Gambling on $100 million credit line to the Navajo Nation?
12/27/2007 11:06:00 AM
Is JP Morgan Chase taking a gamble on $100 million credit line to the
WINDOW ROCK-The Navajo Nation has received notice that a lawsuit looms in
the future against a resolution authorizing the use of what could be a $100
million line of credit from JP Morgan Bank.
A group of individuals who, for varying reasons, believe that President Joe
Shirley and the Navajo Nation Council overstepped their authority in
passing a resolution intended to secure funding for the building of at
least one casino on the Navajo reservation.
Navajo Nation Sovereign Immunity requires that the Nation receive notice of
intent 30 days before a lawsuit is actually filed against it, which allows
the Nation time to resolve the case outside of court. Once a lawsuit has
been filed in tribal district court, the Nation has 60 days to respond.
The Navajo Nation Council Resolution No. CO-46-07 (hereafter, the
resolution) of October 22, 2007, carries an unwieldy title, namely "An
Action Relating to an Emergency; Economic Development; Community
Development, and Finance; Authorizing the Issuance of General Obligation
Bonds within the Meaning of the Bond Financing Act to Finance the
Development and Construction of One or More Gaming Facilities and Related
Infrastructure as Capital Improvement Projects within the Meaning of the
Appropriations Act and the Bond Financing Act; Authorizing a Limited Waiver
of Sovereign Immunity; Designating Authorized Officers to Take Such Actions
and to Execute and Deliver a Loan Agreement, Promissory Notes and Other
Agreements in Connection with the Issuance of Such General Obligation Bonds
in Compliance with the Bond Financing Act; Authorizing the Payment of
Bond-Related Costs in Connection Therewith; and Authorizing Related
Matters." A summary of the resolution could be made with far fewer words.
In essence, various members of the Navajo Nation have retained the services
of Albuquerque attorney James Zion to address their concerns about the
resolution, which they say gives the Executive Branch too much power over a
$100 million line of credit from JP Morgan Chase that could ultimately risk
Nation general funds, federal grant money and trust assets.
In a telephone interview on Dec. 6, Zion stood on a statement given during
a press conference earlier in the week.
"In response to an offhand question by two different reporters, I stated
that if I were an official at JP Morgan Chase, I would be very careful
about releasing any money to the tribe while the threat of a lawsuit is in
the air," Zion said. "I have been reading press on the case to try and see
what the other side has to say, and I read where [it was] predicted that JP
Morgan Chase would seek an opinion that the lawsuit has no merit, and then
go through with the loan. My question is, why would a bank rely on an
attorney who had no authority in Navajo Nation law? And would I rely on the
Zion answered his own questions with a laugh, then said that should any
funds be expended by the time a judge could act on the lawsuit, JP
Morgan-not the Navajo Nation-could end up being liable for any funds
expended while the matter was in court.
Plaintiffs Milton Bluehouse, Sr (Ganado), James Henderson Jr. (Window
Rock), Ivan Gamble (Lechee), Vern Lee (Fruitland), Eddie Arthur (Chinle),
Arnold Yellowhorse (Tuba City), Billy Reese Kee (Tuba City), Norris Nez
(Tuba City), Elouise Brown (Sanostee), Ambrose Teasyatwo (LaPlata), and
Alfred Bennett III (Shiprock) have attached their names to a Notice of
Intent to Institute Suit against Mark Grant, Controller of the Navajo
Nation, and against the Navajo Nation (for declaratory relief). Zion of
Albuquerque filed the document on Nov. 4.
Plaintiffs claim that Navajo Nation Council delegated powers to Controller
Mark Grant that violated the fiduciary duties of his office, as well as
separations of powers in that he operates under the authority and
supervision of President Joe Shirley Jr. The resolution does not mandate
council supervision over Grant, Shirley or Attorney General Louis
Denetsosie. The resolution violates the natural law obligation held by the
council as stewards of all that was, is and will be provided to the Navajo
people. The council further bypassed proper review and signoff procedures
by receiving the resolution as an emergency issue, when in fact not meeting
the definition of an emergency by tribal code.
Plaintiffs further assert that the resolution gives the controller
law-making power to amend existing laws, statutes and custom, waive past
legal irregularities, and amends the dispute resolution provisions of the
Navajo Sovereign Immunity Act.
The resolution violates the Appropriations Act by breaching the fiduciary
responsibility to account for public funds as well as other requirements,
nor does it minimize financial risk to the Nation. The resolution is
invalid without a two-thirds vote of the full membership of the council,
nor was authorized "capital improvement" pare of a Capital Improvement Plan
approved by the Transportation and Community Development Committee.
In failing to define its pledge of "the full taxing power and borrowing
power" of the Nation, or any other security, the Council created further
problems that plaintiffs claim are illegal. Plaintiffs charge that any loan
for infrastructure or buildings will become realty or trust property, and
as such unavailable as security for the loans. Further, vague language
could include Permanent Fund and trust assets, and that Navajo Nation
"Revenue" could be at risk-including all taxes, oil, gas, mining/minerals,
land rentals, and all other income and receipts, which could include
federal grant and program monies.
Plaintiffs assert that the objects of the loan authorized by the resolution
are not part of an approved Capital Improvement Plan, nor did the
Controller review a request to issue general obligation bonds or submit to
full Council a plan that would certify that funding is available to pay
principle and interest pursuant to 12 N.N.C. § 1330(A). Other concerns are
non-compliance with the Bond Financing Act under subsection (C) of the same
statute; that the financial commitment exceeds that permitted by the Navajo
Nation Council and that it offers no assurance that the Nation will not be
a victim of subprime and predatory lending in the current financial market.
Not only does the resolution violate Navajo Nation statutes and Bill of
Rights, it also violates Navajo common law and its principles of popular
participation, popular sovereignty and participatory democracy.
Plaintiffs will seek a mandatory injunction or writ prohibiting
implementation of Res. CO-46-07, and declaration that it is invalid, that
any contracts and agreements are invalid. They further seek attorney fees,
and relief in the nature of nalyeeh (a respectful demand to be made whole,
or, as commonly interpreted, restitution) under Navajo common law.
C. Dale Raphael, a board member of the Forgotten People group, explained
why the grassroots group signed on as a plaintiff in the lawsuit.
"Forgotten People is a plaintiff on the lawsuit to oppose the $100 million
line of credit from JP Morgan Chase because of the Navajo Nation process of
keeping the public locked out of secret negotiations behind closed doors in
violation of due process," Raphael said. "The Navajo Nation did this with
passage of the Navajo Hopi Intergovernmental Compact and they are doing the
same thing with JP Morgan Chase. Our leaders must be held accountable so
they consider the effects of their actions to ensure the protection of our
rights and freedom in a moral and legal manner."
Ray Etcitty, the Chief Legislative Council for the Navajo Nation, was away
from his office during the time this report was prepared. The Navajo Hopi
Observer will continue in its attempt to reach him for comment.