Dunleavy's office pleads ignorance on DigitalBridge review
Tyson Gallagher, Gov. Mike Dunleavy’s chief of staff, had Dunleavy spokesman Jeff Turner tell me that he doesn’t know how much the state has agreed to pay a Washington, D.C. law firm to review the DigitalBridge contract.
Ask Department of Law spokeswoman Patty Sullivan, he said. The Department of Law spokeswoman said in 10 business days she would have some kind of reply.
The Anchorage Daily News had no better luck from the Dunleavy transparency team.
“Dunleavy’s public records officer Guy Bell said the contract with WilmerHale had been signed by the Department of Law, which also declined to immediately share a copy of the contract,” ADN reporter Iris Samuels wrote.
The Dunleavy underlings may be pleading ignorance because that is a hallmark of the Dunleavy regime. The governor himself is saying he doesn’t know details about the DigitalBridge deal either.
The state has hired WilmerHale to review the agreement, but Team Dunleavy isn’t saying for how much and it hasn’t released the contract.
The alleged goal is to have a giant law firm tell the Dunleavy administration whether former Revenue Commissioner Adam Crum did the right thing in abandoning the investment strategy used for years with the Constitutional Budget Reserve and putting $50 million into a limited partnership of some kind.
Here’s some news for Dunleavy—No one needs to hire lawyers who know nothing about Alaska to realize that Crum was wrong. And as I’ve written before, there is no way that Dunleavy didn’t know about this in advance.
The last time that Dunleavy hired WilmerHale for an outside review was a fiasco that cost the state $450,000. That contract was to review the Permanent Fund.
The law firm produced a superficial report that could have been done in a few hours.
A year ago at the end of August, Dunleavy hired the Washington, D.C. law firm under a no-bid $50,000 contract to provide “a review of the framework of the Permanent Fund corporation and the board composition, expertise, diversity and succession planning to assess and evaluate the strengths, weaknesses, opportunities, and concerns to make informed strategic decisions . . .”
In an all-too-familiar pattern with the Dunleavy administration, the contract was extended and extended again to $450,000, nine times the amount claimed on August 19, 2024 as sufficient.
The first contract claimed the company would be paid “a sum not to exceed $50,000” and the work was to be completed by December 31, 2024.
Dunleavy Chief of Staff Gallagher signed that contract as “procurement officer” and “project director” on August 28, 2024, one day after WilmerHale partner Alyssa DaCunha signed for her company.
I’m guessing that Gallagher and DaCunha both knew on August 28 last year that the sum would exceed $50,000, despite the signed statement to the contrary.
Here is the original contract.
A little more than one month later, on October 4, Gallagher signed a $50,000 increase in the contract, pushing the total to $100,000. DaCunha signed it on October 3.
I’m guessing that Gallagher and DaCunha both knew on October 4 that the sum would exceed $100,000, despite their signed assurances to the contrary. “This amended contract shall not exceed a total of $100,000,” the amendment says.
Here is the contract amendment from $50,000 to $100,000.
Under that amendment, the comprehensive review of the governance of the Alaska Permanent Fund was still supposed to be finished by December 31, 2024.
Less than a month later, the contract was inflated again, this time by $350,000.
Gallagher and DaCunha signed the second extension on October 28 and October 31. “This amended contract shall not exceed a total of $450,000,” it says.
Here is the contract amendment from $100,000 to $450,000.
This amendment extended the life of the contract by six months, to the end of June 2025.
The amendment also alleges that the scope of work has been expanded to include information uncovered with the first $100,000 of legal expenses. The claim is that this is a “second phase.”
The amendment claims that in reviewing regulations and documents, the law firm uncovered “a number of areas for further review.”
All of this was obvious before anyone signed the first contract.
With the additional money, it was to do more research and interviews to create “fulsome recommendations on options” for improving the governance of the fund and avoiding conflicts of interest.
Fulsome means either flattering or comprehensive. I think the contract amendment meant that the law firm was to have an abundance of ideas by the end of June this year.
On Februray 21 this year, WilmerHale finished its work on the Permanent Fund.
The report suggested steps to monitor conflicts of interest with annual surveys and institute rules on how trustee investment referrals are handled, a major factor in the Gabrielle Rubenstein debacle. She made dozens of investment referrals, according to corporate emails leaked in early 2024.
The fund could either ban investment referrals from trustees or set firm rules on how they are handled, the report says.
Among the other recommendations, the report says that to improve recruitment, the corporation should look at allowing more employees to work remotely Outside Alaska. The governor should consider looking Outside Alaska for new trustees, the law firm said.
Any number of junior state employees could have come up with a similar or better set of recommendations.
In Crum’s case the situation is simpler and we don’t need an expensive law firm to tell us he should have kept 100 percent of the Constitutional Budget Reserve in cash or short-term investments that can be turned into cash quickly.
That is the asset allocation listed on the Department of Revenue website. There had been nothing in the so-called “subaccount” for nearly a decade before Crum made his move, tying up $50 million or more in a limited partnership that Dunleavy claims is a secret.
Here is the letter Dunleavy sent to legislative leaders who questioned whether the contract would be higher than $50. million. It might be $75 million, Dunleavy now says, claiming ignorance about some key details.
He said his answers in the letter are “subject to amendment as we learn additional facts.”
This conflicts with what Crum has said: “The Department of Law sign-off, the governor’s office sign-off, all of that was there throughout. So this was not something that was done by fiat.”
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