Permanent Fund risks political corruption with unwarranted blackout on in-state investments

With no public review or public discussion, the state bought part of Peter Pan Seafood Co. a year ago, through an investment fund largely bankrolled by the Alaska Permanent Fund.
The same state-backed fund also bought a small part of Astra Space Inc.,  the company that leases the state-owned Kodiak rocket range, again without public involvement or discussion.
We only know about the Peter Pan and Astra deals because one of the companies assigned to invest $100 million in Alaska for the Permanent Fund decided it was in its best interest to publicize a few facts, absent dollar amounts and other important specifics.
A second investment company also assigned to invest $100 million of public money in Alaska has announced only two deals—$10 million for a Tetlin mining venture and an undisclosed amount for a new cargo terminal at the Anchorage airport.
Additional information about the dispersal of public money is being withheld by the state.
With the Permanent Fund considering a goal of expanding in-state investments into the billions, the management and trustees need a more transparent approach.
The corporation claims that these details are allowed to stay secret because of a state law that says “information that discloses the particulars of the business or affairs of a private enterprise or investor is confidential . . . ”
There is nothing about identifying names and amounts of state money invested in a business the “particulars of the business or affairs of a private enterprise,” just that public money has changed hands.
Disclosure is necessary for a healthy system of checks and balances.
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.
The Permanent Fund management and trustees get away with this because the Legislature is not paying attention. There are more things to think about regarding the Permanent Fund than the size of the dividend, which is the lowest common denominator in Alaska politics.
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.”
Relying mostly on $100 million from the Permanent Fund, McKinley Capital Management created what it calls the “Na’-Nuk Investment Fund.” Separately, the Permanent Fund gave $100 million to Barings for what that company calls the “Alaska Future Fund.”
Peter Pan Seafood says that the Na’-Nuk Investment Fund LPand two other companies acquired the seafood company 11 months ago.
McKinley Capital Management, an Anchorage company now headed by Rob Gillam, son of the late Bob Gillam, manages the Na’-Nuk Investment Fund.
Gillam told the Anchorage Economic Development Corp. in June that the acquisition of Peter Pan Pan Seafood was “an opportunity to take our brand and our resource back.”
“We were pretty excited and honored to bring a storied name back to Alaska, back to the United States from a Japanese conglomerate, great group, great firm, lots of respect for them, but they didn’t really care about Alaska,” Gillam told AEDC.
“And yet all the resources of Peter Pan come from Bristol Bay, come from Valdez, come from Port Moller, you know . . .  come from King Cove. They didn’t care about King Cove.”
“Again, with respect, we are friends and neighbors with King Cove. We care about King Cove. That really is an opportunity to use our resources for our benefit and our job opportunities,” he said.
Gillam may be exactly right. The investment in Peter Pan by the Alaska Permanent Fund Corp., anchor of the Na’-Nuk Investment Fund, may be a profitable use of state funds.
Likewise, the investment in Astra for launching rockets could be a great thing for the state.
But no matter how attractive these investments may be, treating the details like state secrets is dangerous for the future of the Permanent Fund and for Alaska. It’s an invitation to political corruption.
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