The Alaska Permanent Fund trustees made a reasonable call Wednesday in capping in-state investments at $200 million, the amount they have already committed to about 20 investments, some of them with tenuous ties to the Alaska economy.

The potential for political corruption and conflicts of interest are two of the biggest problems with this program. Those remain even with the fund now saying it won’t add to the pot of money to promote Alaska projects.

Secrecy is a third big issue, one that remains unresolved. This was clear in 2019 when the fund refused to say how much its managers would get paid for investing the $200 million.

It was clear in 2021 when the fund said that all details of the investments could be kept secret.

And it was clear in early 2022, when the fund—under legislative pressure—said that the companies it hired had voluntarily released limited public information about the investments, but that there was no legal requirement for them to do so.

The dollar figures invested in a range of companies remain secret, except in cases where the recipients have used the investments for public relations purposes.

The $10 million public investment in the Manh Choh project near Tetlin is an example of using the state investment for political leverage.

We know that Contango ORE collected $10 million because the company highlighted that as a signal to private investors that the Dunleavy administration is backing the trucking plan.

In the tug-of-war between the desire for secrecy and the need for transparency, it would be easier to accept secrecy if the Legislature would start doing its job and provide oversight of the Alaska Permanent Fund Corporation.

State law mandates an annual “operational and performance evaluation of the Alaska Permanent Fund Corporation investments and investment programs” by the Legislature, but that has never happened.

The decision by the trustees to hold the line on in-state investments was expected, given a discussion at a February meeting in which three members made it clear they didn’t want to add to the program.

Of the $200 million allocated for in-state investments, $100 million went to Barings and $100 million to McKinley Capital Management, the Anchorage firm established by the late Bob Gillam that is now led by his son Robert A. Gillam.

Barings established the Alaska Future Fund, while McKinley started the Na’-Nuk Investment Fund, with visions of establishing a second fund with $250 million more. A second Na’-Nuk fund, without Permanent Fund backing, was launched this year. Doyon is an investor.

The executive staff of the Permanent Fund corporation have been less than enthusiastic about the in-state program, mainly because the geographic limits that come with an in-state investment fund mean that investment options will be limited and that higher returns—the ultimate goal—are usually available elsewhere.

The money has been invested and while the returns are not fantastic as of this date, the trustees and the investment managers are not about to call for a sale of these assets.

Three of the six trustees—Steve Reiger and Dunleavy commissioners Jason Brune of DEC and Adam Crum, the state revenue commissioner—said they wanted to make a formal declaration in February that no more money would be put into the in-state program.

Rieger, a former legislator who is vice chair of the trustees, made the strongest case for not allocating more millions into in-state investments.

The limited range of possible investments, the political problems created by putting investment dollars into Alaska operations and performance questions were the main concerns. The issue came up again with a resolution this week.

One of the six trustees, Ellie Rubenstein, recused herself from discussing or voting on the topic, perhaps because she has a conflict of interest as a co-founder of PT Capital, a company that has received some of the in-state investment money. Rubenstein is one of the children of Alice Rogoff and David Rubenstein.

That left former Attorney General Craig Richards as the only outspoken defender of the in-state investment program, an operation he has heavily promoted since this 2018 resolution.

The board approved an Alaska Investment Policy in 2018 that would have led to about $2.4 billion invested in Alaska by now had it been followed. Richards, who was appointed by former Gov. Bill Walker and reappointed by Gov. Mike Dunleavy, is the only trustee still on the board since 2018.

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