Zurik: Harrah's negotiations filled with possible conflicts

Zurik: Harrah's negotiations filled with possible conflicts
Updated: May. 9, 2018 at 10:15 PM CDT
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NEW ORLEANS (WVUE) - It's hard to miss Harrah's Casino when you're standing at the foot of Canal Street.  But, unless you keep an eye on the state legislature, you might have missed the heated politics behind Harrah's campaign to extend its state license.

It's a deal that some critics say isn't good enough for taxpayers.

"This whole thing, it stinks like week-old road kill," says John Kennedy, U.S. Senator from Louisiana. "You can count on one hand with fingers left over the bills that I've seen - and there are not many - that are worse than this one. It's just horrible."

The target of Kennedy's ire is a bill working its way through the State Capitol, dealing with the fate of Harrah's Casino in New Orleans.

Six years before their current lease at the foot of Canal Street expires, Harrah's wants a 30-year extension to its license, which requires lawmakers' approval.

The bill sailed through the legislature, until Advocate reporter Tyler Bridges raised questions.

"If they do this deal, this is going to be the second Louisiana Purchase," Sen. Kennedy warns, "except we're not being bought by the United States of America, we're being bought by Harrah's... It's just an insult to every taxpayer in the state."

This FOX 8 investigation may help explain why this bill moved so fast, with little resistance - and raises the question, who is looking out for the taxpayers?

Jade Russell is the general counsel for New Orleans' Sewerage and Water Board; she oversees the law department. The SWB pays her $165,000 a year, taxpayer money.

But multiple sources tell FOX 8 News that, at one point, she was both working for SWB and lobbying on behalf of Harrah's. Those sources, close to City Hall, say Russell met with council members, trying to get them on board with the Harrah's extension.

"I don't know the general counsel," Kennedy tells us. "But the Sewerage and Water Board is clearly related to New Orleans, the Sewerage and Water Board is going to go to the city, and they're going to be coming to the federal government, through Senator Cassidy and I, asking for extra money to help them fix the system. Well, maybe they could start by negotiating a deal that's fair to the people of New Orleans with Harrah's."

Kennedy warns of a clear conflict of interest. We don't know Jade Russell's current lobbying agreement with Harrah's. But we do know, in 2016, Jazz Casino Company, LLC - a subsidiary of Harrah's - paid her $60,000 as a lobbyist.

Russell now has a contract to serve as an administrative hearing officer at City Hall for the red light camera program. And New Orleans' convention center announced in January it had hired her to consult on small and emerging business outreach.

So, she has a six-figure job at the Sewerage and Water Board, contracts with city government and the Morial Convention Center, yet still lobbies for Harrah's.

In a statement, Russell writes,

As the principal of a small, women-owned firm, I have had the support of my former employer, Harrah's Casino, from the day I launched my own business. It is no secret that I have advised them on matters from diversity and inclusion, strategic consulting, and community and government relations. In my capacity as Interim Special Counsel of Sewerage and Water Board, by law, I am an agent of (i) the law department at S&WB; and (ii) S&WB. There is no conflict of interest in the firm having a contract with a private company that has absolutely no connection to S&WB or it's legal department. This issue was discussed and well vetted prior to me accepting this role. As a public servant and agent of S&WB, I am prohibited by law from bidding on or entering into any contract, subcontract, or other transaction that is under my supervision or jurisdiction of my agencies. My commitment to former Mayor Landrieu and the Board was to bring stability and swift reform to the legal department, which I have and will continue to do during my brief tenure at S&WB. I am grateful to my associate and a strong corp of subcontractors who have helped me sustain the firm's clientele until a permanent Special Counsel is appointed.

But City Hall apparently thought it was a conflict.  Last year, Russell was also a lobbyist for the City of New Orleans. According to the Mayor's Office, "When it was brought to the City's attention in January 2018 that Harrah's would be seeking legislation to extend their license,  we ended the relationship."

There's more. Southern Strategy Group is the City of New Orleans' lobbying firm at the State Capitol. Elizabeth Mangham is listed as one of the city's lobbyists.

But Mangham has also been hired as a lobbyist for Harrah's parent company, Caesar's. So, while serving as a lobbyist for New Orleans, she's also working for what Sen. Kennedy calls a competing interest -  Harrah's.

"Somebody asked me today if there was an appearance of a conflict," he recalls. "My response was, 'duh!'"

In fact, Southern Strategy Group has one lobbying contract that includes the City of New Orleans, RTA, Armstrong International Airport and the Sewerage and Water Board. It pays the lobbying firm $240,000 a year to look out and lobby for the citizens of New Orleans.

The president of Southern Strategy Group, Rodney Braxton, tells us in an email,

There is no conflict.  Rodney Braxton is the lead lobbyist for the City of New Orleans and has continued to represent the City's interests throughout this process. Elizabeth Mangham does represent Harrah's for the sole limited purpose of passing this legislation. The City has had no coordination with Ms. Mangham.

For years, the City and Harrah's have worked cooperatively on matters including getting casino support services budgeted and providing more flexibility for Harrah's employees.  The current conversation is yet another instance when their interests are in alignment. The City's leadership and the Orleans legislative delegation are all working for the betterment of the City of New Orleans and the state of Louisiana.

Harrah's parent company, Caesar's Entertainment, has 21 lobbyists listed on the Louisiana state ethics website. Others represent other state and city agencies, like the convention center, the airport and the Port of New Orleans.

"By definition, they're lobbyists for Harrah's - they represent Harrah's," Kennedy says. "I know many of them. Many of them also represent the City of New Orleans. Many of them also represent the State of Louisiana or one of its departments or agencies. That's a conflict; a first-year law student will know that."

Harrah's also hired New Orleans attorney Ira Middleberg. Our sources tell us Middleberg has met with multiple council members and local business leaders on behalf of Harrah's.

Middleberg is a partner at the Middleberg Riddle law firm. Also working at that firm, two New Orleans state senators, JP Morrell and Wesley Bishop.

According to state ethics forms, Morrell makes more than $100,000 a year at the law firm. Bridges with the Advocate reported this week that Morrell and Bishop are both currently involved in negotiations with Harrah's, negotiating on the state's behalf.

So, while one partner at the firm where they're employed is lobbying on behalf of Harrah's, they are negotiating with Harrah's, and will eventually vote on this bill as lawmakers.

"I can tell you this: there's an appearance of impropriety," Kennedy warns.

Bishop ignored our request for comment; Morrell told us he had no comment.

Middleberg's spokesperson sent this statement to FOX 8:

The Middleberg Riddle Group has not been retained by Harrah's. Mr. Ira Middleberg has been retained personally and has been involved off and on since the early 2000's when Harrah's came to New Orleans.  Mr. Middleberg's representation is limited to the New Orleans City Council, local government, and local businesses.

But that separation may not remove any potential conflicts of interest for Morrell and Bishop. According to the American Bar Association, separate firms should be viewed as "essentially one firm for the purposes of conflict of interest."

By the way, according to the La. Secretary of State's office, it does not appear Middleberg has any separate law or lobbying firm set up as a business.

All these questionable relationships have Sen. Kennedy pressing harder to pause the Harrah's deal, raise anew the question: Who actually is looking out for the taxpayers of Louisiana?

"You can't serve two masters," he says. "You can't represent the Sewerage and Water Board - which I consider to be part of the state and part of the city, in terms of its needing money - and also represent Harrah's. Those are two competing interests. You can't represent Harrah's and also represent the City of New Orleans; they're adversarial parties."

Richard Rainey, SWB's communications director, provided this statement on Russell to FOX 8:

Since agreeing to come aboard at the Sewerage & Water Board, Jade Brown Russell has epitomized the type of talent this agency needs to rebuild and best serve the people of New Orleans.

At her own insistence, Brown Russell was thoroughly vetted when asked to join the Sewerage & Water Board's Interim Team. The S&WB is a separate agency from the City and has no legal or contractual relationship with Harrah's.

Her dedication to the S&WB has been indefatigable, as shown by the days, nights and weekends she has devoted toward stabilizing and improving this agency. She has been essential as an adviser to the other members of the Interim Management Team, including Interim Executive Director Marcie Edwards; to a Board of Directors comprised almost entirely of new members who have volunteered their own time and energy and to the S&WB staff as they navigate one emergency after another. Her work is critical to the success of the S&WB as it transitions to new leadership and continues to its mission to keep New Orleans safe and healthy.

Beau Tidwell, Mayor Latoya Cantrell's communications director, sent this response to our request for comment:

Mayor Cantrell believes Jade Russell has done an excellent job, and is grateful for her work and her service. She has been professional, committed, and performed at the highest level.

And Caesars Entertainment emailed the following statement to FOX 8, attributed to Dan Real, regional president:

The unsubstantiated allegations and continued distractions from opponents to this bill threatens to derail 900 jobs, a $350 million no-subsidy investment in non-gaming amenities that will attract more tourism, $21 million more in taxes per year, and a new $7 million annual payment that helps both the city and state. This is all on top of the guaranteed $60 million in taxes to the State and $17 million to the City in lease payments and taxes per year. Facts do matter.  There are no conflicts.  It's another smokescreen to distract attention from the fact that the current proposal is substantially more lucrative than any other relevant comparison in the country. Billions for the city and state are at stake over the term of the contract extension.  And all at a time when there are major cuts to healthcare and education on the table.

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