The Mississippi Band of Choctaw Indians, a tribe that’s already raking in hundreds of millions of dollars per year from gambling, is seeking to cash in on a new business venture — unless the Federal Election Commission gets in its way.
The tribe, which operates the lucrative Golden Moon and Silver Star casinos in Philadelphia, Miss., recently set up a new tribal corporation called IKBI Inc., which will seek federal construction contracts from several agencies, including the Federal Aviation Administration and the General Services Administration.
But before the Choctaws begin soliciting this particular work from the government, their lawyers have asked the FEC whether branching into construction could jeopardize the tribe’s ability to make political contributions directly to candidates and the national party committees — a right granted to Indian tribes and used to the hilt by the Choctaws.
Over the past decade, the politically astute tribe has spent millions of dollars lobbying Congress and made millions more in political contributions.
In 2003-04 alone, the Choctaws gave more than $498,000 in donations to the campaigns of incumbent Members of Congress, party committees and prominent 527 groups.
The Choctaws have attracted unwanted scrutiny over the past year due to the tribe’s ties to former GOP lobbyist Jack Abramoff, who is at the center of federal investigation of his work on behalf of a half-dozen Indian tribes.
Abramoff and Republican political consultant Michael Scanlon took in more than $66 million from the tribes over a three-year period, and those payments are now being scrutinized by the Justice Department and other federal agencies, as well as by the Senate Indian Affairs Committee. Abramoff, who no longer represents the Choctaws, was paid at least $11 million for lobbying services from the mid-1990s until 2004.
The Choctaws also gave $1 million to a school that Abramoff founded, and millions more to other political organizations run by Abramoff’s allies.
But for the tribe — which has become one of the largest employers in the state of Mississippi — the construction business could put that model of political giving in jeopardy.
That’s because federal law specifically prohibits federal contractors from making any contribution to a political party, committee or candidate for public office. Federal contractors can open up a PAC and raise funds from its employees that way, but PACs can be expensive to create and operate.
Under federal law, the Choctaws, as an Indian tribe, are allowed to use tribal funds to give directly to federal campaigns, without facing certain restrictions that limit other types of donors.
The ban on contractor donations, enacted in 1948, was originally intended to mirror the prohibition on corporate contributions, legal experts say. The prohibition, modified in 1976 to allow contractors to set up PACs, was erected when many government contractors were smaller than they are now, and was designed to catch contractors who aren’t necessarily organized as corporations but who operate through alternate set-ups, such a as partnership, or a sole proprietorship, for example.
Indian tribes, however, don’t necessarily fit neatly into the normal corporate structure, or for that matter, into the rest of the campaign-finance regulatory framework.
As FEC spokesman Bob Biersack explained, the commission treats Indian tribes “as people, but not individuals.”
Under the new donation limits set by the FEC last week, a tribe, like a person, may give contributions of up to $2,100 per election to a candidate’s campaign or $26,700 per year to a national party committee. But the tribe is not subject to the $101,400 aggregate limit that applies to “individual” donors — an exemption that hypothetically would allow a tribe that wanted to donate the maximum contribution to every sitting Member of the House and Senate to make more than $2 million in political donations in one cycle.
Moreover, the fact that they can make those contributions straight from the tribal treasury makes them an “odd sort of entity,” Biersack acknowledged.
What is at stake now at the FEC is whether the tribe can “preserve its right to make federal contributions” in light of its relationship with a construction enterprise, according to the request submitted by the Choctaws’ lawyer, C. Bryant Rogers.
Of particular concern is the tribe’s execution of an agreement to serve as co-indemnitor, along with IKBI, on performance, bid or payment bonds that the company must obtain to fulfill its construction contracts.
This is not the first time the tribe has consulted the FEC on this sort of question.
In 1993, the Choctaws decided to pursue an “active program of making contributions to federal candidates,” according to FEC documents, and asked the agency’s officials whether any of its agreements with the federal government would prohibit such activities.
The FEC found no problem with the tribe’s acceptance of federal funds from the departments of Interior, Education and Labor to administer various grants to conduct job training and other programs.
But the FEC did take issue with the tribe’s agreement to sell posters and prints to the Bureau of Indian Affairs — a contract that the campaign watchdog said “falls squarely into the definition of contract … and the prohibitions of section 441c.”
“Accordingly, section 441c prohibits the Tribe, as a federal contractor, from making contributions to a federal candidate during the term of the agreement,” the FEC ruled.
The commission reached a different conclusion in 1999, when it told the Tohono O’odham Nation that its practice of providing utility services to the Bureau of Indian Affairs and the Indian Health Service would not interfere with the Arizona tribe’s political activities.
The FEC noted that the tribe’s Utility Authority had its own bank account, employees, employee benefits and legal counsel, and acknowledged that the federal government often affords specialized and unique treatment to tribal commercial entities in other areas of the law.
With that in mind, the FEC concluded that the utility could be treated as a separate entity from the tribe itself and “that the commercial activity of the TOUA as a federal contractor can be separated from the nation and its political activity.”
In its pending request, Rogers argues that IKBI’s autonomy from the tribe is even stronger than in the 1999 case involving the Tohono O’odham Nation.
The lawyer noted that IKBI has its own bank accounts, hires its own employees, has independent personnel policies and benefit plans, and has its own property and lawyers. IKBI was set up with $468,000 in funds from the Choctaws.
“Further, as in the TOUA advisory opinion, no member of the Tribe’s Council can serve as a board member of IKBI,” Rogers stated. “Nor are funds from IKBI, Inc. commingled with other funds of the Tribe.”
Creda Stewart, a spokeswoman for the Choctaws, said in a statement that the tribe decided to ask for the advisory opinion “in an effort to remain in full compliance with all the rules and regulations governing the federal contracting process.”
She declined to say what impact an adverse opinion from the FEC might have on IKBI’s future in the construction industry.
“We will continue to make business decisions based on what is best for our companies, our customers, and our employees and in compliance with all applicable law,” Stewart added. “Therefore, we will wait to take any action, or discuss any possible action, until after the FEC has issued its ruling.”
If the FEC determines there is a 441c problem, the Choctaws could always establish a PAC of their own, several campaign finance experts pointed out. Judging by the FEC’s own records, however, that is a rare move that only a couple of tribes have taken.
By far the largest is the American Indian Sovereignty Self-Determination PAC, which is sponsored by the National Indian Gaming Association. The PAC made approximately $118,000 in contributions last cycle, fairly evenly split between Democrats and Republicans. The Choctaws donated $5,000 to the PAC.
The timing of the Choctaws’ request to the FEC is also noteworthy. The tribe may be hoping to benefit from its relationship to Sen. Thad Cochran (R-Miss.), who just took over the gavel at the Senate Appropriations Committee, to help it win federal contracts.
Sen. Ted Stevens (R-Alaska), during his tenure as chairman of the Appropriations panel, was able to rewrite federal laws in way that allowed Native Alaskan corporations, which are treated like other Indian tribes, to win billions of dollars in federal contracts, at least $12 billion this year alone, according to the News & Observer newspaper of Raleigh, N.C.
The Choctaws have already paired up with AAI Corp. of Hunt Valley, Md., to win a contract with the U.S. Army worth as much as $29 million to provide ground support equipment for Army helicopters. Work on that contract was slated to begin late last year.
In a statement from his office, Cochran played down any suggestion of special treatment for the Choctaws, although other Mississippi Republicans consider it likely that the tribe will turn to Cochran for assistance.
“I consider the Choctaws and their interests as I do any other citizen from Mississippi,” said Cochran. “To my knowledge they have not asked me to help them get any federal contracts. I think their businesses should be treated fairly and in accordance with federal and state laws.”