Permanent Fund Board discusses investment introductions following concerns from vice chair

JUNEAU — The Alaska Permanent Fund board is considering changes to the way board members present investments to corporation staff.

The fund’s governance committee met Monday to discuss a series of recommendations aimed at improving the corporation’s governance. The meeting came after concerns were raised in emails earlier this month that Ellie Rubenstein, vice chair of the board of directors, had used her position to set up meetings between Permanent Fund staff and business associates and companies with ties to companies she owns. Rubenstein said in a prepared statement at the time: Follows company rules regarding ethics and disclosure.

The email was first obtained and published on a website called Alaska Landmine.

The board sought to investigate who leaked the emails during a heated board meeting on May 8. Craig Richards, the fund’s longest-serving director, expressed concern about a significant increase in the number of investment referrals some directors have made to fund staff in recent years.

Three board members and the fund’s investment adviser group said Monday that public confidence in the Permanent Fund needs to be re-established.

John Skarbem, Utah Retirement Systems’ chief investment officer and the fund’s investment adviser, said events in recent weeks have “put at risk” the corporation’s sanctity.

The board sets policy for the $80 billion fund, which pays the state’s annual dividend to Alaskans and provides about half of the state’s general fund revenue.

The board on Monday discussed a 2023 report prepared by Funston Advisory Services on ways to improve the fund’s governance. No final decisions were made by the five-member board. Chairman Ethan Schutt did not attend Monday’s meeting.

“I think today’s agenda is about transparency and building trust for all stakeholders,” Rubenstein, who chairs the governance committee, said at Monday’s meeting.

The fund’s chief investment officer, Marcus Frampton, is the co-founder of private equity firm Mana Tree Partners and the daughter of Carlyle Group co-founder David Rubenstein. expressed concerns about conflicts of interest over the leaked emails. One of the world’s largest private equity funds. Ellie Rubenstein’s mother is Alice Rogoff, who owned the company until she bought the Anchorage Daily News in 2014, changed its name to Alaska Dispatch News, and filed for bankruptcy protection in 2017. Was.

In response to the 2023 Governance Report, Permanent Fund staff said addressing how board members made investment introductions was one of the most important recommendations.

Board members said Monday that investment proposals for the fund will come in frequently, and they should be forwarded to staff, but the board members’ role ends there, said Britt Harris, former interim CEO of the $53 billion Texas Permanent School Fund and one of the Permanent Fund’s investment advisers.

Board members asked a series of hypotheticals: Ms. Rubenstein noted that the fund had a nine-month period without a head of private equity and that Mr. Frampton had replaced him. She asked how investment introductions should be handled in that case.

Mr. Skarbem said board members’ reaction should be, “We just don’t have the capacity right now to entertain new ideas.”

“There shouldn’t be a blur between the role of the board and the role of the investment team,” Harris said. “That’s really the CEO’s job.”

One of the proposals discussed at the board meeting was to record and publish all investment referrals made to staff. Investment adviser George Jin said this is the model used by the $163 billion Washington State Investment Commission. Chris Pogue, general counsel for the Permanent Fund, said investment referrals were recorded but not made public at quarterly meetings.

“The idea is that transparency can eliminate any conflict if you tell the world what you’re investing in, what your Permanent Fund is invested in,” he said.

Other proposals discussed on Monday include establishing an email address for fund managers to which all investment referrals can be sent and developing a “crisis communications” strategy in the event of a major media event at a company. There was such a thing.

The Permanent Fund’s board plans to consider governance recommendations at its July meeting in Fairbanks.

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