The Alaska Permanent Fund Corporation claims it must keep $200 million worth of in-state investments secret, though the money belongs to the public, because of a line inserted into state law 41 years ago.

It’s a dubious claim, one that deserves public examination, as well as the immediate attention of the Alaska Legislature.

I’ve written six columns on this topic in the last week because the lack of transparency with in-state Permanent Fund investments made by Barings and McKinley Capital is bad public policy.

Alaskans deserve to know where their money is going.

After lengthy presentations to the Permanent Fund Board of Trustees Wednesday in which Barings and McKinley Capital declined to mention the companies that have received $150 million or more in public money so far, the trustees took time to defend secrecy.

Former Attorney General Craig Richards, now the chairman of the trustees, said “there’s been some media around how we treat our investments.”

He said because the $200 million is managed by third parties, “We don’t disclose all the details of the fund, but instead leave it up to the fund themselves to decide what to disclose or their investors.”

Richards asked Permanent Fund Corporation attorney Chris Poag to explain that secrecy is “not just a matter of policy, but a matter of law.”

“It isn’t, as its been suggested, that the board or the staff are choosing secrecy. The board or staff are complying with state law, a state law that’s actually been very beneficial to the Permanent Fund and in turn, Alaskans,” Poag said.

Poag said the investments have to remain secret because the private equity world runs on secrecy. And because state law requires secrecy.

Poag claimed the 1980 Legislature “foresaw this issue and provided a protection that would allow for the creation and the success” of private equity investments by the Permanent Fund, allowing the state to hide investments.

“Turning to the brilliance of the Alaska Legislature, it seems as if they foresaw this. The information that they made confidential is the exact information that our private equity partners expect us to maintain confidentiality on,” he said.

The idea that the 1980 Legislature “foresaw” the need to keep in-state private equity investments secret in 2021 is not brilliant.

It’s this sentence that the Permanent Fund says justifies secrecy: “Information in the possession of the corporation is a public record, except that information that discloses the particulars of the business or affairs of a private enterprise or investor is confidential and is not a public record.”

He said that line “requires us to maintain the confidentiality of what I’ll deem proprietary information.”

I suggest polling the surviving members of the 1980 Alaska Legislature about whether their public access master plan was to keep Alaska investments hidden from the public.

Anything and everything is deemed proprietary, according to the opinion the Permanent Fund has long promoted, all based on a sentence that doesn’t say that exactly. It certainly doesn’t forbid naming businesses that get state money and how much.

This is an urgent item because the Permanent Fund, long focused on investments Outside and worldwide, wants to invest billions in Alaska, starting with the $200 million. Secrecy breeds suspicion and removes a natural part of the checks and balances needed for oversight.

Many enterprises that the funds could invest in secretly have political consequences and implications that should be considered in the light of day.

While Poag said that private equity funds invest in companies to either fix problems or because they see a chance for growth, he made the case for transparency with public money better than I can when he highlighted what comes with the normal secrecy.

“They invest in these companies, they fix them up or improve their prospects and then they exit when the appropriate time exists. But the next level, though, is those private companies are not required to disclose this information, they’re private companies. And as Mr. (Rob) Gillam (CEO of McKinley Capital) explained, a private company may not want it to be public knowledge that a private equity fund has invested in it and seeks to fix it up. Its customers might not appreciate that there’s a problem. Or alternatively, that private company may just choose to have that information confidential,” Poag said.

As managers, Barings and McKinley Capital are responsible for deciding where the money goes and to which companies, he said.

“That fund manager, that’s their private affairs, that’s their decision. And I can tell you in the seven years I’ve been here, every private equity fund has a confidential information requirement. That confidential information requirement will not let us disclose the public companies” the Permanent Fund invests in, he said.

Poag said, “it’s a condition of access to these funds.”

It is a condition of access to most private equity funds, but it didn’t have to be a condition of access to those set up at the request of the Alaska Permanent Fund Corp. with $200 million.

The Permanent Fund had the option of requiring Barings and McKinley Capital to reveal to the public where they would be investing Alaskans’ money. The two funds were set up specifically to handle deals in Alaska. They are not typical private equity funds.

Barings and McKinley Capital could have opted not to take the $200 million and the money they are making as managers if a limited disclosure requirement was a deal breaker.

I doubt that any of the recipients of the $200 million would turn down the money if their names and the amount they are getting becomes public.

This is not about revealing all of the inner workings of the businesses, though Poag presented this as an all-or-nothing situation with dire implications. It’s also not about private equity funds that are doing business in the Lower 48 and around the world.

It’s about two specific funds set up with $200 million from the Alaska Permanent Fund Corporation that are investing in Alaska.

As the source of the money, the Permanent Fund could have exerted control in ways to build public confidence. That it chose not to is a mistake.

Poag told a horror story about so-called “FOIA investors,” institutions that rely on Freedom of Information Act disclosures in other jurisdictions to intrude on the private business of those in private equity and get information they can use to turn a profit.

To suggest that giving Alaskans some basic information about in-state investments would automatically ruin an entire segment of investing that has been exceptionally profitable for the Permanent Fund is clearly false. To choose to withhold that information is a disservice to Alaskans.

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