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Alaska Native Corporations suffer devastating loss of billions in federal contracts

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As I predicted in 2010, federal money to Alaska Native Corporations (ANC’s) has begun to dry up.  This year, the drop has been dramatic, falling from $4.4 billion in fiscal year 2011 to $1.8 billion for the first three quarters of 2012.

The gravy train for the ANC’s, sole source contracts over $20 million, took even a bigger hit.  These no bid contracts, illegal in the European Union and widely criticized in the US  due to suspicions that “illegal or immoral means [are used] to exclude competitors (usually by cronyism or bribery),” cratered from $2.5 billion in 2011 to $587 million in the first three quarters of 2012.

Why has this happened?  Because of limitations imposed after Senate investigations revealed that ANC’s “passed much of their work to large, non-Native companies, failed to employ Alaska Natives to work on the contracts and returned only minimal benefits from the businesses to Alaska Natives.” Sound familiar?

To make matters worse for Alaska’s native corporations in coming years, Senator Claire McCaskill, chairwoman of the contracting oversight subcommittee, is working to ensure that even fewer of these sole source contracts are awarded to the ANC’s in 2013.  Her objective is to “eliminate ANCs’ ability to receive sole-source contracts larger than what other companies get in the Small Business Administration’s 8(a) Business Development program.”

All of this has led to additional workloads for procurement officials as many contracts, formerly sole source, are now open to competition.  But it has also brought significant federal cost savings, the objective of the budget hawks who have pushed for the contracting reforms.

Given the impending loss of even more federal dollars and the fact that their current contracts “fail to employ Alaska Natives,” what should the ANC’s do?  My perspective is that ANC’s need to abandon crony capitalism and join forces with Constitutionalists who seek to regain state control over natural resources.  Removal of federal regulatory restraints on resource development within the State of Alaska would spur explosive economic growth.  The ANC’s could then leave the federal handouts behind and focus on creating real, productive jobs for shareholders and other Alaskans.

The true power of self determination that so many Alaska Natives fought for at ANCSA’s inception is getting back more control over our lands here in Alaska, so that all those who live here can chart their own course, together, as Alaskans.

 

Time for Alaska’s Congressional Delegation to Stop Discriminating Against Alaska Natives

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For the last four decades, Alaska’s congressional delegation, in concert with so-called Native leaders, has taken actions that discriminate against Alaskan Natives.

In 1976 corporate leaders successfully exempted Native corporations from federal security laws. When seeking the exemption, corporate officials told Congress they would obtain State legislation that would provide their shareholders protections from corporate mismanagement, misrepresentations and omissions. Of course, this false promise was never fulfilled. To this day, Native shareholders receive no protections from federal security laws and the State of Alaska refuses to enforce the Corporate Code against Native corporations.

Fundraisers and corporate perks to politicians paid off in 1986 when Senator Stevens enacted special legislation for the Native corporations to sell net operating losses (NOLs). Sen. Stevens told Congress the legislation would cost the federal government a loss of about $50 million. His payoff to the corporations ended up costing the US government more than $1.25 billion. It was reported that Native corporations sold properties at losses of approximately $3 billion. Native stockholders were never informed of the properties that were sold, selling prices, appraisals, losses, or even the names of the purchasers of the properties. And the shareholders did not get to vote on the sales of their properties at huge losses. For any non-native corporation, this would have violated a host of federal and state disclosure laws.

Native corporations spent large sums of corporate money to lobby for the ANCSA Amendments of 1987. Many of the amendments were harmful to Native shareholders. The amendments extended stock restrictions, extended the exemption of federal security laws, and shareholders lost rights that were included in ANSCA. This was done without the knowledge or consent of Native shareholders. The amendments to ANCSA have placed corporate management in a position where they control and dominate their shareholders.

In 2010, Native corporations directly donated over $1.2 million (and untold millions in indirect donations) to defeat Joe Miller who had consistently argued in favor of Native shareholder rights throughout his campaign. In 2012 CIRI hosted a fund raiser for Senator Begich and rose over $100,000. Native corporations do not disclose the amounts of corporate funds that are donated to politicians and the donations are not brought before the shareholders for a vote.

ANCSA divided Alaska Natives. Natives born before the Act were directly awarded shares but those born after the Act were not. The number of shareholders is increasing in the Native corporations but at the same time, the number of shares held by Native shareholders is decreasing. For example, CIRI’s original shareholders numbered 6,280 and now numbers over 8,100. Approximately 500 shareholders are non-natives and 1,000 shareholders own 10 shares or less. In another generation, our Native children and grandchildren will own fewer shares. With corporate managers selling lands and resources, there simply won’t be much left for our grandchildren.

The main benefactors of ANCSA have been the managers of the corporations. Many of them have become multi-millionaires and politically powerful by using the wealth of the shareholders. For example, in 2000, CIRI’s five senior managers were paid an astounding $16,875,848.

It’s time to end discrimination and misuse of Native corporation monies, land and resources. Alaska Natives need to stand up and demand equal rights, unrestricted stock, constitutional rights, fair elections, accountability and transparency in regards to their moneys, lands and natural resources.

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Bob Rude is a lifelong Alaskan native who has seen the transformation of Alaska through statehood, ANCSA, and the Ted Stevens legacy.  He was one of the founders of the Cook Inlet Regional Corporation and a Director for close to 30 years, in addition to being founder and past president of Cook Inlet Tribal Council. He’s been a Director of Anchorage Native Assembly, Crime Stoppers, and Alaska Federation of Natives Human Resources Board. He is the co-author of “ANCSA: Sovereignty and a Just Settlement of Land Claims or An Act of Deception” (1999). In 1957, he was chosen Alaska’s Most Valuable High School Basketball Player while attending Anchorage High School.