Must have info for your business

Signup in less than a minute to join the NativeCo Community.

  • Become a Contributer
  • Access to Comments
  • Free Directory Listing

NativeCo News

Alaska Dispatch examines The 13th Regional Corporation

December 18th, 2009 Posted By: Morgan Howard No Comments

Jill Burke from the Alaska Dispatch takes a hard look at the status of The 13th Regional Corporation:

The 13 regional corporations established by the Alaska Native Claims Settlement Act are unique in the business world. The for-profit entities were created by Congress to stimulate economic development and provide for the welfare of their shareholders, Alaska Natives. The 1971 act settled aboriginal land claims with the U.S. government, thus clearing legal hurdles to construction of the trans-Alaska oil pipeline.

Nearly $1 billion and 44 million acres of land were handed over in the settlement, and 12 regional corporations and 200 village corporations were formed to manage the assets and disperse funds to more than 12,000 shareholders. Four years later, in 1975, another regional corporation — the 13th Regional Corporation — was created and given $52 million, but no land, to compensate about 4,500 Alaskans who no longer lived in the state.

The corporations are meant to be as autonomous as possible, with shareholders owning and ideally overseeing the investment, but they need to be proactive, according to Roger Prince, spokesman for Alaska’s Division of Banking and Securities.

“It’s like any multinational corporation. You can show up (to meetings) whether you own one share or a million shares,” he said.

But when a regional corporation isn’t holding regular meetings — as with the 13th Regional Corporation, which hasn’t held a meeting in three years — showing up is hard to do, and angered shareholders feel unfairly shut out.

In recent interviews, three 13th Regional Corporation shareholders, including a former board chairman, detailed their frustration with the current state of affairs. Among the complaints: missed meetings, lack of board responsiveness, failure to disseminate up-to-date financial reports and the recent closure of the corporation’s Washington state offices. The 13th Regional Corporation, established in Alaska and registered in the state of Washington, lost its ability more than a year ago to do business in Washington because it failed to file a 2008 annual report.

Involuntary dissolution of a corporation allows someone else to take over the entity’s name, and removes the “corporate” umbrella that legally protects individuals, like CEOs or board members, who may take action on behalf of the corporation. Under Washington state law, the 13th has up to five years to reinstate its status and bring its reports current.

The 13th Regional corporation has had a history of business and financial struggles. At its creation, half of the settlement was to go directly to shareholders and the other half, nearly $27 million, was to be invested. By the late 1990s, questions had arisen about what had happened to the money.

Ten years later, shareholders are again asking questions, but say they aren’t getting any answers.

Corporations are regulated by the State of Alaska, and are required to file reports with the Departments of Revenue and Economic Development, and the Division of Banking and Securities, but the departments have little power to force corporations to be accountable to shareholders. The oversight goals are to ensure annual reports and taxes are filed, and that elections follow the rules. And in the case of the Banking and Securities Division, if a corporation’s assets fall below $1 million in worth, or it has fewer than 500 shareholders, it doesn’t need to file reports at all.

Unhappy shareholders have a right to call meetings to force action, and if they’re really unhappy, they can take a corporation to court — although, as shareholders of the 13th are learning, that’s easier said than done.

Liz Ross, a former president of the corporation, called a meeting in October, and even paid for the teleconference, but says none of the board members participated.

“There are just a myriad of obstacles that prevent us from exercising our power in any meaningful way,” said Carl Hart, another dissatisfied shareholder.

Shareholders of the 13th are scattered across the nation, so meeting isn’t easy, and Hart adds that the 100 shares most of them own are worth too little to create much motivation to band together. He, Ross and another shareholder, Debbie Kellog, say they have asked the board repeatedly for information they are entitled to — like audited financial reports, status of the assets and the location of records — only to be ignored.

Ross and Kellog are frustrated enough that they are contemplating legal action.

This fall, the corporation narrowly evaded administrative dissolution by the state of Alaska. By September, its biennial report — which lists current board members and was due nine months earlier, had not been filed. The state gave the corporation 60 days to comply, or face dissolution. The report came in Nov. 9, bringing the corporation into compliance and staving off state action.

By last week at least one board member, past board president and recent secretary Jacqueline Rashleger, said she had resigned.

While shareholders may also force dissolution, it’s difficult, complex, and the wrong way to solve grievances, according to John Havelock, a lawyer who has represented shareholders and village corporations in the past. In his view, even though ANCSA regional corporations function, in theory, under shareholder vigilance and guidance, reality tarnishes the model.

“A business corporation is a business machine,” Havelock said. “It is good at generating profits and for generating income for those that work within it.  That directors are elected by shareholders does not make a corporation democratic. Large corporations, like most ANCSA regionals are sham democracies. Imagine if a municipal council could use municipal resources to elect themselves and pick successors.”

The Alaska Inter-Tribal Council believes the state and federal governments should be empowered to enforce the accountability of ANCSA corporations to shareholders. The group notes that corporations play a vital role in the lives of Alaska Natives — controlling health services, job training, placement and housing — and is frustrated that shareholders are in many ways disenfranchised.

By design, the corporations are exempt from oversight by the U.S. Securities and Exchange Commission, and since their stock is not publically traded, ANCSA corporations are also not covered under Bush-era legislation aimed at cracking down on corporate greed and deceptive auditors, according to AITC.

“We have no oversight and we have no agency to turn to,” AITC states in a position paper on its Web site.

The 13th Regional Corporation itself may also be suffering from the early framework of the law.

Unlike the other 12 regional corporations, the 13th is excluded from a stream of revenue pooled collectively from corporation profit. Seventy percent of the money made on timber and other land-based resources owned by the corporations goes into the fund and is then shared among the 12 corporations. The 13th was shut out because it was never granted land.

Convinced the 13th Regional Corporation won’t ever be able to sustain itself by making money, Liz Ross, the corporation shareholder and former board chairman who is contemplating a lawsuit, hopes the corporation will become healthy enough to at least act as a parent corporation for non-profit endeavors that will benefit the shareholder base.

This fall, Ross received information that the corporation’s current board members have sought advice on filing for bankruptcy.

Yet whether the state can truly dissolve an ANCSA corporation is somewhat unclear. Since the corporations are mandated by an act of Congress, some believe the state doesn’t have the authority to eliminate them. But the state does have the power to revoke a corporation’s ability to do business by dissolving its incorporated status.

Ross, who has tried to reach out to board members and to members of Congress in search of a remedy for the condition of the 13th Regional Corporation, believes there aren’t many options.

“You can’t dissolve it,” she said. “You just let it die away.”

Contact Jill Burke at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Bookmark and Share

Comments are closed.