Sen. Stedman sends criminal referral for leak of audit information - Must Read Alaska
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Sunday, October 24, 2021
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Sen. Stedman sends criminal referral for leak of audit information

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PUBLIC RADIO REPORTER GOT AUDIT BEFORE LEGISLATORS DID
Sen. Bert Stedman, chairman of the Legislative Budget & Audit Committee, sent the Department of Law a criminal referral for the unauthorized leak of a confidential audit related to the Alaska Mental Health Trust Authority.
The seriousness of the referral pertains to a reporter getting her hands on a confidential draft of an audit of one of the state’s most powerful agencies: The Alaska Mental Health Trust Authority.
The audit was ultimately released and it scolds the agency for not transferring tens of millions of dollars to the Alaska Permanent Fund Corporation for management, but instead managing side businesses itself, against State law.
Stedman believes the audit was given to a reporter by the authority’s executive director before the auditor had briefed the full committee, and before the committee had the chance to review, adopt, or approve the audit to make it a public document.

Stedman said that public radio reporter Anne Hillman asked a state auditor for an interview about the audit, but the auditor recommended the interview wait until the audit was released and Hillman would have a chance to read it first. Hillman is alleged to have told the auditor that she knew what was in it because “she had read the preliminary audit,” Stedman wrote.

“When asked who had provided the copy, Ms. Hillman said it had been provided by the AMHT,” Stedman wrote.

Anne Hillman

“The legislative audit process and the work of the legislative auditor are critical to the legislature’s oversight role of the executive branch and boards and commissions,” he said. “The confidentiality of audits still in progress must be maintained. I have asked the Department of Law to review the release of a confidential audit and decide whether prosecution is appropriate.”
Stedman believes that Mike Abbott, executive director of the Alaska Mental Health Trust, could be charged with a crime for giving an unfinished audit to the reporter.
Abbott was the Anchorage Municipality’s city manager under Mayor Ethan Berkowitz until he left last fall to lead the Alaska Mental Health Trust Authority. He took the position that Jeff Jessee had occupied for years; Jessee joined the University of Alaska staff last year.

In the final report that was released in June, the auditor concluded that the Authority’s board of trustees violated State statutes and terms of an earlier state settlement by not transferring $39.5 million in cash to the Alaska Permanent Fund Corporation.

“Alaska statutes clearly and unambiguously command that cash principal be managed and invested by the APFC. Despite the requirement, the Authority’s board of trustees suspended transfers of cash principal to the APFC for almost 10 years. The board of trustees’ actions appeared to be well intentioned, driven by a desire to maximize revenue for use by beneficiaries. However, the actions did not comply with law and were contrary to the roles and responsibilities outlined in the settlement,” according to the summary provided by the auditor.

Instead of transferring cash principal to the APFC for investment, the lion’s share of the agency’s available money was directly invested in seven commercial real estate properties, five of which were located out of state. The Authority was using the Trust Land Office to close commercial real estate deals and manage real estate properties. Six of the seven properties were then mortgaged and the proceeds were used, in part, for additional commercial real estate deals.

The Authority has defended the practice, saying it was seeking higher returns than what was available through the Permanent Fund.

“The Trust’s investment decisions were authorized by and consistent with applicable regulations and legal advice,” Abbott wrote.

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

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