The text below is what the Alaska Permanent Fund Corporation included in its 2021 annual report about the Alaska investment program, which could be called the “Keeping Alaskans in the Dark” section of the document.

At least $124 million of the “initial allocation” of $200 million has been invested, but the Permanent Fund won’t say where the money has gone and why.

The “increasing volume and quality of opportunities our program partners are delivering” should not be kept secret from Alaskans.

The Permanent Fund has talked of investing billions more within Alaska, modifying its operations somewhat to serve as a development bank. Whether or not it keeps pursuing that vision, the secrecy is unacceptable.

The Legislature provides next-to-zero oversight of the Permanent Fund and has been unwilling to invest in the external monitoring and analysis that the state’s largest source of income demands. If and when a scandal erupts, then the Legislature will act.

I’m not suggesting that there is anything wrong with the in-state investment plan or offering any opinion on the merits, aside from the lack of transparency. I don’t know enough about it.

The Permanent Fund trustees approved a resolution setting up the in-state development plan in 2018, saying the goal should be to find investments “that provide a rate of return on investment consistent with the expected risk/return profile of similar investments outside of Alaska.”

That definition is a broad one that leaves plenty of wiggle room as “risk/return” includes subjective elements that are open to debate along with the meaning of the word “similar.” In selecting the recipients of the $200 million, McKinley Capital and Barings, the term “compelling investments” is tossed about.

Developing the Ambler mining district or the Pebble Mine is compelling to some Alaskans.
Abhorrent to others.

Compelling is subjective.

The state law that the in-state policy is supposed to implement is not written exactly the same way, saying Alaska investments should be pursued if they have “a risk level and expected return comparable to alternate investment opportunities.” Alternate is not the same as similar or compelling.

The backup documents for the 2018 resolution said the fund should seek to have 5 percent of its assets invested in Alaska by 2023. Five percent of $80 billion is $4 billion.

There is no public record I can find that says the fund intended to keep the details of in-state investments secret.

In 2019, before the $200 million allocation, the fund said it had $672.8 million in “Alaska investments,” more than a half-billion of which was with McKinley Capital Management in Anchorage, the same firm that set up the Na’-Nuk Investment Fund.

The largest in-state holding in 2019 was the $442 million invested with McKinley Global Equity. The fund also had $80.5 million invested with a McKinley fund that specializes in the Middle East, Africa and South Asia.

In the October financial report, the fund said it had more than $400 million invested with McKinley Capital Managment in global equities.

Speaking to the Anchorage Economic Development Corporation in June, Rob Gillam, CEO of McKinley Capital, talked up the idea of having the Permanent Fund, the state pension systems and other large funds—totaling $200 billion or more in assets—all invest 5 percent of their holdings in Alaska. That would be $10 billion of public money.

Gillam said Alaska resources are abundant and there are opportunities to invest in oil and gas, tourism, mining, other industries and infrastructure.

“By some accounts, we’re 50 years behind the infrastructure development of the rest of the United States. Translated to dollars, that’s probably $100 billion. That’s $100 billion needed for ports and railways and bridges and roads and other types of infrastructure, including technology infrastructure, think broadband and so on,” Gillam said.

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