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.