The Alaska Permanent Fund is facing the most serious leadership crisis in its history, triggered by the behavior of trustee Gabrielle Rubenstein, who can’t seem to separate the mission of a trustee from that of an active investor.

This will damage the reputation of the Permanent Fund and destroy public confidence. It will make it more difficult to hire and retain first-rate employees. It will create another level of risk and reduce returns. The cost to Alaskans is impossible to calculate.

The chief investment officer of the fund, Marcus Frampton, took the extraordinary step in January to privately document what he believes are the serious conflicts of interest that Rubenstein has brought to the operation of the fund. The Alaska Landmine obtained a copy of that document and others.

Rubenstein has complained that some corporation personnel should be fired, charges that might prompt a “reasonable person” to ask if the complaints are retaliation for the corporation not acting on her investment ideas, according to a top executive of the fund.

Gov. Mike Dunleavy recruited Rubenstein for the volunteer trustee position in 2022. Legislative confirmation is not required to serve on the board, however, and there was no independent vetting of Rubenstein.

Her main qualification is that her father is billionaire David Rubenstein, 74, one of the richest people in the United States and a co-founder of the Carlyle Group.

Rubenstein has a direct pipeline to Dunleavy. In January, she was telling corporation staff members that Ethan Schutt, the chair of the trustees, would not be reappointed by Dunleavy when Schutt’s term expires in June.

Schutt is the most responsible and diligent member of the trustees.

Frampton’s detailed account surely puts his job at risk. It may be that the governor’s office and Rubenstein will try to make his position untenable and he will look for another job.

But the email is also a way to preserve his career, as he will be able to say in the future that he called out conflicts of interests that are damaging the fund.

“I think the most serious topic and perhaps more uncomfortable to address are Trustee Rubenstein’s conflicts of interest in the private credit space,” Frampton wrote.

“As we all know she has made dozens upon dozens of investment manager referrals in her 18 months on the APFC board,” Frampton wrote. “Many of these have been in the private credit space and my team has declined to pursue all of them.”

Frampton wrote that Rubenstein has pressured fund officials to make investments and do business with firms in which some of the principals have investments in Manna Tree, Rubenstein’s private equity firm, and are connected to the Carlyle Group, the company co-founded by her father, David Rubenstein.

“Private credit” is the business in which financial institutions that are not banks loan money to businesses that may be highly leveraged and cannot borrow money through corporate bonds, according to this review from the Brookings Institution.

Frampton mentioned three specific proposals that came from Rubenstein in which she has a conflict of interest:

TCW: The largest equity owner of TCW is David Rubenstein, Frampton wrote, and several of its principals are investors in Manna Tree, Gabrielle’s firm. He wrote that Rubenstein “texted me with a fairly emphatic pitch for APFC to pursue an investment in private credit with TCW.” The Permanent Fund reviewed the idea and declined. TCW is a subsidiary of the Carlyle Group.

CHURCHILL: This is a private credit firm run by Ken Kencel, a former Carlyle executive who is a client of Manna Tree. “This is another private credit firm that she encouraged APFC staff to review.” Frampton included an email series in which Rubenstein asked Kencel, “all good on APFC?” Frampton said this was “essentially asking him how his efforts on soliciting money from APFC is going.” The email continued about her efforts to schedule meetings between the investment staff and Kencel.

GOLDMAN SACHS: “I don’t know the extent of Trustee Rubenstein’s relationship with Goldman Sachs, but there appears to be a pre-existing relationship from before she was on APFC board based on the number of times they come up.” Frampton quoted an exchange in which Rubenstein expressed frustration that the private credit staff of the fund was not considering Goldman Sachs for more business.

Frampton concluded by saying that a “reasonable person looking at the facts here might question whether she has some conflicts that are clouding the independence of her positions here. A reasonable person might also ask the question of whether she would be more enthusiastic about APFC personnel handling private credit investments had we elected to invest in TCW, Churchill or Goldman Sachs private credit funds. A reasonable person might wonder if her current position is some sort of retaliation for rebuffing these investment referrals.”

A reasonable person would ask why Rubenstein remains one of the six trustees of the Permanent Fund, responsible for overseeing the most important financial institution in Alaska.

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