04/27/1998 02:15 PM Senate JUD

                                                                               
            SR   2 - WORLD PLUS, INC., INVESTIGATION                           
                                                                               
                                                                               
CHAIRMAN TAYLOR explained SR 2 relates to the World Plus Inc. (WPI)            
ponzi scheme perpetrated in Fairbanks. He asked if anyone from the             
Department of Law was prepared to testify on this legislation.                 
Hearing no one, CHAIRMAN TAYLOR commented that the silence from the            
department on this issue was deafening.                                        
                                                                               
Number 71                                                                      
                                                                               
CHAIRMAN TAYLOR asked MS. PAT DAVIDSON, Legislative Auditor to come            
forward and give the committee an update.                                      
                                                                               
MS. DAVIDSON testified that there was a Legislative Budget and                 
Audit meeting scheduled for April 30, 1998, at which time she would            
provide information and a briefing to that committee.                          
                                                                               
CHAIRMAN TAYLOR asked MS. DAVIDSON how the audit was going.                    
                                                                               
SENATOR ELLIS asked CHAIRMAN TAYLOR to clarify what MS. DAVIDSON               
could discuss with the committee and what would be inappropriate to            
ask of her. CHAIRMAN TAYLOR suggested committee members might ask              
whatever they liked, though he was not sure what MS. DAVIDSON would            
be able to say.                                                                
                                                                               
Number 100                                                                     
                                                                               
MS. DAVIDSON reported that the auditors don't generally talk about             
audits in public while they are conducting them, especially before             
they present their report to the Budget and Audit committee. She               
indicated she couldn't really give the committee any information at            
this time.                                                                     
                                                                               
CHAIRMAN TAYLOR stated that the committee has a prior report with              
findings indicating an apparent conflict of interest within the                
Department of Law. He asked if, after further investigation, the               
auditors had changed that original opinion.  MS. DAVIDSON replied              
she was unable to answer that question due to the confidentiality              
of the audit process. CHAIRMAN TAYLOR asked MS. DAVIDSON if they               
could defer this matter until Thursday, after her report to the                
Budget and Audit Committee, giving the committee time to decide                
what information could be released. MS. DAVIDSON said that might be            
premature, as she will need to brief the Budget and Audit committee            
as well as submit to them a written report. She said she is in the             
process of preparing the report, but she anticipates it might take             
a bit longer due to the ongoing actions against WPI.                           
                                                                               
CHAIRMAN TAYLOR asked if the class action suit filed in the case               
against the State of Alaska was impacting MS. DAVIDSON's ability to            
conduct the audit. MS. DAVIDSON replied they are getting                       
cooperation from all departments involved and she thinks the                   
difficulty posed by the suit will lie in determining what is and               
what is not public information. CHAIRMAN TAYLOR remarked this was              
understandable and he was having the same problem with information             
he received from the Department of Law in relation to the Alaska               
Public Safety Information Network. He said his concern was how                 
people in the state would find out that the chief prosecutor in the            
state failed to prosecute anyone in this case if he couldn't get               
answers in a legislative hearing.                                              
                                                                               
MS. DAVIDSON said that at some point in time, the auditors could               
make a public report. CHAIRMAN TAYLOR asked if that would be before            
the end of this legislative session and MS. DAVIDSON replied that              
she doubted that.                                                              
                                                                               
Number 175                                                                     
                                                                               
CHAIRMAN TAYLOR expressed frustration with his inability to access             
the information necessary to act on behalf of the people. CHAIRMAN             
TAYLOR said he wants a legal opinion from the Department of Law on             
who they think their client is. He said everything he has seen so              
far indicates that the Department of Law thinks that the state                 
employees and their agencies are their clients and so                          
attorney/client privilege applies. CHAIRMAN TAYLOR said this is not            
an appropriate use of this privilege and not a reasonable reason to            
prevent the transmittal of information to the auditors and the                 
Judiciary committee. CHAIRMAN TAYLOR understood MS. DAVIDSON                   
couldn't tell the committee anything at this time but hoped when               
the Budget and Audit committee allowed her to do so, she could                 
provide them with a preliminary report. CHAIRMAN TAYLOR said he was            
primarily concerned about the statement made in the original report            
regarding an apparent conflict of interest and the failure to                  
prosecute on the part of the Attorney General.                                 
                                                                               
Number 215                                                                     
                                                                               
MS. DAVIDSON reported that her office drew their initial                       
conclusions entirely from public information, especially the                   
statement made by the Attorney General regarding why the state                 
deferred prosecution to the federal government in this case. She               
said they did not question this decision, only suggested that when             
the federal authorities were done with the case, someone with a                
state perspective should look into it. CHAIRMAN TAYLOR thanked MS.             
DAVIDSON and said he hoped they could take this up again in order              
to clear up some lingering questions.