Legislature(1995 - 1996)

03/29/1995 03:10 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HB 251 - NATIVE CORPORATIONS                                                 
                                                                             
 Number 057                                                                   
                                                                               
 CHAIRMAN KOTT stated that on Monday, March 27th, they had left off            
 with Willis Kirkpatrick, Director, Division of Banking, Securities            
 and Corporations, Department of Commerce and Economic Development.            
                                                                               
 Number 057                                                                    
                                                                               
 WILLIS KIRKPATRICK, DIRECTOR, DIVISION OF BANKING, SECURITIES AND             
 CORPORATIONS, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT,                
 stated that he would try to explain why the division was involved             
 with Native proxy matters.  When the Alaska Native Claims Act                 
 (ANCSA) was passed, Congress decided that the Securities and                  
 Exchange Commission (SEC) would not have the expertise and should             
 not have the authority to deal in the internal affairs of the state           
 of Alaska.  The ANCSA corporations were, therefore, exempt from SEC           
 provisions and regulations.  Brown versus Wood was between a Native           
 shareholder and a local land owner in Anchorage who had made a                
 proposition containing misleading information to the corporation.             
 From that case came a requirement by the Division of Banking,                 
 Securities, and Corporations to make a determination as to what was           
 false and misleading, in proxy contests.  The result of this                  
 regulation was oversight in proxy contests and in other matters,              
 before a vote of the corporation.  It took a substantial amount of            
 time to promulgate those regulations, the effort of which is that,            
 in a proxy solicitations, certain criteria must be met.                       
                                                                               
 MR. KIRKPATRICK related a story from a woman who had been employed            
 by a corporation.  She came to him after her employment and said              
 "always remember that your authority in the Native proxy situation            
 was limited to truthfulness."  In other words, the issue is whether           
 statements are true.  The department sees its responsibility in               
 administering proxy regulations, as that of representing all                  
 shareholders.  One of the things he has learned is that the idea of           
 a Native Settlement Claim under the Corporations' point of view, is           
 a test.                                                                       
                                                                               
 MR. KIRKPATRICK told of when he was employed as a Pharmaceutical              
 Manufacturer's Representative.  He traveled in six week cycles, and           
 he happened to be in Klammath Falls, Oregon, when there was a                 
 settlement there.  The first week he was there, the Indian                    
 community was poor.  During the next cycle he saw the distribution            
 of $45,000 to each Indian in that particular settlement.  Congress            
 tried to make provisions for that settlement through a trustee.               
 However, the recipient had rights to his money.  He stated that it            
 was a travesty to come back six weeks after that, and see that the            
 funds were still there, but that there had been a 99 percent                  
 distribution to other people.  When he came to Alaska in 1969,                
 there wasn't anything available for Natives except for what the               
 Alaska Federation of Natives (AFN) was trying to accomplish.  With            
 the Alaska Native Claims Settlement Act, some 40 million acres were           
 titled, and $900 million was available.  Twenty years later, those            
 assets are still here.  The test is a good test.                              
                                                                               
 MR. KIRKPATRICK said that some shareholders told him they would               
 like a total distribution of their corporations.  Over the last few           
 years, there has been some distribution of assets, but it has not             
 been in the form of dividends.  The corporations are reducing size            
 by partially liquidating.  He said that when you get involved with            
 this type of action, there should be a two-thirds vote of the                 
 shareholders before you start dissolving corporations.  The                   
 majority of the shareholders don't want this.  There are good,                
 honest shareholders that have testified that they have been waiting           
 20 years and haven't seen their distribution, unlike other                    
 corporations.  He stressed that these corporations are still in               
 existence, and the funds are still available and are being                    
 distributed to shareholders.                                                  
                                                                               
 Number 325                                                                    
                                                                               
 MR. KIRKPATRICK stated that the corporations, themselves, are major           
 players in Alaska's economy.  He believes that they should continue           
 to play a major part for their shareholders and others supportive             
 of them.  He feels that all shareholders need to be heard.  Total             
 corporate management is not good.  During the meeting on March                
 27th, there were conflicting statements.  He stressed that                    
 dissidents need to be heard.  With the present posture of HB 251,             
 it could turn off the voice of dissident shareholders entirely.               
 Every dissident party with any strength at all should have at least           
 one member on the board to speak for them.                                    
                                                                               
 MR. KIRKPATRICK said that he has researched corporate law, in                 
 general.  Mr. Huhndorf stated that he couldn't incorporate in                 
 Delaware because of Congress; he's stuck in Alaska.  In Delaware,             
 there aren't any provisions for shareholders to petition for                  
 special meetings.  Most articles of incorporation contain that                
 provision.  Not all corporations want to shut out their                       
 shareholders.  In states that require a certain percentage for                
 shareholders to call special meetings, the lowest percentage is 10            
 percent, the highest 33.5 percent.  Some states only allow this if            
 the articles of incorporation also allow it.  In determining how              
 the concerned or dissident shareholders can be heard, he tried to             
 determine the range of considerations.  Some of the testimony has             
 indicated that the Alaska Business Corporation Code was designed by           
 Professor Dan Fessler, from Stanford.  Professor Fessler counseled            
 the Alaska Code Revision Commission in the adoption of the Alaska             
 Corporation Code.  One of the things they have seen is that                   
 management is under a barrage of shareholder activity, which                  
 probably has a negative effect on the corporation and the majority            
 of the shareholders.  They have taken a look at HB 251 to come up             
 with specific recommendations so they could strike a balance,                 
 allowing the dissidents to be heard, and preventing the rules of              
 the majority from being diluted by the disruptions of their                   
 corporations.  He suggested that under Section 2, page 2, lines 17            
 and 18, the requirement of 25 percent be limited to those                     
 corporations having 500 or fewer shareholders.  For corporations              
 that have over 500 shareholders, 15 percent would be appropriate.             
 The other concerns line 28, page 2, of Section 2, which is the 90             
 day provision.  This provision blocks any basic action concerning             
 larger corporations.  He suggested that this be extended to 120               
 days.                                                                         
                                                                               
 Number 370                                                                    
                                                                               
 CHAIRMAN KOTT restated that they were going to lengthen the window            
 from 90 days to 120 days.  He asked what the current window was.              
                                                                               
 MR. KIRKPATRICK replied that there isn't one.                                 
                                                                               
 Number 375                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG commented that he wasn't clear if the                 
 Alaska Business Corporations Code had provisions for Native and               
 non-Native Corporations.                                                      
                                                                               
 MR. KIRKPATRICK replied that in Section 900, 45.55 of ACC, there is           
 a body of law that addresses special provisions for ANCSA                     
 corporations.                                                                 
                                                                               
 Number 386                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked if there was a difference between               
 Native and non-Native under the code.                                         
                                                                               
 Number 388                                                                    
                                                                               
 MR. KIRKPATRICK said the he was addressing only those provisions              
 specific to ANCSA corporations.  He did not want to open up Title             
 10, as far as the Corporations Code was concerned.                            
                                                                               
 Number 393                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked if there were any time lines with               
 petitions for special hearings in the non-ANCSA corporations.                 
                                                                               
 MR. KIRKPATRICK replied that there is not a time line for people              
 soliciting for special meetings.                                              
                                                                               
 REPRESENTATIVE ROKEBERG asked if, under ANCSA, there were none.               
                                                                               
 MR. KIRKPATRICK said that was correct.                                        
                                                                               
 Number 403                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked if there were any difference in                 
 percentages between the two bodies of law.                                    
                                                                               
 Number 405                                                                    
                                                                               
 MR. KIRKPATRICK said that the current code for all corporations,              
 including ANCSA, was 10 percent of the existing shareholders.  HB             
 251 would change that to 25 percent for ANCSA corporations.  The              
 division was suggesting they leave it at 25 percent for                       
 corporations under 500 shareholders, and change it to 15 percent              
 for ANCSA corporations over 500 shareholders.                                 
                                                                               
 MR. KIRKPATRICK noted that on page 2, line 23, for "prefiling with            
 the corporation," he would suggest that this be made to read, "with           
 the department."  He explained that there is presently a                      
 requirement to prefile solicitations with the department.  When the           
 department receives a pre-filing in relationship to any                       
 corporation, they notify that corporation.                                    
                                                                               
 Number 427                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG asked if the Non-Native Alaska Business               
 Corporate Code provided for petitioning if it was only for special            
 meetings.                                                                     
                                                                               
 Number 430                                                                    
                                                                               
 MR. KIRKPATRICK stated that the word "petition" doesn't exist                 
 in most corporate laws.  However, if 10 percent of the shareholders           
 are required to call a meeting, the only way to legally do this is            
 by petition.  The department has taken that position, because the             
 petition usually results in a vote, that it is a pre-proxy                    
 statement in itself and cannot be false or misleading.  If they               
 find a false or misleading petition, the only remedy is to void               
 proxies.  If they discover false and misleading statements, they              
 make the person who filed the statement issue a correction.                   
                                                                               
 Number 466                                                                    
                                                                               
 REPRESENTATIVE PORTER said if a group of shareholders wishes to               
 petition, could they do so with the proxy of members, to constitute           
 their 10 percent.                                                             
                                                                               
 Number 474                                                                    
                                                                               
 MR. KIRKPATRICK responded that theoretically they could start a               
 proxy campaign.  However, a proxy means that you're giving someone            
 the right to vote for you.                                                    
                                                                               
 REPRESENTATIVE PORTER interjected, "vote for a petition," and then            
 asked, "would you interpret that as a vote?"                                  
                                                                               
 MR. KIRKPATRICK answered yes, any document that would solicit                 
 another person for a vote would fall under proxy regulations.                 
 Physically, it is easier to solicit a petition, whereby eligible              
 shareholders could be recognized by their signatures.                         
                                                                               
 REPRESENTATIVE BILL WILLIAMS joined the meeting at 4:30 p.m.                  
                                                                               
 MR. KIRKPATRICK addressed the amendments relating to the Alaska               
 Securities Act.  The department would be a "policeman" over the               
 concerns of the dissident shareholders.  When Mr. Huhndorf                    
 testified, he had his lawyer by his side.  When the Native                    
 community gets together to discuss the problems with their                    
 corporations, they may use the word thief or crook, and even                  
 question his heritage and birth right, and these are serious                  
 charges.  Mr. Kirkpatrick said he has concerns with the department            
 having the right to threaten Natives with civil and criminal                  
 penalties.  The Natives do not have the resources to seek legal               
 counsel.  He said incorporating criminal and civil actions into HB            
 251 would be extremely disruptive for both the corporations and the           
 dissidents.  He asked that those provisions be omitted.                       
                                                                               
 Number 547                                                                    
                                                                               
 CHAIRMAN KOTT asked if there was a standardized petition process.             
 For instance, when they talk about penalizing someone through fines           
 and imprisonment, is there some identifying signature as the                  
 sponsor of the petition, and are they regulated.                              
                                                                               
 Number 555                                                                    
                                                                               
 MR. KIRKPATRICK explained that at the top of the petition, there is           
 a statement of what the petition is addressing.  The rest of the              
 page is a lined page with spaces for signatures, names, and                   
 addresses, of the shareholders.  When the required percentage of              
 signatures is reached, they present the petition to the secretary             
 of the corporation, who would then verify those signatures.  The              
 department becomes involved in regards to the statement at the top            
 of the page.                                                                  
                                                                               
 Number 572                                                                    
                                                                               
 CHAIRMAN KOTT asked if the individual that collected the signatures           
 and turned them in to the corporation was responsible for any                 
 non-factual information contained on the petition and, therefore,             
 subject to the penalties as stated in HB 251.                                 
                                                                               
 Number 577                                                                    
                                                                               
 MR. KIRKPATRICK replied, not directly.  There is public                       
 communication including charges and counter charges on both sides             
 during any petition drive.  The problem is that the regulations say           
 that if you gather 30 to 35 people together and tell them certain             
 things, in itself is a solicitation.  It is these types of meetings           
 and campaigns that make it difficult to determine what is truthful.           
 The petition is usually straight forward.                                     
                                                                               
 Number 592                                                                    
                                                                               
 REPRESENTATIVE PORTER asked if the person affected by the civil and           
 criminal penalties included anyone who had given misleading or                
 false information to a group of shareholders trying to solicit                
 their votes for petition.                                                     
                                                                               
 Number 595                                                                    
                                                                               
 MR. KIRKPATRICK replied that in certain situations, there could be            
 a solicitation of itself in trying to get the petition or proxy               
 signed.                                                                       
                                                                               
 Number 599                                                                    
                                                                               
 REPRESENTATIVE PORTER observed that while attempting to get a                 
 petition signed and filed, there could be one or several                      
 individuals subject to the possibility of fines or criminal charges           
 if they are doing this in a way that violates the statute.                    
                                                                               
 MR. KIRKPATRICK replied absolutely, and stated he couldn't find               
 this in any other state.                                                      
                                                                               
 REPRESENTATIVE PORTER asked if the section was aimed at more white            
 collar FCC kinds of activity, as opposed to Native corporations.              
                                                                               
 MR. KIRKPATRICK responded yes.  Under the Alaska Securities Act,              
 they have imposed major fines.  Last year, the department fined               
 Prudential Base $500,000.  They often find people selling                     
 unregistered securities, and impose fines on them.  In regards to             
 shareholders, they recently had a situation with a Cook Inlet,                
 Incorporated (CIRI) shareholder who solicited proxies with                    
 untruths.  They called for a restraining order prior to the filing.           
 The individual acknowledged he had started out in the wrong                   
 direction.                                                                    
                                                                               
 Number 620                                                                    
                                                                               
 REPRESENTATIVE PORTER asked if in that case, was there a                      
 requirement that he file that with the department before it hit the           
 street.                                                                       
                                                                               
 MR. KIRKPATRICK responded yes.  However, the individual did not.              
                                                                               
 REPRESENTATIVE ROKEBERG asked for an example in a proxy or petition           
 fight, historically, what type of resources would (indisc.)                   
                                                                               
 MR. KIRKPATRICK said he would never forget the day he appeared                
 before the Senate Finance Committee with a fiscal note of $50,000.            
 When the department was given the remedial responsibility to void             
 proxies, Senator Ferguson said he didn't think it would cost that             
 much money.  They spend a great deal of time with both the                    
 corporations and the dissidents so that... (end of tape)                      
                                                                               
 TAPE 95-27, SIDE A,                                                           
 Number 000                                                                    
                                                                               
 MR. KIRKPATRICK continued... activity around any elections.  The              
 department has tried to figure out the amount of time involved and            
 how to recover that time.  He said they had recovered nothing from            
 Native activities as far as proxy regulations are concerned nor had           
 they asked.  He said that they just haven't found an equitable way            
 to do it.                                                                     
                                                                               
 REPRESENTATIVE PORTER asked if there was a provision regarding the            
 restriction of recall petitions if the directors are hired in                 
 certain ways.                                                                 
                                                                               
 MR. KIRKPATRICK stated that on page 2, line 31, Subsection N, the             
 provision of AS 10.06, Section 460 relates that directors can be              
 removed without cause.  HB 251, without this provision. provides              
 that the directors can only be removed with just cause.                       
                                                                               
 REPRESENTATIVE PORTER asked if that provision was still in the CS.            
                                                                               
 CHAIRMAN KOTT replied that it was.                                            
                                                                               
 Number 052                                                                    
                                                                               
 REPRESENTATIVE PORTER asked if a corporation had staggered term               
 directorships.                                                                
                                                                               
 MR. KIRKPATRICK finished, that a recall of the total board would              
 have to be for total cause.                                                   
                                                                               
 REPRESENTATIVE PORTER asked if you could recall an individual.                
                                                                               
 MR. KIRKPATRICK said not without cause.                                       
                                                                               
 Number 052                                                                    
                                                                               
 REPRESENTATIVE PORTER concluded that any recall petition would have           
 to be for cause, that includes for one, a number of directors, or             
 all of them.                                                                  
                                                                               
 MR. KIRKPATRICK replied yes.                                                  
                                                                               
 Number 084                                                                    
                                                                               
 CHAIRMAN KOTT asked if there were further questions for Mr.                   
 Kirkpatrick.  There being none, he stated that they would hold the            
 teleconference lines open for another 30 minutes.  After today's              
 meeting they would close public testimony, and hold a work session            
 on April 5th.  The panel would consist of two board members, one              
 from Sealaska the other from CIRI; two shareholders from any                  
 corporation; Mr. Kirkpatrick from the Department of Commerce and              
 Economic Development; and a representative from the Department of             
 Law.  He said they would not take public testimony at this work               
 session but would sit down and "hammer out the issues."                       
                                                                               
 CHAIRMAN KOTT asked those people who had previously testified on              
 March 27, to yield their testimony to those people who had not yet            
 had the opportunity.                                                          
                                                                               
 Number 134                                                                    
                                                                               
 SAMMY KALLANDER, SHAREHOLDER, CIRI, testified via teleconference              
 from Anchorage, that he was opposed to HB 251.  He said that                  
 shareholders of CIRI had seen their rights taken away.  They would            
 no longer be able to meet (indisc.) with the 25 percent cap.                  
 He urged the committee not to pass HB 251.                                    
                                                                               
 Number 160                                                                    
                                                                               
 PATRICIA PRINCE, KODIAK SHAREHOLDER, testified from Anchorage via             
 teleconference that she was representing 14 relatives holding 1,400           
 shares, not to mention cousins, etc.  She believes that a great               
 majority of Alaska Natives do not fully understand corporate                  
 business, including herself.  She opposes HB 251, and would like to           
 see her people more educated in regard to corporation business.               
 With too much power given to the corporations, a great percentage             
 of shareholders do not know what is transpiring.  HB 251 would                
 hinder shareholders interest in keeping the power theirs.  She                
 asked that the board members and shareholders having conflicts get            
 back to basics and take care of the shareholders.  If the                     
 shareholders don't believe in them, find out what they want and do            
 what they want.  She said if this was true of Roy Huhndorf and                
 white corporate America, she believes that Roy Huhndorf would have            
 been impeached long ago.                                                      
                                                                               
 MERLIN PRINCE, SHAREHOLDER, BRISTOL BAY NATIVE CORPORATION,                   
 testified from Anchorage via teleconference that he is opposed to             
 HB 251.                                                                       
                                                                               
 ELIZABETH OSKOLOFF, SHAREHOLDER, CIRI, testified from                         
 Kenai/Soldotna via teleconference.  She told the committee that it            
 was not fair that a corporate leader introduce legislation that               
 would take away the rights of shareholders.  Mr. Huhndorf and                 
 Representative Moses didn't inform them they would be introducing             
 this bill.  HB 251 discriminates against Alaska Natives.  They do             
 not feel they need interference from Mr. Huhndorf and the state.              
 She said some corporations are hypocritical in involving themselves           
 with another corporation's business.  If she were a corporate                 
 leader, maybe this would be a good bill.  However, there are more             
 shareholders than corporate leaders.                                          
                                                                               
 Number 216                                                                    
                                                                               
 BOBBIE OSKOLOFF, SHAREHOLDER IN NINILCHIK AND CIRI, testified from            
 Kenai/Soldotna via teleconference.  She pointed out that previously           
 CIRI has asked them to come up with resolutions.  They had hoped              
 everyone would be able to vote on them.  However, CIRI has the                
 option of not printing them.  They did not tell the shareholders              
 they weren't going to abstain from voting on them.  Therefore, the            
 people don't realize this and could not get a majority vote.  She             
 said that they will never be able to propose resolutions if                   
 something important should come up.                                           
                                                                               
 Number 226                                                                    
                                                                               
 STEPHANIE THOMPSON, PRESIDENT OF ALEXANDER CREEK INCORPORATED,                
 testified from Anchorage via teleconference.  She said that she was           
 a good example of how informed Natives are, having just heard of HB           
 251 from reading the newspaper.  She read the following statement:            
                                                                               
 "The reason that corporations were established was so the Natives             
 could learn how to manage for themselves; to foster participation.            
 At 10 percent, it gives the memberships the opportunity to come               
 forward, to be able to discuss these matters.  To get 25 percent of           
 membership involved is very difficult to gather, something that               
 high would mean that the issue is a universal problem.  If you                
 raise it to 25 percent, you will cut off participation effectively.           
 What you will get will change the (indisc.) participation,                    
 eliminating participation.  So now you need to decide what the                
 purpose of this legislation is.  If the purpose of it is to                   
 perpetuate management in a proxy, then admit it up front.  If the             
 purpose of the corporation or the legislation is to foster the open           
 discussion consideration, if they want participation by members and           
 if they want it fully, 10 percent is a significant percentage.  I             
 think the nature of this is to bring the matters forward to be able           
 to discuss these matters and issues.  To say that at any time you             
 have 10 percent everyone has to pay a cost of that process, it is             
 the reasonable cost.  Corporations are owned by members equally.              
 Most can spend their money and their own costs that way.  Let us              
 say it is worth it for we want our petition to be acknowledged by             
 the corporation and considered.  So, 10 percent is a good sound               
 philosophy."                                                                  
                                                                               
 Number 270                                                                    
                                                                               
 HAROLD RUDOLPH, SHAREHOLDER, CIRI, testified via teleconference               
 from Kenai/Soldotna, that he had sent new information on a                    
 statement made by the CIRI attorney at the meeting of March 27th.             
 The letter is in reference to the statements made, with documents             
 to support that letter.  He felt the documents should be forwarded            
 to the Law Department.                                                        
                                                                               
 Number 280                                                                    
                                                                               
 BOB HENDRICKS, SHAREHOLDER IN CHUGACH ALASKA CORPORATION, said he             
 is also on the Board of Directors and is President of Native                  
 Village Eyak Tribal Council.  He testified from Cordova, via                  
 teleconference.  He said he is 100 percent opposed to HB 251.                 
 Management at Chugach Alaska had not seen fit to notify the Board             
 of Directors that the bill even existed.  "If you hold Native                 
 shareholders to higher standards than non-Native corporations, it             
 is called racial discrimination.  If anything, the law should be              
 made easier to recall members of the Board of Directors, because              
 there were so many in the past that should have been recalled as              
 well as gone to prison."                                                      
                                                                               
 Number 292                                                                    
                                                                               
 CHAIRMAN KOTT asked Mr. Kirkpatrick if there were any ANCSA                   
 provisions which impose special burdens as opposed to benefits.               
                                                                               
 Number 302                                                                    
                                                                               
 MR. KIRKPATRICK responded that one of the reasons that the special            
 section was put in the Corporation Code for ANCSA Corporations, was           
 that in the setting up of corporations, there was a huge amount of            
 assets.  The corporation code addresses dividends.  Under the                 
 Alaska Corporation Code the corporations could not pay anything to            
 shareholders that wasn't out of earnings.  The special section                
 provides for the distribution of certain non-earning types of                 
 accumulation of funds, for example, timber and other resources.               
                                                                               
 Number 318                                                                    
                                                                               
 CHAIRMAN KOTT commented that he thought racial groups could be                
 singled out for benign treatment, but not for special burdens.                
                                                                               
 DOROTHY ZURA, Representative, Shareholders for Shareholders, stood            
 and requested that Mr. Kirkpatrick listen to her comments.  She               
 said to him, "We file everything we put on the street to Banking              
 and Securities, and I want to hand this one to him now before he              
 leaves."  She said, "It had been out and about in Seattle."  She              
 also requested to testify on new issues.                                      
                                                                               
 Number 338                                                                    
                                                                               
 ALMA MCCORMICK, SHAREHOLDER, CIRI, testified from Anchorage via               
 teleconference.  She said that it is not fair for their corporate             
 leaders to work against its shareholders when it is the                       
 shareholders who own the corporations.  She is opposed to HB 251.             
                                                                               
 Number 343                                                                    
                                                                               
 LYNETTE WATSON, MARRIED TO CIRI SHAREHOLDER, testified from                   
 Anchorage via teleconference.  She is opposed to HB 251.  She                 
 attended the CIRI Shareholders meeting last November, at the Hilton           
 Hotel.  She was amazed that the then President Huhndorf "tried to             
 have the microphones turned off and told people to `shut-up.'  She            
 was told by Native shareholders that they had no right to speak.              
 This bill will silence them further.  They have rights just as the            
 citizens of this state and country have rights to talk, disagree              
 and protest when they choose.  They've been treated unfairly for              
 some 20 years."  She asked that people take a trip to Anchorage and           
 see the Rescue Mission on Tudor Road, or the Brother Francis                  
 Shelter on Third Avenue, where natives have no homes and only exist           
 from day to day, in jails or on the streets of Fourth Avenue.  Some           
 are classified as homeless, over 70 percent are at the poverty                
 level.  She doesn't see any of the corporations helping them to get           
 jobs or educating them.  They get dividends, but they don't add up            
 to the paychecks that the board of directors receive.  She wondered           
 how much they bring home along with their yearly bonuses, maybe               
 they need a pay cut.  The Native people have to fight long and hard           
 to receive NOL money.  The corporations can afford to give money to           
 the shareholders even though they are successful in real estate,              
 timber, etc.  She concluded by saying that "our forefathers in the            
 1770s gave us laws, one was the first amendment, the freedom of               
 speech.  Don't take this amendment or any of their other rights               
 away because of one man and his ideas."                                       
                                                                               
 Number 377                                                                    
                                                                               
 CHAIRMAN KOTT stated that he was aware of the facilities in                   
 Anchorage, and was previously employed by General Motors, making              
 one-twentieth of what the board of directors made.                            
                                                                               
 Number 394                                                                    
                                                                               
 JOHNNIE HARRIS, SHAREHOLDER, SEALASKA NATIVE CORPORATION; AND                 
 GOLDBELT NATIVE CORPORATION, testified from Anchorage via                     
 teleconference, that he had also represented the Anchorage area in            
 dealing with Goldbelt.  He said that he did not like the word                 
 "dissident" in referring to the majority of shareholders.  He said            
 management is not representative of the shareholders.  It is                  
 getting further away from the shareholders owning and running their           
 corporation.  He said "follow the situation with Goldbelt, they               
 were going to win and get the corporation back to the                         
 shareholders."  He said "if you keep taking from them, the only               
 thing left will be management and no shareholders.  Listen to                 
 what's right and do something right for a change."                            
                                                                               
 Number 420                                                                    
                                                                               
 JO DENE KERR, MARRIED TO CIRI SHAREHOLDER, testified from Anchorage           
 via teleconference.  She pointed out that between 1987 and 1993,              
 Mr. Huhndorf received approximately $2.8 million in compensation              
 and bonuses.  There are 15 board members.  Figuring that those                
 board members receive even half as much compensation as Mr.                   
 Huhndorf, would mean that management fees are running 31 percent of           
 what was being distributed to shareholders.  As a group, they are             
 trying to bring the management compensation and bonuses into                  
 acceptable industry standards.  They have not been able to find any           
 government agency to help them accomplish this.  They're not a                
 tribal agency, so the Bureau of Indian Affairs (BIA) cannot help              
 them.  If this legislation were to pass, the shareholders wouldn't            
 be in a financial position to fight this outrageous form of                   
 management abuse.  Shareholders have no recourse except for the               
 special meetings.  If HB 251 passes they will have no voice in                
 their corporations.  Only 50 to 60 percent of the shareholders now            
 vote, if this bill would require 25 percent of the total shares, in           
 reality you'd be asking for 50 percent of the voting body.  She               
 implored the committee to vote against HB 251.                                
                                                                               
 Number 447                                                                    
                                                                               
 GLENN KERR, SHAREHOLDER, CIRI, testified from Anchorage via                   
 teleconference in opposition to HB 251.  He said that the board is            
 there to help run the corporation, the shareholders are there to              
 keep it in a check and balance.  Passage of this bill would take              
 that away from them.                                                          
                                                                               
 Number 459                                                                    
                                                                               
 JACQUELINE GUZLIAK, SHAREHOLDER, SEALASKA NATIVE CORPORATION,                 
 testifying via teleconference from Anchorage stated that there are            
 two file drawers full of complaints from Sealaska shareholders.               
 She felt that these hearings were not advertised widely enough for            
 the Natives to voice their concerns.  They were never asked what              
 they wanted in 1970 or 1971 either.  She said "Under Due Process 1.           
 Right Privilege Doctrine.  The essence of justice is largely                  
 procedural.  It is procedure that spells much of the difference               
 between rule by law and rule by whim or caprice.  This seems to me            
 by a whim these people are trying to put this through.  Steadfast             
 adherence to strict procedure safeguard is our main assurance that            
 there will be equal justice under law.  Procedural fairness and               
 regularity are the indispensable essence of liberty.  The history             
 of liberty, the constitutional right, has largely been the history            
 of procedural safeguards.  Who's interests are affected?  Almost              
 17,000 Sealaska shareholders plus children.  We've complained to              
 Banking and Securities, in which they say they don't have enough              
 funds to pursue anything.  We now have our complaints before the              
 State Troopers on the last Sealaska election.  I've also challenged           
 the 1992 election because they brought a vote (indisc.) 5:00                  
 deadline.  Our complaints go unheard, the board tells us we are               
 just advisors.  It's our money and we have no control due to the              
 power of our boards haven't hardly a chance.  Therefore, we protest           
 tearing people's lives apart because when we do this, we are                  
 censured and not able to obtain jobs, although qualified and are              
 known as dissidents, even in our own subsidiaries.  By the way,               
 there are more dissidents than there are board members.  We can't             
 use legal services.  Banking and Securities is under funded because           
 the Bush Representative like the sponsor of HB 251 stopped it years           
 ago.  Where are our rights?  Where is our better life?  Our parents           
 and families waited over 23 years for result and everyone treats              
 the so called leaders, elected under their own by-laws, the                   
 absolute leaders.  Now, some of the corporations are under                    
 investigation for several reasons.  Wait until the truth is                   
 revealed before raping us one more time.  Please stay out of this             
 and don't pass this bill which affects 87,000 plus Natives.                   
                                                                               
 MS. GUZLIAK said in closing, according to George Washington in his            
 1790 speech to the Senate, "Where then is the security of your                
 lands.  No state, no person can purchase your lands unless by some            
 public treaty. (indisc.) under the authority of the United States.            
 The general government will never consent to your being defrauded.            
 But it will protect you in all your just rights."  Don't give our             
 boards the authority to continue to do what they have done to us in           
 the past.  We have too much going on right now.  We are worse off             
 than we used to be.  We have a large suicide rate.  We have the               
 most drug, although we are making a change with the sobriety                  
 movement.  We feel that these people don't listen to us.  Let us              
 be.  This happened before with the (indisc) select committee.  The            
 so called leaders, I call them the "Native Mafia" state "You didn't           
 have to be there."  How can we state what's wrong unless we're                
 there.  (indisc.) Sealaska shareholders unofficial news.  I am                
 quoting the laws from special relationship of Alaska Natives from             
 the federal government.  You better take a look at the due process.           
 I know you people are fair and will want to do what's right.                  
 Please stay out of it.  Thank you very much.                                  
                                                                               
 ARCHIE NIELSEN, SHAREHOLDER, SEALASKA NATIVE CORPORATION; AND SHEE            
 ATIKA NATIVE CORPORATION, testified via teleconference.  He stated            
 that there has been mention of discrimination.  "You're (indisc.)             
 on special elections or within this bill, then you better put the             
 same cap on the south 48 corporations.  We are not exempt from the            
 south 48 corporations.  We are just as equal as they are.  When we            
 talk about monopolizing, this bill would give management total hold           
 power.  We don't like that.  We as individuals own corporations,              
 not management, not special interest groups.  The liability of                
 directors and agents of a corporation under the law is very clear             
 and explicit.  One thing I've heard.  What happens when, with                 
 Johnnie Harris, who someone turned in a proxy that wasn't his?  In            
 the law books it's called (indisc).  If you don't research this,              
 you as well as the people voting or in charge of the elections; as            
 well as the state outfit are liable and can be fined or sent to               
 prison.  We don't like this bill for one simple reason, we as                 
 shareholders have rights.  You're trying to infringe them.  You're            
 trying take them way.  As for time, give us a chance to respond,              
 maybe we can work something out.  As it stands this bill is no                
 good.  Thank you very much."                                                  
                                                                               
 Number 560                                                                    
                                                                               
 DOROTHY ZURA, Representative, Shareholders for Shareholder,                   
 testified that she was a full Tlingit with 125 shares in both                 
 Sealaska and Goldbelt Corporations.  "As it was stated yesterday by           
 lawyers, they said to treat the petitions as proxies.  I'm going to           
 challenge them in their statement that they put an amendment in               
 there that the corporation is going to be liable to mail out 16,500           
 petitions to each shareholder, as they do proxies."  She said the             
 committee was not versed on ANCSA law.  Regarding the 25 percent,             
 the lawyers stated that this provision came from federal statute.             
 She said this was one of the many games played with them.  They               
 treat shareholders on the federal level which is highly                       
 restrictive, and give the board of directors lenient rights as to             
 state law.  "If we're going to play this game, let's go to tribal             
 law, and eliminate and kill the bill right here.  We will see them            
 in tribal courts."  She said this was not a money issue on the                
 shareholders side, rather it was a money issue on the corporations            
 side regarding NOL'S, and their salaries, wages and job security.             
 On the federal level, in order to do petitions it only takes one              
 person to request a special meeting, then there would be no money             
 wasted.  The money isn't wasted on shareholders, it's wasted from             
 the board of directors.  "When we did Goldbelt, the shareholders              
 dug out of their own pockets to fight a fight and we won that                 
 fight."  Ms. Zura said she would like to see a roll call vote on              
 the bill.  She reiterated that this was not a money issue from the            
 shareholders side.  They are only asking for what was theirs over             
 25 years ago.                                                                 
                                                                               
 Number 598                                                                    
                                                                               
 IKE CROPLEY, SEALASKA NATIVE CORPORATION; AND GOLDBELT NATIVE                 
 CORPORATION, testified that they were all opposed to HB 251.  When            
 the election in Klawock took place, there was forgery and tampering           
 with proxies.  Mr. Kirkpatrick said the department had no authority           
 to invalidate any election.  Mr. Cropley asked what his office was            
 suppose to do.  There main objective as shareholders is NOLs.  Mr.            
 Cropley gave the following information regarding Sealaska's NOLs:             
 $157 million was written; $13,000 million in interest since 1985;             
 $60 million in permanent fund before NOLs were approved.  He added            
 that 100 percent vote was required by shareholders, and 100 percent           
 was not voted.  That put the amount of money at $230 million, or              
 $14,500 per 100 shares for 15,780 shareholders.  These figures had            
 been taken from Sealaska reports, financial statements, and studies           
 made by a University of Alaska Professor Steven Cope (sp.?),                  
 specializing in Native corporations.  He said that he had submitted           
 this information to the Juneau Empire at which time Sealaska                  
 attorneys wrote him a letter requesting that he cease and desist,             
 to reply and to retract his statements.  He responded to Sealaska             
 by asking that the correct figures be given to him so he could                
 correct this with the Juneau Empire.  To this date, he has not                
 received a response.  "What has happened to the $34 million not               
 accounted for?"                                                               
                                                                               
 TAPE 95-27, SIDE B                                                            
 Number 000                                                                    
                                                                               
 KATHY POLK, SEALASKA AND GOLDBELT SHAREHOLDER, indicated that Mr.             
 Kirkpatrick had worked with certain individuals in the audience.              
 She was concerned as to how that would sway the committee decision.           
 To have these rights of recall taken away wasn't fair to the                  
 shareholders.  The issue of proxies are important.  Rather than               
 having bills such as this, it would seem that we should be for the            
 benefit and protection of management and the shareholders.  As it             
 currently stands, the corporations are completely protected.  They            
 have "our" money to fight "our" people.  She would recommend that             
 a concerned legislator submit a bill to look at the election rules,           
 to make it fair.  The way the votes are obtained is not fair.                 
 There was no way to prove how many proxies were picked up and not             
 turned in.  The main problem they have with the corporations is in            
 communicating.  At the annual meeting, they have an agenda.  That             
 agenda is usually only to elect the board of directors.  They                 
 establish how things are taken care of.  She added that she is                
 interested in sitting on the panel as one of the shareholders.                
 "Look in your hearts at this bill and put yourself in our place,              
 and respond accordingly."                                                     
                                                                               
 Number 105                                                                    
                                                                               
 LORETTA WALLIN testified before the committee that she was a United           
 States Citizen as well as an Alaskan Citizen.  She has two children           
 not belonging to a corporation other than through her affiliation.            
 She wonders how her children will be able to vote for these                   
 corporations.  In regards to the ANCSA laws, one individual who               
 studied the law for years said that every shareholder had given up            
 between $200,000 to $600,000 to (indisc.) these corporations that             
 exist today.  She is wondering what the legislature's jurisdiction            
 was in the matter.  ANCSA was created because of the uniqueness of            
 the Native people.  "Now they're trying to bring in the state                 
 policies, it's kind of scary.  They are trying to get our people to           
 believe that your policies and your laws overdo ours.  Which is not           
 true, not when you look into ANCSA."  This was made clear by Mr.              
 Kirkpatrick.  He has no jurisdiction other than with proxies.  She            
 was concerned with lines 17 and 18, requiring 25 percent of the               
 shareholders for corporations under 500, and 15 percent of the                
 shareholders for corporations over 500.  It's at 10 percent and               
 should remain that way.  The 90 days filing deadline should be                
 deleted and left at no limit.  Ms. Wallin referred to page 2, line            
 31, provision M, regarding cause in eliminating the board of                  
 directors and asked who is going to justify that cause.  "The                 
 shareholders?  You? Banking and Securities?  Many of the                      
 corporations say this has to do with money.  I worry about the                
 children, if not that, the elders that are alive today.  Their                
 dream was to see us being able to get something out of the                    
 corporations, and what have they gotten today?  Probably nothing,             
 not compared to what they've given up.  Even an education for                 
 myself, most of my funds have come from the State of Alaska loans,            
 not my corporations."                                                         
                                                                               
 Number 214                                                                    
                                                                               
 CHAIRMAN KOTT commented that ANCSA specifically allows for state              
 jurisdictions, with some exceptions.  We are not completely removed           
 from ANCSA provisions.                                                        
                                                                               
 MS. WALLIN thought the only jurisdiction the state had was with               
 banking and securities.                                                       
                                                                               
 CHAIRMAN KOTT said the corporations are also included in that                 
 exception.  The meeting on Wednesday will consist of questions,               
 directed toward the panel, to determine the underlying problem.               
 The committee could pursue some direction as far as the solution              
 goes.  He told the public that any questions they would like asked            
 of the panel could be directed through one of the committee                   
 members.  There would be no public testimony.                                 

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