This is the last of a 13-part Empire series examining the Alaska Native Claims Settlement Act regional corporations.
Maybe a name without the number 13 in it would have been a better idea.
The 13th Regional Corp., set up for Alaska Natives living out of the state, hasn't had a lot of good luck.
``We couldn't think of a name, so we decided to use The 13th Regional Corporation until we came up with a name we could agree on,'' said Dennis Small, the first president of the corporation. ``It stayed.''
The 13th was the last regional Native corporation to be formed following the Alaska Native Claims Settlement Act. The corporation survived an early bout with bankruptcy, and now, with an unpaid president, is trying to overcome the bad reputation it earned through financial miscues, apparent mismanagement and misfortune.
For the 5,500-shareholder Seattle-based corporation, even good luck looks bad.
When the 13th's 338-foot fish processing boat, the Al-Ind-Esk-A Sea, caught fire and sank in 1982, a pending liquidation of the corporation was avoided because the boat was insured for $14 million. The corporation had bought the boat for $125,000 and had spent another $7.5 million restoring it.
The only regional corporation that didn't get Alaska land with the Alaska Native Claims Settlement Act, the 13th has had other scrapes with annihilation, according to Kurt Engelstad, 61, who was president before the Al-Ind-Esk-A Sea went down.
``When I became responsible for the company, it was $14 million in debt and had assets of $3 million,'' he said. ``My strategy was to do whatever it took. My goal was to regain everything that was lost by those before us.''
Unlike the other regional Native corporations, the 13th was formed by court order in 1975 after a federal judge reversed a Bureau of Indian Affairs decision that there weren't enough shareholders enrolled with the 13th to justify its existence. Under the order, the corporation wasn't granted Alaska land, was excluded from sharing in the profits of the other corporations and was ordered to immediately distribute half of its $52 million settlement money it received.
The corporation still can't say exactly what happened to the remaining $27 million of land claims money the corporation kept - records are incomplete. Present management and past management both say mismanagement by administrators or the board of directors was to blame for the 13th's early losses.
Lawyers looked into the corporation's books. They determined that there may have been enough evidence of dubious activity to pursue lawsuits but proceeding with litigation would have cost more than would be recouped, Engelstad said.
When Engelstad took over as president, the corporation was owned, for all practical purposes, by a Minnesota bank that held most of the 13th's debt.
Engelstad pleaded with other banks and tried to take advantage of any money-making opportunity. When old fighter planes were found on land the corporation bought at a former Air Force base at Cold Bay, on the tip of the Alaska Peninsula, the 13th and a partner dug them up and sold the parts to collectors.
``It was just doing what we could until something happened,'' Engelstad said.
The corporation was informally bankrupt already. He and the corporate board made it official, which allowed the corporation to sell its net operating losses to other businesses looking for tax write-offs. By 1988, the decision had helped earn $5.3 million.
The next year, Engelstad invited the 13th's creditors to a luncheon at Seattle's Olympic Hotel. He handed each of them a check, paying off the last of the corporation's outstanding debts.
``We crawled out of an impossible hole,'' he said.
The first president, 56-year-old Small, said the hole was dug with shovels of impatience. A bad year for crab fishing caused a panic within the company, leading to losses of millions.
``The main problem is, most people don't understand credit,'' he said. ``We bought a lot of ships. We bought a lot of material. People got excited and stopped things and it fell apart.
``Everybody did what they thought was right. Who can tell when the fish come in? The board can't tell.''
Two years after Small left the 13th, he watched on television as the corporation's processing boat burned. ``I was sitting there watching TV and seeing the Al-Ind-Esk-A burning, and I had mixed feelings because I knew it was insured,'' he said.
The media noted the coincidence, but an investigation showed the fire was an accident.
Newspapers had other stories to write about the 13th.
The vice president at the First Bank of St. Paul was sent to prison in connection with the loans he arranged for Transalaska Fisheries Corp., a 13th subsidiary. He was found guilty of 25 counts of making improper loans in 1979 and 1980 in what was characterized by the press at the time as the worst example of bank fraud in Minnesota's history.
At about the same time, the 13th caught more flack when the corporation's name turned up on the ownership papers for the Whitecap, a 54-foot powerboat that authorities seized after determining it was being used to ferry 33 tons of marijuana into Canada from a ship near Seattle. At the time, it was the biggest drug bust in Canadian history.
The Whitecap was bought with a loan from the 13th. It was returned to the corporation after the 13th was cleared of any involvement with the drugs.
It was the corporation's poor performance, rather than its bad press, that deflated the hopes of Ben Paul, 47, a 13th shareholder who lives in Seattle. The land claims settlement and the decades that followed have been a marked disappointment. His Tlingit grandfather, William Paul Sr., was one of the notable figures who fought for Native rights in Alaska decades before ANCSA.
``We just don't worry about it,'' he said. ``If I ever get another dividend from them, great. It's pretty hard. A lot of mistakes were made. I'm glad they're doing better. About the most positive thing I could say is I was tempted to go to a meeting, since it was nearby .ƒ.ƒ.
``I didn't go.''
The negative attitude shareholders such as Paul have for the 13th may be turning around, said the corporation's current president, 76-year-old Norman Ream.
One reason is that Ream has presided over three straight profitable years for the corporation. Another may be that Ream is working for free, which helps keep administrative costs down and gives the appearance that the corporation is working for the benefit of shareholders.
In 1980, the corporation had a $450,000 payroll and suffered net losses of more than $8.7 million. In 1997, the payroll was $33,000 and the 13th turned a net profit of $816,000.
The top money-maker for the corporation is its investment portfolio, which brought in $620,000 in 1997. Other sources of revenue are franchise royalties for Mail Boxes Etc. stores in Oregon and Washington, rent from a 30,000-square-foot office building in Vancouver, Wash., and about $11,000 from sales of an educational video about Indians in the Lower 48: ``More than Bows and Arrows.''
Upcoming developments for the corporation include a construction company, M. Kennedy Co., which will have a minority-status advantage when bidding on contracts, and a push to get what all the other regional Native corporations got - land.
``We hope to get a land base,'' he said. ``I'm very, very hopeful that we will get land like the other regional corporations in Alaska.''
Ream said the hardest part of his job is hearing shareholders lambaste the corporation because of its past. Many believe their corporation hasn't changed.
``Some think I'm ripping them off,'' he said. ``They think I'm just a bad old guy because I don't give dividends.''
The 13th's 5,500 shareholders are a far-flung group, with a shareholder living in every state.
Linda Milne, 44, is about as far away from Alaska as she can get, living in Coogee, a suburb of Sydney, Australia. A Tlingit from Southeast Alaska, she enrolled with the 13th, but lost interest when the corporation went bad. The stories of corporate infighting have faded and she's interested in the corporation again.
``When it first started, I was a bit skeptical about how they were managing things,'' she said. ``I got back in touch with them when I was told they were back in business.''
Today's Empire also features a 60-page compilation of the Native corporations series, including additional articles not printed in the daily paper examining issues common to the different corporations. Readers' letters in response to the series will also be published in the Feb. 7 Empire and should be submitted by Feb. 3.
