Editorial: Permanent Funds should retreat from bad investment bets

Alaska Permanent Fund Corporation Trustee Gabriel Rubenstein is once again making headlines for all the wrong reasons. After the disastrous development of pushing forward with a private equity investment plan that other members of the APFC board refused to support (and all the while publishing a series of false and misinformation statements in front of an audience of financial professionals around the world) Emails provided to a series of Alaska Landmine political news websites reveal further wrongdoing by Rubenstein behind the scenes at the state-run company responsible for managing the state’s nest egg. I made it.

No matter how you look at it, this email was a deliberate attempt by Marcus Frampton, APFC’s chief investment officer, to document Rubenstein’s destabilizing and inappropriate conduct related to his management of the Endowment Fund. It appears to be an initiative. Specifically, Mr. Frampton said Mr. Rubenstein had repeatedly asked the fund to increase its investments in companies and people with whom he had business or family ties, raising significant red flags for a potential conflict of interest. expressed concern.

To be fair to Rubenstein, it would be difficult for her to avoid conversations with some of the people involved — one of whom is her father, David, co-founder of the giant private equity firm Carlyle Group.・It’s Rubenstein. Additionally, her experience at her own private equity firm, Manna Tree, has led her to regularly communicate with other investors and investors, especially those with whom she has financial relationships. became. However, what is at issue is the tenor of these conversations and the fact that they specifically discuss her APFC business. As Mr. Frampton pointed out, Mr. Rubenstein regularly suggested that the Permanent Fund invest in companies and individuals with whom he had financial ties—a practice that is not necessarily illegal on its face, but certainly is. anti-corruption laws and self-dealing by the Alaska executive branch. Ethics laws are in place to prevent that.And as someone who allegedly spent many years Mr. Rubenstein must be well aware that such conduct is inappropriate in the financial world and would, at the very least, damage the reputation of Alaska’s leading sovereign wealth fund. It’s a reputation built over decades of ethical and professional management, and Alaskans should be very concerned about the possibility of it being torn down.

And Rubenstein’s antics go beyond conflicts of interest. Another communique indicated that she has, or at least believes she has, an extension to the governor’s office, telling Frampton that current APFC board chair Ethan Shutt will not be reappointed when his term ends this summer. I told you. Such palace intrigues are more suited to reality TV than financial management, which begs the question. Assuming Mr. Rubenstein is right about the governor’s plan, why is Gov. Mike Dunleavy more comfortable with Mr. Rubenstein than with Mr. Schutt as trustee? Did he perform his duties credibly during his tenure on the board?

As previously noted, the growth of the Permanent Fund and its greater importance in meeting the state’s budgetary needs has clarified the process by which APFC directors are selected. All APFC directors are elected by the governor and there is no confirmation by the Legislature. This in itself is a serious imbalance in the state’s power structure. Gone are the days when laws relating to the administration of the Endowment Fund were amended to include a requirement for legal confirmation of all director appointments.

When the APFC Board of Directors fired former CEO Angela Rodell, who oversaw the most successful investment period in the fund’s history, lawmakers were understandably concerned and held public hearings to discuss Rodell’s removal. It helped clarify the situation. Similarly, with respect to Mr. Rubenstein’s inappropriate communications, we are committed to uncovering what else is happening publicly that, if left unchecked, could undermine the Permanent Fund’s credibility and investor confidence. Should. Why isn’t Congress doing anything about this? And Governor Dunleavy continues to demonstrate a bewildering willingness to support Mr. Rubenstein as a trustee, despite the difficult position the fund’s management professionals continue to find themselves in. Testing their ethical standards repeatedly. Why does the Governor continue to tolerate her stupidity and dishonesty on behalf of the nation? There is no earthly reason for her to be a trustee of Alaska’s Permanent Fund – at least professional and competent management is desirable. As long as I can.

By documenting Rubenstein’s actions, Permanent Fund employees are performing a service to Alaskans who rely on the revenue the Fund provides as an essential service. But unless legislators and Alaskans alike get to the bottom of Rubenstein’s half-hearted antics and show their support, it remains to be seen how long they will be able to maintain their professionalism or keep their jobs. It’s a problem of resolution.