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Benjamin Spillman

LVCVA spending under microscope

10 December 2008

LAS VEGAS, Nevada -- Expenses for everything from charitable donations to restaurant and bar tabs submitted by workers for Las Vegas' biggest booster group could be getting more scrutiny.

That was just part of the discussion Tuesday among board members of the Las Vegas Convention and Visitors Authority regarding a report that criticized the group for lax financial oversight and overly cozy relationships with vendors.

The conversation was a mix of acknowledgement for mistakes made and admonishment for publishers of the report, which directors said also included "misleading" and "absurd" allegations.

It was prompted by a lengthy and critical report from the Nevada Policy Research Institute, a conservative-leaning organization that counts political opponents of the authority among its numbers.

The research group hired independent investigative reporter John Dougherty to compile public documents from the authority.

The documents, according to the institute, painted a picture of a culture of lax oversight and loose spending at the agency, which has an annual budget of about $294 million, most of which comes from taxes on Las Vegas hotel rooms.

"We understand better than anyone the importance of proper financial oversight and proper financial procedures," said board member Keith Smith, who is also president and chief executive officer of Boyd Gaming Corp.

Smith, who is chairman of the authority's audit committee, said the research institute dredged up old allegations about oversights that have since been corrected.

Most of the audit-related allegations revolved around how the authority oversees money spent through a contract with R&R Partners, the advertising agency behind the "What happens here, stays here" slogan.

In the past five years, the authority has spent $399 million through the contract, some of which the institute said went to subsidiary companies wholly or partly owned by R&R owners through transactions that weren't fully transparent.

The research group also identified instances of overbilling by R&R in 1999, a situation the authority said was inadvertent. R&R later credited the authority $33,678, according to the authority's 12-page rebuttal of the report.

"The point is that we are catching these mistakes, we are identifying these mistakes and we are correcting these mistakes," Smith said.

The rebuttal also listed awards for R&R's work, financial reporting awards for the authority's auditing efforts and continued growth in the number of people visiting Las Vegas as evidence of its overall effectiveness.

"There is no widespread systematic problem at the Authority," President and CEO Rossi Ralenkotter wrote in a memo to the board members.

But there were also acknowledgements that perhaps new spending policies or controls were needed in response to questionable spending of taxpayer money identified by the institute.

Las Vegas Mayor and board Chairman Oscar Goodman said it was important to address the report to prevent it from distracting the authority from its mission -- to attract tourists to Southern Nevada.

"We have got to get whatever burden has been placed on us off our back, off the table," Goodman said.

Board member Kara Kelley, who is also president and CEO of the Las Vegas Chamber of Commerce, said some of the language in the report was "inflammatory."

But she added, "I think it is important the public understands we do take these issues seriously."

One situation the research institute identified that drew the board's attention was a decision by Ralenkotter to sign off on a $25,000 contribution to the Denver-based National Jewish Medical and Research Center after the hospital chose to recognize him with a humanitarian banquet in his honor at the Four Seasons in Las Vegas.

The hospital has a relationship with the authority and Las Vegas that dates back to the 1970s. But in earlier years the authority never contributed more than $2,500.

Ralenkotter also authorized thousands of dollars for the planning dinners, which were held at upscale restaurants around Las Vegas and included steaks and liquor.

After the meeting Ralenkotter defended the decision.

"Let's not forget I was asked by Congresswoman Shelley Berkley to accept this award and the destination did receive deliverables for the sponsorship," he said via e-mail. "In hindsight, however, if I ever get asked again to receive an award, I will think long and hard before agreeing, even if it's the Nobel Peace Prize."

Goodman said it isn't always clear when it comes to evaluating whether "wining and dining" expenses are justifiable because they can be an important part of recruiting customers to Las Vegas.

"If that is what gets it done, I think it is legitimate," he said.

However, Goodman also said people spending tax dollars should consider "how does it look" to the public.

"We learned a lesson from this," Goodman said. "We have to be careful as to how the money is expended."