Permanent Fund's $29 million Peter Pan fiasco deserves a legislative review
The decision by the Alaska Permanent Fund Corporation to invest $200 million into companies with some connection to Alaska has been a mixed success at best.
Nat Herz, Hal Bernton and ProPublica have a good story today on how the decision by Rob Gillam of McKinley Capital Management to put $29 million of state money into Peter Pan Seafood went wrong.
Their reporting details a process flawed by bad policy from the start.
The $29 million disclosure is new. It shows that nearly one-third of the $100 million assigned to McKinley was placed in a single investment. Had the fund disclosed any details at the time this investment took place, the danger signals coming to light now would not have remained secrets.
I wrote numerous columns about the fund’s in-state investment program in 2021-2022, objecting to a pattern of excessive secrecy that the fund claims was mandated by the Legislature in 1980.
The Permanent Fund corporation has consistently declined to release the specific amounts invested in companies by McKinley and by Barings, each of which had $100 million to place into Alaska-linked companies.
The Permanent Fund claimed at first that all information about the investments made by McKinley and Barings were secret, including the names of the companies. The state claimed that it would be entirely up to the two financial management companies to decide what Alaskans would be allowed to know.
As I wrote here on December 6, 2021: “The real danger is that secrecy can be a tool to hide public investments from the public to avoid controversy and public discussion. It can also be a tool that allows political influence to decide who gets the benefit of state money.”
Former Attorney General Craig Richards said in December 2021 meeting that because the $200 million was 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 it’s 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.
“Two former Permanent Fund employees told ProPublica that staff members considered the proposed in-state investment plan a distraction from their mission to maximize returns regardless of geography — and that they made that position clear to board members in private,” Herz and Bernton wrote.
At a minimum, we need a real examination of why Permanent Fund secrecy prevented a public discussion.
It is one more reason why the Legislature needs to change the administrative structure of the fund and revamp the laws governing its board.
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