Proposed hot line on complaints about LVCVA scrutinized

Taxpayer-funded Las Vegas boosters are pressing forward with a financial mismanagement reporting hot line despite an apparent loophole that could undermine the system's accountability.

That's the take of an accountant who reviewed the policy behind a proposed Las Vegas Convention and Visitors Authority hot line for reporting accounting, audit and internal control problems.

The hot line rings first to the desk of authority President and Chief Executive Officer Rossi Ralenkotter when it should go directly to the audit committee or an independent auditor, Chicago accountant Sherwin Brook said.

"It allows for something to be swept under the rug," Brook said. "That is not where you want to be. You want to have visibility and clarity."

Brook reviewed and commented on the eight-page policy before the audit committee meeting Tuesday.

"It is not a terrible policy but there are some weaknesses," he said.

Among those are elements that direct reporting of questionable activity to upper management, who might have incentive to filter the message before passing it along.

"Only the President/CEO will have access to the hotline," the policy says.

It continues: "The President shall conduct an initial evaluation of each (c)omplaint and seek to respond to the (c)omplaint to the satisfaction of the person who made the (c)omplaint."

There's an option to lodge a complaint by e-mail. But electronic submissions are also directed to Ralenkotter.

Another option exists for people to make a complaint directly with audit committee chairman Keith Smith, but the only contact for Smith is by written letter mailed to the convention authority headquarters.

The policy also calls on the president to promptly forward each complaint to the chair of the audit committee.

It later says: "The President may also, in the President's discretion, bring the (c)omplaint to the attention of the authority's full Board of Directors, other officers and personnel, outside auditors, outside counsel or any other party that the President deems necessary or appropriate."

Brook said the chain of custody for complaints should be clearer.

"That really is inappropriate," he said. "The audit committee should review this."

Smith, who is also president and CEO of Boyd Gaming Corp., said it doesn't matter whether the hot line goes first to management or the audit committee.

"I've seen it done both ways," Smith said. "The important thing is there is a hot line and these issues get discussed and followed up on."

Fiscal precision -- or lack thereof -- has been a hot topic lately for the authority.

The agency has an annual budget of about $294 million, most of which comes from hotel room taxes in Las Vegas.

Late last year, conservative Las Vegas think-tank Nevada Policy Research Institute, which counts political opponents of the authority among its board members, used public records to paint a picture of Ralenkotter and the authority as lax overseers of public money.

In one instance, Ralenkotter took heat for directing $25,000 to a charity that hosted a banquet in his honor.

The institute also criticized what it said was a lack of oversight for spending on advertising with the company R&R Partners.

Authority defenders said the criticism was politically motivated, but board members also directed Ralenkotter and the audit committee to review some fiscal oversight and reporting procedures within the organization.

Contact reporter Benjamin Spillman at bspillman@reviewjournal.com or 702-477-3861.