The Alaska Permanent Fund’s Board of Trustees met at an emergency special meeting today to go after the leak of a series of internal communications that documented the staff’s concerns with a trustee’s efforts to steer business to close associates.
At the heart of the issue are a series of leaked emails obtained by political writer Jeff Landfield that document several Permanent Fund executives’ concerns and misgivings with Trustee Ellie Rubenstein’s efforts to orchestrate meetings with business partners. Executives regularly raised concerns over Rubenstein’s appearance of self-dealing, which included criticizing an analyst that her father, billionaire investor David Rubenstein, was “unimpressed” with.
According to the emails, executives met with the investors but never inked any deals and never shifted their investment strategy.
While several members of the Board of Trustees seemed keen on tracking down the source of the leaks — framing them as a grave threat to the fund — today’s meeting became about far more than just email security.
A marked rift between trustees was exposed when Trustee Craig Richards said they should be less concerned with the leaks and more about why the staff felt compelled to record Rubenstein’s actions in the first place. He went on to suggest that they need to consider governance changes that would more clearly outline the role of trustees in order to better protect the staff.
“We have the specific ethical allegations against Trustee Rubenstein, which I presume will ultimately be handled through the state’s ethics process,” he said. “We’ve got, in my mind, some of the broader behavior of this board that has resulted in an atmosphere at the Permanent Fund where we’re seeing the need of employees to do your standard cover-yourself behavior. In my mind, the key thing is I’m less concerned about leaks than I am about fixing the behavior that caused the leaks. … To me, as a stepping stone to get to governance reform, that’s fine but it’s ultimately governance reform that’s going to be necessary to solve the core, underlying problem here.”
That was a point that Trustees Adam Crum, who is the state’s Revenue commissioner, and Jason Brune, who was appointed by Gov. Mike Dunleavy to the board after resigning as the Environmental Conservation commissioner last year, hotly disputed during the hearing.
“I want some more definition because those were some pretty large allegations about trustee behavior,” Brune said, demanding specifics.
Trustee Richards replied that it was precisely why he thought the meeting was premature and could have waited until their regular meeting later this month, but relented after Brune continued to insist on specifics.
“What I’ve witnessed in the last two years, maybe 18 months, is I’ve witnessed among some trustees a large increase in the number of referrals the staff are getting related to investments and investment managers,” he said. “It’s increased volume to a point where staff has obviously become uncomfortable. That’s been communicated, yet the behavior still occurred. There’s also the fact that there have been a lot more discussions not at the table at the board recently, where things are getting decided behind closed doors — discussed.”
He added that there has also been a marked uptick in direct communications between some trustees and the staff, which has left managers feeling undermined and some employees in fear that their jobs could be on the line. In one series of emails, Rubenstein complained about an analyst with whom her father was “unimpressed” and questioned the capabilities of the fund’s team that works on private equity investments, the area in which Rubenstein is closely involved.
“There have been probably some indirect threats around people in a way that they’re leading to feel threatened around their employment or the status with the company, which is why we’re seeing leaks,” Richards said. “That’s my observation.”
“I’m not actually familiar with any of that at all,” Crum shot back.
“OK, well, that’s been my observation,” Richards said.
Crum continued to press Richards for fixes to whatever problems he had with the trustees’ behavior. Richards reiterated that they should be working on a larger approach to defining the appropriate behavior of the trustees.
“Again, gentlemen, I’m sitting here trying to say that the right way to handle this is not to sit here and point fingers at each other or point fingers at members of the staff,” Richards replied. “The right way to handle this is to come up with expectations around communications. If everyone is in alignment that the things I’ve talked about are things that shouldn’t be occurring, then it should be no challenge at all to adopt a series of governance reforms to prevent behavior that I view as a little inappropriate.”
Brune continued to demand that he had personally done nothing wrong or unethical.
Rubenstein, for her part, never weighed in on the debate.
The Board of Trustees then met for about two hours in a closed-door meeting called an executive session. Such meetings are allowed under state law if their contents, in this case email security, could expose vulnerable information that could harm the fund. But before heading into the meeting, Richards noted that some trustees had a tendency to wander off course during the meetings to other topics and asked that a Department of Law attorney be present throughout the meeting to keep them in line with the Open Meetings Act.
In a head-turning exchange, Trustee Brune insisted that they maintain the right to kick the attorney out at any point during the hearing. While he continued to insist that they follow the Open Meetings Act, he said they needed the flexibility to have conversations outside of the lawyer’s earshot.
“I definitely want him there, but I want us to have a frank discussion in the absence of him, if appropriate,” Brune said.
Both Schutt and Richards opposed the motion, but it was approved with a vote by Brune, Crum, Rubenstein and Trustee Ryan Anderson (who is the commissioner of Transportation).
Following the meeting, Chair Schutt said they received a report that showed no evidence of an external hack of the Permanent Fund. He said the governance updates that Trustee Richards had discussed will also be worked on in the coming weeks. He also said the Department of Law attorney remained throughout the hearing and was never dismissed as Brune had suggested they’d do.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter.