown in the papers that were put in. But the road is contiguous to the property and that was cleared up. But we were told that there was nothing that was fatal to the application and in fact it was moving along and we would be notified.
Mr. WILSON. OK. I'm down to my last 2 or 3 minutes, so I am going to start talking quickly and I apologize. I am going to read you a passage from a document that we just recently received and I would like to have your views on it very briefly. If we could put up on the screen exhibit 335–1, please. Again that's in the book in front of you, Mr. Havenick, at 335.
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And if you'll turn your attention to the second page it states: ''We are primarily concerned about our ability to show that plaintiffs were told about and given an opportunity to remedy the problems which the Department ultimately found were outcome determinative. Area Directors are told to give applicants an opportunity to cure problems and it will be hard to argue persuasively that applicants lose this opportunity once the Central Office begins its review. The administrative record, as far as we can tell, contains no record of Department meetings or communications with the applicant tribes in which the Department's concerns were expressed to plaintiffs. These communications may have occurred, but they simply are not documented in the record.''
In a one-word area, yes or no, does this representation comport with what you know about what happened with the dog track application?
[Exhibit 335–1 follows:]
INSERT OFFSET FOLIOS 48 TO 50 HERE
[The official committee record contains additional material here.]
Mr. HAVENICK. Yes, there was no communication.
Mr. WILSON. Just for the record, I know this is a Department of Justice analysis of the case in this particular matter. My time is running out. I'd wanted to ask you, we are having witnesses this afternoon—it's very quick, we didn't expect that—one of the witnesses that will testify is Ms. Nancy Bieraugel. My understanding is that Ms. Bieraugel attempted to enter into a business deal with the Hudson Dog Track. Is that correct or false?
Mr. HAVENICK. That is correct.
Mr. WILSON. Could you provide a fairly brief indication of what that deal was?
Mr. HAVENICK. Yes. The general manager of the track told me that she was—she's in the water business, bottled water or some kind of water business and she was attempting to sell water to the track. We do not control the concessions at the track. That's controlled by a company called Ogden, and we have no control over where any of those supplies come from. I do believe that Ogden did not buy the water from her.
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Mr. WILSON. So it's fair to say that you rejected her advances in terms of this proposed business deal?
Mr. HAVENICK. Well, my wife is here, so I would not phrase it—yes, that is correct.
Mr. WILSON. I have no further questions for now.
Mr. BURTON. The gentleman yields back the balance of his time. Unless any colleagues have any——
Mr. WAXMAN. Mr. Chairman, I want to make a point just for the record that the document that was just used was an attorney-client—there is an attorney-client issue with that document and the Members should be aware of that.
Mr. BURTON. Attorney-client privilege—that document was turned over to the committee and because it was turned over to the committee we feel that we have a right to utilize that document.
Mr. WAXMAN. Mr. Chairman, just on that point so we can be very clear about it, that document was turned over to the committee. No question about that. This document now has been put into the public record. But this document represents the attorney's views to the Department of the Interior, which was the client. And this litigation has been going on for several years, and it may be your judgment to put in documents that may be prejudicial to ongoing litigation against the Department of the Interior, but this is the kind of document that does reflect the attorney's opinion to a client and it was put in without the client's concurrence.
Mr. BURTON. I understand that the Department of the Interior is drafting a letter to the committee asserting attorney-client privilege over this document, that I referred to in my opening statement today, that the committee will have questions about it, and that it has already been included in the record pursuant to the second and third unanimous consent request adopted today and was not objected to by anybody on the committee.
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And so the minority has a copy of the letter that the Interior officials have represented to my staff as a draft. However, it was signed and not stamped ''draft.''
Let me just say for the record this committee takes its responsibility seriously.
Mr. KANJORSKI. Mr. Chairman.
Mr. BURTON. Even though we may have many disagreements the committee has often——
Mr. KANJORSKI. Mr. Chairman.
Mr. BURTON. If the gentleman would let me conclude. Even though we have many disagreements the committee has often come together on issues which impact the Congress as an institution. If the Secretary of the Interior thinks that a lawyer in the Office of the Solicitor can write a letter asserting attorney-client privilege over a document that the Department admitted in its January 12, 1998, letter to the committee was not subject to any privilege vis-a-vis the Congress, he is mistaken. The Secretary must assert a countervailing claim of executive privilege which trumps Congress' oversight responsibility.
When then Chairman Dingell subpoenaed certain EPA litigation documents, President Reagan, whether right or wrong on the law, had the courage to sign the letter asserting the privilege in Chairman Dingell's review of environmental litigation involving ongoing criminal investigation.
Let me also say that this last minute behind the scenes maneuvering makes little difference. The document in question was included in the record pursuant to the second and third unanimous consent requests today. Furthermore, members of the committee under the committee's document protocol are permitted to use any document, except classified documents, during the hearing.
Some members of this committee have asserted that the Department's decision was correct. Others disagree. The American people should be the ultimate arbiters of the truth and should have as much information as possible. I believe the American people have a right to know. I think it's in order to allow this to be in the record and it has so been inserted in the record.
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Now do you have a point of order?
Mr. KANJORSKI. Yes, Mr. Chairman.
Mr. BURTON. The gentleman will state his point of order.
Mr. KANJORSKI. In reliance, when the chairman asks unanimous consent to include certain documents in the record, I was not aware of the fact that it was in contest, that having a lawyer-client privilege, and I think the Chair takes extraordinary advantage of this committee. Henceforth, let it be known that when you ask for unanimous consent for the admission of anything I can no longer trust you, and I would like to have it appear in the record that I have a blanket objection.
Mr. WAXMAN. Will the gentleman yield?
Mr. KANJORSKI. I certainly will.
Mr. BURTON. There has been no assertion from the Secretary of the Interior regarding privilege on this document. Now, you can question my integrity——
Mr. KANJORSKI. No, you gave us justification because you offered it by unanimous consent and there was no objection that it was a matter of being put to the record and anybody was in consent. I did that as a Member of the Congress of the United States, and a member of this committee, respecting the fact that the chairman would never abuse the minority of this committee, or the majority of this committee, by making an offer unless it had been patently agreed upon by all parties concerned that it was legitimately to be entered into the record as a matter of course under unanimous consent. You have abused this committee's respect for unanimous consent.
Mr. BURTON. You are not stating a point of order. But let me say that the minority counsel was advised of the documents that we put in the record. If you want to take issue with somebody, take issue with your minority counsel for not informing you. It's not a point of order anyway.
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Mr. WAXMAN. Mr. Chairman? Mr. Chairman.
Mr. BURTON. Regular order has been called for and will be granted.
Mr. WAXMAN. Point of order.
Mr. BURTON. The gentleman will state his point of order.
Mr. WAXMAN. I want the record to be clear that the minority counsel was not informed, to my knowledge, that the unanimous consent was for depositions to be put in the record but not this particular letter.
I don't think it was appropriate to put it in. But that is your decision. I wanted to make note for the record that that document was considered attorney-client privilege and you have used it. So that point should stand on the record.
And I withdraw my point of order, which I did not make properly.
Mr. BURTON. The minority counsel did consult with the majority counsel and they agreed that the Interior Department had waived that privilege. Well, I'm not going to get into a big long debate about it.
Mr. WAXMAN. That is not correct.
Mr. BURTON. You may interrupt it in any way that you want. It is in the record. It is going to be utilized by the committee. You have a motion before us. You're recognized for 5 minutes on your motion.
21Mr. WAXMAN. Mr. Chairman, as I said in the beginning of this hearing, I think it's appropriate for us to get the testimony of the witnesses who have information to give us to get a complete understanding of the facts of this episode in Wisconsin. And I have requested that a number of witnesses be brought to the committee, to be invited to come to the committee. I made a motion that is now pending that we issue invitations or subpoenas to Governor Thompson, Congressman Gunderson, the State representative from the area, Sheila Harsdorf, and Hilda Manuel, who is the person in the Department in charge of making the determination of the application.
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I think we ought to have those people brought before this panel so we can get the full information. There was even a dispute this morning. Mr. Souder raised the question of what Governor Thompson meant and when he meant it, when he said he opposed it and whether he did oppose it at the time when it would have been appropriate for him to oppose it and whether he supported it at one time or opposed it at another. These are very legitimate questions and the best way to get answers to them is to have the witnesses before us.
I requested it of the chairman. He has not seen fit to grant the approval of these witnesses to be brought before us, and now I make a motion and hope to have support on a bipartisan basis that we have these witnesses included so that we can have a full and complete transcript and record in this hearing so that we can get all the information and not just part of the information.
Mr. BURTON. Has the gentleman concluded?
Mr. WAXMAN. I yield back the balance of my time.
Mr. BURTON. The gentleman yields back the balance of his time. Let me say that we listened to the requests from the minority. We weighed that very seriously. Mr. Waxman, for my majority members as well as minority members, asked for eight minority witnesses. It would have required two extra days of hearings, according to our staff. This would easily have taken a lot more time than we wanted to dedicate to this part of the investigation.
I'm sorry, did you have a comment, Mr. Lantos? Is that analogous to the comment that you made to the independent counsel when he was here? You do not have the floor, Mr. Lantos, and I would expect you, as a member of this committee to abide by the rules. I will recognize you and give you your time and I will keep my mouth shut, and when I have the time I will respectfully request that you keep yours shut.
Now, we have granted the minority four witnesses. Mr. Skibine, Michael Anderson, Nancy Bieraugel, and Fred Havenick. This is far more generous to the minority than they ever were when we were in the minority. Ever. And so I respectfully request that the minority members join with me in defeating this motion.
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The motion is now before us. All those in favor of the motion will signify by saying aye. Those opposed will signify by saying no. In the opinion of the Chair the noes have it.
Mr. WAXMAN. I request a roll call vote.
Mr. BURTON. The gentleman from California requests a roll call vote and a roll call vote will be granted. The clerk will call the roll.
The CLERK. Mr. Burton.
Mr. BURTON. No.
The CLERK. Mr. Gilman.
[No response.]
The CLERK. Mr. Hastert.
Mr. HASTERT. No.
The CLERK. Mrs. Morella.
[No response.]
The CLERK. Mr. Shays.
[No response.]
The CLERK. Mr. Schiff.
[No response.]
The CLERK. Mr. Cox.
Mr. COX. No.
The CLERK. Ms. Ros-Lehtinen.
[No response.]
The CLERK. Mr. McHugh.
[No response.]
The CLERK. Mr. Horn.
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[No response.]
The CLERK. Mr. Mica.
Mr. MICA. No.
The CLERK. Mr. Davis of Virginia.
Mr. DAVIS OF VIRGINIA. No.
The CLERK. Mr. McIntosh.
[No response.]
The CLERK. Mr. Souder.
Mr. SOUDER. No.
The CLERK. Mr. Scarborough.
[No response.]
The CLERK. Mr. Shadegg.
Mr. SHADEGG. No.
The CLERK. Mr. LaTourette.
[No response.]
The CLERK. Mr. Sanford.
[No response.]
The CLERK. Mr. Sununu.
Mr. SUNUNU. No.
The CLERK. Mr. Sessions.
[No response.]
The CLERK. Mr. Pappas.
Mr. PAPPAS. No.
The CLERK. Mr. Snowbarger.
Mr. SNOWBARGER. No.
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The CLERK. Mr. Barr.
[No response.]
The CLERK. Mr. Miller.
[No response.]
The CLERK. Mr. Waxman.
Mr. WAXMAN. Aye.
The CLERK. Mr. Lantos.
Mr. LANTOS. Aye.
The CLERK. Mr. Wise.
[No response.]
The CLERK. Mr. Owens.
[No response.]
The CLERK. Mr. Towns.
[No response.]
The CLERK. Mr. Kanjorski.
Mr. KANJORSKI. Aye.
The CLERK. Mr. Condit.
[No response.]
The CLERK. Mr. Sanders.
[No response.]
The CLERK. Mrs. Maloney.
[No response.]
The CLERK. Mr. Barrett.
Mr. BARRETT. Aye.
The CLERK. Ms. Norton.
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Ms. NORTON. Aye.
The CLERK. Mr. Fattah.
Mr. FATTAH. Aye.
The CLERK. Mr. Cummings.
Mr. CUMMINGS. Aye.
The CLERK. Mr. Kucinich.
Mr. KUCINICH. Yes.
The CLERK. Mr. Blagojevich.
[No response.]
The CLERK. Mr. Davis of Illinois.
[No response.]
The CLERK. Mr. Tierney.
[No response.]
The CLERK. Mr. Turner.
[No response.]
The CLERK. Mr. Allen.
[No response.]
The CLERK. Mr. Ford.
[No response.]
Mr. BURTON. The clerk will report the tally.
The CLERK. Mr. Chairman, there are 8 ayes and 10 nays.
Mr. BURTON. The motion fails. The gentleman from California is recognized for 30 minutes.
Mr. COX. Mr. Chairman, I wonder if I might be recognized out of order to make a unanimous consent request.
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Mr. WAXMAN. Reserving the right to object, I think you had better clear it with us first and let us go on with our time.
Mr. COX. I ask unanimous consent that the written testimony, as it may be submitted timely to this committee, of the witnesses that it was proposed we hear from just now be included in the record.
Mr. WAXMAN. Reserving the right to object, I don't understand the request, and it is our turn to ask questions, so why does he not just temporarily pull it back, and we will try to find out what he wants part of the record that is not already part of the record.
Mr. BURTON. I assume objection is heard.
Mr. Waxman, you are recognized for 30 minutes.
Mr. WAXMAN. Mr. Chairman, first of all let me point out to the Members for their information, it is laughable, this idea that Mr. Skibine, Mr. Havenick and Mr. Anderson, who are going to testify in this hearing, should be considered our witnesses, since they are so essential to any kind of explanation as to what went on in this casino issue. I regret that we were denied again any opportunity for getting a fair hearing out of the 4 days that this committee is devoting to this issue.
I was away during Mr. Havenick's testimony. I was at another meeting. Mr. Kanjorski acted as the ranking member under those circumstances. I yield to him 10 minutes at this time to begin the questioning for our side, and then I will ask whatever questions I may have.
Mr. KANJORSKI. Mr. Havenick, you originally started this proposition, as I understand it, with another Indian tribe; is that correct?
Mr. HAVENICK. Yes, we did.
Mr. KANJORSKI. Why was it that that Indian tribe did not continue as an applicant?
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Mr. HAVENICK. What had happened was that Indian tribe had approached us in June 1992, to form a joint venture and have the land under the tract taken into trust, and then we could have——
Mr. KANJORSKI. You did not approach them, they approached you?
Mr. HAVENICK. They approached us, yes.
Mr. KANJORSKI. This was never an original thought of yours to convert this to a reservation-type casino; it was really the Indians' idea?
Mr. HAVENICK. It was the idea of the St. Croix Chippewa Management Co., a management company of the St. Croix Chippewa. This management company approached us to see if we would be interested in entering into a joint venture with them, where we would apply to have the lands under the tract taken into trust, and then we would be able to offer the other games that the tribes were allowed to offer that we cannot. We worked with that tribe from June 1992 until December 1992.
During that time we grew to not trust the management company of that tribe. You, or I believe one of the Democratic Members today recited a story about how Indian tribes had been ripped off on the slot machines, and that they could have bought the slot machines in 3 months for what they paid leasing fees for for about 3 or 4 years. The St. Croix was one of the tribes that was involved in that. We did not like that business tactic.
The second thing that was done by that management company was that they owned the land around the casino, so there was—the casino was the hole in the doughnut, but they controlled the access to the casino. We did not like the way that company did business. We value our pari-mutuel licenses very, very highly, the ones in Florida, the ones in Texas, and the ones in Wisconsin. We every year have to submit applications in which we've got to show every person, group, and entity with whom we have any type of business arrangement. We were fearful of having a business arrangement with the St. Croix group, as it was then constituted, that it could hurt our licensing, the renewal of licenses in other States.
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Mr. KANJORSKI. It took 18 months to carry on this type of negotiation and discover that?
Mr. HAVENICK. No. It took from June 1992 until December 1992. It took 6 months for us to realize that these were not the people we wanted to be in bed with.
Mr. KANJORSKI. It was not the fact that they would not agree to the terms of the conditions and the splitting of profits?
Mr. HAVENICK. No, it was not. They were really the ones who came to us with the terms and the conditions and everything else.
Mr. KANJORSKI. Their terms were better than what you eventually gave the tribes, the three tribes, or were they worse?
Mr. HAVENICK. The terms of the deal with the St. Croix group, the group was getting 40 percent, the non-Indian group was getting 40 percent, and the tribes were getting 60 percent. We were then going to split that between the two of us. But our reason for not dealing with——
Mr. KANJORSKI. So you would have ended up with a lesser profit if you had gone with the first deal than if you went with the second deal?
Mr. HAVENICK. Our reason for not going with the first deal was that we did not want to deal with the people who were involved in the first deal. It had nothing to do with the economic terms. It had to do with the——
Mr. KANJORSKI. That was just coincidental, that you would not get as big a profit with that deal if you went with that deal?
Mr. HAVENICK. That is just coincidental.
Mr. KANJORSKI. I see. The Indians, the Four Feathers group, the three tribes that we had here this morning, they came with the terms of this agreement and said what they wanted, or did you propose what the split was going to be?
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Mr. HAVENICK. We made the proposal to the second group of tribes. It was our——
Mr. KANJORSKI. So you set the terms, that you were going to get a greater profit by dealing with this new set of three Indian tribes than you would have ended up with the first Indian tribe?
Mr. HAVENICK. We did not really want to deal with the first group. It really was not clear as to who would get what percentage of the 40 percent because that deal was not finalized. We were the ones who went to the other group of tribes.
Mr. KANJORSKI. In your testimony, it sounded like you were hanging around Wisconsin and you saw these poor Indian tribes out there, and you just felt a tremendous compulsion to go out and make sure that they made more money. And it had nothing to do with the fact that you were stuck with this dead dog track that was losing money, and you were able to take that and convert it by getting all the money invested paid back to you by the agreement, $39 million, even though you had reduced the tax rate valuation on the tract to $2.2 million from $2.5 million. And you also made a fairly sweetheart deal on the parking lot, where you were able to convert that into a revenue stream without having to put that into the trust fund. Is that correct?
Mr. HAVENICK. That is not correct. I am sorry if you misunderstood what I had said earlier. Just so that you understand how this all happened, Congress passed IGRA, and IGRA gave the tribes the right to have gaming. We are not permitted to have gaming. There is a case in California called the Cabazon case. In the Cabazon case the Supreme Court of the United States ruled that the Indian tribes were allowed to conduct any type of gaming which was legal within the borders of the State, which was not criminally prohibited.
Mr. KANJORSKI. I understand that. You are making a point, though.
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Mr. HAVENICK. The point is that when Justice Crabb ruled that the lottery legalized slot machines, that for all intents and purposes killed the dog track. I never went to the tribes and told them that I was going to be their benefactor. I said that we each had something good to bring to the table, as any good business deal should have.
Mr. KANJORSKI. Why didn't you just offer the dog track up for sale and let the Indian tribes get together and buy the dog track and put a casino in it?
Mr. HAVENICK. Because they did not have the means to buy it.
Mr. KANJORSKI. But the first Indian group would have had the means, because they had a management company.
Mr. HAVENICK. I can't speak for the first Indian group but just for the deal that actually came to fruition. The tribes just did not have the economic wherewithal to do that.
Mr. KANJORSKI. I have reacted to the idea, and I don't particularly like these arrangements, as you heard this morning when I talked to the three Indian tribes. I don't think they struck a very good deal. Now that you have cleared that up, that they didn't really strike a deal, you told them what terms you would take them in as partners on, so you really put the deal together.
Mr. HAVENICK. No. What happened was I went to the tribes with a proposal.
Mr. KANJORSKI. And they accepted it?
Mr. HAVENICK. No, they did not accept it. It took us almost 14 months to negotiate the agreement. I am not sure if you have seen the agreement or not, but the agreement is a very intricate, complicated agreement. They negotiated among themselves and with us, because there are other questions that the tribes had to ask each other.
Lac Courte Oreilles has more members than Red Cliff, so Lac Courte Oreilles could have said, well, let us do this on a per capita basis. The concept was everybody would be fair and equal to each of the partners. The tribes would be fair and equal to each other and to us, and we would be fair and equal. But we didn't go to these tribes and say, ''Here is a deal, take it or leave it, or we are going down the street.''
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Mr. KANJORSKI. But it wasn't quite that you put this deal together to take care of the welfare of these poor Indians; is that right? That is not what you want the record to reflect, is it?
Mr. HAVENICK. No.
Mr. KANJORSKI. This was a business proposition, taking a losing asset and converting it to a very profitable asset?
Mr. HAVENICK. Congress through IGRA had given the Indians an economic tool, and we were saying to them, you——
Mr. KANJORSKI. I participated in that legislation, and I never anticipated people from Florida coming up and making deals in Wisconsin to make casinos.
I think you have heard that expression a lot in this committee. I think we probably should spend our time to see whether or not this whole act has been abused by the gaming forces of this country who are really using Indians as shells.
Mr. HAVENICK. That was not the case in this deal, sir.
Mr. KANJORSKI. Let me ask you, you are a businessman. You said that you engaged in activities with both political parties. Have you ever contributed funds to the Democratic National Committee?
Mr. HAVENICK. Yes, I have.
Mr. KANJORSKI. Have you ever contributed funds to the Republican National Committee?
Mr. HAVENICK. Yes, I have.
Mr. KANJORSKI. Have you ever contributed funds to any other candidates on a State and local level?
Mr. HAVENICK. Yes, I have.
Mr. KANJORSKI. Can you tell us whether or not you have contributed what amount of funds in the current year, or say since 1992, how many contributions have you politically made to both parties, to all candidates that you can recall, you and your wife and your business associates and allied corporations?
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Mr. HAVENICK. I would guess about $50,000.
Mr. KANJORSKI. Maximum?
Mr. HAVENICK. Yes.
Mr. KANJORSKI. That is all the corporations in Florida? That is all the gaming operations throughout the country?
Mr. HAVENICK. I believe so, yes.
Mr. KANJORSKI. I think I have some information here that Governor Thompson's contributions may have exceeded $12,000 in just 2 years. Did he receive more than 25 percent of the contributions that you made?
Mr. HAVENICK. He may have, yes.
Mr. KANJORSKI. I see. I yield back.
Mr. WAXMAN. Thank you very much, Mr. Kanjorski, for yielding back.
Mr. Havenick, I am pleased to see you today. Let me start off by saying that you are a businessman. I do not think you have done anything wrong. I do not think you have done anything improper. You are a successful businessman, you are trying to make some money out of a failing dog track, and there is absolutely nothing wrong with that. What I want to do is to explore with you where we are and the reason this issue has now come before this committee, which ordinarily does not have oversight over dog tracks, Indian gaming, or decisions at the Department of the Interior.
Just so I can get some kind of time line on all of this, as I understand it, in 1986 gambling was illegal in Wisconsin; is that right?
Mr. HAVENICK. Yes, sir.
Mr. WAXMAN. They changed the law in 1987, and they adopted an amendment to the constitution and permitted a narrow exception to gambling, which included dog track betting?
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Mr. HAVENICK. In 1987, it permitted dog racing, horse racing, snowmobile racing, and the lottery, or I believe the lottery at the same time.
Mr. BARRETT. At the same time, separately?
Mr. HAVENICK. Separately, but it was all in 1987.
Mr. WAXMAN. In 1988, just to get the chronology, in 1988 your company, HAH Enterprises, first unveiled its dog track in Hudson; is that correct?
Mr. HAVENICK. That's correct.
Mr. WAXMAN. In 1989 a lot happened. You were granted a license for this facility, but then the mayor who supported it was recalled for supporting this dog track; is that right?
Mr. HAVENICK. That is correct.
Mr. WAXMAN. The next big event is, in 1991 the dog track opened, and as you testified, at the same time an Indian casino began operating near the dog track. The result was that the track began to lose money; is that correct?
Mr. HAVENICK. That is correct.
Mr. WAXMAN. In 1992, according to your testimony, you knew that you could not compete with the Indian casino. You knew that because State law forbids casino gambling, you faced severe legal hurdles in building your own casino. So you came up with the idea of a business deal with an Indian tribe, and if you can persuade the Department of the Interior to approve a transfer of your land to a tribe, your land ceases to be subject to State laws. You could then build a casino on it.
And you approached the nearest tribe, which was the St. Croix Chippewa, with this idea. They are about 30 miles away. They are interested in pursuing your concept. You announced an agreement in principle with them in August 1992?
Mr. HAVENICK. There is one correction that I would make in that. That is that the St. Croix Chippewa approached us. We did not approach them. But everything else you said was correct.
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Mr. WAXMAN. OK. But you are now proposing to go into business with the St. Croix Chippewa Tribe?
Mr. HAVENICK. Correct.
Mr. WAXMAN. And run a casino on your property?
Mr. HAVENICK. Correct. It would no longer be our property, but yes.
Mr. WAXMAN. There is local opposition. Hudson city council adopts a resolution opposing the casino. In December there is a local referendum, narrowly passing in Hudson, 51 to 49, but loses by a 2 to 1 margin in Troy, which surrounds the dog track on three sides. The St. Croix Tribe pulls out in December 1992. Is that all accurate?
Mr. HAVENICK. The only thing is that it was a mutual termination between us and the St. Croix.
Mr. WAXMAN. At this point you are searching now for a new tribal partner. In August and October 1993, you find three tribes, the three we heard from this morning. They are all much further from the site than the St. Croix Band, but nevertheless, you engaged then in a partnership with these three tribes?
Mr. HAVENICK. We began negotiating in February 1993.
Mr. WAXMAN. In early 1994, you enter into a service contract with the city of Hudson. At the same time, however, local opposition begins to mount. Over 3,100 Hudson area residents sign a petition to Governor Tommy Thompson and Secretary Babbitt opposing the casino. The supervisors of the town of Troy voted unanimously against the casino. Is that correct?
Mr. HAVENICK. The 3,100-person petition is subject to question. No one ever verified the signatures. I believe most of them were not from Hudson.
Mr. WAXMAN. In 1995, the local opposition intensified, and in February the Hudson city council voted against the proposal. On March 30 members of the State legislature, led by Sheila Harsdorf, the Republican representative from Hudson, wrote in opposition to the casino. In April the Republican Congressman for the area, Steve Gunderson, and the Democratic Attorney General, Jim Doyle, both wrote in opposition. In May, Congressman Tom Barrett of this committee joined them. In June, Governor Thompson and Senator Feingold also announced their opposition. During this period the lobbying campaign begins in earnest.
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Mr. HAVENICK. No, it actually began in earnest in January 1995.
Mr. WAXMAN. The lobbyists for the opponents of the casino began to have their contacts with the Department and the White House. In response to this mounting opposition you hired two lobbyists, Paul Eckstein, who was Secretary Babbitt's former law partner, and Jim Moody, a former Congressmen. These lobbyists are the only ones to meet with Secretary Babbitt. The Department finally announced its decision in July and then you filed suit in September. Is all that correct?
Mr. HAVENICK. All that is correct.
Mr. WAXMAN. OK. Now, you have been facing a lawsuit on this issue for a couple of years now?
Mr. HAVENICK. Yes, we have.
Mr. WAXMAN. You have maintained that there were procedural improprieties but also there were political improprieties, and that the political improprieties, according to the affidavits that have been filed, have to do with the statement by Mr. Eckstein as he relates what Secretary Babbitt had to say.
Today he testified——
Mr. HAVENICK. That, among others.
Mr. WAXMAN. OK. Well, what others there might have been, today for the first time you mentioned Terry McAuliffe. When you say that he approached you to help stop the casino, why wasn't that in any of your previous affidavits? Who just joined you at the table, by the way?
Mr. FRIEBERT. My name is Robert Friebert. I am one of the attorneys in the matter.
Mr. WAXMAN. I hope we have that for the record.
Mr. HAVENICK. Could you just repeat that?
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Mr. WAXMAN. Today is the first time you mentioned the anecdote about Terry McAuliffe. That never appeared in any other place. It was not in any of your affidavits; it was not in any of your public statements, private statements, statements in the litigation. Why not?
Mr. HAVENICK. I have never given an affidavit in the litigation. I am not really a party in the litigation, but it was never mentioned, also because of lawyer-client privilege.
Mr. WAXMAN. How was it lawyer-client privilege?
Mr. HAVENICK. It was work product. It was work product with the attorney.
Mr. WAXMAN. You related in your testimony that you had a social conversation with Terry McAuliffe and that he came over to you and said, I took care of your problem. It turned out he was wrong. He thought you were on the other side.
Mr. HAVENICK. He didn't know I had a problem until I said something to him. And then he said, I took care of that. He didn't come over and volunteer that he had taken care of that, because I do not think before that he knew I had anything to do with Wisconsin.
Mr. WAXMAN. It didn't sound like he knew much about what he was talking about when he talked to you at the time, either.
Mr. HAVENICK. He knew about Hudson and the problem, and he knew that the thing had been killed. Yes, he did.
Mr. WAXMAN. But he thought—from your testimony it sounds like you were telling us that he thought you were happy with what he had done.
Mr. HAVENICK. He did, because he had been misled. I said that there was this massive propaganda and lobbying campaign to discredit us, and he had been told that the non-Indian applicant in the Hudson casino case was another company, not us, so he was misled, too.
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Mr. WAXMAN. Why wasn't this ever mentioned before? This is central to your lawsuit. Why is this the first time you are raising an anecdote about a lobbyist or fund-raiser who was trying to take credit for something, and then it looks like, according to your statement, ''I told Terry that it was my project, that I was the one who owned the track in Hudson, and his face dropped. He clearly was in shock; he said little else.'' It sounds like he was taking credit with you, and it turned out he was telling you he had opposed you.
Mr. HAVENICK. This is a strategy in the lawsuit that, as you have said, has been going on for a very long time, and on advice of my attorney, this is what we have done.
Mr. WAXMAN. Why? You haven't said anything about this until now. How did you decide——
Mr. HAVENICK. Who would I have said something to? That was the strategy.
Mr. WAXMAN. Tell me the strategy. Not to talk——
Mr. HAVENICK. That is the work product.
Mr. WAXMAN. The whole basis of your lawsuit is that there was political interference. Isn't that right?
Mr. HAVENICK. No, that is not correct.
Mr. WAXMAN. Isn't it partly right?
Mr. HAVENICK. There are two parts to it. But the main basis of our lawsuit is that there were procedural errors in the way in which the application was handled, and that there was a failure to consult with the tribes, as we found out even more information about today.
The second part is that there were political improprieties, yes.
Mr. WAXMAN. OK. As to political improprieties, that is the reason we are having this hearing.
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Mr. HAVENICK. Yes.
Mr. WAXMAN. As to political improprieties, it has never been mentioned, although it would be helpful to your cause to have mentioned, that there was some reason that Terry McAuliffe might have been involved in this issue.
Mr. HAVENICK. It was our strategy that we handle the lawsuit in the way in which we are handling the lawsuit.
Mr. WAXMAN. Maybe your attorney can tell us what the strategy is. You had a strategy to say that Babbitt did something improper, you had a strategy to say that the tribes maybe were not included that were partners of yours in some of these discussions, you had a strategy to claim that there was political pressure, and one of the evidences you give to us today is an anecdote that you never brought forward to indicate that there was some further support for your contentions. That seems to me very peculiar, that it hasn't been brought up before.
Mr. FRIEBERT. Do you want to hear a response, Mr. Waxman?
Mr. WAXMAN. Yes, that is why I am asking the question.
Mr. FRIEBERT. Mr. McAuliffe's name has come up in the litigation through documents that have been filed in the Federal court. We have been attempting to obtain permission to take his deposition. As I'm sure all of you here understand, in the context of litigation, there is a great value to surprise. That is all I care to say about it.
Mr. WAXMAN. Didn't you violate that strategy of surprise by announcing it today?
Mr. FRIEBERT. The question was asked and he answered. I don't have to respond to that, as to what you asked as to why the——
Mr. WAXMAN. Speak into the microphone.
Mr. FRIEBERT. You asked a question as to why it wasn't responded to or mentioned previously. Today is today. The past is history.
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Mr. WAXMAN. OK. So in other words, you changed your strategy. You were going to surprise Mr. McAuliffe because you were going to ask for his deposition, so you didn't want to mention that he was under——
Mr. LANTOS. Point of order, Mr. Chairman.
Mr. FRIEBERT. What is the point?
Mr. LANTOS. The attorney has not been sworn in and he was testifying.
Mr. FRIEBERT. Thank you.
Mr. WAXMAN. I would like you to stay because you are here, and you have already, with the consent of your client, come forward.
What I find peculiar is that you had a strategy to surprise him, and suddenly today the strategy changed by announcing that Mr. McAuliffe was taking credit for something. Of course, it turned out he was taking credit for something that was the exact opposite of what he thought he was doing, because it looked like he was pretty embarrassed.
Mr. Havenick, you complained to your friend Jerry Berlin about the denial of the Hudson application; did you not?
Mr. HAVENICK. Yes, I did.
Mr. WAXMAN. Did you ever tell him what you said about Terry McAuliffe to us today? Are you aware—have you ever told him about Terry McAuliffe?
Mr. HAVENICK. No, I have not.
Mr. WAXMAN. Why not?
Mr. HAVENICK. I met Terry McAuliffe on August 15, 1995. We filed the lawsuit in the western district of Wisconsin on September 15, 1995. From September 15, 1995, until today, the lawsuit continues. I have been operating under the strategy of the lawsuit from that time forward. There was only a 4-week time period between the meeting with Mr. McAuliffe and the filing of the lawsuit.
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Mr. WAXMAN. I don't know the facts in your case, but I have been around Washington and politics a long time, and I do know that there are lobbyists and fund-raisers who are anxious to say things that please people, especially people who may well contribute to the campaigns. It sounds like Mr. McAuliffe was trying to take credit for something with you, and then he was shocked to find out that what he was pumping up as to his good actions was exactly the opposite of what you would have wanted to be the result.
Mr. HAVENICK. I really can't speak for why he did it, you know, but it had the opposite effect of whatever effect he thought it would have on me.
Mr. WAXMAN. I went through that long time line with you, and I thought it was important to do it, because whether the tribes approached you or you approached them, you were the big partner in this whole thing because you are the one paying most of the bills.
What I think is important is that the real struggle is between you and the local community. You want to build a casino in Hudson because it is close to Minneapolis. It would be very lucrative to have a casino right there. The local community opposed a Las Vegas casino in their midst.
There is nothing wrong with having a dispute like this. It is just a lot different than the picture that I see being painted, where it was as if you had all the merits on your side, there wasn't an argument on the other side, and, lo and behold, what should have been a slam dunk gets overturned by the Department of the Interior. How could that be, except through skullduggery? And I think that is a picture that is not an accurate one.
Mr. HAVENICK. May I answer that?
Mr. WAXMAN. Sure.
Mr. HAVENICK. What we are saying is that we went through every rule and regulation that IGRA required in order to take the land into trust. Included in that were statements from the local community about the impact of the proposed casino on their communities. The statements that were sent in by the city of Hudson and by St. Croix County that are part of the record that led to the decision from the Bureau of Indian Affairs in November 1994 supported the casino. There was no finding of detriment to either the city or the county in the official records that were transmitted to the Bureau of Indian Affairs.
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Mr. WAXMAN. How do you explain, despite all that, that the Governor came out against it, the Attorney General, the Congressman, the State representative, they all came out against that?
Mr. HAVENICK. I will tell you what we say. We say that, No. 1, we are not sure that the Governor came out against it. The Governor came out against an expansion of gambling, which we discussed before, as to whether this really constitutes an expansion or doesn't constitute an expansion.
With regard to all of the other people who came out so strongly against it, all of that occurred after January 1995. In the 14 months prior to that, there was no congressional opposition to the proposal. Under the normal time established that is taken in these things, there was no governmental opposition. In fact, there was governmental approval, there were governmental agreements for services.
None of this happened until this massive campaign began in January 1995, at which time the Interior Department reopened the hearings on this, or reopened whatever they would call it on this, without telling the applicant tribes, for a 6-week period after a meeting on February 8th with the Minnesota delegation. And it was during this time that unbelievable amounts of money and unbelievable lobbying and unbelievable political influence was used to kill the project. Nothing happened prior to the——
Mr. WAXMAN. I am being advised that what you just said was factually incorrect as to the time and when this issue became a reopened issue. But if I am to accept what you are saying, the local Congressman, the State legislator representing the area, the Attorney General, all were part of a conspiracy then to come out against your proposal at a particular time, when before you didn't think they were against it? And you are still not sure whether Governor Thompson was ever against it?
Mr. HAVENICK. I'm not saying there was a conspiracy against us, I am saying that there is a massive lobbying and misinformation campaign that was produced against us. And it was the result of that massive campaign, where incidentally, Patrick O'Connor also in his diary says that he met with Terry McAuliffe about this project. But it was during that time that the opposition pulled out every plug in their attempt to stop the casino from coming into being.
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Mr. WAXMAN. When did you have your lobbyists working on it, at the same time?
Mr. HAVENICK. No. Our lobbyists started working at probably the end of April. There is a difference in the quality of the lobbying work that was being done.
Mr. WAXMAN. You live in Florida and you gave a contribution to Governor Thompson?
Mr. HAVENICK. Yes.
Mr. WAXMAN. Was that because you were hoping that he would be open to your views on this issue?
Mr. HAVENICK. No. I happen to agree with a lot of Governor Thompson's political views. I have given contributions to people in Nevada; I have given contributions to people in California. I gave a contribution to Senator Cranston in California. I have given contributions in various other States because I believe in what those people are saying.
Mr. WAXMAN. And sometimes they can help you?
Mr. HAVENICK. In most of those, they really cannot help me. It is very rare that they can help me.
Mr. WAXMAN. Those were the smaller contributions?
Mr. HAVENICK. No.
Mr. WAXMAN. Thank you. My time is up.
Mr. SOUDER. I thank the gentleman from California. Since Mr. Cox had taken his 5 minutes, I yield to Mr. Lantos.
Mr. LANTOS. Thank you very much, Mr. Chairman.
Mr. Havenick, I read your testimony which you gave under oath. I would like to ask you to turn to page 2, paragraph 3. I want to give you an opportunity to either explain it or to take it back.
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Mr. HAVENICK. I have a different page 2 than you.
Mr. LANTOS. Page 2——
Mr. HAVENICK. I have a bigger one. If you start with the first sentence, I will find it.
Mr. LANTOS. The first sentence of the paragraph says, ''It is important to stress.''
May I read the relevant statement, and then ask you to either explain or retract? ''All decisions on management would be controlled by the tribes.''
Do you really want this committee to believe that you as an experienced gambling operator would turn over all management decisions to the three ill-equipped tribes to make all management decisions?
Mr. HAVENICK. We did not think, No. 1, that the tribes were ill-equipped partners. Yes, we were prepared to turn it over to them.
Mr. LANTOS. So you considered yourself a silent partner in this whole venture?
Mr. HAVENICK. No.
Mr. LANTOS. Allow me to finish. Your testimony under oath is that all decisions on management would be controlled by the tribes. That is what your written testimony says?
Mr. HAVENICK. It should say all decisions on management could be controlled by the tribes.
Mr. LANTOS. No, it said, would be controlled by the tribes. Would you read it in your own text? I want you to read it, now, because you have changed it for me.
Mr. HAVENICK. That is correct.
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Mr. LANTOS. Could you read it, please?
Mr. HAVENICK. All decisions on management would be controlled by the tribes, that is correct.
Mr. LANTOS. Do you really expect anybody above the age of 6 to believe that you, a multistate gambling operator, who must have some profitable operations, because this surely was an unprofitable operation, would turn over all management decisions to these three tribes? That is what you are testifying to?
Mr. HAVENICK. That is what I am testifying to and that is the truth.
Mr. LANTOS. OK.
Mr. HAVENICK. That is what we were prepared to do.
Mr. LANTOS. I understand.
Now let me sort of walk you through the transaction, in layman's terms. You invested $40 million in the facility, and the moment it opened it started losing money, and the losses ran as high as $7 million per annum. Is that correct?
Mr. HAVENICK. That is correct.
Mr. LANTOS. OK. Now, if I may direct you to your own written testimony again, where I find another remarkable statement, this is paragraph 6.
Mr. HAVENICK. On what page? On page 2?
Mr. LANTOS. Page 2.
Mr. HAVENICK. I have it now.
Mr. LANTOS. Page 2, line 4. ''The existing debt on the track, about $40 million, would be paid by the partnership.'' Now the partnership involves the Indian tribes. ''In addition, the same partnership would own and operate the parking lot, though this land would not be placed in trust.'' Why not?
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Mr. HAVENICK. I don't have that in the same paper.
Mr. LANTOS. I am just reading from your testimony.
Mr. FRIEBERT. He said page 2.
Mr. LANTOS. Yes, page 2, the top paragraph.
Mr. HAVENICK. OK.
Mr. LANTOS. ''The existing debt on the track, about $40 million, would be paid by the partnership.'' So you built this facility for $40 million?
Mr. HAVENICK. Yes.
Mr. LANTOS. It is a white elephant. It is losing you $7 million a year. So you now want to recapture your investment, you bring in these tribes that have no resources; you testified to that. They haven't got a dime. But they will now be responsible for repaying the $40 million?
Mr. HAVENICK. No, they are not responsible for paying—repaying the $40 million.
Mr. LANTOS. No.
Mr. HAVENICK. The entity would be responsible for paying the $40 million.
Mr. LANTOS. Without them you have no entity. What you are saying is—it is such a phony deal, it reeks of phoniness. You have a facility which is losing $7 million a year. You pull in the Indians so you can have a Las Vegas-type casino gambling, hopefully now it will make money and it will pay off the $40 million, and you have the audacity to state in your sworn statement that you are not making any money on it, you are recapturing the investment, which you lost by your poor decision.
Mr. HAVENICK. No. There is a $40 million debt on the facility which would be paid——
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Mr. LANTOS. For which you are responsible, before you make the deal?
Mr. HAVENICK. For which we are responsible solely after we make the deal. Only we are responsible as guarantors of that after the deal is made. We bring the tribes into this partnership. The partnership operates the casino. When the casino is operating, there is a payment that is made to each of the three tribes first. The second payment that is made is to the bank, and the third would be a distribution of what is left among the partners.
Mr. SOUDER. The gentleman's time has expired.
Mr. HAVENICK. There is no direct obligation on the tribe.
Mr. LANTOS. It is the ultimate rip-off on the tribes.
Mr. SOUDER. The gentleman's time has expired.
Mr. HAVENICK. May I just respond to that?
I know that you believe that what you are saying is the truth, but the facts that you are relying on are really incorrect.
Mr. LANTOS. Those are your facts.
Mr. HAVENICK. We were looking to rip off nobody. If somebody looks at this under a microscope, and we are prepared to discuss this with anyone, no one is being ripped off. This is a fair and equal agreement among all of us, and it is really unfair to cast it in any other way, because that is not a true reading of the facts.
But there is one other thing that I think is very important here. Even if it were unfair, which it isn't, that is the function of the NIGC. That is not the function of the Interior Department at this point, because it was that Interior Department that let many bad deals go through for the tribes. But this was a very good deal. I believed it was a very good deal when I came in here, and no matter what you say, this was a very good deal. You are misinterpreting the facts.
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Mr. SOUDER. Mr. Mica.
Mr. MICA. Thank you.
Mr. Havenick, it is not going to do you any good to try to explain that, because most of the Members from the other side have not been in business and they would not understand that when you are losing money in an operation, you try to find a way to make money to make it profitable. It is far and above their ability to comprehend that.
You are lucky you were only called, what, an Indian bully, buller, today. You are very fortunate. There have been some other terms used here to describe our witnesses I won't go into. But basically, you are in business.
I want to also preface my questions with the point that I don't support casino gambling. I come from Florida. I have tried to oppose it. I have worked against having a casino in my backyard, or anywhere in Florida, for that matter. It is my personal opinion.
But you are in business to do what? To make——
Mr. HAVENICK. To make money.
Mr. MICA. OK. It is a shocking revelation. What you try to do, then, is to look at an operation that doesn't make money and make it profitable.
Did you drag any of the these Indians kicking and screaming to sign this agreement against their will?
Mr. HAVENICK. No.
Mr. MICA. They would have made money if you had made money; is that correct?
Mr. HAVENICK. They would have made a lot of money, yes, sir.
Mr. MICA. The other thing is you testified you followed all the laws. I wasn't here then, but some of the folks who are here today actually voted for this legislation, which I would have voted against, actually. But you followed all the laws, you hired the expertise, dotted the i's, is that correct?
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Mr. HAVENICK. That is correct.
Mr. MICA. I think, in answer to my question, the chairmen of the Indian tribes said they did the same. And then you found out that in fact that you went through this process, and you left off at November 1994, that everything was submitted in proper forms, and that there were some substantial objections at that time?
Mr. HAVENICK. That is correct.
Mr. MICA. Then what took place? Bring me up to the point of the August 15 meeting, when you found out from Mr. McAuliffe that you were going to get hosed.
Mr. HAVENICK. November 15 the regional office recommended that the land be taken into trust, and they then sent their recommendations to the Department of the Interior in Washington. We called the Department of the Interior, just calling and asking the question, how long will it take to get this final approval out of Washington?
In the past there had never been an overturning of a regional office recommendation, so the thought of it being overturned had never entered into our minds.
Mr. MICA. In the past there had never been an overturning?
Mr. HAVENICK. This was the first time one of these regional decisions had been overturned. In January, we started wondering what is happening, and in February we were wondering about what is taking so long. It was attributed to the bureaucracy in Washington. So we said, you know, maybe there is a bureaucracy in Washington.
In March, in the middle of March 1995, Chairman Ackley was in Washington and he was informed at that point that the Department had reopened the comment period for our application. Now, I am not sure of this, but I don't think one of those had ever been reopened before, either. I think this was the first time that there had been a reopening.
Mr. MICA. It was supposed to be finalized and then it was reopened?
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Mr. HAVENICK. Yes, because what Washington was supposed to do was review the findings of the Minneapolis office. We received a 40-page extensive study of what we had proposed, and they went through all of the various IGRA-related things and they approved it. In general, every other time Washington just stamped it.
Mr. MICA. When was the first time that you heard of the political influence?
Mr. HAVENICK. In the middle of March in 1995, at that point.
Mr. MICA. At that point?
Mr. HAVENICK. Yes. At that point we heard of the political influence, but the tribe sent a letter and they were told that that comment period would end——
Mr. MICA. You testified that unbelievable amounts of money and political influence were used. Could you describe those for the committee?
Mr. HAVENICK. Yes. The opposition, which included Patrick O'Connor, who was a very high-powered lobbyist, went around and through their web of people in both the State of Wisconsin and in Washington, lobbied any public official from the city of Hudson to the State legislature to Congress about this project. Prior to this happening there was virtually no interest at the Federal level in what happened in Hudson, WI, on the dog track application.
They also had a continual barrage of the people at the Department of the Interior to change the opinion, change the opinion. And really, what they were doing was, the entire campaign was forget the law, forget the facts, forget that there is IGRA, forget that you have a fiduciary responsibility to the tribes, rule in favor of our clients. All that is important is that our clients get their desired result. And they used any way that they could in order to do that, even attempting to cast aspersions on us, my family, our company. There were no limits to what they did to kill this project.
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But the whole thrust of it was, forget IGRA, forget the law, forget the facts, give my clients what they want, and no one was immune to that lobbying and propaganda effort.
Mr. SOUDER. Mr. Barrett.
Mr. BARRETT. Thank you very much. Mr. Havenick, you testified several times that was the first time that a regional office or local office decision had been overturned, and you may be correct. I don't know. But I have got before me a denial by the Bush administration of the Santee Sioux Tribe's application. Are you familiar with this case?
Mr. HAVENICK. No, I am not.
Mr. BARRETT. OK. Let me just take a minute and maybe I can help you with this one. All we would have to do is change the names and I think it would be quite similar.
In this case the tribe, in partnership with Harvey's Resort Hotel Casino, would purchase certain properties on Council Bluffs, IA, and requested that the property be placed in trust for the tribes.
Documents . . . indicate this is . . . an excellent economic development proposal for the Santee Sioux Tribe. However, the Sac and Fox Tribes, the Governor of Iowa, and members of the affected community have stated their strong opposition to the project.
After several meetings and consultations between and among representatives of the Santee Sioux Tribe, Harvey's Resort Hotel Casino, Central Office Bureau of Indian Affairs officials, and myself, I have decided to deny the request for approval of the land acquisition. The proposed venture would place the Santee Sioux, a Nebraska tribe, in direct competition with the tribes in Iowa.
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and that goes on and on.
[The letter referred to follows:]
INSERT OFFSET FOLIOS 51 HERE
[The official committee record contains additional material here.]
Mr. HAVENICK. But first of all, they crossed State lines. But in addition to that, there was not a recommendation from whatever regional office, which I would assume would be Minneapolis, approving the project.
Mr. BARRETT. I think there was. I see heads going up and down. Am I correct in saying that the regional office recommended that this be approved?
Mr. HAVENICK. OK. But this was across State lines.
Mr. BARRETT. As was the one here. You objected to the Minnesota——
Mr. HAVENICK. No, no. This was Wisconsin tribes applying in Hudson. The tribes were not brought in from another State, they were indigenous Wisconsin tribes.
Mr. BARRETT. So there is a difference, but again, I am saying this was not totally unprecedented. This was done under the Bush administration. I don't know that anybody is talking about that. But let me move on.
Why do you think—why do you think the tribes opposing the casino contributed to the DNC?
Mr. HAVENICK. I am sorry?
Mr. BARRETT. Why do you think that the tribes opposing the casino contributed to the DNC? That is the whole reason we are here today.
Mr. HAVENICK. Because the tribes wanted to protect their monopoly.
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Mr. BARRETT. So they were doing something nefarious?
Mr. HAVENICK. Yes.
Mr. BARRETT. Why did you contribute to Governor Thompson?
Mr. HAVENICK. Because I believe in what Governor Thompson says. I happen to believe in a lot of his programs. I would like them to be administered in Florida. I think Governor Thompson is a fine politician, and I agree with him. I was not trying to get Governor Thompson to change anything. These people were asking that the people who got the contributions from them, they were asking them to ignore the law, ignore IGRA, forget the facts, and rule in their favor.
Mr. BARRETT. But, of course, Governor Thompson has the final say in this, you are well aware of that?
Mr. HAVENICK. I am very aware of it.
Mr. BARRETT. In 1990 you contributed $3,600, and Barbara—is that your wife——
Mr. HAVENICK. Barbara is my wife.
Mr. BARRETT. She contributed $5,000, and Florence——
Mr. HAVENICK. My mother-in-law.
Mr. BARRETT. She contributed $5,000, so $13,500——
Mr. HAVENICK. What was the date?
Mr. BARRETT. July 6, 1990.
Mr. HAVENICK. This project began in 1993.
Mr. BARRETT. I am well aware of that. In 1991, $500 to Governor Thompson, $2,500 to Governor Thompson on November 8, 1991; $500, May 21, 1993. There are several other—Marlene Hecht, is that a relation to you and your wife?
Mr. HAVENICK. No, Florence Hecht is the only relation.
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Mr. BARRETT. Again this reminds me of when I was first running for Congress and a group asked me what my definition of a special interest was, and I said someone who contributes to my opponent, because I think everybody in this room believes that their motives—and I think you are sincere, that you think Governor Thompson is a very good Governor, but nobody in this room is ignorant of the fact that Governor Thompson had the last say in this issue, and after the testimony today no one appears to be ignorant of the fact that Governor Thompson appeared to be sometimes saying one thing and sometimes saying another thing.
What is your opinion of what Governor Thompson was saying?
Mr. HAVENICK. I would like to just say two things. In 1990, when the bulk of the contributions were made to Governor Thompson, this issue was not even on the horizon.
Mr. BARRETT. I understand that.
Mr. HAVENICK. Because the Indian gaming did not begin until 1991, and if we could have foreseen that what happened would have happened, we would have acted very, very differently. So there was no attempt on our part to influence Governor Thompson.
Mr. BARRETT. But it is clear that you and your family members have contributed roughly $20,000.
Mr. HAVENICK. Yes, we have.
Mr. BARRETT. And you have had meetings with Governor Thompson to discuss this proposal?
Mr. HAVENICK. Yes.
Mr. BARRETT. What has he told you?
Mr. HAVENICK. He has told us that he is—I believe Governor Thompson is open to see what happens.
Mr. BARRETT. Notwithstanding his earlier——
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Mr. HAVENICK. Governor Thompson continues to say that he is opposed to the expansion of gaming, but there has not been a definition of what constitutes expansion, and we contend that this is not an expansion, this is a contraction.
Mr. BARRETT. When you hired Mr. Eckstein, I bet you were one happy guy. Did he tell you what kind of access he had to Secretary Babbitt?
Mr. HAVENICK. I wasn't one happy guy, OK? We were one very unhappy people, because we felt that what was being done to us was that the tribes that were against us were making enormous amounts of money every day that this project was delayed, so we felt that what they were trying to do was, since you couldn't kill it on the merits, they were just going to never give us a decision.
Mr. BARRETT. But then you hired Mr. Eckstein because you thought he was a man who had special access to the Secretary?
Mr. HAVENICK. We felt Mr. Eckstein could get this project back on track.
Mr. BARRETT. You felt he had special access?
Mr. HAVENICK. Yes, we did. Yes, we did.
Mr. BURTON. The gentleman's time has expired. I am not going to take my 5 minutes. I will only take 1 minute, and yield to my colleague from Indiana, so we don't keep him waiting.
I just wanted to restate what I said before. The law requires consultation with the tribe. This tribe, because it was a poor tribe, was not consulted with.
The tribes that had a vested interest in stopping this agreement, that were making $400,000 for every man, woman, and child in the tribe, lobbied, went to a private meeting with lobbyists, and with members of the Department of the Interior. Those who should have been at that meeting or at meetings to talk about the problems with him, to talk about the law, were not, and that was a violation of the law. Tribal meetings that were held were with these major contributors.
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And then after these meetings took place and after the application was denied, $350,000, not $500 or $1,000 or $2,500, but $350,000 was given to the DNC. And then the top lawyer at the Department of the Interior and the chief of staff at the Department of Interior go to work for the rich Indian tribe. And then Mr. Collier, one of the two people I just mentioned, carries a $50,000 to $100,000 check over to the DNC from the rich tribe.
Now, I understand what my colleague is trying to do, he is trying to equate your contributions with what has happened. But I think it is ridiculous on the face of it, because I don't think you can compare what happened if you look at that scheme or that series of events with what you were trying to do.
Once again, I want to state my opposition to legalized gambling, but nevertheless, we are not talking about that today, we are talking about illegal use of campaign finances to try to influence policy at the Interior Department.
I yield the balance of my time to the gentleman from Indiana.
Mr. HAVENICK. Could I make one comment, if I could, sir? If you turn to exhibit 302, which is a letter to Chairman Ackley, and look at the last paragraph, it is from John Duffy. The date of that is March 27, 1995. That letter was sent after our applicant tribes found out that the comment period had been reopened.
In that, John Duffy, in the last paragraph, says,
Please be assured that our commitment regarding the submission of additional information will not delay consideration of other aspects of your application by the BIA's Indian Gaming Management staff. Should areas of concern with the application be identified, you will be so notified,
and we never were.
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Mr. BURTON. The gentleman from Indiana is recognized.
Mr. SOUDER. Here we are talking about what looks like, at any rate, the attempt of influence, but successfully buying influence. When you have the former treasurer of the Democratic National Committee repeating the Delaware North charge, which is what the current finance chairman of the Democratic National Committee repeats to you, where you have a Democrat national leader like Don Fowler—you have other things that the chairman and we are looking at as to whether influence was actually bought, not whether there were attempts to buy it. Quite frankly, I think this demonstrates a lot of evils of gambling and power of concentration of Government, because this is what happened when major decisions are made that can then be corrupted by money pouring into both sides. The dangers of gambling are inherent at the State level and corrupting State government as well as the Federal Government.
Nevertheless, we are here looking at whether, in fact, our Government has been corrupted. In connection with the St. Croix tribe, I got a little confused in the original proposal. It was 60/40, where you were going to do a 20/20 split with the management company.
Mr. HAVENICK. Correct.
Mr. SOUDER. Their management company represents several tribes or just St. Croix?
Mr. HAVENICK. They were just the St. Croix tribe.
Mr. SOUDER. And in the agreement that you proposed that has been turned down, it was, in effect, 75/25?
Mr. HAVENICK. Correct.
Mr. SOUDER. The parking lot agreement, was that part of a collateral agreement vis-a-vis the bank for loan purposes?
Mr. HAVENICK. Yes.
Mr. SOUDER. In effect, you were not doing this as a charitable operation for the Indian tribes, you were in a business arrangement with somebody whose only collateral was the Indian contract; they had no cash in any way, and no property?
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Mr. FRIEBERT. That is correct.
Mr. SOUDER. When you switched from the St. Croix tribes to the other tribes, did you anticipate that the St. Croix tribe would turn and oppose you?
Mr. HAVENICK. We thought they might, yes.
Mr. SOUDER. It was not just a money deal, because certainly since you had been turned down, since you spent thousands of dollars on other things, the difference in 5 percent is not that significant.
Mr. HAVENICK. No, not relevant to whether you get it or you don't get it. That is really the key.
Mr. SOUDER. You expressed concerns it might have brought down your dog racing elsewhere. The time of the referendum had passed and it would have been smooth sailing if you had cut the deal with the St. Croix tribe right at the beginning?
Mr. HAVENICK. Probably it would, because it would have just sailed right through.
Mr. SOUDER. Did you state the position as a businessman—you may have run into this in dog racing—did you anticipate the intense opposition of the Minnesota tribe?
Mr. HAVENICK. No.
Mr. SOUDER. Why not?
Mr. HAVENICK. Why did I not anticipate it? Because at the time this was really happening, the Minnesota tribes were also having problems with their management companies, so most of these tribes were so preoccupied with their own internal affairs that they weren't worried about any external affairs. It really wasn't until the end of 1994, that they were in a position where they could start fighting against this. They weren't focused on us at the time. We did anticipate that there would be some opposition, yes, but we didn't think it would take on the character that it did.
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Mr. SOUDER. All right.
Mr. BURTON. My time has expired. The gentleman from Indiana will be next in line, if he so chooses.
Mr. WAXMAN. Mr. Chairman, I am recognized for 5 minutes, but I am not going to take the 5 minutes.
I would like to put on the board the chart the chairman just had on the board saying ''Hudson Facts'' on the screen. Here is Hudson Facts. It says, The law requires consultation with the tribes. Lobbyists were hired to stop progress. Tribal meetings with big contributors. $400,000 opponents versus $600,000 proponents. $350,000 contributions to Democrats. Duffy and Collier leave Interior to work for Shakopees. Collier carries $50,000 check to DNC on behalf of Shakopees. And the chairman said even a blind person can see there is something wrong. Something is wrong with this.
[Note.—The chart referred to may be found on p. 105.]
Mr. WAXMAN. I want to put up something else, called Tobacco Facts. I want to read from this. The tobacco industry hires former Republican National Committee Chairman Haley Barbour as their lobbyist. Tobacco industry gives $8.8 million to Republican party since 1995. The three biggest contributors to the Republican party were all tobacco companies. Speaker Gingrich and Senate Majority Leader Lott insert a secret provision into the budget bill that gives the tobacco industry a $50 billion tax break. With no discussion on the merits, the largest special interest tax break in history is passed.
[The information referred to follows:]
INSERT OFFSET FOLIOS 52 HERE
[The official committee record contains additional material here.]
Mr. WAXMAN. Now, I raise this issue because look at what this committee is ignoring, not what it is reviewing, but what it is ignoring, when we talk about the influence of money, special interest decisionmaking, but elected officials who receive contributions.
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I don't know about this case, I hope to hear all sides on it, and I am not convinced that these Hudson Facts are accurate and that they were the determining influence. But I am convinced that these tobacco facts are accurate, and that the money from the tobacco industry dictated the result of the $50 billion give-away led by the Republican leaders who received the money.
My question is, and I have said it in the past and I am going to say it again, why aren't we looking at that, something like that? And the reason we are not is because this committee's investigation is not to be taken seriously, because it is all partisan. It is all partisan politics. And the only purpose of this investigation is not to get to the facts about campaign abuses, but to try to smear Democrats, sometimes with some information that sounds like it might have some credibility, oftentimes with information that is fabricated.
I want to yield now the rest of my time, and of course he will have time if he wants on his own to—Mr. Kucinich—to question the witness.
Mr. KUCINICH. If I could say at the outset, Mr. Chairman, Mr. Waxman, that in sitting in on the many hours of testimony today, I think the American people have to see these proceedings as further proof of the need for a broad-based campaign finance reform. When we are here and listen to the amount of money that goes into the political process, just from one witness, to try to—whether it is for the purposes of giving money to nice people because you like them or giving money to people who are in positions of power because they can make decisions on your behalf, the fact of the matter is that the American people are not really enjoying the same kind of benefits that go to people in positions of power in the business community and other areas.
So I—and that—you know, we can't proceed further unless we recognize there are 187 signatures on a petition right now, in the House, to release campaign finance legislation and give the House a chance to vote on it. These hearings prove the need for that.
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You know, a businessman who is—you, sir, I am sure you are a very honorable person and probably a very good businessman. And I could imagine that a very good businessman who is also an honorable person might be a little bit perplexed if he gives about $50,000 of his money and can't get a decision in his favor. I am sure that is a shock to you. But the American people who do not contribute money to campaigns because they may not have that kind of money, they worry about getting decisions in their favor, too. So you know how the people of this country may feel.
Now, I would like to go on to some questions here.
Mr. HAVENICK. Could I just say one thing?
Mr. KUCINICH. I have some questions I would like to ask.
Mr. HAVENICK. Can I just answer one thing that you said, please, sir?
Mr. KUCINICH. Sure. The gentleman is certainly free to respond.
Mr. HAVENICK. We did not give $50,000 to anybody to influence this decision. We did not give $1 to anyone to influence this decision.
Mr. KUCINICH. I heard you testify when Mr. Barrett questioned that your total contributions to the political system may have totaled about $50,000.
Mr. HAVENICK. Since 1990.
Mr. WAXMAN. If I may reclaim my time, how can you be so pure to tell us that you gave money and you did it for noble purposes, but when somebody else gives money, and they advocate a position contrary to yours, they must have done it for nefarious purposes?
Mr. HAVENICK. That's not what I said.
Mr. WAXMAN. I find that very troubling and a little disingenuous.
Mr. HAVENICK. I feel that the other side gave the money to have people disregard the law. There is a difference.
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Mr. WAXMAN. You gave money, and you got to meet with the Governor. You gave money to a lobbyist who got to meet with the Secretary of Interior. Ordinary people don't get that opportunity.
Mr. HAVENICK. I never met the Secretary of Interior.
Mr. WAXMAN. Your lobbyist did.
Mr. HAVENICK. Pardon me?
Mr. WAXMAN. Your lobbyist met with the Secretary of the Interior.
Mr. HAVENICK. He did. But I don't believe that people shouldn't have the right to lobby people. But I am saying to you——
Mr. WAXMAN. How about contribute to them?
Mr. HAVENICK. I think they have a right to contribute to people, but I am saying that it is the quality of the lobbying that was done in this case that produced a grievous wrong. This is not ordinary lobbying. This is not just trying to get somebody to hear my case. This is telling somebody, ignore IGRA, ignore the law, ignore the facts. It's a very different kind of thing.
Mr. WAXMAN. And you lost, and you don't like it.
Mr. BURTON. The gentleman's time has expired.
The gentleman from Indiana has 5 minutes on his own time now.
Mr. SOUDER. I believe one of the greatest hungers in America right now is for integrity, and they don't see it out of public officials or a lot of times in private business or a lot of different places. One of the things as we look at campaign finance reform and what this committee is trying to do is, rule No. 1 is if you can't follow the current laws, what good will it do to pass new laws? And if you don't have people of integrity, and if you have people who are going to bend and abuse it, it won't do us any good to pass more laws.
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And I happen to be willing to speak out against my own party, as I did on the tobacco issue, because I don't understand how that got in the bill. I don't understand why we weren't told. And our leadership ought to be rebuked when they do that, too. And that is not the jurisdiction of this committee, but it is something that should be looked at.
I believe that, in general, we probably need to look at various kinds—I sponsored a number of bills, but any type of finance reform we have to look at needs to include not only the business side, but the labor side, the soft money, and what we do with millionaires and billionaires who decide they are going to dump all their money in, right now that is constitutionally protected.
This is not an easy issue to answer, but what we are looking at is following the current law and whether, in fact, it has been abused from calls from the White House to Air Force One and back to the White House. Was that just nominal checking, or was it trying to bully? Were there decisions made by staffers under Secretary Babbitt in return for their getting a future job? The Secretary has admitted he has lied. We just don't know which ones are lies. This is serious stuff, and being trivialized for political purposes is wrong. It is not about gambling. I am more than happy to have hearings on gambling because I oppose gambling. I oppose dog racing, and I oppose casinos. What we are trying to sort out here is what happened in this process.
One of the things that is really interesting to me is why a former treasurer of the Democratic National Committee, Patrick O'Connor, put out letters saying that you were part of Delaware North and then a Patrick—or Terry McAuliffe down in Florida used the same charge to you that it was Delaware North. Why do they think you were Delaware North or that dog track was?
Mr. HAVENICK. I have no idea why they would.
Mr. SOUDER. Is Delaware North a fairly sizable organization? When one of the memos has a reference to them being tied to——
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Mr. HAVENICK. In the Patrick O'Connor letter, the original Patrick O'Connor letter of either April or May 1995, Patrick O'Connor said that we were Delaware North, and that, you know, that Delaware North is very close to Senator Alfonse D'Amato, who I think is a very fine man but I've never met. And you know how the—I believe the President feels about Alfonse D'Amato or how we feel about Alfonse D'Amato.
So the point of tying Delaware North into this was to say that we were a Republican company that was seeking this transfer of the land into trust. That was in one Patrick O'Connor letter.
There's another Patrick O'Connor letter, which is your exhibit 334, and if you turn to the second paragraph there, it says, unquestionably, tribal governments will need to call upon the Clinton administration and the President himself to assert leadership—leadership and assist tribes through the difficult 1996 budget process and to help fend off attacks on tribal gaming. As witnessed in the fight to stop the Hudson Dog Track proposal, the office of the President can and will work on our behalf when asked to do so.
Mr. SOUDER. Did the Delaware North charge come up anywhere other than those two Patrick O'Connor letters?
Mr. HAVENICK. Yes.
Mr. SOUDER. Where else?
Mr. HAVENICK. It came up with Senator McCain.
Mr. SOUDER. How did it come up with Senator McCain?
Mr. HAVENICK. The lobbyists against us said that we were Delaware North, and Delaware North had—there is a—Delaware North had had a checkered past. And there was an incident in Arizona that involved a predecessor company to Delaware North. Senator McCain, coming from Arizona, would be particularly sensitive to that issue. So hearing that Delaware North was involved in this, we get an extremely negative reaction out of Senator McCain toward us.
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Mr. SOUDER. The—do you know—and you are testifying under oath, because we will be able to ask Patrick O'Connor—when we ask him why he was floating this, you don't know where it came from; there is nobody associated with you in any of your other business events, so on, that is with Delaware North? The reason this is important is it looks to me like Terry McAuliffe got his information from Patrick O'Connor.
Mr. HAVENICK. He probably did. I—there is nothing—first, there is nothing in our business associations that in any way tie us to Delaware North other than that Delaware North, in our opinion, is a fine company who was involved in greyhound racing also, among other things. And we do belong to an association, a trade association, with them. We have no business relationships with Delaware North.
But there was a definite attempt to say that this was Delaware North. Delaware North also owns two dog tracks in Wisconsin, so there was a way to muddy the waters as to who the real owner was except for the fact that all the people had to do was contact Madison and get a list of the owners.
Mr. SOUDER. Because if Terry McAuliffe got it from Patrick O'Connor, it proves that muddying the water worked pretty well. In other words, by tying it in with D'Amato and putting a political angle to this, it was rattling around at the very least, and with very top officials. The finance director for the President of the United States is picking up scuttlebutt, not based on fact, probably because they have played this as a political case.
Mr. HAVENICK. It helped overturn a regional decision of the Bureau of Indian Affairs and got people to disregard the facts, disregard the law, and rule for the other side. It was very important.
Mr. SOUDER. Thank you.
Mr. BURTON. The gentleman's time has expired.
Mr. Kucinich.
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Mr. KUCINICH. Thank you, again, Mr. Chairman. And, again, from the standpoint of trying to take an overview of some of the things that have transpired here today, I will again insist that we ought to start considering the implications of campaign finance just based on the testimony today, the need for reform.
I want to tell the chairman, Mr. Burton, when you presented your Hudson facts, one of the things that we know as a matter of fact, No. 5, with respect to people who left Interior to work for Shakopees, I want you to know that bothers me. I look at that, and I say there is something wrong there.
We spend a lot of time, though, in these hearings trying to prove that people are bad. But people actually may be decent people, but the system is bad. People are thinking that they have to buy access. That is wrong. And people trying to buy access, that is wrong. Decisionmaking that would be based on contributions, that is wrong and illegal. And people working for the Government one day and then turning around and working for groups that—or working for a company that would be regulated the next day by them previously, that is wrong.
So it should be said that there are those of us who are aware that there is something wrong with this system. We are charged to get to the facts of the particular matter that is before us.
Mr. Havenick, you have testified today that I think it was on August 15, 1995, that Mr. McAuliffe made some remarks to you that this committee could only take to mean that somehow there was an awareness and—within the fund-raising machinery of a decisionmaking process that was and should have been the sole province of an administrative body in the Federal Government. When you learned that, the day that you learned that, the day that he told you that, did you tell anyone else?
Mr. HAVENICK. Yes, I did. I told——
Mr. KUCINICH. Who did you tell?
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Mr. HAVENICK. Mr. Freibert.
Mr. KUCINICH. And who else did you tell?
Mr. HAVENICK. He was the only one.
Mr. KUCINICH. Did you make a decision not to mention at any other time to anyone when you first told him; did you decide you couldn't mention that to anyone at any time, you were going to save that information?
Mr. HAVENICK. No, I had also told that to Mr. Goff, Mark Goff, that I knew that.
Mr. KUCINICH. Mark Goff is who again?
Mr. HAVENICK. Mark Goff is a political consultant who works with us, as a public relations person.
Mr. KUCINICH. But earlier you and your attorney both stated, if I am correct, that you did not mention this conversation you supposedly had with Mr. McAuliffe in your litigation against the Department of Interior because you wanted to save it up for its surprise value; is that correct?
Mr. HAVENICK. Originally I—he was so in shock by what happened, and I was so in shock by what happened, and I knew that there were serious errors that came to get to this terrible decision that I wanted to see if he was going to try and do anything or direct me as to what we should do next.
Mr. KUCINICH. But didn't you really decide to save this? I mean, we are here, we are 2, almost 2 1/2 years later where we are in committee. I just heard this for the first time. So did you—and you testified there is some strategic work than just kind of saving this fact and bringing it out at a certain time.
Mr. HAVENICK. We had on September 15, 1995, which was 1 month later——
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Mr. KUCINICH. Right.
Mr. HAVENICK [continuing]. We filed the first lawsuit. And at that point, the strategic decision was made not to do anything at that time, OK, that it was not the proper time to use that information.
Mr. KUCINICH. Is it not true that in June 1995, Judge Crabb in Wisconsin ruled against your side in various ways in a published decision, giving the Department of Interior a significant victory at the time by denying your motion for summary judgment and granting a protective order to the Department?
Mr. HAVENICK. That is 1996, but it is correct.
Mr. KUCINICH. 1996.
Mr. HAVENICK. OK.
Mr. KUCINICH. OK. That was an important decision; was it not?
Mr. HAVENICK. Yes.
Mr. KUCINICH. And you and your side were not particularly happy with that decision, I take it?
Mr. HAVENICK. No, we were not.
Mr. KUCINICH. You moved to get that order reconsidered?
Mr. HAVENICK. We did.
Mr. KUCINICH. Now, in moving for reconsideration, your side filed new documents, including affidavits, to try to get the judge to reconsider a decision?
Mr. HAVENICK. We did.
Mr. KUCINICH. And the lawyers tried to show Judge Crabb that the Department had been corrupt; were they not?
Mr. HAVENICK. Yes.
Mr. KUCINICH. And—but you still did not testify as to your conversation with Mr. McAuliffe when your side moved for reconsideration?
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Mr. HAVENICK. That's correct.
Mr. KUCINICH. And you still say that your side decided to save your story about Mr. McAuliffe even though you were trying to get the judge to reconsider her opinion?
Mr. HAVENICK. That is correct.
Mr. KUCINICH. Now, Mr. Havenick, I know that when lawyers are trying to get a judge to reconsider a major decision, they provide all the evidence they can that the decision was wrong. I find it very unusual for a lawyer in such a significant case to save up evidence when they are filing such an important motion. And I find it very unusual that this story about Mr. McAuliffe surfaces today even though it never came up in what can only be described as very contentious litigation with the Department when you were trying to get the judge to reconsider her decision for the Department. Would you like to comment on that?
Mr. HAVENICK. Yes, I would. There are three lawsuits that are currently happening because of this grievous wrong. The first is in the Federal court, the second is a State lawsuit, and the third is a slander suit that we have filed against the O'Connor law firm for alleging that we are mob-related family, people.
In the State lawsuit, we uncovered a tremendous amount of information that was then presented to Justice Crabb. The—we were never given the opportunity to take the deposition of Terry McAuliffe. At the time that that deposition would have been taken or will be taken, it was intended that the information would be used at that time.
Mr. KUCINICH. Is it possible, though, if I, you know—isn't it possible that had your publicist released this information publicly, it would have created such an uproar that there would have been no way that your bid could have been easily dismissed?
Mr. HAVENICK. We have a tremendous amount of difficulty in the Federal lawsuit because we really don't know who the Justice Department is representing. I think that they should be representing me as an American citizen. I don't think that they're doing that in this case. The Justice Department is defending people who we feel did wrong. But we—what we gave to Justice Crabb that was a result of the State lawsuit was sufficient for her to come out with her ruling in March 1997 in which she found that there was evidence of political maneuvering or whatever in the outcome of this event. So what we presented to her was enough.
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But we are very, very suspicious of what the position of the Justice Department is in the Federal lawsuit, because are they defending me as an American citizen, forgetting that we're a part of the plaintiffs; are they defending people who have alleged to have done something wrong who are employees of the Interior Department? We're really not sure what side they're on. And we have got to be careful with what we do with information that we have, because we don't know who's on what side.
Mr. KUCINICH. Finally, Mr. Chairman, I will wrap this up. I know you have been very generous, and I thank you.
Are there any other—this McAuliffe revelation today is kind of a surprise. Are there any other surprises that you have been saving that might be helpful to bring forward right now so we can get a better understanding of what kind of case you are bringing before this Congress?
Mr. HAVENICK. I don't mean to belittle this, but this is not a surprise party. But that would really be part——
Mr. KUCINICH. If you are enjoying it, I hope you are.
Mr. HAVENICK. We're not. But it would be part of the work product of the Federal lawsuit, which is extremely important to us.
Mr. KUCINICH. Thank you, Mr. Chairman. Again, I think these hearings do have use and value. And I thank the gentleman for taking his time to bring this information before this committee.
Mr. HAVENICK. Thank you.
Mr. BURTON. The gentleman's time has expired.
Mr. Snowbarger.
Mr. SNOWBARGER. Thank you, Mr. Chairman.
And I guess, first of all, let me respond to the remarks of my friend from Ohio, when he suggested that we have a terrible system out there. And the implication was that when things go bad, the system makes us do it. I think we still have some personal responsibility and accountability for what we do, and I think we are excusing people much too easily if we say the system made them do it.
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The other thing I want to point out—I noticed my friend Mr. Mica and Mr. Souder also prefaced their remarks. I am no proponent of gambling. As a matter of fact, in the 12 years of the Kansas State Legislature, I gained quite a reputation. You can go back and talk to your industry group about that. But, again, as I mentioned, that is not the issue here.
I am also an opponent of political corruption, and I am also an opponent of that corruption being used and using the system to improperly influence decisions.
I want to followup on the letter that you were handed by Mr. Barrett when he was doing some questioning. It had to do with the Nebraska tribe who is looking for trust land in Iowa. And part of that letter indicates that that IGRA would require the concurrence of the Governor of Iowa for seeking any such acquisition. That refers to a fact that a Governor basically has a veto power over whether or not trust—or land within his State can be taken into trust; is that correct?
Mr. HAVENICK. That's correct.
Mr. SNOWBARGER. To your knowledge, in your case, has Governor Thompson ever communicated his willingness or his opposition to placing this land around Hudson in trust?
Mr. HAVENICK. No, he has not. We have never gotten the approval out of Washington. And the Governor is the next step. So he's never been asked directly what the answer is. And I really don't think he should have to answer the question until he's presented with it.
Mr. SNOWBARGER. Well, apparently they are asking for differences in the cases. And apparently the Governor in Iowa has already indicated his unwillingness to place that land in trust, which gave them a reason to deny this application. Again, you haven't reached the stage where the Governor of Wisconsin has been put in that position?
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Mr. HAVENICK. No, sir.
Mr. BARRETT. Will the gentleman yield for a moment, please?
Mr. SNOWBARGER. I yield.
Mr. BARRETT. Again, I think that there is some uncertainty about this. I read three times a letter that I felt was pretty unequivocal in the Governor's opposition. And I read——
Mr. SNOWBARGER. Reclaiming my time, what I had asked was whether there was anything in the record anywhere about the Governor's willingness or opposition, and the answer was no. And that differs from this case in that the Governor of Iowa had expressed opposition and was unwilling to place that land into trust. So there is a distinction between the two.
I would like to followup a little bit on the discussion about your conversation with Terry McAuliffe. I note, and I think it is rather ironic, that you met Mr. McAuliffe at the time of this conversation at a fund-raising event in Florida.
Mr. HAVENICK. Yes.
Mr. SNOWBARGER. Do you recall what that fund-raising event was for?
Mr. HAVENICK. Yes. It was the Clinton/Gore Re-election Campaign.
Mr. SNOWBARGER. Did you make a contribution to attend the event?
Mr. HAVENICK. Yes.
Mr. SNOWBARGER. All right. I will leave it at that.
Let me go on and ask for some clarification. Well, I guess the point being you have contributed to Democratic candidates as well as to Governor Thompson and other candidates——
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Mr. HAVENICK. Correct.
Mr. SNOWBARGER [continuing]. In California. OK.
Let me followup on one that hasn't had much attention here, and that is the December 3, 1996, meeting in Wisconsin. You discussed the fact that tribal members were meeting with officials of BIA. First of all, I find that curious. The lawsuit had been filed at that point in time; is that correct?
Mr. HAVENICK. Correct. The lawsuit was filed 14 months before—15 months before that.
Mr. SNOWBARGER. Did the topic of the lawsuit arise at this particular meeting——
Mr. HAVENICK. No.
Mr. SNOWBARGER [continuing]. The December 1996 meeting?
Mr. HAVENICK. No. I don't believe it did.
Mr. SNOWBARGER. It says in here that you were complaining about the turndown. It is quite difficult to believe you didn't discuss the lawsuit in relation to the turndown.
Mr. HAVENICK. I don't think we did discuss the lawsuit, because I think we were told that we were both litigants, you know. Both sides were told that and not to get into—into the lawsuit.
Mr. SNOWBARGER. But apparently you did have some conversation with BIA officials about their reasoning or their rationale for turning you down.
Mr. HAVENICK. Yes. At that December 3rd meeting, yes.
Mr. SNOWBARGER. Right. And it sounds like there may have been some long discussion with disagreement among the parties about what the facts may have been. Is that——
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Mr. HAVENICK. No. There were—there were other proposals that they were coming with, like drop the lawsuit and start over and that sort of thing. And, you know, we were not going to start over. We feel that the case was very strong, and the application was very strong in the way in which it was presented. And that was really the gist of what Mr. Skibine was coming to try to convince the group Four Feathers to do, to start to drop the lawsuit and start over. There was no real discussion as to the merits of the lawsuit, but that suggestion was dismissed out of hand, so it never went anywhere.
Mr. SNOWBARGER. Well did Mr. Skibine leave the impression that if you were to drop the lawsuit and start the process again, that there would be a better outcome?
Mr. HAVENICK. Well, there was an implication that there could be a better outcome.
Mr. SNOWBARGER. And yet your statement that Mr.—your recollection of the statement Mr. Skibine made was that, basically, don't blame me, it was the political people who turned you down?
Mr. HAVENICK. Correct. It went upstairs—don't blame me. When it went upstairs, politics took over.
Mr. SNOWBARGER. OK. And implication, you said, of his—of the whole discussion was that that might not happen to you the next time around?
Mr. HAVENICK. Correct.
Mr. SNOWBARGER. And this is after the November 1996 election?
Mr. HAVENICK. Correct.
Mr. SNOWBARGER. Thank you, Mr. Chairman. I yield back.
Mr. BURTON. The gentleman's time has expired.
Mr. Sununu.
Mr. SUNUNU. Thank you very much, Mr. Chairman.
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Mr. Eckstein has testified in the Senate that in a meeting with Secretary Babbitt, Secretary Babbitt stated quite clearly to him, I guess his phrase was, do you know how much these opponents of this project have contributed? And Mr. Eckstein's response was that he didn't know. And the Secretary indicated that it was as high as a half a million dollars. Were you aware of that testimony that Mr. Eckstein provided?
Mr. HAVENICK. Yes, I was.
Mr. SUNUNU. Were you aware of that story, or had Mr. Eckstein relayed that story to you at any time prior to his giving testimony in the Senate?
Mr. HAVENICK. Yes, he did. Actually, Mr. Eckstein relayed the story to Mark Goff right after his meeting with Mr. Babbitt on July 14th, and Mr. Goff relayed the conversation to me right after his conversation with Mr. Eckstein on July 14th.
Mr. SUNUNU. And when was Mr. Goff's conversation with you?
Mr. HAVENICK. On July 14th, right after—within a couple of hours.
Mr. SUNUNU. Literally immediately the same——
Mr. HAVENICK. Yes. Yes.
Mr. SUNUNU. So you were aware—prior to any of the discussion, the testimony, the subpoenas that have gone on through these committees, you were aware that Mr. Eckstein had clearly made that allegation?
Mr. HAVENICK. Yes.
Mr. SUNUNU. When Mr. McAuliffe said to you that he had met with Don Fowler and others and turned this project around, obviously you were surprised. What did you take to mean that he had met with Fowler? What kind of a discussion did you understand to have taken place?
Mr. HAVENICK. I thought that he had been the conduit who had brought together the opposing tribes and their lobbyists with the appropriate parties, and that together they backed the denial.
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Mr. SUNUNU. And obviously one of your greatest concerns with this denial and what you have emphasized in your lawsuit is that as a result of that influence and money being brought to bear, the rules, the regulations and the laws associated with granting or rejecting this permit were not followed, correct?
Mr. HAVENICK. Correct.
Mr. SUNUNU. I direct your attention to exhibit 335. It is an analysis of the risks of the litigation, Sokaogon, Sokaogon, and the rest.
[Note.—The information referred to may be found on p. 137.]
Mr. HAVENICK. Sokaogon.
Mr. SUNUNU. That is the Federal case; is that correct?
Mr. HAVENICK. Yes, it is.
Mr. SUNUNU. On page 2 of that, it states that—this is the solicitor writing, analyzing your claim of rules, laws, regulations not being followed. And it states that,
We have determined that the alleged problems with the section 2719 process are significant. We are concerned about our ability to show that plaintiffs were told about and given an opportunity to remedy problems, which the Department ultimately found were outcome-determinative. Area Directors are told to give applicants an opportunity to cure problems, and it will be hard to argue persuasively that applicants lose this opportunity once the Central Office begins its review.
Now, as far as we can tell, it seems that you were never given that opportunity to cure problems with the application; is that correct?
Mr. HAVENICK. That's completely correct. We were never given the opportunity.
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Mr. SUNUNU. You referred to a memo that Mr. Duffy had sent that also referred to the right of the parties to be given the opportunity to cure defects.
Mr. HAVENICK. Yes, I did.
Mr. SUNUNU. Both cases, sir, are obviously an attempt to make sure that this is a fair and open process; is that correct?
Mr. HAVENICK. That is correct.
Mr. SUNUNU. Ultimately, however, you were not successful. You were not given this opportunity through the process. Mr. Skibine has said in your conversation that it was a political process from above that caused this to fail. Are you familiar with a memo of June 8th authored by Mr. Skibine, however, that seems to contradict the final rejection?
Mr. HAVENICK. Well, I believe that's Mr. Hartman's; June 8th is Mr. Hartman's.
Mr. SUNUNU. I am referring to that draft.
Mr. HAVENICK. The one that is stamped ''draft.''
Mr. SUNUNU. It is signed by Mr. Hartman?
Mr. HAVENICK. Yes.
Mr. SUNUNU. I would just like to re-emphasize the conclusion stated right in the beginning of the paragraph. It says, ''Therefore, the staff recommends''—this is the Indian Gaming Management Staff at Interior—''That the Secretary, based on the following, determine that the proposed acquisition would not be detrimental to the surrounding community.''
That clearly contradicts the memorandum of July 14th; does it not?
Mr. HAVENICK. Yes, it does. We also found it strange that if that were just a draft, why was it signed? But that's neither here nor there.
Mr. SUNUNU. I certainly don't have an answer to that. You were not aware that this memorandum was written on or about June 8th supporting the finding of no detriment to the community?
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Mr. HAVENICK. We were aware.
Mr. SUNUNU. Were you made aware of it when it was written?
Mr. HAVENICK. No, we were not.
Mr. SUNUNU. You were not made aware of the decision to reject the application or any problems with the application until the June 14th decision memo, correct?
Mr. HAVENICK. We got the July 14th decision memo turning us down. We were never made aware of any problems with the application or anything that was not fixable.
Mr. SUNUNU. When Skibine—Mr. Skibine indicated that he was turned down or forced to back down by political forces, did he reference the fact that he had written a memo in support of the application previously?
Mr. HAVENICK. No.
Mr. SUNUNU. Thank you very much, Mr. Chairman.
Mr. BURTON. The gentleman's time has expired. Mr. Shadegg.
Mr. SHADEGG. Thank you, Mr. Chairman. Let me briefly state at the outset that I have grave reservations about Indian gaming. I have opposed Indian gaming in Arizona. I believe that we owe the Native American people of this country a sound economic development, but to place all of our eggs in the basket of Indian gaming I think is a mistake.
However, this hearing is not about Indian gaming. This hearing is about the process which resulted in the decision turning down your license request. And I have to tell you that I am stunned by one particular section of your testimony here. And I want to clarify part of it.
I think the McAuliffe testimony is very interesting, but I want to focus on what you have to say about what Mr. Skibine said at the December 3, 1996, meeting. That is a meeting which occurred long after this decision was made.
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And first I want to clarify the language. If you look at that language, you have written, finally, Mr. Skibine said, quote, ''look, don't blame me.'' And then your typed statement that I have says ''we have it to you.'' I presume that's a typo and that it should have said ''we gave it to you.''
Mr. HAVENICK. That is correct.
Mr. SHADEGG. OK. So for the record, you would like to correct that statement?
Mr. HAVENICK. Yes.
Mr. SHADEGG. That's a typo. It should say ''we gave it to you''?
Mr. HAVENICK. Correct.
Mr. SHADEGG. And you go on to say, and this is a direct quote from Mr. Skibine, it was the political people who turned you down, close quote.
Mr. HAVENICK. Correct.
Mr. SHADEGG. Can you first set the stage? Who all was present at the meeting, what was the meeting called for, and how did that statement happen to come out?
Mr. HAVENICK. The meeting was—Mr. Skibine was coming up to Wisconsin to meet with all of the Wisconsin tribes, all 11 tribes.
Mr. SHADEGG. I understood he was bringing good news.
Mr. HAVENICK. That he was bringing good news and he was going to have a meeting with our group the day before the big meeting with all of the tribes, and that he was bringing good news with him.
Mr. SHADEGG. What was the good news to be?
Mr. HAVENICK. Well, good news is relative. But the good news was that, if we started the application all over and we dropped the lawsuit, that we would probably be looked favorably upon the next time around.
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Mr. SHADEGG. Why would Mr. Skibine consider that good news? Was he generally favorable to this idea?
Mr. HAVENICK. Favorable to the idea of starting the application?
Mr. SHADEGG. No, generally favorable to allowing you and your partners to have the casino.
Mr. HAVENICK. In any meeting that I ever attended with Mr. Skibine, he always was favorable or at least appeared favorable to me to this project.
Mr. SHADEGG. Which would be consistent with the memo that my colleagues just questioned you about which indicated support, written by Mr. Skibine, indicating support for the casinos.
Mr. HAVENICK. That memo would be completely supportive of every indication that he ever gave me or any of my partners.
Mr. SHADEGG. All right. So he's there. And what leads him to say, under what circumstances does he happen to say, don't blame me, we gave it to you? That sounds like past tense. It was the political people who turned you down.
Mr. HAVENICK. When he presented the idea of filing the new application and starting the process over, it had taken us 3 years to go through that. And as Mr. Lantos pointed out, we lose money every day that we operate that thing. And just the thought of, to us, of starting this over was not palatable.
The tribes are really desperate for some kind of funding, and they have limited resources. So the thought of their using any more of their limited resources to start this thing over was highly unpalatable. So that suggestion was dismissed in the first sentence. It didn't go anywhere beyond that.
At that point, the tribes and the other people in the room, including me, started asking him questions about what was it that was so wrong in the application and why weren't the procedures followed and why was there no consultation and why, why, why. And after about the fourth or fifth why, I guess he really didn't want to listen to the whys anymore. He said it was that mea culpa. Listen. We gave it to you. When it went upstairs, politics took over.
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Mr. SHADEGG. Who did you understand him to mean by we gave it to you?
Mr. HAVENICK. I understood him to mean Mr. Hartman and him, the people who were in his office, the people that we understood to be the people who were working on this application. All of the other people involved, Mr. Anderson and the others, never even read the application.
Mr. SHADEGG. Did you question him at all as to what he meant by the political people or politics that turned you down?
Mr. HAVENICK. No, we had a pretty good idea of what he meant.
Mr. SHADEGG. You were aware that he has said that he, in sworn testimony before the U.S. Senate, or in a deposition before the Senate, that he made this decision and that politics played no role in it?
Mr. HAVENICK. I am well aware of his statement. But I know what he said to us also.
Mr. SHADEGG. How many people were witness to that conversation?
Mr. HAVENICK. Probably 20.
Mr. SHADEGG. And all of them you believe would have a recollection close to yours that he said that we gave it to you, meaning line people within the Department of Interior, and politics reversed it.
Mr. HAVENICK. I would say the majority of them would know that. It was like the career people who were for this. But it went beyond the career people.
Mr. SHADEGG. Your testimony says officials of the BIA, meaning that Mr. Skibine was not the only official with the BIA present when he made that statement.
Mr. HAVENICK. Correct.
Mr. SHADEGG. Can you—I know the chairman has asked you to give the names of the individuals present.
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Mr. HAVENICK. Yes.
Mr. SHADEGG. Can you tell us the names of the other BIA or government officials who were present?
Mr. HAVENICK. I believe one of them was Robin Jaeger. But if you ask Chairman Ackley, I believe he might have a better handle on who those people are, because I really wouldn't have known who they were. You know, I met them maybe once and maybe never before. But I think he could give you the names.
Mr. SHADEGG. Knowing the names of all—I think this is particularly significant. I think knowing the names of all of those individuals, including other BIA officials, would be extremely important for us.
With the chairman's indulgence, one last question. This has been under study by the Justice Department for more than 70 days. You have not been questioned by anybody at the Justice Department about the conversation?
Mr. HAVENICK. No, I have not.
Mr. SHADEGG. To your knowledge, has anyone else present in the room when this revelation occurred by Mr. Skibine been questioned by the Justice Department?
Mr. HAVENICK. I don't know. But I—I don't know.
Mr. SHADEGG. Thank you very much.
Mr. BURTON. The gentleman's time has expired. We are not going to a second round; however, we are going to recognize Mr. Barrett briefly for a couple legislative comments.
Mr. BARRETT. If I could, Mr. Chairman. I want to concur with what Mr. Kucinich said, because I think, if there's one thing that probably all the Members of this panel agree on, is that it probably wasn't appropriate for Duffy and Kelly to leave the Interior to work for the Shakopees. I think there's a problem there if you have someone who basically is going from the Department of Interior directly to the tribe.
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I don't know if there are limitations because of Indian treaties, as to limitations on that, but that's something I would be interested in exploring as a committee. If not, I would request the Department of Interior to look into that. And I know on the State level, at least in Wisconsin, this is a time when the gaming compacts are being renewed. If we're going to have credibility on this issue in the future, I think this is an issue we have to address. So we may not agree with you on everything, but I agree with you and I agree with Mr. Kucinich that this is a problem.
Mr. BURTON. We will ask Representative Young and Representative Pombo, the chairman of the Committee on Resources and the Subcommittee on the Interior to look into this, and I'm sure that they will.
Mr. Havenick, I want to thank you very much. You've been a good witness, and you've been very patient, and you've acquitted yourself well. And we thank you very much for being with us today.
Mr. HAVENICK. Thank you very much.
Mr. BURTON. We now invite Ms. Bieraugel and Ms. Berg to come forward and be sworn. As I understand it, Ms. Bieraugel represents the people who oppose the facility in Hudson. And Ms. Berg is a resident and president of the Sandra Berg Communications, and that's a company located in Hudson, WI. Would you both stand and be sworn? I don't know who that is in the middle, but would you like to be sworn as well?
A VOICE. No.
Ms. BIERAUGEL. Mr. Chairman, I wasn't informed that I was going to be sharing this.
Mr. WAXMAN. Could you speak into the mic?
Ms. BIERAUGEL. I wasn't informed that this was going to be a dual thing. We are obviously on opposite sides. I don't think you would have Mr. Havenick and Mr. Babbitt sitting at the same table. Can I ask how this is going to be conducted in terms of questioning?
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Mr. BURTON. Well, what we will do is——
Ms. BIERAUGEL. Can you do one at a time?
Mr. BURTON. No. What we will do is we will allow you to make an opening statement. We'll allow Ms. Berg to make an opening statement. And then the members of the committee may question whomever they like. I don't think the questioning is going to be of long duration. The main part of your testimony will be your opening statement. I don't think you're going to have to endure too much in the area of questioning. That's fine of you.
Mr. WAXMAN. Mr. Chairman, before you swear them in, just to answer this question that has been raised. We've been pressing to have you testify. The chairman agreed we could have you testify tomorrow. He told us at the beginning of this morning, at the beginning of this hearing or early this hearing, that you would be permitted to testify today. We were very appreciative of that. Just 2 seconds ago, the chairman informed me that he found somebody else to speak on the other side. I don't have any problem with that. I just think it's a little bit of a cruddy way to do business.
Ms. BIERAUGEL. I don't have any problem with this.
Mr. WAXMAN. But it's not unusual for a congressional hearing to have two witnesses taking different points of view on the same panel. We've even encouraged that. We have that so we can have the witnesses heard.
Ms. BERG. I would be happy to go afterwards and not sit up here.
Mr. WAXMAN. What I'm saying is that, as far as I'm concerned, and you shouldn't be concerned about it, we ought to have both of you make your statements. We can ask questions of either one of you.
Mr. BURTON. Let me just say that you were not here, Mr. Waxman. The minute I found out that Ms. Berg wanted to testify I did talk to Mr. Barrett. He'll attest to that fact. It was probably 45 minutes ago. If you were in attendance, you would have known and you would have had time to raise your objection.
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Mr. WAXMAN. Wait a minute. 45 minutes. We started at 10 a.m. It's now almost 6 p.m. I don't object to having two witnesses testify.
Mr. BURTON. Do you have a point of order?
Mr. WAXMAN. It just it seems to me that if you're going to give a courtesy, you ought to give a courtesy more than 45 minutes to any of the minority about witnesses you're going to have at a hearing.
Mr. BURTON. I'm not going to extend this debate——
Mr. WAXMAN. I do not have a point of order.
Mr. BURTON [continuing]. Other than to tell you, Mr. Waxman, I did not know about this myself until a short time ago, and I was trying to accord the same courtesy to Ms. Berg that we were according the other person. That's all I was trying to do.
Mr. BARRETT. Mr. Chairman.
Mr. BURTON. Would you ladies like to be sworn?
Mr. WAXMAN. You're only the chairman. You should have informed us earlier.
[Witnesses sworn.]
Mr. BURTON. Ms. Bieraugel, if you would like, we would be glad to start with you. You may have 5 minutes for an opening statement.
STATEMENTS OF NANCY BIERAUGEL, RESIDENT, HUDSON, WI; AND SANDRA BERG, RESIDENT, HUDSON, WI
Ms. BIERAUGEL. Thank you. My name is Nancy Bieraugel. I've been a resident of the Hudson—of the community of Hudson, WI, for over 20 years. I'm the mother of two teenage sons John and David and wife of Robert. I am also the CEO of a small beverage business called Kristian Regale. Thank you, Mr. Chairman and committee members, for having me testify.
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For weeks we have been reading stories in major newspapers about the scandals surrounding the decision to deny an application to take land in the city of Hudson and put it into trust land for the purpose of opening an Indian casino. The process that is being examined and the claim that the decision was tainted greatly concerns the people of Hudson, WI.
We hired no high powered lobbyists. We had no ''connections.'' We were our own lobbyists. And despite the intense efforts of the tribes and their lobbyists, we believe that this is a case where government truly worked. That a very good policy of not cramming a casino down the throat of a community who opposes it was in part the result of intense opposition from the Hudson community.
We were very much a part of the process by which this decision was made as we, like the other parties involved who will be affected by the outcome of this decision, were allowed to comment and give our input. Yet, in both the Senate and almost the House committee hearings, our role has been completely ignored or glossed over. We believe this has happened because we don't fit in with the scandal theory.
The local opposition was not partisan. It was not anti-Indian. There is not an Indian reservation in Hudson or St. Croix County. The local opposition was about not wanting casino gambling in our small city.
The opposition includes a vast majority of the people of the Hudson community, and it cuts across all political parties and income levels. The local opposition was the basis for the denial of the casino application. And we are here to tell Congress that these reasons are valid. You see, we believe that the casino interests have switched the issues. The real David versus Goliath story is not ''poor tribes'' versus ''rich tribes'' but the small community of Hudson versus the Florida based gambling enterprise.
This battle began nearly 10 years ago when the Florida controlled dog track was forced upon our community. The opposition has been vehement and continues to this day. In fact, the tact to switching the issues has been raised before. In the 1992 casino referendum, Croixland poured over $12,000 into a marketing scheme that told people in the city of Hudson to ''Vote Yes For Lower Taxes.'' Nowhere did you see the word ''casino'' on their hundreds of yard signs. Their ads read: If you own a $100,000 home, it's $900 in your pocket, the savings they guaranteed in property tax savings. In fact, they guaranteed $5 million to the county, city and schools.
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The truth is that the 1992 referendum was not even the same casino proposal that is being debated. That didn't exist at that time. That casino proposal was with a different Indian tribe, the St. Croix Chippewa, which is the closest tribe to the city of Hudson.
The 1992 referendum was a loss for the casino proponents when you combine the votes of the city of Hudson and the town of Troy. Why should the town of Troy be considered? Because the town of Troy is part of the Hudson community. The people who live in Troy have a Hudson address. They have a Hudson telephone exchange, and they bring their children to Hudson schools, to which they pay thousands of tax dollars. They have no shops or gas stations. Land was annexed from Troy for the purpose of building the dog track and up until recently bordered the track on three sides.
Who recruited who? Did the tribes approach the failing dog track? Did the failing dog track recruit the tribes? Was this an act of benevolence, or was it driven by the self-serving need to bail the dog track out of nearly $40 million of debt?
Another truth is that the agreement for government services was never an endorsement of having a casino in the Hudson area. Our elected officials had been told that the land could be put into trust and that the community could get no compensation for the lost property tax dollars. This agreement was negotiated under the condition that the merits of a possible casino were not to be discussed. All such discussion would be ruled out of order. This agreement was an insurance policy. It was only enforceable if the land went into trust.
In 1993, the statewide gambling referenda, which is the most recent reflection of voter sentiment, 70 percent of the Hudson area voted to restrict casino gambling in the State of Wisconsin by means of a constitutional amendment. In 1994, long before the BIA's announcement, of which Mr. Havenick testified, there was little opposition, a petition of over 3,100 signatures of Hudson area residents, this isn't divided up, but this—this is just the Hudson School District. And there were hundreds more that we could have obtained. This was presented to Governor Tommy Thompson opposing the current, the current casino proposal. A copy of this petition was also presented to the BIA regional office in Minneapolis.
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In 1994, the town board of Troy passed a resolution opposing casino gambling and declared it would be detrimental to their community. The vote was unanimous, 6 to 0. In 1995, the common council of the city of Hudson passed a resolution opposing the casino 4 to 2. And in 1995, many major businesses sponsored a full page ad which was an open letter to Secretary Babbitt, Governor Thompson, and Mayor Breault opposing the casino and stating that it would be detrimental to our community.
Who is the best judge of detriment? Shouldn't the owners of businesses be in the best position to determine what is harmful to their business? Shouldn't the people who live in these communities? In 1995, Congressman Steve Gunderson, Senator Russ Feingold and Representative to the Wisconsin assembly Sheila Harsdorf, our representative, with 28 other Wisconsin legislators, sent a letter to Secretary Babbitt opposing the Hudson casino application.
All of the above information was submitted to the Bureau of Indian Affairs. How do we know? Because we sent it. We were part of the process. We sent letters and made phone calls, and we received letters and phone calls. But no one from the majority side of the committee ever bothered to check with us.
This decision to deny the casino application because of the objections of the people—it said the objections of the people of Hudson counted. If this decision stands untarnished, it will protect all the other Hudsons in the United States of America. Make no mistake, the gambling industry is looking for Hudsons. If this decision falls, and I might add for political reasons, then no community is safe. This decision has relevance to the entire country. Hudson could be any small city.
Had the Department to the Interior approved the application, a national precedent would have been set. Off-reservation casinos could then be forced upon other communities over the objections of their elected officials. And the Indian Gaming Regulatory Act would truly fail to protect.
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We have brought Hudson to Washington because we are part of the process that has been ignored. We applaud the Department of the Interior for respecting the community of Hudson and denying the casino application for the right reasons. The right reasons are facts. And we are here to tell them. Thank you.
[The prepared statement of Ms. Bieraugel follows:]
INSERT OFFSET FOLIOS 53 TO 55 HERE
[The official committee record contains additional material here.]
Mr. BURTON. Thank you very much. Ms. Berg, you're recognized.
Ms. BERG. I, too, thought I was coming to observe, so I don't have an opening statement. And I wonder if you would let me just speak extemporaneously.
Mr. BURTON. Sure.
Ms. BERG. I would like to draw your attention to the very nice display that the opposition has put together for you, everything on that display is truthful. But what I would like, really like to draw your attention to is what is not on that display.
Starting from the left, the city of Hudson opposes the casino. That is a resolution from our city council. The vote was 4 to 2. It was not unanimous. There are three government entities that are party to the agreement. Along with the city council, the county board and the school district are also equal partners in that agreement. And those entities have chosen to stay out of this fight and to remain neutral.
The town of Troy opposes the casino. That is absolutely true. They have also opposed the joint library agreement. They opposed the—there was a lot of contention with our fire protection agreements.
The town of Troy and the city of Hudson don't get along. That's the truth. And when Nancy said that they belong to the Hudson School District, they have Hudson addresses, they have Hudson telephone numbers, some of them do. A lot of them, about half of them have River Falls addresses. They have River Falls phone numbers, and they go to the River Falls School District. That township stretches from the north to the south about 13 miles. So those people are not in our community.
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Going on to the Wisconsin and Hudson say no to the expansion of gambling, that's absolutely true. And in that statewide referendum, I voted against gambling, because, along with a lot of other people here, I'm not sure it's the right thing. But you know what, it's the law of the land, and you people did it.
Majority businesses—major businesses oppose casino. There are, I think, about 25 or 30 businesses there. And that represents, I don't know what percentage, you guys do the math, but there are between 300 and 400 businesses in Hudson. So you tell me if that's an overwhelming majority.
Republicans and Democrat officials oppose the casino. There is only one Democrat up there, so you can erase that ''s.'' You've talked at length about Tommy Thompson and his position, whatever it is. We have two U.S. Senators. The other one is not represented up there.
Steve Gunderson is a very dear and close friend of mine. I love him dearly and we differ on this issue, but you know what, he's not our Congressman anymore. And our Congressman doesn't have a position up there, does he?
Sheila Harsdorf, our representative in the State legislature. There are—I'll take Nancy's word for it—30 signatures on that letter. That's representative of 101 legislators. Not overwhelming opposition, Mr. Waxman.
So you have four legislators up there. We have a lot more. You don't see our State Senator up there. She hasn't taken a position. You have lovely pictures of very good people, my neighbors in Hudson. There are, I counted about 100 pictures, Nancy?
Ms. BIERAUGEL. I don't know.
Ms. BERG. OK. Hundreds.
Mr. WAXMAN. In the Congress, we don't refer to people by the first names even if we know each other.
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Ms. BERG. Mrs. Bieraugel. I've never called her Mrs. Bieraugel in my life. I'm sorry.
Mr. BURTON. Mr. Waxman, when you have a comment, please address the Chair for a point of order instead of the witnesses. I would accord you the same courtesy if you were chairing this meeting.
Ms. BERG. And I will call her Mrs. Bieraugel. If I were to put up a display, I could put up that many pictures, too, because the referendum that was held on a different issue, absolutely on a different agreement, but the people of Hudson were asked clearly, and they knew what they were voting on—yes, we talked about taxes because I'll bet every one of you in your campaign talk about taxes, because that's what people want to talk about. And we did talk about taxes. But everybody knew what they were voting on. They were voting on the sale of St. Croix Meadows to an Indian tribe, any Indian tribe, an Indian tribe, for the purposes of casino gaming. And that referendum passed. Not by much, but it passed. Not overwhelming opposition.
I would also like to say that you need to hear from both sides. And I'm here because I am the other side. And you said a lot today about these people need to be heard. And they do. They're fine people. And I respect the right—as a matter of fact, I applaud their coming out here. But I came out here, too. And I didn't book in advance, and it cost me over $1,000, and I'm hoping I can get my plane out of here because I don't want to rebook.
Mr. BURTON. Do you yield back the balance of your time?
Ms. BERG. Well, I could keep talking.
Mr. BURTON. I presume you do.
Let me just start off, we're going to go the 5-minute rule, I presume, rather than spend the 30 minutes on each side. You can turn the clock on for me and for our counsel here if you will.
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Let me just say that I appreciate both of your statements. I think everybody in the committee does. But the issue is not about gambling. What we have been talking about all day today is whether or not the system has been corrupted by illegal contributions and unethical or illegal political influence. I would say that most of the Members up here, myself included, are not for legalized gambling. But the fact of the matter is that it is an issue under discussion today.
But the major issue that we're talking about is whether or not the Department of Interior was influenced by wealthy Indian tribes and their lobbyists who had connections with the White House, with the President, with the Vice President, and with the Secretary of the Interior.
It really does not bear at all on whether or not we're for or against legalized gambling or whether we're for or against a dog track in Hudson or whether we're for or against a gambling casino in Hudson. It has nothing to do with that. I would not have had the hearing if we were just talking about gambling.
We're talking about illegal or possible illegal campaign contributions. And that has been the focus of our hearings from day one. We've been looking at illegal or possibly illegal foreign contributions coming in from China, in the Middle East, from South America, from all over the place. And coupled with that is illegal contributions that may have come from Indian tribes to buy influence to stop a process that was ethical and lawful. That's what this is all about.
So I appreciate you and all your friends coming out from Hudson. It's very nice to be here. But I think you came out here not understanding fully what this hearing is about. It's not about the Hudson Dog Track. It's not about the Hudson casino. It's about whether or not illegal campaign contributions bought influence that altered the process that was passed by law through the Congress of the United States. That's what this is all about.
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Do any of my colleagues wish time on my side? I'll yield the balance of my time to Representative Snowbarger.
Mr. SNOWBARGER. Just quickly to followup on some of your comments, Mr. Chairman. I was originally going to ask these as a question but I don't feel like I should put you on the spot to answer the questions.
Ms. BIERAUGEL. You can put me on the spot.
Mr. SNOWBARGER. You're welcome to if you care to. And again, I want to point out that I have had to deal with these exact same issues at the State level in the State of Kansas, and I'm not known back there as a fan of gambling or of IGRA, either one. And if any of my colleagues care to take on IGRA and change that, I'm with you all the way. Let's go about doing that.
I'm also very well aware of the tactics that are used by the gambling industry to try to assert this in States where we really didn't want it. And we've thus far been able to hold off casino gambling, at least for everyone except Indians. IGRA kind of took away that option for us.
Here's the question, I guess, that I've had to ask myself, and very frankly I don't care to overturn this decision. I just as soon see it stand. I like the decision.
Ms. BIERAUGEL. How does everybody else feel about it?
Mr. SNOWBARGER. I don't like the process by which the decision was made. I think that's the key question to this committee. And here's the question I ask myself; and that is, if it's found out that this decision was based or heavily influenced by campaign contributions, do I support that process? And the answer was, no, I don't. Whereas I am very, very supportive of the end, I'm not supportive of the means. And I don't live my life by a philosophy that the ends justify the means.
I wish you well in your fight against this. Again, I'm not looking for this decision to be overturned in any way, shape, or form. If that happens through the court process, and you need assistance in fighting it back through the other way, again please let me know. I'll be happy to come up and help, because, again, I don't like gambling and I don't like the way IGRA has imposed on the States.
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Thank you, Mr. Chairman.
Ms. BIERAUGEL. It's very obvious for us that the proponents of the casino would not have taken it to this level if they didn't have hopes of overturning this decision. And so we just want it to be very clear that if this had been approved it would have set a national precedent, as Steve Gunderson our Congressman at the time stated.
Mr. BURTON. Let me just say that nobody brought it to this level, madam. I called the hearing as chairman to investigate illegal contributions. The proponents of the gambling casino or the opponents had nothing to do with this hearing.
We called this hearing strictly because we wanted to find out if illegal campaign contributions were influencing political decisions or decisions made at the Department of Interior. I called the hearing as the chairman of this committee. It had nothing whatsoever to do with whether the proponents or the opponents were for this project.
Did you want to make one final comment before I yield to my colleague?
Ms. BERG. I would. I would. I really feel that the whole issue here is the issue of fairness and the fairness of the process. And there are some of us out there that really believe that our Government should be fair. And if there is a casino in Hudson or if there is not a casino in Hudson, it stands not to change my life one iota.
But let me tell you. If my Government cannot be counted on to be fair to all of its citizens and to follow its own regulations, then I think we all lose.
Mr. BURTON. I thank you.
I yield now to my colleague from California, Mr. Waxman.
Mr. WAXMAN. Thank you, Mr. Chairman.
The contributions from Indian tribes, whether they were to Democrats or Republicans, have not been called into question as illegal, as the chairman has indicated. He thought they were illegal. They are not illegal. The question is whether the decision by the Department of Interior was influenced and, therefore, improper because they received campaign contributions from those for whom they ruled.
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Now, you cannot question and evaluate the Department of Interior's decision without some examination of the merits. It is just impossible to do it. The Department of Interior had a decision to make, and they looked at the merits. And it is interesting to see most of the members of this committee thinking that the decision that was made was the proper one on the merits. So they may well have made the decision on the merits for all the right reasons. There are some people who argue they should have made the decision the other way. That argument didn't prevail.
Ms. Bieraugel, what you had to say was very, very important; it is not irrelevant what the community thinks about this issue. And you and your colleagues have come all the way at your own expense to give us this view and are entitled to be heard.
My regret is, it is now 6 p.m., in a hearing that started 10 a.m. There is no press that I can identify in the audience, although there are some, but most of the press has left. I don't know how many people are going to be watching this on television after such a long day.
What you had to say was completely relevant and important to this hearing, and that is what the witnesses that started off the hearing had to say. They wanted to tell us why, as a poor Indian tribe, the decision should have gone their way on the merits as they saw it. So it is not unimportant what you had to say here, and you should have been given an opportunity to speak earlier.
Ms. Berg, usually we are informed of witnesses in advance. I was informed seconds before you came before us, so I don't know much about you. Were you a member of the city council?
Ms. BERG. Yes, I was.
Mr. WAXMAN. And did you lose your re-election over this issue?
Ms. BERG. Yes, I did. I also ran for the State Senate in 1988 and lost that election.
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Mr. WAXMAN. And was an issue in your campaign that you supported the——
Ms. BERG. Huge issue. As a matter of fact, in that election there were two dog tracks being talked about, one in the township of Hudson and one in the city of Hudson. And all of the incumbents who supported the dog track were not re-elected. It was definitely why I was not re-elected.
Now let me go on, please.
Mr. WAXMAN. Excuse me. This is my time, and I only have a limited amount.
Ms. BERG. OK. But let me tell the whole story, please.
Mr. WAXMAN. We will see if you get a chance to do it. And I hope you do.
So you ran for office on this issue and lost, and the people have expressed their view on it. But you have been presented to us as Sandra Berg from Sandra Berg Communications. Who do you represent in the Sandra Berg Communications?
Ms. BERG. Me.
Mr. WAXMAN. Do you have any contractual relationship with Mr. Havenick or the casino?
Ms. BERG. Yes, I have. In the early part of the 1990's, right around the time that the dog track was opened, and during the period of the referendum in Hudson, I did work for Mr. Havenick. And my job specifically was to make sure that that organization followed all of the campaign laws in the State of Wisconsin. That was my job; I was paid for it. And I worked for him, and I made sure that the $12,000 that——
Mr. WAXMAN. Excuse me. I have to ask the questions, and you have to answer them. This is not an opportunity to go on at random, because we only have a limited time.
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Ms. BERG. The answer is yes.
Mr. WAXMAN. Do you work for him now?
Ms. BERG. No.
Mr. WAXMAN. Well, listen to the question. You gave the wrong answer. You say $1,000 trip. Who paid for this trip?
Ms. BERG. I did. American Express did, and they'll be reimbursed in about 30 days.
Mr. WAXMAN. What motivated you to come here today at an expense of maybe $1,000 to hear this testimony?
Ms. BERG. Because there was a reporter who came to my house to interview me that told me that seven or eight people were going to be here from the opposition. And I called Mr. Bruns, who was a former city council member, who resigned last June, and asked him if he would like to come out and observe. I really thought we were just going to observe.
Mr. WAXMAN. So you are here simply to observe. You are not in any economic relationship with anybody that has an interest in this casino?
Ms. BERG. Not at this time. But I was. I did.
Mr. WAXMAN. I see my yellow light is on, and that just means that my time is up. Let me thank you for your testimony. And I want to yield to Mr. Barrett.
Mr. BARRETT. I just want to disagree strongly with Mr. Waxman. I think the journalists who are here are fine journalists, some of the finest journalists on Capitol Hill. And the spelling of my last name is B-A-R-R-E-T-T.
Mr. WAXMAN. My apologies to the journalists who are here today.
Mr. KUCINICH. Will the gentleman yield?
Mr. WAXMAN. Let me yield to Mr. Kucinich.
Mr. KUCINICH. In the seconds that remain, I think that we are here to determine whether there were plausible reasons why the application for the casino in Hudson should have been rejected. The testimony that has been given here suggests that there were, there was widespread opposition.
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All over this country, Mr. Chairman, we have people who are protesting things that could damage their community—rezonings, the location of chain drug stores in residential areas, cellular towers, nuclear waste being dumped in their communities, eminent domain for highways and widening of roads. And if there is one place in the country, Hudson, that won a victory, then there ought to be people cheering all over the country for that one place.
And you ought to be congratulated. Your appearance here was not in vain. You are an inspiration to people around the country that they can fight the system and win.
Mr. BURTON. Let me just say that I think it is laudable that people do stand up against things that they don't want in their community and are successful. But, once again, I want to state that the purpose of this hearing is to find out whether or not the law was broken by illegal campaign contributions or campaign contributions given to influence political decisions. And if that did occur, and that is what we are after, then people broke the law, and if they broke the law, they should be held accountable.
In the hearings, I know that the opposition today has tried to make this a referendum on whether or not there should be a gambling casino in Hudson, WI. The fact of the matter is, that is not what is at issue before this committee. It is whether or not illegal campaign activity took place, illegal contributions, or contributions that were made that influenced the decisions made by the Department of Interior. And if that was the case, then those who broke the law must be held accountable.
Does anyone else seek 5 minutes?
Mr. Shadegg.
Mr. SHADEGG. Thank you, Mr. Chairman. I will endeavor not to use my full 5 minutes.
I want to thank you both for being here. I appreciate your energy and effort, taking the time to come here and express yourselves. I want to make some points very clear.
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I want to begin by saying that I violently disagree with my friend, Mr. Kucinich. This is not about whether there were plausible reasons for the Department to turn down the license. That is not what this hearing is about. This hearing is not about whether casino gambling is good or bad. It is not whether Indian gambling is good or bad. It is not about whether casino gambling for Hudson, WI, would have been good or bad.
This hearing is precisely about whether or not we are a Nation of laws and we follow those laws and they are applied equally to all citizens regardless of their power or their political influence; or whether we are not a Nation of laws, whether we are a Nation of political influence where we write a series of laws and lay out procedures where people can be treated equally before the law, equally before the lady of justice, who has a blindfold on, or in fact they are not treated equally because some have money and some have power and some have influence and some have aggressive lobbyists who will not give up. This is an inquiry into whether corruption went to the highest levels of this Government, and it is not about gambling.
I happen to be a vehement opponent of Indian gaming. I have worked in Arizona with gaming and nongaming interests, with Indians and non-Indians. And I will tell you that I think IGRA is a grave mistake for this Nation. I think we are creating a huge dependency within America's Native Americans on gambling and its proceeds. We are not giving them legitimate economic development, which we should be doing. We are not giving them free enterprise zones, which we should be doing. We are not giving them tax breaks so they can build long-term legitimate businesses that do not bring crime.
Instead, having breached our obligations to Native Americans for generations, we suddenly say, let's solve it by giving them gambling, and if they get some crime or if it hurts their kids or if it brings corruption into their communities, too bad, they'll at least have money.
Now, I personally have fought Indian gaming in Arizona not because I don't care about Native Americans but because I believe it is wrong and will do severe damage. I personally led the fight against a ballot initiative in my county to expand Indian gaming in the last election, and I put my own personal money into that effort, and I recruited money and solicited money from others.
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This isn't about Indian gaming. What it is about is whether or not we are a Nation of laws and we abide by those laws and whether those laws were ignored in this case. And I think there has been some shocking testimony today to suggest that at least someone is not telling the truth in this story, and I think we need to get to the bottom of it.
Now, with regard to you, Mrs. Bieraugel—is that right?
Ms. BIERAUGEL. Bieraugel.
Mr. SHADEGG. I apologize. I am trying to pronounce it correctly.
I am with you all the way. I think Hudson should not have gaming if you as a community don't want it. And I will come there and help you fight it, because I don't like it. But that doesn't mean I agree with the decision of the Department of Interior. And I certainly don't agree with it if it was made on the basis of something other than the merits under the law.
And I simply want to conclude by pointing out to you that while I think IGRA is a mistake and it has serious problems which are bringing about the detriment of this Nation—a lot of gambling, a lot of corruption, and you see the power and money and influence in this particular case—there is one piece of IGRA which is worthwhile and which I call to your attention.
The particular section here that requires the Secretary to decide whether to grant trust status says that if there is a determination that the gaming establishment on newly acquired lands would be, one, in the best interest of the Indian tribes and its members and, two, would not be detrimental to the surrounding community, the Secretary may approve it. And then here is the key for those of you in Hudson who oppose Indian gaming in your community: But only if the Governor of the State in which the gaming activity is to be conducted concurs in the Secretary's determination.
What that means is that what happens in this hearing about a totally different issue, whether or not corruption occurred, isn't the question. The question is, will Governor Thompson turn this down if it is ultimately done?
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The last point I want to make: There was some significance to tribe being made out of this issue, a similar license being turned down, where a tribe from Iowa—no, I'm sorry—a tribe from Nebraska wanted to come into Iowa and set up a gaming operation and the Governor of Iowa said, no, I'm not going to grant permission for an Iowa Indian tribe to come in and conduct gaming—excuse me, a Nevada—a Nebraska Indian tribe to come into Iowa and conduct gaming to the detriment of Nebraska Indians. I don't see a parallel at all. And I thank you for being here.
Ms. BIERAUGEL. May I respond when you're done?
Mr. SHADEGG. Certainly.
Ms. BIERAUGEL. Thank you.
First of all, I think we agree on almost everything, almost everything. Especially I like what you had to say about detriment, about the detriment that gambling is bringing to this whole country. And that's how we see it in the community of Hudson.
Second, I'd like to ask you, do you agree with the policy that has been professed in the Department of the Interior that they should not cram it down the community's throat if the elected officials representing that community vote against it?
Mr. SHADEGG. Yes, ma'am, I do. And that is precisely why IGRA is written to say the Governor has the ability to turn to it down. Yes, ma'am.
Ms. BIERAUGEL. And can I also comment on the Governor? There was another quote that nobody ever mentioned from Governor Thompson. It is right in front of me.
He was debating his Democrat opponent, and they both agreed on the casino issue of Hudson. They both said they were opposed to it. The Governor added, ''I would oppose a casino at the dog track and would use whatever power the Governor's office had to block it.'' I have never heard any statements about the Governor taking back that statement or saying anything to the contrary.
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In regards to the discussion about the expansion of gambling saying, you know, that they would drop some casinos and reduce the number of casinos by 3 from 17 casinos in the State of Wisconsin to—I suppose that would mean 14—it is like trading bags of sands for bags of gold; and everybody with a brain sees that as an expansion of gambling.
Also, may I comment about anything else? I mean, there was some really——
Ms. BERG. I'm going to want some time, too.
Mr. BURTON. We are trying to give you as much latitude as possible. The hour is late. If you could summarize relatively quickly, we would appreciate it.
Before we go any further, do any of my colleagues have any?
OK. If you could make a brief statement on whatever subjects you would like—you have waited all day—we would appreciate it.
Same thing for you, Ms. Berg.
Ms. BIERAUGEL. Thank you. Just a couple points.
The county's position was neutral. It was never an endorsement for the casino. And I have a letter written by the chairman of the county board saying that. Also, the city's position was neutral.
And there needs to be an understanding that our officials were told they could end up with nothing if they didn't negotiate that agreement. And that was why the agreement was negotiated. It was never an endorsement of a casino. It was viewed as an insurance policy. That's all.
Mr. BURTON. Ms. Berg.
Ms. BERG. I'd like to agree wholeheartedly that we're here to talk about the process, we're here to talk about a fair process and making sure that that process that you people laid out is done in a fair manner. And I was under the impression that the Governor's approval or disapproval comes at the end of that process. And it seems to me that we've spent a lot of time here today trying to figure out what the end process is going to be.
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And I was of the opinion that the Department of Interior was supposed to make their determination independently. So I don't understand what difference it really makes what Tommy Thompson says, because Tommy Thompson, I would guess, because he's a fine Governor, is going to make that decision based on the final product that comes out of the Department of Interior. Right?
Mr. SHADEGG. Mr. Chairman, reclaiming my time, if I could just conclude by saying that I would suggest to Ms. Bieraugel that you don't want a system where the rich and powerful win and the procedure isn't followed.
Ms. BIERAUGEL. We had no lobbyists. We hired no high-powered lobbyists. We were our lobbyists, and we were part of the process, and that's whats being ignored here.
Mr. SHADEGG. It is not being ignored at all. This hearing isn't about gambling, it is about whether or not the process was corrupted. And there was massive lobbying on behalf of people who wanted to block this casino. And I don't think you want a process where the rich and powerful win and the law gets ignored.
Ms. BERG. May I say, too, that the Patrick O'Connor letter that was faxed to City Hall was faxed to Mrs. Bieraugel. Now, she may not have paid for him. But this came from Lewis Taylor, tribal chairman, to Mrs. Bieraugel. So to say that there was no, you know, large lobbying.
Ms. BIERAUGEL. May I respond to that? That absolutely requires a response.
Mr. BURTON. I will let you respond, but I don't want you two ladies getting into a prolonged debate. So you respond, and I will see if any of my colleagues have any final comments.
Ms. BIERAUGEL. As the organizer of the petition here that we brought a copy of to show you, and also I was part of the business group that opposed it, which represents many very large businesses, I had an idea because we were so surprised that the BIA and the regional office recommended it. In fact, the Governor must have been surprised, too, because he told us in a meeting that he didn't think it would go any further, he thought it would be shot down in Minneapolis.
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So I had an idea that I would get a delegation of many people that represented all of the groups that opposed this casino proposal together and that we would all come to the BIA and sit down and tell them all the different reasons that we were opposed to this casino application. And so we knew that the tribes were opposed. We had no contact with them whatsoever.
So I called Lewis Taylor and made the suggestion. I talked to him maybe three times, and he sent me a fax about the letter, the meeting with Dan Fowler. We're mostly Republicans, so we didn't go. He then called me—I don't know, it must have been when this letter was sent—and he said he had a letter that he wanted to send me a copy of. And I said, ''Fine. Do you still have the fax number from when you sent me that one other fax?'' And he said, yes; his secretary faxed it to city hall by mistake. No one ever even told me. It was when a reporter called me and said, ''What's going on? How come they're getting faxes at City Hall from an Indian chief?'' And I said, ''What are you talking about?''
So he came over to my house. That was the first time I saw the letter. And if I might add, it was such a screwy letter and it had so many inaccurate facts in it that I thought it was just ridiculous and I thought, who would take this seriously? And I didn't even save my copy. I mean, I couldn't believe it.
Ms. BERG. Maybe President Clinton took it seriously.
Mr. BURTON. Mr. Barrett, do you have some more comments?
Mr. BARRETT. If I could have 5 minutes, I'd appreciate it.
Mr. BURTON. Mr. Barrett is recognized.
Mr. BARRETT. Thank you very much. And I know the hour is late.
The chairman said that, really, your being here today is a little misplaced because that is not the issue.
Mr. BURTON. I didn't say that.
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Mr. BARRETT. I apologize.
But the inference that I drew was that your attendance was not necessary for these hearings. But, obviously, now you are here. So I apologize to the chairman if I put words in his mouth.
But I am looking at the denial letter from the Department of the Interior, and the first issue or the first ground that is laid out for denying this is the opposition from the community. And I am reading from the letter. ''The record before us indicates that the surrounding communities are strongly opposed to this proposed off-reservation trust acquisition.'' It goes through some of the actions that we have talked about today—common counsel, State legislators.
The paragraph ends, ''Because of our concerns over detrimental effects on the surrounding community, we are not in a position on this record to substitute our judgment for that of local communities directly impacted by this proposed off-reservation gaming acquisition.''
I don't know if this is the first time that the Department of the Interior ever used this. I don't know if it was inappropriate for them to use this. But they used it.
Ms. BIERAUGEL. We think it was the right thing to do.
Mr. BARRETT. I understand, and I agree with that.
Let me continue, if I could. I think what we have here told, though, is we have a hearing that is obviously very, very critical of the decision that was made. The first panel were the aggrieved tribes, the tribes that lost. I understand why they lost and why they—maybe I don't understand why they lost, given their statements, but they lost. And I understand why they are upset.
Our second panelist was the gentleman who had the controlling interest in the dog track. He lost. He was not happy. So until you testified, our whole first day are people who lost in this. And, frankly, I think that had the decision gone the other way, we could have had a wonderful hearing in the other direction. And I wouldn't put it past the majority in Congress to have held a hearing in the other direction.
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And to drag Mr. Eckstein in here and rake him over the coals for being a close associate of Bruce Babbitt, Mr. Havenick said that they had hoped to get access by having Mr. Havenick—I mean by having Mr. Eckstein. You have got people involved on both sides that have close ties at the national level to the Democrats, because the President is in control.
Let's look at the State level. At the State level we have heard a lot of testimony today about how much money was given to Governor Thompson. I have no reason to disagree with Mr. Havenick's reasons for giving money to Governor Thompson, $13,500 on one day from he and his wife and his mother-in-law; that is his right. But my guess is that Mr. Havenick probably gives money to legislators who support dog tracks. I don't have any problem with that. I don't support them; I don't give them any money; that is fine; that is life in the big city. But I don't impugn his integrity for doing that.
But what we have here is people that have lost, that are impugning the integrity of the people who won. And, again, if it had gone the other way, I will tell you what you would have seen. You would have seen Mr. Havenick being raked over the coals for giving all this money to Governor Thompson from the tribes that lost.
And the whole point of this is, you get involved in gaming, you get involved in the Government of the United States or State government deciding economic issues; you are buying yourself a can of worms that you are just going to regret forever, because once the Government decides who should win in the marketplace—and that is what this is, the Government is deciding who is going to win in the marketplace—you are going to have winners and you are going to have losers.
And here you have big guns on both sides. You have the big guns representing the tribes that won; you have big guns representing the tribes that lost. And when you have got big guns firing at each other, someone is going to get shot. And that is what happened here.
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My opposition to gambling has been precisely because of some of these issues. I think there is so much money around, it just clouds people's judgment. And I think people that may have been opposed to it all of a sudden are in favor of it. And that is fine. But I don't think that we should leave today without recognizing a couple things. One, this was a messy situation. And I think that Mr. Babbitt probably made some comments that he regrets. If my best friend in my whole life came in to me and asked me to do something, I would probably fudge a little answer as to why I wasn't doing it. And I think that is what he did. But that is what happens.
So I want to thank you both for coming. I think that your testimony has been well received. And I want to thank the other witnesses for being here today, too.
Thank you, Mr. Chairman.
Mr. BURTON. Any other comments?
Mr. Kucinich.
Mr. KUCINICH. Thank you, Mr. Chairman.
I want to go back to this point Mr. Barrett started to pursue and continue. There are two tests which the Department of Interior must follow with respect to the Indian Gaming Regulatory Act. One test is whether or not the deal or arrangement would be good and beneficial to the Indian partners, and the other test is the local opposition or how local communities feel about it.
The information which has been presented today indicates that there is a dispute over both of those parts. But the hearing has shown conclusively that it is plausible that the law was applied correctly by the Department of Interior. It is not a far-out notion. Had they approved or disapproved of the application and there was no community opposition and the Indian partners who were themselves complaining about the deal, that would have been very interesting. But they had particular concern about the benefits to the Indian partners and they also, according to records, were able to see a demonstrated community opposition, as has been testified today.
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I will state again, Mr. Chairman, that if money was used to influence the decisionmaking process, whether the outcome was favorable or not, that is reprehensible. And I think everyone on this committee would agree. But we have had no proof presented to us today of illegal campaign contributions. We have had no proof presented today that decisions were made based on those contributions. We have heard charges, yes. We have heard allegations. That is right. Some of us have suspicions about it, yes. But proof? No.
This committee is about gathering information to be able to make an assessment as to whether or not laws have been broken. If we are going to be consistent with the American system of justice, we have to reach our conclusions based on the evidence, not on wishful thinking of partisans, but on the evidence.
And I am still waiting for the evidence to be brought forward. And Mr. Chairman, if we bring it forward, I will vote with you for the purposes of recommending any action that needs to be taken. But I haven't seen that yet.
I do want to say, though, that I think that it is useful that the chairman holds these hearings. I know I have a difference of opinion with some of my colleagues on this side of the aisle about that. But it is useful that you hold these hearings, because it is still possible that from these hearings we may find a way to change this system.
Thank you.
Mr. BURTON. As we conclude, let me just point out some of the facts that we have found today. The law requires consultation with tribes that make application if they are going to have that application declined. That law was not followed. Rather, the rich tribes that are making $400,000 for each man, woman, and child had a meeting with the Department of Interior, along with their lobbyists. One of the lobbyists was Mr. O'Connor.
Mr. O'Connor is a former executive with the Democratic National Committee, who had met with the President in Minnesota. Subsequent to that, a call was made from Air Force One to Mr. Ickes, who was asked to look into the problem with the Department of Interior. These are facts that came out today. Lobbyists were hired, Mr. O'Connor and others, to stop the progress or process that was taking place at the Department of Interior. After the application was rejected, even though it had been approved at the lower levels, $350,000 in contributions were made to the Democratic National Committee.
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After that Mr. Duffy and Mr. Collier, one of whom was a chief counsel to the Department of Interior, and the other was a chief of staff at the Department of Interior—chief of staff to Mr. Babbitt, left the Interior Department and went to work for the very wealthy tribe, the Shakopees, making quite a bit of money.
Subsequent to that, Mr. Collier, who was one of the people who was involved in the decisionmaking in this particular case, carried a $50,000 to $100,000-dollar check to the DNC on behalf of this wealthy tribe, the Shakopees.
Now, you may not consider those facts worthy of consideration. I do. I think those are things that we ought to bear in mind as we continue our hearings. I believe more facts will come out in the days to come.
And with that, let me just thank the witnesses for being here and say that this committee stands in recess until 10 tomorrow morning.
[Whereupon, at 6:30 p.m., the committee recessed, to reconvene at 10 a.m., the following day.]
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