Bankruptcy controversy leads to members; unhappiness
SAULT STE. MARIE, Mich. - The Sault Ste. Marie Tribe of Chippewa Indians has begun to lay off 2 percent of its work force as it struggles to recover from a $15 million budget deficit and Chapter 11 bankruptcy filing on its Greektown Casino.
The plan to ''streamline operations'' by laying off workers was announced in a July 30 news release.
''This is an extremely tough decision to make; it has not been easy,'' said Chairman Joe McCoy, who was elected to office in July.
''However, due to our financial position and to ensure the longevity of our tribe and the profitability of our tribal businesses, changes must be made. We have to look to our future and make decisions that will sustain our tribe and benefit our membership.''
But one member has claimed the layoffs were political payback to people who were connected to a previous chairman, and another is calling on the board of directors to cut their salaries.
In addition to being the majority owner of the Greektown Casino, which operates as a nontribal, commercial facility in Detroit, the tribe owns the Kewadin Casinos - five tribal gaming operations in Sault Ste. Marie, St. Ignace, Hessel, Christmas and Manistique in Michigan's Upper Peninsula.
''Unfortunately, over the years, millions in tribal reserves have been dwindled down to nothing. According to financial analysts, if changes are not made, the tribe will not recover,'' McCoy said in a release.
The news release did not explain how the millions dwindled.
At a special meeting July 29, the board of directors amended a number of policy areas regarding employment ''to ensure that any layoffs or elimination of positions made as a component of this [cost savings] plan remain intact,'' according to the minutes. The amendments ensure, among other things, that laid-off employees cannot appeal being laid off.
Although the Greektown Casino bankruptcy has played a substantial role in the tribe's economic woes, the layoffs will come from tribal and casino facilities in the Upper Peninsula only, according to the news release.
''We don't include Greektown,'' Communications Director Cory Wilson told Indian Country Today. ''It's a different situation because it's a state-regulated casino, not similar to our [tribal] casinos here.''
He declined to give specific numbers targeted for layoffs, but dismissed speculation that up to 400 people will lose their jobs.
''I don't know where that number came from. I don't have an exact number and it's not something we would discuss. The number we released in the media is approximately 2 percent of all our employees and we employ just over 2,000 people, excluding the Greektown Casino, which has around 4,000 employees.''
Nathan Wright, the tribe's former webmaster, who was laid off July 31, said around 70 people were laid off that day.
''The sad thing is kids are getting ready to go back to school and Christmas is coming, so we're in a time when people need money. So rather than string them along, if more people are going to be let go, they should do it quickly. I don't like the way they're doing it. It's making everybody who works for them nervous,'' he said.
He said members believe more layoffs are coming.
''What's coming from this whole thing is the people who were laid off feel it was political because of the
connections we had with [former Chairman] Aaron Payment. Some people have been there for 20 - 25 years and that's their only connection.''
But he said the layoffs had nothing at all to do with the recent election.
''I think the financial status of the tribe was talked about well before the election was completed. We all knew that changes need to happen regardless of who was in office.''
According to Wilson, the tribe was seeking ways to reduce the budget before layoffs were even considered.
''We were doing a lot of things to try to avoid that. Program directors and supervisors were asked to find ways to reduce their budgets and be more efficient. It's not a secret that the government budget deficit was projected at $15 million. It's not a secret that Greektown is a big part of the financial picture.
''We have a $33 million government budget. There are a lot of other things, such as the current gaming revenue downturn, tourism, gas prices, the economy, the lending situation. This could be described as a perfect storm and we're trying to do the best we can to strengthen the tribe financially.''
The tribe was able to balance its budget last year, Wilson said. He confirmed that the tribe had borrowed money to complete the Greektown Casino, but declined to go into details.
According to a Bloomberg report, the Greektown Casino won court approval last June to borrow $150 million to continue operations and construction of a new hotel and gaming facility. A group of creditors and a U.S. trustee filed an objection Aug. 11 to the casino getting an extension from
September until next June to file a turnaround plan.
Greektown sought court protection from creditors May 29, citing cost overruns on the $332 million expansion, according to the report. Greektown opened in 2000, four years after Michigan citizens voted to legalize three gaming facilities in Detroit. MGM Grand and MotorCity casinos also operate there. The company said Greektown gets 15,800 visitors a day, according to the report.
Wilson said the completion of the Greektown facility is a priority. Construction is on schedule and the hotel is expected to open in January or February.
Tribal member John Hatch said the tribe's resources have been squandered through mismanagement. He said the Greektown expansion needs to be completed ''because you can't sell an unfinished hotel.''
He is calling on board members to cut their salaries as a way to ''share the pain with the 70 employees who lost their jobs, health insurance and retirement.''
''Tribal officials have mismanaged tribal resources for the past 12 years, which includes two tribal chairmen and three elected boards. Blame will not comfort those members who lost their jobs. It will not help them pay their bills now. Action needs to be taken.
''Board members must cut their salaries. We must return to the time when board members were not paid. Those people did not make their living from the tribe; they sought office because they were motivated to help our tribe, its members and create a better future.''
Hatch said he plans to petition the board in September. He owns his own company and was not part of the layoffs in July.