Legislature(1997 - 1998)
04/24/1997 03:34 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 GREEN brought SJR 28 back before the committee as the next
order of business.
CAROLE NEWCOMER of Juneau said as an Alaskan Alaska Native and a
shareholder of an ANCSA regional corporation, she is appalled by
this blatant attack against the ANCSA regional corporations, the
leaders and the shareholders of these corporations. She pointed
out she has experience as both a shareholder and as a past employee
of her own regional corporation.
Ms. Newcomer said the regional corporation, like any other
corporation, has accountability to its shareholders. Her
corporation is audited every year by their in-house accounting
department and by a respected certified public accounting firm.
The financials and minutes of all board and committee meetings of
the corporation are available for all shareholders to review. As
a shareholder, like all other shareholders having shares in
corporations, they are able to make changes through corporation
process. She emphasized that changes can and have been made.
Ms. Newcomer said the officers of her corporation are compensated
accordingly; like any other corporation they are paid for services
rendered.
Ms. Newcomer stressed that ANCSA regional corporations are for-
profit corporations, and as a people, she does not believe they
seek sovereignty due to any failure by their corporations.
However, she added that sovereignty is another topic altogether
like subsistence.
Ms. Newcomer asserted that the shareholders in her corporation are
more informed than other shareholders of other corporations. They
have never been deprived of a legal right or the right to vote.
She said she has worked for several Alaska Native leaders, all of
whom are highly ethical and committed to the betterment of all
Alaska Natives.
In her closing remarks, Ms. Newcomer said ANCSA corporations are
the vehicle that give Alaska Natives a voice both politically and
economically, and they are the thread that binds them together as
a people.
Number 307
ED THOMAS stated he is a member of the Sealaska Board of Directors,
President of the Tlingit & Haida Central Council, Alaska Area Vice
President of the National Congress of American Indians, and a
shareholder of Shaan Seet, Inc., but he was testifying on how own
behalf.
Mr. Thomas voiced his opposition to SJR 28, stating that he feels
it is a very discriminatory resolution, and he is opposed to any
resolution that separates Alaska Natives out and tries to set up
different standards for them than they do for the rest of the
population of this state. He then reviewed several pieces of
legislation that have been introduced this session which he
believes are discriminatory against Native people. He believes SJR
28 is just another vehicle to discredit the leadership of ANCSA
regional corporations at a time when Native people really should be
pulling together with welfare reform, the federal budget cuts, and
state budget cuts.
Mr. Thomas suggested that if the Legislature is truly interested in
doing what is best for Natives, it should: (1) uphold the Indian
Country ruling; (2) ask Congress to investigate why most budget
cuts are to the poor and needy; and (3) ask Congress to investigate
what is being bought with large campaign contributions and the use
of lobbyists.
Mr. Thomas said he would agree with Senator Halford's comment that
the reason why Alaska Natives are interested in sovereignty is
because these corporations have failed; they have made mistakes and
have not met their expectatios. However, he thinks the Native
people are most interested in sovereignty because of a failed state
system. Most of the money is going into the urban areas with no
money going to water and sewer needs in some the state's poorest
villages.
In closing, Mr. Thomas urged that SJR 28 and all other anti-Native
legislation be withdrawn.
Number 420
SENATOR MACKIE asked Mr. Thomas if there has ever been a year that
all shareholders of his particular corporation have not been issued
an audit or a financial statement, and MR. THOMAS responded that
there has not. SENATOR MACKIE asked if it was correct that it is
not only a law but a policy of Sealaska that every shareholder has
access to any information they want about any salaries, or any
investments made by the corporation. MR. THOMAS responded that
they would have access to information on salaries and the general
investments in the companies that are under the umbrella of the
corporation, but not on the intricacies of the investments.
SENATOR MACKIE asked Mr. Thomas why he believes that SJR 28 is so
discriminatory. MR. THOMAS responded that any time you put forth
even a request to single out a group of people because of their
ethnic background or their status as a people, that's
discriminatory. He added that he has long felt that the pipeline
should be audited, but they can contribute to campaigns, and they
don't have to answer these questions. He said their Native
corporations represent some of the poorest people in the country.
SENATOR MACKIE noted he is a shareholder in a Native corporation,
and he knows for a fact there are a lot of shareholders that are
not happy with management in just about every Native corporation in
the state. He asked Mr. Thomas his feeling about whether or not
Sealaska Corporation has made it mistakes and what is being done in
trying to correct those in terms of working with shareholders as it
relates to election policies and other things that shareholders are
dissatisfied about. MR. THOMAS answered that shareholders were
dissatisfied that the proxy did not include a place for a write-in
and that was then included; they were dissatisfied that the
corporation was using proxy solicitors to go out and beat the
bushes for management, and they got rid of that; and they are
trying to provide public forums by which questions relative to the
operations can be addressed. The responses have been designed to
create some clarity as to what the concerns are and what's being
done about them.
Number 488
CHARLES WHEATON of Juneau stated he was speaking out for the fallen
warriors, those who have given up all hope of receiving any kind of
settlement. He said he was one of these fallen warriors, and that
he almost lost his life to drinking like so many of his people do.
Mr. Wheaton said he has never had any pride in the Native
corporations because of their greed and disregard for their own
people.
Mr. Wheaton related that he has been in and out of jails, but he is
going through a change because he found a family and a job in a
Native-setting work place. However, after he caught a fellow
employee altering time sheets and reported this to the top boss, he
was placed on leave. Some of his own people made false charges
against him, and as a result, he lost his job. He asserted that
one of the leaders of Sealaska knows about this incident.
Mr. Wheaton believes that an audit should be done on the Native
corporations to show how the money and people are being mishandled.
Number 490
DENNIS WILLARD of Anchorage, testifying in opposition to SJR 28,
said the state doesn't have a good history when it comes to meeting
the real economic and social needs of the Alaska Natives. There
are cutbacks being made to the maintenance and upkeep of the
villages and this affects the Alaska Natives. There are cutbacks
being made in welfare, which makes it difficult for a recipient to
receive higher education or vocational training. The state
approved $1 million to oppose Indian land decisions. The state
gave up its right to manage the fish and game because it wouldn't
allow eight percent of its population to live in a subsistence way
of life.
Mr. Willard said he knows the shareholders have legitimate
concerns, but he believes they should be addressed within the
corporations themselves. The shareholders need to realize that SJR
28 will not even address the needs of the Alaska Natives. He said
if the state is truly concerned about the needs of the Alaska
Natives, then it should work with the nonprofit organizations which
address these needs.
Number 510
JULIET HILDRETH, a Native corporation shareholder testifying from
Anchorage, voiced her support for SJR 28. She stated there is no
voice for the Alaska Native in the nation's capital, much less in
the state capital. As an ANCSA shareholder she is concerned and
troubled about their financial future and the direction of these
regional corporations. She said the ANCSA was intended to
financially benefit a few of a select group of board members and
executives, who cleverly word proxy cards and abuse discretionary
votes to continually secure their elected offices and the high
salaries. She declared the self-proclaimed Native leaders of today
will morally and financially bankrupt young Natives of tomorrow.
Number 535
BYRON CHARLES of Ketchikan questioned who put the resolution
together and if there was a violation by a regional corporation
prior to the resolution being put together. He believes it is an
embarrassment to their elders, because they were the founders of
the corporations that are existing in the state of Alaska today.
He said if there is in fact a violation by any or all of the
regional corporations, as a concerned shareholder he would like to
see some documentation on that.
Number 565
SENATOR MACKIE asked Mr. Charles if he believes if SJR 28 passes,
an audit will occur. MR. CHARLES said that is what he believes.
SENATOR MACKIE clarified that a resolution passed by the
Legislature is nothing more than a letter requesting Congress to
consider doing an audit, so that even if SJR 28 passes, it will not
relieve all of Mr. Charles' concerns.
TAPE 97-23, SIDE B
ALAN LARSON, a CIRI shareholder, testified from Mat-Su in favor of
SJR 28. Back in 1975 or 1976, CIRI declared that it made $50
million in profits but the method it used was questionable. On one
hand they gave it an actual value, in another column they gave it
a face value and called the difference profit. One has to be a CPA
to understand the financial reports. The Alaska Native Fund should
also be examined. The state of Alaska was required to pay into
that fund. During one year, a budget cut was made that was the
identical amount that was supposed to be paid into the Native fund.
He stated he is in favor of a complete audit of ANCSA from its
inception.
Number 563
PATRICIA WADE read a statement from the elders of her clan, all
CIRI stockholders.
"I support an audit of the ANCSA corporations. I remember the
embarrassment 25 years ago when Alaska Native Claims Settlement Act
was blast over the radio every 15 minutes. They made it sound like
the Natives were getting billions of dollars. Because of it,
everybody looked at us like we were the lowest on Earth, even more
so than before. I was busy raising my own family and tribal
members, minding my own business, and this was being blast over the
radio nationwide, over and over and over again. Now, let's put
them on the hot seat, the people that benefitted from it, and kept
me embarrassed for too long. I'm tired of taking the blame for
Hundorf (ph) and his lawyers' wages."
WILLIAM FRANCE, a CIRI shareholder, testified in full support of
SJR 28. He stated CIRI shareholders still do not have enough
information on the four options presented by CIRI.
RON DOLCHOK, a CIRI and Kenai Native Association shareholder,
stated that ANCSA is working. He has been involved with ANCSA
since 1968, and does see problems with the CIRI board of directors
election process. Also, KNA is getting rid of corporation lands
even though shareholders have voted against it twice. The intent
of ANCSA was to allow for maximum participation by shareholders,
but that has not happened for 20 years. He is in support of SJR
28.
Number 500
HARRIET BELEAL testified in support of SJR 28 and made the
following comments. In 1992 she sued Sealaska for not allowing
shareholders to vote on whether or not to sell their stock before
1991 but the case was dismissed. When shareholders do sell their
stock, it will be minus the land and mineral value. In 1992
Sealaska counted proxies for the election of six directors one day
after the polls closed. On the ballot was the issue of eliminating
the discretionary vote and the super majority vote. The
discretionary vote was defeated, the super majority vote passed
which requires that two thirds of the voters approve any major
issues. The Division of Banking and Securities will not respond to
protests for a fair election. The corporations are now playing a
vicious game of politics while 70 percent of Alaska Natives are
suffering in poverty. Land has been removed from Alaska Natives
and is now in a corporate structure.
SHIRLEY DEMIENTIEFF, a Doyon and [indisc.] Village Corporation in
Nenana, remembers the treatment Natives used to get in Fairbanks
many years ago, and still do today, to some degree. She remembers
when Natives were not allowed to stay in certain hotels, yet due to
ANCSA those hotels are now owned by Natives. Doyon is audited
every year, and she trusts the CPA firm that conducts that audit.
She believes SJR 28 is unnecessary. She ran as an independent
candidate for the Doyon Board of Directors last year, came in
fifth, spent $25 on her election, and garnered a respectable number
of votes. Next year, if she chooses to run, she believes she will
win a seat as an independent candidate. She believes Doyon
stockholders are strong enough to demand what they want and will
get it. Although many social issues need to be addressed among
Alaska Natives, that is an internal matter. Sovereignty has always
been an issue; regional corporations have nothing to do with it.
She questioned why the State needs to be included in this requested
review. Regional corporations already fall under Title 10.
Number 430
DARLENE HERBERT testified in opposition to SJR 28. She believes if
regional corporations are going to be audited, oil companies should
be too. As a Doyon stockholder, she sees its management as capable
of solving its own corporate problems.
PO'A JOHNSTON testified in support of SJR 28. He expressed concern
about the sad and unjust treatment of Alaska Natives employed at
Prudhoe Bay. Subsidiaries are managed by the "good old boy"
networks from down South. At one time, KNA owned the King George
Hotel, named after KNA's president. KNA and Salamatoff Native
Corporation continue to watch out for their kingdom: hopefully SJR
28 will stop these dictatorships. After management takes its cut
of the pie, there is nothing left for the shareholders.
ANGELA MCCOMSEY, a CIRI shareholder and Kenai resident, testified
in support of SJR 28 and made the following remarks. As a CIRI
shareholder, she is concerned and angry about top management voting
for ridiculously high salaries, bonuses and retirement packages for
themselves. She asked why, if salary increases are justified by
successful business practices, dividends do not reflect the
corporation's success. CIRI is involved in a lawsuit against a
board member who was voted in by shareholders and has spent
thousands of dollars to oppose the election of that director.
Shareholder opinion is not highly regarded by the Board.
Shareholders need honest full disclosure on all four options being
offered by the CIRI Board.
Number 334
IKE CROPLEY, a Sealaska and Goldbelt shareholder, spoke in favor of
SJR 28 and said there are many people that question why efforts to
recall Sealaska board members have been unsuccessful. He asked how
the State can defend the ANCSA settlement which would require proof
that the Native corporations have improved the lives of 80,000
Natives. He asked if those corporations have shared the wealth
with the shareholders. He did not think those corporations could
be defended especially since financial statements show extravagant
executive payrolls, huge retirement plans, and outrageous bonus
payments. Shareholders want the corporations under the scrutiny of
the highest court in the land. He believes the corporations are
unconstitutional because they were forced upon Natives who never
had the right to vote to accept them. Sealaska has lost money on
every business it has owned, and huge out-of-court settlements with
FDIC and Kake Tribal have never been disclosed. He encouraged
auditors to compare the pitiful benefits received by shareholders
to the high salaries received by management and board members. His
solution to Sealaska's shareholders concerns is to liquidate and
close the entire operation.
ARCHIE NIELSEN, a Sealaska and Shee Atika shareholder, testified
that while in Seattle last year, he ran across two yards filled
with thousands of board feet of Sealaska timber that no one wanted
to buy. The issue was never acknowledged by the Sealaska board.
If shareholders had a voice, something with bite, they would not be
supporting SJR 28. He said he hoped, in the near future, there
will be someone in the Division of Banking and Securities that will
stand up for shareholders.
HAROLD RUDOLPH suggested amending SJR 28, on page 2, line 10, the
"one-third" should be changed to "two thirds" since 70 percent of
Alaska Natives live at or below the poverty level. He stated he
supports SJR 28 and questioned why no one from the regional
corporations was testifying on this resolution. He is involved in
a lawsuit with CIRI and hopes it will reveal "what these people are
made of."
ROBERT MONETTE testified in full support of an audit, and said if
the word "audit" could be replaced with the word "accountability"
it would alleviate his concern that the regional corporations have
a level of authority and responsibility for others lives yet no
accountability to those people. He noted two regional corporation
executives earned $400,000+ and $900,000+ in 1996. Shareholders
cannot afford to hire attorneys to challenge the lack of regional
corporation accountability. Shareholders are looking to the
Legislature as their last resource.
Number 155
VIRGINIA RUDE testified in support of SJR 28. She has encountered
many difficulties as a corporate shareholders and is concerned that
the ordinary shareholder is effectively blocked from running for
corporate board seats because of the expense and intimidation by
corporate policies and the Division of Banking and Securities.
Shareholders need protection and equal opportunity to participate
in their corporations as intended in ANCSA. Passage of SJR 28
would immediately make the boards of directors accountable. Right
now, CIRI shareholders do not even know who the directors are.
Passage of SJR 28 will not divide the people, but will bring them
together at long last. Alaska Natives will have a goal of
conserving whatever is left. Last, passage of SJR 28 will show
that lawmakers do care about the original inhabitants of this great
land.
DIANE SHRADER, a CIRI shareholder, said shareholders deserve full
accountability and responsiveness from their corporations. She
believes CIRI speaks half-truths to the stockholders and general
public in its newsletters, information updates, and annual reports
for shareholders. For example, CIRI has made burial services
available to all shareholders regardless of where they reside,
however to be eligible for burial assistance one must have proof of
one-quarter Native blood, one cannot receive certain types of
public assistance and must not have been suspended from any
assistance program. This eliminates 70 percent of CIRI
shareholders. Other criteria eliminate many other shareholders.
CIRI is giving false and misleading information to its shareholders
and the public.
DUNE LANKARD, tribal spokesperson for the Eyak Division of Elders
and Counseling in Cordova, and shareholder and past director of the
Eyak Village Corporation and a shareholder of the regional
corporation called Chugach, spoke on behalf of the last full-
blooded Eyak, Chief Marie Smith Jones. Eyaks wholeheartedly
support SJR 28. One of the problems Eyaks have had to deal with is
the private Native corporation exemptions from the law - Eyaks call
it the exemptions of sovereignty. ANCSA regional corporations and
all 226 village corporations are able to escape scrutiny by their
shareholders. No environmental or economic impact statements are
required, nor are contracts, annual operating plans, restoration
bonds, or executive session minutes. Shareholders cannot evaluate
or monitor their performance without such invaluable information.
Alaska Natives' sovereignty is not for sale. When the joint
venture corporations do business with their regional and village
corporations, they are selling Alaska Natives' sovereignty. They
indemnify themselves from any wrongdoing by putting together
resolutions and by-laws that protect them from any bad decisions.
TAPE 97-24, SIDE A
Mr. Lankard continued. There is a good chance that the only jobs or
revenues that could be traded for the shareholders will be through
the extraction of their natural resources, again destroying the
land for profit. It is necessary to investigate CIRI's stock
options and reverse the congressional amendment that allowed stock
options be established without a shareholder vote. The U.S.
Supreme Court could show true leadership by respecting the special
government to government trust relationship between the Alaska
tribes and the federal government in honor of the sovereign
trusteeship by refusing to hear this appeal. The U.S. Supreme
Court should also exercise its power and invoke the trust doctrine
to review federal actions. The 1971 Alaska Native Claims
Settlement Act and its amendments are federal actions that need
immediate review.
MIKE BOSKOSFKI, a CIRI shareholder, testified from Ouzinkie in
support of SJR 28. He believes people should show up for Tribunal
meetings.
SHARON KAY, a CIRI shareholder, testified in support of SJR 28.
CIRI shareholders have a great many concerns about its'
corporations managers and directors. CIRI stated that shareholders
would get a final vote on their favorite options. If that is so,
then CIRI should remove the word "advisory" from the vote. She is
requesting a certified copy of CIRI's 1996 tax returns.
Number 104
KATHY HONEA, a Sealaska shareholder, testified in support of SJR 28
because although this is one small issue, elders have made many
attempts to try to get information about the Sealaska as
shareholders. Because shareholders are not versed in corporate
law, they are not heard. By the time shareholders get versed in
corporate law, there will be no corporation left. An audit will
bring information to light, and elders will finally get
recognition. The young people who are very dissatisfied and do not
want to stand up for what they feel is right because it separates
them. If nothing needs to be hidden, there is no reason to fear an
audit.
SENATOR WARD commended Ms. Honea for speaking well for her parents.
MICHAEL PATTERSON, a Sealaska and Goldbelt shareholder, commented
that the Sealaska board member who testified earlier admitted that
Alaska Natives are the poorest nation of people and that it is the
corporation's duty to protect Alaska Native's assets. He
questioned how board members can accept bonuses that are more than
he will ever see in his lifetime, how they can watch their elders
pass away without ever receiving what they were promised, and how
they can build expensive homes in Juneau and out-of-state in good
conscience. He noted he called CNN and asked for national news
coverage of this issue.
Number 210
PAULETTE MORENO testified from Anchorage in support of SJR 28. She
asked what brings her people before the committee at this time with
such passion, conviction and determination to see things change.
Alaska Natives have watched ANCSA and the people who say they
represent and lead them for the last 20 years. ANCSA was supposed
to help all Alaska Natives, but has only helped a few. The reason
Alaska Natives are before the committee today is because they are
raising a new generation who needs change. Alaska Natives are a
powerful and strong people, with some of the brightest, well-
educated people who are unifying their voices for the purpose of
making ANCSA corporations accountable for their decisions. The
introduction of SJR 28 has given hope for a brighter future.
DOROTHY ZURA WILLIAMS, a full-blooded Tlingit, testified that two
recall petitions have been filed against Sealaska's current board
and noted she is the very first newly-elected Goldbelt director
that was voted without discretionary votes. She is proud to fight
for change for her people, which can occur if the corporate offices
are audited. If corporations are honest enough, they will change.
The members of the audience have attended this hearing at their own
expense, while Sealaska's CEO has written the committee a letter at
shareholders' expense. To regain the confidence of shareholders,
discretionary voting needs to be eliminated and the board of
directors needs to do what the shareholders ask and are paying them
for. Sealaska's financial statements do not reveal the cash flow
and where the money that came from the NOLs went. Sealaska's board
members run SERHC, Tlingit and Haida BIA affiliates and
shareholders are afraid they will lose their jobs if they talk.
Number 305
JULIE GONZALES testified on behalf of her mother and brother who
are full shareholders in Sealaska and Goldbelt and fully support
SJR 28. For years they have watched other corporations distribute
large dividends, while their dividends were very small. When they
received their dividends, their welfare benefits would be cut. The
corporations should give more money to the shareholders, or at
least build affordable housing for low-income and middle class
people. As a family on welfare, without help from ANB Camp 2, they
would not survive.
FRANK L. JONES, Sealaska shareholder, said he has had polio almost
all of his life, and has not been able to work for the past three
years. For the past two years he has been living in a tent. He
has explained his situation to the BIA, Sealaska and Tlingit and
Haida who offered no help. He supports SJR 28.
KATHY POLK stated she was the chairperson for Goldbelt
Shareholders' Future and explained the purpose of the recall effort
was to demand corporate change. She read the following testimony.
"I believe that this platform, if it was enforced by law, for our
corporations, I believe that the disenchantment of our people will
level off, because I really believe in this platform. It has
helped our people and it made a lot of positive changes within
Goldbelt Incorporated. They have adopted rules that they no longer
use discretionary votes. I would like to endorse to you and ask
you if you would look into an election repeal for the Native
corporations so that we could do away with discretionary votes. I
am really against the way the elections are run along with the
other people all over the State of Alaska. We have people that are
in power right now that have been there since the beginning of our
corporations. I believe that the people should be responsive to
this platform and it should be made available to anyone who would
like to see it. There are a lot of people who will not come
forward to speak because of what Dorothy said in regard to the
people being afraid and intimidated by our people in their jobs
with BIA and Tlingit and Haida - the Native corporations. I would
recommend that we would consider having a petition circulated
amongst all of the Natives for every corporation that they state
whether they are in favor of this bill or not. All it does is it
will come forth and tell the legislators, the lawmakers of the
United States Government what the people of Alaska feel. It is
straightforward. We are very proud to be shareholders of our
corporations but we do need change. It is time, it's time for
change. We have children who are growing up and it is time for
them to belong to our Native corporations. I really ask you to
take this bill very seriously - this resolution - it is very
important to our people. It is the first hope that we have had and
I believe that the recalls will be a thing of the past if they
would adopt this platform - all the Native corporations. If they
would adopt this platform we are going to see peace and love and
unity within our corporations and we would not have to be wasting
this beautiful day sitting here trying to dispute it. Thank you
for your time."
Number 390
SENATOR HALFORD commented he gave Chair Green a copy of the legal
report from Tam Cook, Director of the Division of Legal and
Research Services, that contain the special provisions in the
Securities Act that just apply to Native corporations. There are
two of concern: one is an exemption from the prohibitions on self
dealing that are otherwise a corporation; the other allows for the
adoption of by-law changes to indemnify the board of directors
against stockholder action by a much lower vote than any other
change. He stated he probably will be drafting legislation to
repeal those two special provisions that work against stockholders
because that is a problem within state law.
CHAIRMAN GREEN announced the Senate State Affairs Committee will
hold SJR 28 over, and depending on requests to provide testimony
from representatives of the regional corporations, will rescheduled
the bill accordingly. She asked interested parties to direct
inquiries to the Senate State Affairs Office and adjourned the
meeting at 5:47 p.m.
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