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Journalist presses for permanent fund investment records

Posted: Monday, March 06, 2006

The Alaska Permanent Fund two years ago started down an investment path that put it squarely in the sights of one of Alaska's most fervent open-records law advocates.

The Permanent Fund Corp. - like many other deep-pocketed investors in the United States - began funneling some of its oil tax-derived wealth to two types of highly confidential, unregulated investments.

That was a red flag for Gregg Erickson, a former state economist and the founding editor of Juneau's Alaska Budget Report - a weekly newsletter read by legislators, business officials, journalists and others who follow financial matters at the state Capitol.

Erickson has been a prolific writer of public-records requests since the early 1990s, when he entered journalism. And this secrecy on the part of the permanent fund and its financial partners wasn't something he could resist probing.

Erickson, who testified in 1982 with the late Gov. Jay Hammond in the Legislature for creation of the permanent fund dividend, said he believes the fund needs to maintain total public transparency.

In recent months, Erickson has dogged the Permanent Fund Corp. with a volley of public-information requests about the two classes of investments.

"Is it worth the extra risk to cut the public out of the process?" Erickson said during a Thursday interview at his downtown Juneau office.

Erickson, a former state economist, dug around his crowded but organized desk to retrieve copies of pages with blacked-out paragraphs sent to him in recent weeks by the Alaska Permanent Fund Corp.

He pointed out documents in which the Permanent Fund Corp. has blocked the names of its private equity partnerships, the names of the people working on the partnerships, and their investment strategies.

The private equity partnerships - and a second type, called absolute return investments - are not subject to Securities and Exchange Commission reporting requirements. Such reporting is a commonly used tool by shareholders who monitor how their investments are being managed.

The permanent fund trustees are privy to the confidential information, and do their own audits on the partnerships that they invest in. The permanent fund does divulge how much of its assets they are allocating to the privately held investments.

But legally, the public is not privy to further information about the investments, according to Mike Burns, the executive director of the Permanent Fund Corp.

Confidentiality itself is a major selling point of the two funds among wealthy investors.

"Everybody is playing the angle of private information, and that's how you get this special value," Erickson said.

While the Alaska Permanent Fund has invested about 4 percent of its assets in the two confidential fund types, others such as the Yale University endowment fund and the Massachusetts Institute of Technology (MIT) pension fund have put much larger chunks of their assets into them, according to Burns.

So far, the permanent fund has had good returns on its absolute return investments, Burns said.

Alaska law provides that the state can exempt any confidential investment information that is in the possession of the permanent fund from public-records requests, Burns said. That law has been on the books since 1980.

Erickson said in his appeal to the fund's board of trustees on Feb. 22 that he has asked the permanent fund for records for more than a decade, but was never refused information until Dec. 2005.

In the past, Erickson and the Alaska Budget Report have sued for records. For example, they won a lawsuit against the Knowles administration in 2003 when it was attempting to withhold state budget documents.

Erickson says he files information requests with the state of Alaska because they typically lead to some of his publication's biggest news scoops.

For example, a couple of years ago, the Alaska Budget Report filed public-records requests on legislative salaries, and ended up breaking a story about unauthorized bonuses for Republican legislative aides.

The Legislature retroactively approved the bonuses in 2005, but decided to never do it again.

Some legislators and other right-to-know advocates said Erickson's struggle for documents illustrates an important question about Alaskans' right-to-know, with regard to financial disclosure.

"It's important for the Legislature to understand what the (permanent fund) policies are, and why they are invoking them," said Rep. Bruce Weyhrauch, R-Juneau.

Weyhrauch said he scheduled a hearing in the House Ways and Means Committee today at 9 a.m. to allow the Permanent Fund Corp. to explain what it is doing.

"It seems to me that whenever public money is involved, a greater level of transparency is called for," said Lucy Dalglish, the executive director of the Reporters Committee for Freedom of the Press, based in Arlington, Va. Her nonprofit organization monitors the efforts of journalists, such as Erickson, to obtain government records.

Dalglish added, "I would hope that the state could come up with a more transparent investment policy."

Burns said he wishes he could talk about the investments in more detail. It would make his work easier, he said.

• Elizabeth Bluemink can be reached at elizabeth.bluemink@juneauempire.com.



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