The Corporate Whale: ANCSA, The First 10 Years Program

Program 5 of 10
McPherson, Karen Michel 1982

5...4...3...2...1. LADIES AND GENTLEMEN OF THE AFN, THIS IS THE WHITE HOUSE IN WASHINGTON CALLING. I PRESENT THE PRESIDENT OF THE UNITED STATES...

[President Nixon] I APPRECIATE THIS OPPORTUNITY TO EXTEND MY GREETINGS AND BEST WISHES TO THE CONVENTION OF THE ALASKA FEDERATION OF NATIVES. I WANT YOU TO BE AMONG THE FIRST TO KNOW THAT I HAVE JUST SIGNED THE ALASKA NATIVE CLAIMS SETTLEMENT ACT. THIS IS A MILESTONE IN ALASKA'S HISTORY.

[Narrator] THE CORPORATE WHALE: ANCSA, THE FIRST 10 YEARS.

[] The Reverend Merculieff from St. George Island...

This land of Alaska, which thou gave to our ancestors, who have come and gone before us, is now being handed to us a second time, by the Act of the United States Congress and our untiring efforts. A second chance is given to us by thee to be the new custodians and caretakers.

UNDER THE TERMS OF THE ALASKA NATIVE LAND CLAIMS SETTLEMENT ACT, ANCSA, THE $962.5 MILLION AND NEARLY 44 MILLION ACRES OF LAND GIVEN IN EXCHANGE FOR RELINGUISHING ABORIGINAL LAND CLAIMS, WERE TO BE DISTRIBUTED TO ELIGIBLE ALASKA NATIVES, SHAREHOLDERS TO A BUSINESS CORPORATION. TWELVE REGIONAL PROFIT-MAKING CORPORATIONS WERE MANDATED, ARRANGED ROUGHLY ALONG ETHNIC DIVISION, WITH A POSSIBILITY OF A 13TH FOR ALASKA NATIVES LIVING OUTSIDE THE STATE. IN ADDITION, EACH OF THE MORE THAN 200 VILLAGES LISTED IN THE BILL WAS REQUIRED TO FORM EITHER PROFIT OR NON-PROFIT CORPORATIONS. ALL CHOSE THE PROFIT OPTION.

INEVITABLY, AS WITH ALL BUSINESSES, SOME HAVE BEEN MORE PROFITABLE THAN OTHERS. PERHAPS, MOST REMARKABLY, ALL HAVE SURVIVED THE TEN YEARS SINCE PRESIDENT RICHARD NIXON SIGNED THE ALASKA NATIVE LAND CLAIMS SETTLEMENT ACT ON DECEMBER 18, 1971. [DECEIVING] PREDICTIONS THAT SOME AT LEAST WOULD SOON GO BACKRUPT. BERING STRAITS REGIONAL CORPORATION, BASED IN NOME, NEARLY DID IN 1978, AND CONTINUES TO FLOUNDER. AND THE 13TH REGIONAL CORPORATION, HEADQUARTERED IN SEATTLE, WASHINGTON, RECENTLY DISCONTINUED NEARLY ALL OPERATIONS. DEBT PAYMENTS WERE NEGOTIATED IN ORDER TO AVOID CLOSURE, IN ATTEMPT TO TURN AROUND FROM 1980 LAWSUITS EXCEEDING $9 MILLION. BUT THERE ARE SUCCESSES AS WELL, BIG ONES. NOTABLY SEALASKA CORPORATION IN JUNEAU, THE FIRST OF THE CORPORATIONS ESTABLISHED UNDER ANCSA TO MAKE THE FORTUNE 1000.

IN THIS PROGRAM, THE FIFTH IN A TEN PART SERIES, THE CORPORATE WHALE, LEADERS OF SEALASKA AND COOK INLET REGION, INC., WILL PROFILE THEIR ACTIVITIES IN DIVIDING THE BENEFITS OF ANCSA INTO PROFITS FOR SHAREHOLDERS.

ØDividin' the maktak is they way it's always been
Dividin' the maktak between family and friends
We're sailin' toward to future, we're anchored in the past
Rich in our tradition, our ways will surely last Ø

The [Growth] Star was a newcomer, Sealaska Number 951, a seafood products concern headquartered in Juneau, Alaska. It's sales soared 684% from 17.6 million in 1979 to 137.9 million last year. For several years, it dabbled cautiously....

FORTUNE MAGAZINE, IN ITS ANNUAL ASSESSMENT OF THE CORPORATE GIANTS OF THE COUNTRY, GAVE THAT REPORT IN THE JUNE 15, 1981, ISSUE. SEALASKA HAS MORE SHAREHOLDERS, CLOSE TO 16,000 TLINGIT, HAIDA, AND TSIMSHIAN INDIANS, AND GREATER NET WORTH, ALMOST $200 MILLION, THAN ANY OF THE 13 REGIONAL NATIVE CORPORATIONS. THE CORPORATE OFFICE IS LOCATED IN ITS OWN HIGH RISE BUILDING IN THE STATE'S CAPITOL, JUNEAU. IN 1959, THE COURT OF CLAIMS AWARDED THE TLINGIT AND HAIDA INDIANS A CASH SETTLEMENT FOR LANDS TAKEN. ANCSA IS THE SECOND LAND CLAIMS SETTLEMENT. TWELVE VILLAGES ARE WITHIN THE REGION, WHICH IS ELIGIBLE TO RECEIVE 280,000 ACRES OF LAND IN SOUTHEAST ALASKA, INCLUDING TIMBERLANDS AND THE TONGASS NATIONAL FOREST.

BYRON MALLOT, A PAST PRESIDENT OF THE ALASKA FEDERATION OF NATIVES AND FORMER STATE COMMISSIONER OF COMMUNITY AND REGIONAL AFFAIRS, IS THE CHAIRMAN OF THE BOARD...

Sealaska had standing timber, a valuable asset that could be taken to market very quickly. Uhh..and..uh..having 16,000 shareholders under the formulas of ANCSA, we got the largest chunk of cash. And so Sealaska had a real opportunity to marshall and utilize its assets quickly..uh...that most other Native corporations..uh..didn't.

PAST PRESIDENT OF THE ALASKA FEDERATION OF NATIVES, CURRENT PRESIDENT OF THE ALASKA NATIVE FOUNDATION, AND SEALASKA BOARD MEMBER ROGER LANG...

We happen to be in fish and timber. And there's no conjecture about timber. [Them] things are standing there, you don't have to wonder how many trees you got, you go out there with a counter and you count them, ya know. And if the resource it can be marketed and developed quickly. It's not like oil, gas, or..or gold or any of the...either..uh..any of the subsurface, you know, so. Our resources are visible, easy to get to, and..uh..easy to..easy to get into business with, build roads and cut trees.

THERE ARE OTHER BUSINESS OPERATIONS BESIDE SEALASKA TIMBER CORPORATION AND OCEAN BEAUTY SEAFOODS. SEALASKA ALSO OWNS OR HAS INTEREST IN ALASKA [BRICK] COMPANY, UNITED BANK ALASKA, A WHOLLY NATIVE OWNED BANK, SEALASKA BUSINESS INVESTMENT CORPORATION, AND A ONE PERCENT INTEREST IN BEAUFORT SEA OIL AND GAS LEASING IN CONJUNCTION WITH SOHIO/BP AND THREE OTHER NATIVE CORPORATIONS. BUT PROFITS AREN'T THE ONLY MOTIVE. ROGER LANG...

No, there's [not anymore] factors into...to what we do than pure..pure profit. If, for instance, Sealaska wanted to be [truly] a profit mode, you have nothing at all to do with fish. And we have $58 million tied up in that end. And it happens to be something that our people are good at, that our people can work in, and..uh..that kind of stuff. That's a large part of what we did.

BUT AS IN ANY CORPORATION, THERE ARE DISGRUNTLED SHAREHOLDERS WHO WOULD PREFER LESS ALTRUISM AND MORE CASH IN THE FORM OF DIVIDENDS. SITKA COMMUNITY ASSOCIATION EXECUTIVE DIRECTOR, SHEE ATIKÁ CORPORATION DIRECTOR, AND SEALASKA SHAREHOLDER ANDY HOPE III...

They didn't give out any of it out in dividends. You know, Sitka come out and made 5.7 million in..uh..profits last year. And they..uh..gave 900,000 of that as dividends. Sealaska made 5.9, it gave the village.

SHAREHOLDER MARY ITTA WILLIAMS...

The things that have going like a big company..uh..and are they really..are we really getting things out of this? Are we really..um..going to get something out of this, I mean eventually?

ACCORDING TO MALLOTT PEOPLE ARE GETTING A GREAT DEAL NOW. SEALASKA'S DEVELOPMENT TEND TO IMPACT VILLAGE LANDS. AND RATHER THAN PROCEED IN A MANNER THAT MAY BE COST EFFECTIVE, BUT ENVIRONMENTALLY DESTRUCTIVE, SEALASKA CHOOSES TO SPEND MORE MONEY AND MINIMIZE THE NEGATIVE EFFECTS TO SAVE TIMBER HARVESTING.

You know, if you're a Native corporation, you come down on the side of the Native even if it does impact your..uh..bottom line.

Sealaska is trying to be the kind of business corporation that can be utilized as a tool by our shareholders as Native people. Native people still have not been able to grasp the brass ring of the American Merry-Go-Round. Uh..and..uh..and that's what we're setting out to do.

CLOSE BEHIND SEALASKA IN TERMS OF PROFITABILITY IS THE COOK INLET REGION, INCORPORATED, LOCATED IN AN ARCHITECTURALLY COMMANDING BUILDING IT OWNS NEAR DOWNTOWN ANCHORAGE, THE STATE'S LARGEST CITY. CIRI, AS ITS CALLED, HAS A SET OF AMENDMENTS TO ANCSA DEVOTED TO ITS PARTICULAR LAND NEEDS. COOK INLET REGION, INCORPORATED, 6,300 SHAREHOLDERS ARE PRIMARILY URBANS RESIDENTS, SO SOME LIVE IN VILLAGES AND OTHER SITES NEARBY. IN 1980 CIRI'S NET WORTH WAS A BIT OVER $46 MILLION AND NET PROFITS FOR THAT YEAR WERE $5.7 MILLION, UP FROM 3.4 MILLION THE YEAR BEFORE. A YEAR THAT CORPORATION LED ALL OTHERS CREATED UNDER ANCSA. ROY HUHNDORF HAS BEEN PRESIDENT SINCE 1975...

Our geographic area is the southcentral part of Alaska. Um..the..the land entitlement of the region and its villages is approximately 2.3 million acres. Um..we have seven villages..uh..each entitled to..uh..some of the surface estate. Uh..essentially about a million acres of the..a million of the surface acres of the 2.3 million acres..um..are..uh..part of the village entitlement.

ONLY 1,500 OF CIRI'S SHAREHOLDERS LIVE IN VILLAGES AND ARE ENROLLED IN VILLAGE CORPORATIONS. THE REST ARE SO CALLED AT-LARGE AND RECEIVE PAYMENTS FROM THE SETTLEMENT DIRECTLY RATHER THAN HAVING THEM DIVERTED THROUGH VILLAGE CORPORATIONS. CIRI SHAREHOLDERS, BEING PRIMARILY URBAN, ARE ALSO LESS INCLINED TO URGE CORPORATE LEADERSHIP TO GET INVOLVED IN THE SUBSISTENCE ISSUE, OR [FEELING] STRONGLY ABOUT THE BALANCE BETWEEN RESOURCE DEVELOPMENT ON CORPORATE LANDS VERSUS ITS IMPACT ON TRADITIONAL LIFESTYLES.

We're going to be careful, and we're worried about how their land is used. But..but..uh..we..we have..um..um..slightly different priorities. Uh..for example..um..um..it's quite likely that CIRI might develop a mineral..uh..resource on its land before another region might de..might develop a mineral resource on..on village land in rural Alaska. And this is because the village..the village will no doubt be consulted, and they may have some objections to..to bringing development into their subsistence area. Um..here we..we don't see much of that kind of a conflict.

A LARGE MEASURE OF COOK INLET'S CONFLICT IS CENTERED ON THE LAND, ON GETTING THE ANCSA ENTITLEMENT.

In our case, unlike other regional corporations, much of the land which was prescribed for..for the villages and the regions had already been patented to the state and is therefore not..not available for selection by us. So therefore we were thrown into this..into this..uh..category..um..of discretion that the Secretary had. And he..he would..um..as the Act requires, withdraw land of similar kind and character, of which we would..um..we would select our entitlement. And of course we disagreed with how he exercised that discretion. We ultimately went to court..um..and we settled..um..out of court..um..by engaging in a three-way land exchange, the state, the federal government, and CIRI in 1976. Um..it was challenged in court subsequently. Um..it cleared the courts in nine..late 1978. And we have been in the process of implementing the exchange since then.

INSTEAD OF THE UNACCEPTABLE, INACCESSIBLE MOUNTAINTOPS AND GLACIERS, CIRI HOLDINGS NOW INCLUDE SURPLUS FEDERAL PROPERTY IN THE SOUTHEAST AND IN THE INTERIOR, SUBSURFACE LANDS IN THE KENAI MOOSE RANGE WITH GOOD COAL, OIL, AND GAS POTENTIAL, AND THE BELUGA COAL FIELD.

CIRI is primarily a..a natural resource company, that is an energy and minerals company. Um..we have broadened that definition of..of..uh..of the corporation's business somewhat by adding that we are in the business of energy and minerals and service industries that are attendant to the development of..of these resources, such as oil and gas drilling..um..engineering and design of..um..of remote..um..energy related facilities. Um..we've recently become involved in..in specialized pipeline construction plus resource development are our main areas of..of interest. Additionally, the fourth area is naturally real estate. We have some commercial real estate..uh..and..uh..and that is a part of our portfolio. But of course the..the real profit, the real cash flow from mineral development will come if the..if development of a mine occurs and you begin to get production payments. Or development..uh..or development continues and expands in oil and gas..in the area of oil and gas and coal.

NEXT YEAR ROY HUHNDORF EXPECTS COOK INLET REGION, INCORPORATED'S PROFITS TO TOP $10 MILLION AND SHAREHOLDERS CAN ANTICIPATE DIVIDENDS.

I think this is the net, the end result of..of those early decisions. Uh..uh..there's been a number of correct decisions made by people at CIRI..uh..uh..since the Act had passed in 1971..and..and then..and a lot of luck. A lot of luck rolled into it. We're..naturally we're located right..uh..in Southcentral Alaska where the majority of the people live and therefore..uh..the bulk of the economy is. And..and we should be expected to do better than..than the average corporation, I suppose.

YOU'VE BEEN LISTENING TO THE CORPORATE WHALE: ANCSA, THE FIRST 10 YEARS. THE FIFTH PROGRAM IN A TEN PART SERIES WRITTEN AND PRODUCED BY KAREN MICHEL MCPHERSON, WITH TECHNICAL ASSISTANCE FROM PHILLIP KAKOWSKI (sp?). FUNDING WAS PROVIDED BY KUAC SPONSORS AND THE ALASKA NATIVE HUMAN RESOURCE DEVELOPMENT PROGRAM OF THE COOPERATIVE EXTENSION SERVICE OF THE UNIVERSITY OF ALASKA.

SPECIAL THANKS TO DAVID HARDING, JOHN NEWSTROM AND CATHY CODY OF KCAW, PATTI GINSBERG OF KTOO, AND MUSICIANS HERBIE VENT, BUDDY TABOR, THE GAJA TEEN DANCERS, AND WILL ACKERMAN.

Part 1
"This 10 part series, The Corporate Whale, will listen to some of the events leading to the Land Claims Settlement, the mechanisms that were employed to manage the Act, government agencies, and Native corporations, hear how leaders assess the first 10 years, and predictions for 1991."

Part 2
"Both restrictive provisions included in the Act, what the Alaska Native Land Claims Settlement is, and how it divides up the land and the money will be discussed in this program, the second in a ten part series: The Corporate Whale."

Part 3
"In this program, the third in a ten part series, The Corporate Whale, Native leaders and others involved with the framing of the Land Claims Settlement give some of their thoughts on the corporate concept and how well that mechanism works for dividing the benefits of ANCSA: The Whale."

Part 4
"This program is the fourth in a ten part series, The Corporate Whale: ANCSA, The First Ten Years. Agency representatives and Native corporation leaders will give their perspectives on the land's aspect of the Land Claims Settlement."

Part 5
"In this program, the fifth in a ten part series, The Corporate Whale, leaders of Sealaska and Cook Inlet Region, Inc., will profile their activities in dividing the benefits of ANCSA into profits for shareholders."

Part 6
"In this program, the sixth in a ten part series, The Corporate Whale, leaders from NANA, the Northwest Alaska Native Association region, and Calista Corporation will profile their corporation's activities in managing ANCSA's benefit."

Part 7
"Both the Land Loss Formula and 7(i), the revenue sharing provision, were intended to be equalizers in the Settlement providing resource revenues to regions without rich lands and additional land to those without large populations. This program, the seventh in a ten part series, The Corporate Whale, will examine two regional corporations particularly affected by the provisions, the Arctic Slope Regional Corporation in the north and Doyon Limited in the interior."

Part 8
"In this program, the eighth in a ten part series, The Corporate Whale, village and regional corporation leaders will discuss centered approaches to managing ANCSA's land and money entitlements, and impact."

Part 9
"This program, a ninth in a ten part series, The Corporate Whale, will examine the role of the Alaska Federation of Natives and its efforts to survive and continue to be a unifying body for the corporations who manage ANCSA's benefits."

Part 10
"In this program, the last in a ten part series, The Corporate Whale, leaders involved in land claims implementation assess the bill that Barrow activist Charlie Edwardsen, Jr., Etok, once referred to as 'a new harpoon.'"

Alaska Native Knowledge Network is responsible for the transcription of this series. We would like to humbly apologize for any misspellings in advance.