Bates: Gaming fund collateral request ‘a slap in the face’

By Kathy Helms
Diné Bureau

WINDOW ROCK — An agreement between the Navajo Nation and JP Morgan Chase for a $100 million line of credit to finance gaming still has not been signed, according to Budget and Finance Committee Chairman LoRenzo Bates.

The reason is JP Morgan “continues to insist on collateral, and it is very highly possible that collateral is the Permanent Trust Fund as well as possibly any other investment funds,” Bates said.

“The Budget and Finance Committee is still involved because we have to ensure our responsibility to the people. As such, I am keeping myself informed of what is going on so I can pass this on to my committee, and that was passed on to me today — JP Morgan continues to insist on collateral,” he said Wednesday evening.

“We went into this deal with the understanding that ‘we’re going to pay you back. It’s a good deal for all of us.’ With JP Morgan coming back and insisting they want collateral, it’s a slap in the face of the Navajo Nation because they’re saying, ‘We don’t trust Navajo,’” he said.

He believes the legislation needs to be brought back to the Navajo Nation Council to make them aware that they could be putting the Permanent Trust Fund in jeopardy.

What are the ramifications if the trust fund is used as collateral? “If council has other plans for that Permanent Trust Fund in the future, it cannot be used, because now it’s used as collateral,” Bates said.

“The other alternative is to use the Undesignated Reserve as collateral, which means that any dollars that go in there can’t be used. Council is not going to allow that. Council uses that to meet unmet needs, to help communities, etceteras,” Bates said.

The group Ha’a’da’a Sidi, “The Vigilant Ones,” made up of former Navajo leaders and grassroots groups, has filed notice of intent to sue Controller Mark Grant and the Navajo Nation, saying they want the legislation reconsidered to ensure the Nation’s sovereignty and its property are adequately protected.

At a news conference earlier this month, former Navajo Nation President Milton Bluehouse cautioned that the legislation grants broad authority to the president, controller and attorney general to engage in financial activities that pose a dangerous risk to the Navajo people’s sovereignty and assets.

Bates said that when Council referred the legislation back to the Budget and Finance Committee for a 30-day review, it was to specifically outline what was going to be used as collateral. But that never happened, because five days later, the legislation was brought up before Council again and passed.

“It doesn’t specify what can be used as collateral, so it’s broad enough for JP Morgan to say, ‘This is what we want,’” Bates said.

“That was one of the concerns that initially was on the table — it didn’t specify — and that’s one of the reasons it got referred back. But because that didn’t happen and we passed it, that language is still there. So, basically, JP Morgan is taking advantage of that clause.”

Delegate Leonard Tsosie, who voted to refer the legislation back to B&F for review, said there were concerns about the open-endedness of language in the legislation regarding “legally available assets.”

“We could have easily protected the permanent trust fund by saying ‘legally available assets except for the permanent trust fund and other reserved funds,’ ” he said. But the legislation, as passed, does not say that.

Bates said it was later edited out of the agreement and sent back to JP Morgan, “and JP Morgan came back today and said, ‘No, we want collateral.’

“The Permanent Trust Fund can be used as collateral. The statute says it can be,” he added.

The next step, in the extreme, according to Bates, is for Council to come back and rescind the resolution. “In line with that is to go out and have other banks come in. Right now, that loan document is on the street. It’s not on the street by choice, but it’s out there, and it’s probably gotten into the hands of other financial institutions; so now they have looked at it, and I would almost guarantee they’re going to come back and say, ‘Hey, we can do better than this. Look at us.’

“The most important thing is time is of essence. This is not a situation where we are against gaming — and I want to make that very clear. We’re looking at this in the form of what is in the best interest of Navajo.

“We want gaming, but we’re not going to put up with what they’re asking for. They’re basically taking advantage of what we passed, and saying, ‘We don’t trust you Navajo.’ If they don’t trust us, fine. We’ll take our business someplace else.