Klukwan, Inc. shareholders will vote in the next three weeks on whether to liquidate more than half of the corporation’s general income trust, the village Native corporation’s biggest piggy bank, worth $20 million.
The proposed payout of $12.6 million would be one of the largest single distributions in the corporation’s history, paying $500 per share, or $50,000 to original shareholders possessing 100 shares.
Shareholders who believe the trust has been tapped by the corporation in violation of rules governing it are among those supporting the distribution, saying they would rather control their money themselves.
"They tend to make allowances for how they can use the trust fund. In the past, they used it for the corporation when it was not right. I don’t know how they made allowances for that," shareholder Marilyn Wilson said this week.
A survey of shareholders last year found support for a partial liquidation, according to corporation officials, who say the distribution – if approved – would not affect the day-to-day operations of the corporation.
Klukwan, Inc. manager Ralph Strong said this week that the corporation maintains that spending from the trust didn’t violate trust agreements. Recent corporation information mailed to shareholders in advance of the vote said more than $2 million from the trust was spent on the corporation and subsidiaries by an employee acting alone, and that trustees have made a legal claim against that individual.
Corporation board members serve a dual role as trustees.
Shareholder Wilson said she would like to use her distribution for her family. "I don’t have much longer to live. I’d like to help my granddaughter go to school," she said.
The Chilkat Valley News could not find a shareholder willing to speak publicly against the distribution.
With as many as half of the corporation’s shareholders residing in the area, the payout represents a huge potential windfall for the local economy. (Recent Alaska Permanent Fund dividend checks, in comparison, brought about $2 million to the Chilkat Valley.)
But the distribution also means the corporation will have less to invest and potentially smaller distributions in the future.
Klukwan, Inc. board members declined comment on the distribution this week, some citing legal action against the corporation by board member Rosemarie Hotch. Hotch also declined comment.
Hotch, who has made multiple allegations about the corporation’s management of the trusts, secured a preliminary injunction against the corporation and its trustees March 3. State Superior Court Judge Trevor Stephens ruled in favor of some of Hotch’s complaints.
The injunction orders trustees to limit payments from trusts to those authorized by trust agreements and prohibits the corporation from accepting any money from corporation trusts. It also disallows trust funds to be used for paying Klukwan, Inc. expenses.
Besides the general income trust, there are smaller trusts set aside for shareholder scholarships and for reforestation of corporation timber lands.
The corporation set the general income trust aside in 1995, when its balance was $29.6 million, as an investment account for making distributions to beneficiaries, using earnings. The idea, partly, was to set aside money for shareholders that was independent of the corporation’s business operations, some of which were struggling.
The general income trust has paid out about $36 million in distributions since 1996.
The corporation became a titan among Alaska Native corporations during the 1980s, making millions in logging in Southeast. Its coffers swelled again with a special provision in federal law that allowed it to sell declining revenues as losses. At one point, it even made an overture to take over Sealaska, the regional Native corporation.
But for the past decade or more, the company has struggled, closing its subsidiaries, including a Haines-based tourism venture. The venture’s boat and dock were sold last year to the Chilkat Indian Village, the tribe at Klukwan.
Mailed ballots are due April 5.