Legislature(1997 - 1998)
04/22/1997 03:30 PM Senate STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SJR 28 FED AUDIT OF NATIVE REGIONAL CORPORATIONS
CHAIRMAN LYDA GREEN called the Senate State Affairs Committee
meeting to order at 3:30 p.m. Present were Senators Miller, Ward,
Mackie and Green. Chair Green announced the first order of
business was SJR 28 and due to the large number of people wishing
to testify, she would take teleconference testimony in a rotating
fashion after the sponsor explains the resolution. She noted SJR
28 would also be heard before the Senate State Affairs Committee on
Thursday.
SENATOR RICK HALFORD , sponsor of SJR 28, explained the measure as
follows.
SJR 28 is not about subsistence; subsistence is an inalienable
right and the State is certainly engaged in a dispute with the
federal government on subsistence management of that right, but
subsistence is not the topic. SJR 28 is not about sovereignty
either. Sovereignty is something that we all want as individuals,
as communities, and every way we can get it, but it is not the
topic of this resolution. SJR 28 deals specifically with the
corporations and the Alaska Native Claims Settlement Act (ANCSA).
The resolution is important because as we have an obligation to
non-Native Alaskans to defend the equality provisions in the State
constitution, we also have an obligation to Native Alaskans to
defend the provisions of ANCSA upon which all of those equality
provisions are based because if ANCSA is not successful, then those
equality provisions are in question.
Corporations did not have aboriginal rights: people did. We need
to make sure that that system works. It is in the State's
interest. In the formulation of ANCSA, there were three entities at
the table: the Alaska Native interests, the federal government
interest, and the State interest. All represented, to varying
degrees, sovereign points of view and principles. The State of
Alaska put one-half billion dollars into the Alaska Native fund for
Alaska Native people. The State of Alaska backed away from land
selections under the Statehood Act so that land could be selected
for Alaska Natives. The State of Alaska backed away from land and
mineral rights as well. We are responsible, in part, for the
future of ANCSA, and yet what do we have? We have the highest
rates of poverty, suicide, birth defects, violence and
incarceration twenty-five years later.
It is time to audit the Claims Act in multi-year, forensic audits
of the corporations, to find out what is going on. People will say
that audits are already being conducted: those audits are done by
private corporations and paid for by the very corporations being
audited. The results of a complete federal or state audit are
unknown, but at the very least, Native corporate shareholders, who
cannot sell their shares, need more protection than the
stockholders of Ford or General Motors. Second, any audit should
concentrate on what is happening to the land because that was the
greatest concern at the time of ANCSA, and remains the greatest
concern of individual Alaska Natives today. Corporations never had
aboriginal rights; they were to be a multi-generational entity to
carry forward for future generations. If they do not protect the
land, it will not be protected.
JOHN HAVELOCK stated he served as co-chair of the Lowell Thomas Jr.
Supporters of the Settlement in 1969 and as attorney general of
Alaska during the final year of ANCSA negotiation and the first two
years of its implementation. He agreed with Senator Halford's
historical summary of the origin of ANCSA and the three-entities'
development and responsibility for it. Mr. Havelock believes it
took courage to introduce SJR 28 as it has opened the door for an
initial inquiry. Some particularly entrenched interests vehemently
oppose any public scrutiny of the workings of ANCSA, as it may
affect them. In addition, many persons who might actually benefit
from a ray of sunshine on Native corporation operations are
concerned for fear of the unknown.
Mr. Havelock noted many Native corporations have survived and
succeeded as the result of the dedication, hard work and
selflessness of hundreds of Alaska Native leaders whose names are
often unsung and have worked without, or for minimum, compensation
on the affairs of their corporations. The great majority of the
people who have administered ANCSA are honest, dedicated people,
but there may be some who are blissfully unaware of what is going
on in someone else's backyard. These folks need assurance that
neither this committee, nor the people of Alaska, are out to do
them harm. On the contrary, an evaluation and assessment of
critical features of ANCSA, 25 years later, will help to put ANCSA
on a fresh footing for the 21st Century.
Mr. Havelock emphasized that tribal organizations, which bear a
closer relation to the sovereignty of Indians recognized in the
U.S. Constitution, have often been more responsive to the
sentiments of the rank and file than the ANCSA corporations, and it
is important for us to discover why. The sovereignty claims,
upheld by the Ninth Circuit Court in the Venetie case, are not very
important in the long run of the ANCSA framework in that Venetie
was one of the opt-out villages that chose not to be an ANCSA
corporation. The broad sovereignty implications of the Venetie
case are not going to blanket the State. The evolution of the
ANCSA corporations will have far greater impact on most Alaska
Natives than any consequences of the Venetie case.
Mr. Havelock said ANCSA is a public act that fulfills a
constitutional obligation of the United States and the State of
Alaska. Accordingly, the idea that these matters are private, or
even that they are exclusively federal, is not supported by the
history of the Act. He suggested seeking a joint federal-state
evaluation and assessment of ANCSA, since all three sovereigns
involved have oversight responsibility.
Mr. Havelock advised that the setting for the adoption of the Act,
with respect to public sentiment at the time regarding corporations
in general, in the late 1960's and early 1970's, was a time of talk
of great corporate democracy. The term was advanced in favorable
comparison to political democracy. It was a time when there were
great hopes that corporate America would be responsive to the
people through the addition of millions of small shareholders who
would elect publically dedicated individuals to be directors. The
CEOs of major corporations made regular speeches to this effect.
It was a critical error, receptive to thinking the business
corporation could do all things and be all things for all people.
This was a time before the Millikens, it was a time before the
savings and loan debacle when free-wheeling managers showed us how
unresponsive corporations could be to shareholders. It was before
the multi-billion dollar banking collapse that followed the savings
and loan collapse. It was a time before junk bonds and leveraged
buy-outs and asset sell-offs and the calculated downsize. Now, in
contrast to the confident assessment of the early 1970's, it is
acknowledged that the only real influence that the small
shareholder can have on corporation policy is to sell one's stock.
Mr. Havelock explained it was in this early corporate democracy
setting that ANCSA was adopted giving the role to Alaska's business
corporations that is so central to the Act's purposes. Under the
circumstances, it is surprising how well it has worked. There are
clearly some problems and major concerns, in particular what has,
and could, happen to the land base of the settlement which was to
last from generation to generation. He expressed concern that the
Act better fulfill its promise of declaration of policy, and that
there be maximum participation by Natives in decisions affecting
their rights to property and that ANCSA be administered in
conformity with the real economic and social needs of Alaska
Natives.
Mr. Havelock concluded by saying the best interest of Alaska
Natives will be best served by conducting an evaluation assessment
of the performance of the corporate stewards to ANCSA. Mr.
Havelock disclosed that he was asked, on the previous day, to
represent Mr. Bob Rude and Mr. Rudolph in a lawsuit recently filed
by the managers of CIRI, and which was served first on Channel 2
News. He stated his decision to represent those clients has not
altered his testimony before the committee today.
Number 240
EMIL NOTTI , a CIRI board member, former president and board member
of Doyon, Ltd., and the first president of the Alaska Federation of
Natives (AFN), testified in favor of SJR 28 and suggested that the
state and federal government conduct a joint audit to determine why
there is so much shareholder unrest. Although the regional
corporations are audited each year by private auditors, those
audits only have to comply with SEC format rules as far as the
asset, liability and equity portions are concerned; the content of
the numbers is not regulated. Mr. Notti believed for that reason
alone, a federal audit is warranted.
Mr. Notti commented on the regional corporation election process
because it is an area of recurring complaint among shareholders.
Compared to individuals, the corporations have unlimited resources
to elect their board slate. Individuals cannot challenge the
corporations in any effective way. According to the election laws,
the corporations always win on a second ballot if all directors are
not elected on the first ballot. When that happens, people who
would not normally get elected, who are low vote getters, get
placed on the board of directors by the corporations, usually
because they follow the dictates of the management. All board
members are not treated equally; it is common knowledge that only
the ruling faction gets committee assignments. Committee
assignments are where board members make extra board fees which are
a significant part of a board member's compensation. Most
disturbing of all is that several board members are unable to get
information from the corporations, and need that information to
carry out their responsibilities. Last, name calling is occurring,
and anyone who disagrees with a corporation is labelled a
dissident, racist, etc. and information is leaked to the press to
make those who oppose current policies look bad.
Number 291
ROBERT RUDE testified in support of SJR 28 and commented its
introduction was a courageous action. Regional corporation
shareholders have no protections; they are exempt from SEC. The
Interior Department views them as shareholders who do not fall
under the Indian Civil Rights Act of 1968. State regulations do
not provide necessary protections either. For example, there was
an NOL issue that arose in 1994 at a special meeting. The CIRI
Board of Directors called a meeting and within 20 days, without
notifying the group that collected the petitions, the resolution
presented by the people was modified. CIRI chose Veterans Day as
the deadline for proxy submittal which disenfranchised 525
shareholders. When contacted, the State securities office said it
did not have the authority to require those proxies to be counted.
Every time a shareholder runs for a seat on the board of directors
the corporation spends thousands of dollars campaigning against the
shareholder. Last year, CIRI spent $41,000 on a media campaign
against himself and Mr. Rudolph. Mr. Rude said in addition to the
audit requested in SJR 28, he would like to see regulations enacted
to protect and give shareholders equal opportunity to run for board
of director seats.
RON BARNES , representing the Tunik (ph) Traditional Elders Council,
said he initiated, along with other councils and individuals, the
[indisc.] Alaskan [indisc.] Tribunal. His concern with regard to
ANCSA is the need to develop a viable political relationship with
the indigenous peoples of Alaska. In order to acknowledge the
principle of trust, the State of Alaska must acknowledge the
indigenous peoples' right to self-determination. The audit must
encompass a thorough investigation of the steps which lead to
Statehood, and the formation of ANCSA. The first step is to review
the history which recognized that the indigenous people of Alaska
are to be respected as peoples and sovereigns among the law of
nations. This status confirms that the indigenous people have
possession and absolute title over the territory of Alaska. This
status includes a right to govern their territory without any
interference by other peoples. These events in history recognize
that the Alaska Natives are sovereign people and continue to hold
possession of Alaska. Section 57 of an edict by the Czar of
Russia, dated September 13, 1821, mandated the establishment of
factories in some places on the American continent in order to
secure commerce, and to do so only after having acquired the
consent of the Natives. It also requires everything be done to
maintain those arrangements and avoid anything that might create
the suspicion that Russia intended to deprive the Natives of their
independence.
Mr. Barnes discussed other historical events in 1824, 1867, 1923
and 1946 that established Alaska Native land possession and the
right to self determination. The State of Alaska and the U.S.
government must address one single issue: the right of self
determination to the indigenous peoples of Alaska. He supports SJR
28 as the first step taken to recognize the rights of indigenous
peoples of Alaska.
Number 378
JOEL BLATCHFORD , a CIRI shareholder, said he recently registered
with his village in Elim. He will not get any land from his
village corporation, and although all CIRI shareholders were
supposed to receive land when ANCSA passed, none have. CIRI trades
land without any say from the shareholders, and uses shareholders'
votes as it sees fit. Mr. Blatchford expressed dismay with the
election process and said he no longer signs their proxies.
Shareholders are also unable to hunt on corporation land. The
intent of ANCSA was that shareholders would have a say in their
corporate activities; that does not happen.
RALPH PERDUE , President Emeritus of the Fairbanks Native
Association, past President of the Tanana Chiefs Council, and a
member of the Traditional Chiefs of the Fairbanks area who filed
the Native land claims, said that ANCSA has not solved anything.
He stated support for SJR 28.
Number 421
MARYANN MILL testified in support of SJR 28 in light of the poor
options CIRI is presenting to its stockholders. She made the
following comments. ANCSA was contrived by big oil industry and
governments that were foreign to indigenous people through the
perversion of truth. ANCSA was accomplished without the consent of
indigenous peoples. Such documents can be found in the Village
Journey, documented and recorded by the Honorable Thomas Burger and
in the Alaska Native Commission Report in the Senate Select
Committee on Indian Affairs. She supports a full investigation
into the legal status of the holders enumerated in Document #162,
Alaska Boundaries Tribunal, filed in the 58th Congress. The crisis
Native peoples are facing today were explained by Rudy Riser [ph],
a professor with the Centers for the World of Indigenous Studies
who spoke at the Sovereign Alaskan Indigenous Nations Tribunal last
month. Mr. Riser stated that without a land base an ethnic group
no longer exists. Brian Effer [ph] who is presently working on the
Middle East peace accords also lectured at the Tribunal. He
stated, with regard to the Law of Humanity, to extinguish an ethnic
group's rights, such as in Section 4(b) of ANCSA, is to deny a
people's right to exist and is considered a declaration of war. In
a letter dated April 14, 1997 to the Alaska Legislature, the
President and CEO for CIRI wrote of CIRI's wonderful net profits
and how its shareholders enjoy shareholder equity in excess of
millions of dollars. In reality the only ones benefitting
financially are CEOs, management, and the board of directors. As
net profits increase, bonuses and salaries increase while dividends
remain the same. CIRI is donating millions of dollars to non-
profit agencies. ANCSA corporations were established for profit
for the shareholders. A more detailed financial reporting system
is necessary if shareholders are to understand their corporate
business. Shareholder participation committees have been formed to
provide information, however CIRI would not allow shareholders to
vote or have a voice in who would sit on the committees. The CIRI
board makes it very difficult for independent shareholders to run
for the board of directors.
Number 466
PETE SCHAEFER stated he has mixed feelings about whether to support
SJR 28, mostly because he is a former member of a regional
corporation. He expressed concern that SJR 28 may be another means
to make life more difficult for the Governor. He said we have to
remember that tribal and corporate members are, for the most part,
one and the same. There is controversy within the Native community
over whether the regional corporations are doing what they were
mandated to do, to make the transition from tribal life to a purely
economic pursuit.
HAL ENGLESTAD testified from Mat-Su in support of SJR 28. Sealaska
has mismanaged funds, lands and the corporation. He criticized
donations to political groups made by Sealaska.
Number 506
CHAIR GREEN noted Senators Duncan, Miller, Ward, Mackie, and Green
were present.
GEORGE JAMES testified via teleconference from Seattle in support
of SJR 28. Sealaska elections are rigged to benefit the
corporation and shareholders cannot challenge the system. He
requested that audits be done of all subsidiaries of regional
corporations.
FRANKLIN JAMES , an at-large shareholder, also testified via
teleconference from Seattle in favor of SJR 28. He agrees that all
Native corporations should be audited and criticized village
corporation timber sale methods.
ALYSSA LOUIS WEBER , an at-large shareholder from Seattle, testified
in support of SJR 28.
Number 556
WALTER BRADLEY , another shareholder from Region 13, testified in
support of SJR 28. Shareholders had no choice in which corporation
they were placed, and need a voice in their corporation's policies.
ROBERT STOKES testified from Seattle in favor of SJR 28 and agreed
with all previous testimony regarding Sealaska.
Number 574
KATHY POLK , a shareholder of Goldbelt and Sealaska, testified in
favor of SJR 28 and made the following comments. It is time the
officials of the State of Alaska and the United States government
listen to the cries of Alaska Natives. Alaska Natives were given
a portion of lands that belonged to their grandparents. ANCSA was
fought for by many Alaska Natives who pooled their money together.
Many elders who fought for ANCSA did not even have the opportunity
to become shareholders of Native corporations. ANCSA was meant for
all shareholders, not a few leaders who took control of corporation
money. These leaders do whatever it takes to keep the shareholders
at arm's length from the wealth of the corporation. The
corporation leaders choose and endorse their candidates by using
discretionary votes that they are legally allowed to do to keep
themselves in power.
TAPE 97-21, SIDE B
MS. POLK said that many of Board of Director members are the
original members elected when the corporations were formed. If a
board candidate withdraws his or her name from a proxy vote, those
votes become discretionary at the annual meeting which empowers the
board slate. The votes are given to the candidate the corporate
proxy holder wants. The corporate proxy holders consist of board
directors who can find out from the inspector of elections how many
votes every person has that is on the corporation's proxy. The
independent candidates who try to get elected to the board of
directors has a poor chance because of the discretionary privileges
that are allowed by the corporations.
Ms. Polk asked who made the laws that caused this corruption: the
salaries, the bonuses, and benefits received by both the board of
directors and upper management. Shareholder monies are used
against them by corporations in many tricky ways: corporations use
intimidation, expensive lawyers, old shareholder address lists,
etc. Sealaska has been shown to be one of the most successful
corporations in Fortune Magazine yet it has many poor shareholders
who struggle to make ends meet. She strongly supports SJR 28.
Number 565
MR. MICHAEL PATERSON , Sealaska and Goldbelt shareholder, said he
didn't know much about politics, but he knows that in 1971 when
ANCSA passed, Alaska Natives were told to wait 20 years and their
land and money would be worth a lot more. It is 20 years later and
now it is locked up. Before the white people came the Natives were
proud and happy, but because alcohol was brought, it destroyed the
lives of their parents and their children. Because of alcohol they
live on welfare and don't have jobs or job histories, rental
histories, or credit histories.
He said he is a single parent with one daughter and he wants to
leave her something. He doesn't want her to have to struggle with
the poverty he has lived with all his life. He thought it was a
travesty that Native people were given hope, only at the end of 20
years to have it snatched away. Those at the top of the corporate
ladder get full retirement benefits after five years of service;
they have set themselves up like gods. In order for him to
benefit, he would have to be a corporate board member, which is
impossible. In conclusion, Mr. Paterson said he strongly supports
SJR 28 and now has a little bit of hope.
Number 510
MS. JOAN D'ANGELI, representing her grandmother's Athabascan tribe,
related how her grandmother taught her about her grief. About
6,000 of the 15,000 Sealaska shareholders were not given any
village. Their whole Native status included her full Native
status, is tied up in Sealaska. She provided the committee
evidence of the lack of corporate accountability to Alaska Natives,
Ms. D'Angeli stated that according to copies of records of an
exchange between Senators Aspenal and Morton during the ANCSA
debate, the 40 million acres was originally intended to provide the
subsistence required by the Natives themselves.
Ms. D'Angeli said that land has not been distributed to the Natives
the way it was originally intended and that she ran for the Board
in 1987 but can't even tell how many votes she got because the
system is so complicated. The way the money is flowing is out of
control. She said a copy of Sealaska's financial report states
that all ANCSA assets are at a $0 value so she does not even know
the actual amount of her share. She noted that in 1988 AFN signed
a bill barring the sale of stocks for 20 years. She left the
committee with papers to study that reflect accountability
problems.
Number 412
MR. TIM ACKERMAN said he has been writing letters for about seven
years concerning the corporate structure and its effect on Alaska
Natives. The State of Alaska has spent millions of dollars
providing welfare benefits for Alaska Natives which shows that the
ANCSA is not providing for the social and economic well being of
Alaska Natives.
He said the average Native shareholder cannot afford justice. They
do not have a million dollars to throw at a recall effort. The
corporations have completely divided Native people through their
voting procedures, etc.
MS. DELICE CALCOTE supported SJR 28 and said she is an at-large
stockholder of CIRI. She cited an account that showed that CIRI
had received approximately $120 million and $30 million went back
to the IRS. CIRI's minutes showed that an NOL payment to the
shareholders was $8,300 and totalled $44 million. She asked what
the corporation did with the other $46 million and how much was
given to CIRI's board and management in bonuses. She questioned
why profit-sharing is offered to employees when quarterly
distributions have not changed substantially. She said that all
at-large people are not a tribe and those who are on needs-based
programs are the elderly, mentally and physically impaired, etc.
MS. MARTHA BRADLEY, Region 13 Corporation member, agreed with
previous speakers. She thought the original intent of the ANCSA
money was to take care of children, education, and to help those
Natives who needed help. She fully supports SJR 28 and asked how
far back the audit would go. She thought shareholders should have
an equal opportunity to get elected to corporation boards.
SENATOR HALFORD answered his intent is to have the audits go back
to 1971.
MS. ELLA RING, CIRI shareholder, asked for a moment of prayer for
Dolly Turner. She wanted to know what Roy [indisc] since 1985
until now. She supported the audit thoroughly.
Number 305
MR. WILLIAM FRANCE said he is one of three shareholders in his
household and that from 1988-1992 only two out of three dividends
arrived in the mail. He asked Roy Hudolf about it and the problem
was blamed on the mail service. He supports SJR 28 very much.
MS. SUSAN WELLS , CIRI and Kenai Native Association (KNA), said she
supports SJR 28 but does not think it is as encompassing as it
should be. It is imperative that the village and at-large
corporations be included in the audit process - not only for
accountability reasons, but to review the articles of
incorporation, bylaws, and resolutions their board has passed. She
asked that they find out who really manages the business affairs of
their corporation. She thought an audit would find that a majority
of the corporations are not in compliance with the purpose and
intent of ANCSA or with state corporate laws.
MS. LORETTA WALLEN noted she submitted written testimony but added
that some of the NOLs for some of the corporations are gone. Her
main concern is what is left of her people's land. She did not
think Native people are concerned with new cars and houses; they
want the land back to they can continue to teach their children the
way of life their parents have taught them.
Number 144
MR. THOMAS TILDEN opposed SJR 28 because he does not know what
would be done with information uncovered by an audit. The State
has $490 million tied up in the corporations and should do its own
audit. His biggest concern is with the land, and he questioned
what would replace the corporations once an audit is completed.
SENATOR HALFORD said he thought the audits should come from three
different directions: SJR 28 is only one part, and requires a
federal audit. He believes there should be a State audit, which
the Governor opposes; and a legislative audit. He also stated the
need to review and revise State corporate law, to ensure that
shareholders who own stock in a corporation that they cannot sell,
are adequately protected. Senator Halford also thought ANCSA
itself should be reviewed. The relationship between village and
regional corporations needs to be reassessed as well as where
people were originally allowed to enroll.
MR. TILDEN thought that the subsistence issue should be part of the
audit also.
SENATOR HALFORD said he believes subsistence is an inalienable
right and that issue is about how that right is implemented in
State and federal law.
Number 34
MR. MAXIM DOLCHOK supported SJR 28, but expressed concerned that
historically, the State has not been an "impartial opponent." If
SJR 28 is to be effective, the audit needs to be reviewed by an
impartial body.
TAPE 97-22, SIDE A
PAT SIERRA , testified in support of SJR 28 and made the following
comments. ANCSA was enacted to achieve a fair and just settlement
with maximum participation by Natives in decisions affecting their
rights and property. At Sealaska, shareholders do not have any
rights in any decisions affecting them. The corporation ignores
shareholders' concerns and ideas, seldom answers questions, and
totally ignores them until an election to the board of directors
occurs. She said many of the elections were tainted with forged
proxies, but the Division of Banking & Securities always sides with
Sealask by stating the number of forged proxies would not have
changed the outcome of the election. Ms. Sierra said she would
like to see audits done on individual directors and managers who
receive retirement plans, huge board fees, life insurance policies,
car maintenance, bonuses, etc., while shareholders get a few crumbs
that Sealaska announces in the newspapers as dividends. She noted
in 1990 there was an FDIC lawsuit involving a then director and
former director which was settled out of court. It was rumored
that it might cost the corporation $30 million, but shareholders
have never been told how much the corporation settled for.
Number 125
ROSEMARY MESSENGER , a CIRI shareholder testifying from the Mat-Su
LIO, voiced her support for SJR 28 so that audits will be conducted
on Alaska Native regional corporations, especially CIRI.
Number 139
CHIEF GARY HARRISON , testifying from the Mat-Su LIO in support of
SJR 28, said in 1971, when he was in the seventh grade, he was told
to join the land claims because he would get lots of money and
land. Now he has children in the seventh grade, and he wonders
what will be left for them. Many attorneys, accountants, and
people in management have made their fortunes from ANCSA and have
retired, while the shareholders have received very little. If
their shares were deposited in a bank account, they would earn six
times the money.
Number 164
JULIE GONZALES of Juneau, speaking on behalf of her mother and
brother in support of SJR 28, said that in 1971 her mother was told
that when she got older she would be able to get a lot of land and
money, but she never received the money promised to her and was
forced to raise her family on welfare. It is her mother's hope
that when she passes on, her grandchildren will benefit from her
corporation.
Number 184
ARNELLA HORSFORD, a Sealaska shareholder living in Juneau, said she
attends a tourism industry program, and has learned self respect
through this program. She thinks that somewhere along the line the
corporation lost respect for its shareholders because they are
being given very little. She has spent four years on welfare and
is trying to get off of it. She does not want her children growing
up the same way she did so she is taking advantage of everything
that her corporation has to offer to give them a better life.
Number 214
JAMES SHOWALTER , a member of CIRI and KNA, said SJR 28 should
include audits of village corporations because the financial status
of the corporation has declined over the years and the corporation
is not providing an economic foundation for its shareholders. He
noted KNA has been selling some of its land, and he believes the
monies received from the sale of these properties will be
squandered, as other monies have been. He said their ANCSA has not
benefited them, and they must be audited.
Number 251
SENATOR HALFORD clarified the resolution requests a federal audit,
but he thinks in the process between state and federal audits,
village corporations can be included, particularly in cases where
the shareholders of a corporation request an audit.
Number 260
BRIAN RICHARDSON, testifying in Juneau, stated he is 100 percent
behind a federal audit, as well as a state audit. He is of the
opinion that the Native corporations have been crooked and have not
served the Native people. He said that Alaska was not owned by
Russia and it did not have the right to sell it to anyone. The
Native people fought and drove the Russians out of Alaska. He also
believes that hunting rights and fishing rights should be given
back to the Native people.
Number 293
JENNIFER HARRISON , a resident of Palmer, stated that although she
is not an ANCSA shareholder, nor is she married to a ANCSA
shareholder, she is a life-long Alaskan voter who supports SJR 28.
She said she sees the ANCSA corporations as a social experiment
that is failing. She knows many aging Native elders that live
below poverty level and have an extremely difficult time receiving
the medical care they need. She suggested the corporations plan
for their shareholders' futures by actively encouraging Alaska
Native high school seniors to attend college. She believes young
people should not be excluded from participating in corporations
just because they were born after 1971, or because they are not at
least one-quarter Alaska Native.
Number 316
BERNADINE ATCHISON , a CIRI shareholder testifying from Kenai,
voiced her support for SJR 28 and said it is important to include
village and city corporations because they follow the same policies
as the regional corporations. This was apparent in 1995 and 1996
when CIRI's attorney offered his assistance to the KNA Board of
Directors. The KNA settlement was, and is, a means of taking land
away from the indigenous people of Alaska. In the last four years,
KNA has lost a substantial amount of money, with the greatest
expense being attorney fees to negotiate the sale or exchange of
their land. Instead of increasing the financial security of
shareholders, their revenues go to outside interests and leave
shareholders in poverty.
Number 348
DELORES WHEATON of Juneau, testifying in support of SJR 28, said it
is time for the corporations to open the doors, open their eyes and
look at the Natives' needs instead of putting them down. She is
one of the many Natives that have trying to get off of welfare for
a long time. She said the corporations have the right to give out
land and her people deserve it.
Number 376
DOROTHY ZURA of Juneau said thousands of Alaska Natives have been
hurt by ANCSA, and it is because of problems between the board of
directors and management of these corporations. Board members go
to meetings and make decisions for the people and then an executive
committee overrides those decisions. Laws were implemented that
none of them ever understood and these laws need to be reversed,
the first one being to lift all of the laws against the peoples'
land. She spoke of the need of her people to be educated and to
make a law to where they can govern themselves; to where the common
law says that they are equal shareholders and have the right to say
what they want.
Number 433
MARGARET OSBORNE of Juneau expressed her appreciation to Senator
Halford for helping the shareholders regain their dignity. Many of
her people have felt worthless and are not on equal ground with
even those who are living an average life. At meetings the
shareholders are put down and their questions go unanswered. She
believes that the discretionary voting is harming the Native people
and should not be allowed. Shareholders need the protection of
those who know something about corporate law.
Number 484
ADA PATTERSON , a Sealaska and Goldbelt shareholder living in
Juneau, said many shareholders are homeless and live below the
poverty level. She pointed out that Klukwan, Inc. gives its
shareholders $65,000 per year in dividends, while shareholders of
other corporations are lucky to receive $500 per year. Some
shareholders, mainly village shareholders, received land; other
shareholders did not get any. Goldbelt will not give its
shareholders land, but its management receives many thousands of
dollars per year in salaries. Management borrows millions of
dollars for themselves and shareholders do not know if that money
is ever repaid. Some directors go to Las Vegas every year for
board meetings using shareholders' money. She advised that banking
specialists say that Sealaska's annual reports contain huge
discrepancies. She supports an audit and would like to see the
corporate criminals prosecuted.
Number 515
FRANKLIN WILLIAMS, SR. , a Sealaska shareholder testifying in Juneau
in support of SJR 28, stated the Sealaska Board of Directors does
not listen to the shareholders' concerns. He said freedom and
democracy do not corrupt equal rights and justice, but for some
reason, Sealaska does not believe in this principle. The people
are not recognized as members of this corporation. He said the
discretionary voting is a fraud; they use the 300 shares of stock
belonging to the people who do not vote to elect their own slates.
He noted he has two grandchildren that were born after 1971, and
they don't see any way that they will see any benefit from ANCSA.
He also voiced his distress with the bonuses that management gives
to one another for performance when they are not performing
according to the law of ANCSA.
Number 560
PAUL FROST of Togiak said SJR 28 might be well intended, but he
doesn't see the resolution really getting to the heart of the
problem. When ANCSA was enacted, there were no options offered to
any of the Native people. They said "If you want to give up your
land and your hunting and fishing rights, and forever give up your
rights to the resource, we'll give you these corporations and best
of luck to you, and we hope that they're successful." This Act
was just passed on to them and they are supposed to make something
of it. He believes that all traditional governments throughout the
state should own all of the resources and get all of the money made
from resource extraction, and that the regional corporations should
be used as business agents, not government representatives. He
said ANCSA is dividing Native peoples and causing problems; the
solution is to have their own governments and ownership of the
resources taken off the land.
TAPE 97-22, SIDE B
Mr. Frost said that if the Native corporations choose to be a
business entity, then that is how it can be.
SENATOR WARD moved to place CSSJR 28(STA) before the committee for
consideration. Without objection, it was so ordered.
CHAIRMAN GREEN explained that before the Thursday meeting, the CS
will be distributed so that people can comment at Thursday's
hearing when more testimony will be taken on this matter. Chairman
Green reminded everyone of the two minute time limit for testimony.
Number 575
JAMMIE HARTLEY supported SJR 28. As a CIRI shareholder, Mr.
Hartley saw the need for an audit some time ago. Mr. Hartley noted
that he had attempted to introduce an audit resolution at one of
the CIRI annual meetings, but it failed. Mr. Hartley stressed that
he forced CIRI to provide minutes of board meetings and
subcommittees per the Alaska Statute. For three years, CIRI has
avoided implementing an accounting standard for ANCSA land. Mr.
Hartley said that should fraudulent activity be discovered, there
should be a complete recall of the board, the guilty sent to prison
and stripped of the plundered money.
JUDITH KALTINS , CIRI shareholder, informed the committee that she
is a member of the Concerned Shareholders for CIRI as well as
Sovereign Alaska Indigenous Nations Tribunal. Ms. Kaltins supports
sovereignty and self determination for indigenous peoples of
Alaska. ANCSA is an act of genocide against the Alaska Native
people. ANCSA laws state that shareholders in ANCSA corporations
have the right to maximum participation which has not been allowed
to date. CIRI has done everything possible to stifle its
shareholders, such as HB 251, known as the "shut-up bill." CIRI
has announced it will do a partial audit, but she questioned how
one votes using partial information. There should be a freeze
until the federal and state governments perform audits on the
corporation. Ms. Kaltins informed the committee that during a CIRI
option meeting in December, there was a statement that CIRI did not
object to a federal audit. Now there is objection to the audit.
Ms. Kaltins supported a federal audit.
SHARON KAY informed the committee that she is a CIRI shareholder,
a Concerned Shareholders for CIRI member, and Sovereign Alaska
Indigenous Nations Tribunal member. Ms. Kay emphasized that she is
a Native activist in support of sovereignty, self-determination,
the smoking gun document on who owns Alaska, tribal self government
for indigenous people, and bringing forth the truth. Ms. Kay
supports SJR 28. Alaska Native corporations were never filed under
SECs, therefore CIRI nor any other corporation is required to
provide full disclosure of its activities. This leaves the
shareholders without any protection for their assets which, in CIRI
alone, could be over $1 billion. Ms. Kay informed the committee
that CIRI had a Congressional bill passed, without shareholder
input, to buy back shareholder stock. Why was CIRI the only Native
corporation to be bought out? CIRI has now implemented a four
stock option plan to the shareholders to be voted on this July.
CIRI shareholders have never had full disclosure of the pros and
cons of each option. Since the vote on the stock options will set
precedent for all Native corporations, Ms. Kay recommended that SJR
28 include a freeze of all CIRI stock options until a full federal
investigative audit is completed.
JAMES GROTHA , CIRI shareholder, supports SJR 28 as it is merely one
small step to uncover what happened to the aboriginal land and
money. This proposed audit must hold the past and present board of
directors, officers, and employees accountable for the continued
abuses against the aboriginal shareholders. Mr. Grotha
acknowledged that there are some good corporations and leaders in
these ANCSA corporations, for example the Arctic Slope. CIRI does
not help its villages and does not appoint village people to its
subsidiaries or its commissions. Why are the corporations not
fighting for the fish and game resources, water, and sewer? Mr.
Grotha stated that the federal and state governments are poor
trustees by not protecting Alaska Natives. Section 2(b) of ANCSA
indicates that it will be without litigation, with maximum
participation effecting the rights and property. Mr. Grotha
discussed some of the litigation in which CIRI was involved and
stated he does not recall voting for the 1991 legislation which
lifted stock restrictions. CIRI made 22 by-law changes that were
never published for shareholders, nor were changes to its Articles
of Incorporation or land trade. How questioned much money CIRI has
spent to pass HB 251?
Number 509
HAROLD RUDOLPH , CIRI shareholder, informed the committee that he is
running for the CIRI Board of Directors and will be sending the
committee information regarding that election process. He supports
SJR 28 and said many wonder why CIRI sues its owners, be they
Native or not. He welcomes the lawsuit because it will bring into
the open the concerns of many shareholders. Mr. Rudolph said one
of his goals, if elected to the CIRI board, is to change current
policies to avoid the current situation.
DENNIS WILLARD informed the committee that he would be reading
Carlton Smith's testimony. CARLTON SMITH , shareholder of Native
Regional Corporation, said that Senator Halford's call for audits
is dividing the Native community and should not be considered by
the 20th Legislature. The regional corporations have done audits
in strict compliance with 43 USC 1606 which also directs annual
audits of the books and accounts of a regional corporation "in
accordance with generally accepted accounting standards by
independent public accountants and independent licensed public
accounts with detailed summaries of the annual audit to be
transmitted to each shareholder." Basic legislative history shows
that the regional corporations provided these audits to the
Department of Interior beginning in 1971 until the requirements
were repealed by 1991 legislation and approved by Congress. Where
was Senator Halford during that period of time? During the audits
from 1971 to 1987, no known substantial changes were discovered to
support today's concerns. Mr. Smith stated that neither the
Department of Interior nor the Bureau of Indian Affairs uncovered
mismanagement of the use of staff in the audits.
VICE CHAIR WARD requested that Mr. Smith's written testimony be
forwarded to the committee.
MICHAEL CARPENTER , a non-Native, informed the committee that many
of his relatives belong to Salamatof Native Corporation and Kenai
Native Association. Mr. Carpenter said that he had been involved
with the corporations since their inception. Mr. Carpenter
supports SJR 28 but cautioned that audits may not show any criminal
activity because the corporations have lawyers to avoid such. The
audit will find that the corporations are morally wrong. The
Salamatof Native Corporation and the Kenai Native Association have
a lot in common, both sell land and other assets to pretend to be
viable corporations without giving money to the shareholders. Both
corporations act like dictatorships. The shareholders cannot use
the land because the corporation intends to sell it.
Number 433
RUTH WILLARD , Sealaska and Kootznoowoo shareholder, informed the
committee that she is a former Kootznoowoo board member and
currently serves as a trustee for the Kootznoowoo Corporation and
is a former executive council member of the Tlingit & Haida Central
Council. She views SJR 28 as divisive for Native Alaskans. Ms.
Willard noted the IRS did an intensive audit of Kootznoowoo, and an
even more intensive audit occurred when Kootznoowoo prepared to go
into its trust. Kootznoowoo has one of the best trusts in Alaska.
Ms. Willard expressed concern with Senator Halford's use of his
position for such action. The Native corporations have distributed
millions of dollars in Alaska through dividends, economic
development, and employment. Natives and non-Natives have
benefitted from the corporations. Ms. Willard asked if such a
resolution would be brought forth for Carrs or another non-Native
corporation. She suggested that the resolution address all Alaskan
corporations not just Native corporations.
IRENE ROWAN , former chair of Klukwan Inc., opposed SJR 28 as
currently written. Ms. Rowan expressed the need to clarify the
meaning of "audit." The audits should include the 200 plus Native
corporations, not just the regional corporations. Under Alaska
law, all state corporations are required to file reports with the
Department of Commerce. Ms. Rowan suggested doing audits on all
corporations regardless of race, maybe in a random fashion. Ms.
Rowan believes it is important to give village corporations further
assistance since the village corporations own the land that the
village site sits on or that surrounds the village. If this land
is lost, more than just the corporation is lost. Ms. Rowan
encouraged the State to do a better job with education. The
corporations are spending thousands of shareholder dollars to do
what the school system should. The corporations are trying to teach
business and the rights of shareholders. Ms. Rowan commented that
state agencies should be properly funded so that they can
adequately carry out their functions.
VERNITA HERDMAN informed the committee that she was a Tribal Member
of the Native Corporation of Unalakleet, CIRI shareholder, and
citizen of Alaska. All those aspects of her carry rights and
privileges of which she is unwilling to give up any. Ms. Herdman
opposes SJR 28. Based on previous testimony, she believes that
audits may be necessary; however, she questioned the involvement of
the Legislature. Ms. Herdman noted that many board members have
served their communities faithfully and deserve praise for that.
Ms. Herdman believes SJR 28 places a red herring into the
sovereignty debate. Contrary to Senator Halford's sponsor
statement, Alaska Natives were not "endowed with 44 million acres,"
but rather were allowed to keep one-tenth of ancestral land and
paid just under $1 billion for the nine-tenths of Alaska given to
the U.S. That process went through Congress, therefore if audits
are to take place, Congress or Alaska Natives bear that
responsibility. The Legislature does not have any standing in this
debate. ANCSA corporations were chartered as private for-profit
corporations which was the first mistake. The fiduciary
responsibilities to the shareholders made it inadvisable for the
profit corporations to attempt to address Native social needs.
Number 351
DIANE SHRADER , CIRI shareholder, supports SJR 28 and identified it
as the first step in dealing with the Native corporations and the
boards. Ms. Shrader supported auditing the village corporations as
well. She said that the at-large shareholder is not being treated
fairly compared to their fellow village shareholders.
LYNETTE MORENO HINZ, Sealaska and Shee Atika shareholder, supports
SJR 28 because she knows of many financial abuses by corporate
leaders.
DAVID HARRISON supports SJR 28. He said the State of Alaska has
disregarded the indigenous people and corporate leaders have tried
to usurp the authority of the traditional villages which are the
legal and governing authority throughout all of Alaska, not the
State or federal government or corporations. To correct the
situation he suggested recognizing the authority of the traditional
government, grandmothers, chiefs, and spiritual leaders within
their nations.
STEPHANIE THOMPSON , President of Alexander Creek Corporation,
supports SJR 28 and said that a review and audit of CIRI to provide
accountability to shareholders and especially to determine
Alexander Creek's eligibility as a full blown village corporation
is long overdue. Someone has to be accountable for ANCSA.
KEN JACOBUS, Anchorage attorney, supports SJR 28 because he has
seen many Native individuals who have not been receiving the
benefits they should under ANCSA. Their rights need to be
protected as opposed to the rights of the corporations. This audit
is a first step.
DAN ALEX , CIRI and Eklutna Inc. shareholder, strongly supports SJR
28 as it is long overdue. An audit will show that fraud and
misrepresentation has occurred on a grand scale.
SENATOR GREEN announced that would conclude the teleconference and
testimony for today and adjourned the meeting at 6:28 p.m.
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