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.
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.