The Dunleavy Administration today released the independent review conducted by the WilmerHale law firm on former Alaska Department of Revenue Commissioner Adam Crum’s decision to commit up to $75 million from the state’s Constitutional Budget Reserve Fund (CBRF) Sub Account into a private equity investment with the alternative asset management firm DigitalBridge. The three-month investigation by WilmerHale attorneys involved multiple interviews and analyzed the State’s investment policies to determine if state law and department policies and protocols were followed.
The independent review has 12 findings into the process and decisions that lead to the DigitalBridge investment.
WilmerHale also recommended four steps the administration can take to prevent deviations from the non-routine investment protocol in the future and ensure due diligence during the investment process:
A. Consider administrative action to modify the CBRF’s sole fiduciary structure.
B. Formalize a requirement to complete and document the steps outlined in the current nonroutine investment protocol.
C. Require consultation between the Commissioner of Revenue and the Department of Law regarding application of statutory fiduciary duty standards to non-routine investments.
D. Promulgate a regulation implementing procurement procedures surrounding the engagement of outside legal services to clarify that the procurement procedure must be followed even where the State may not be responsible for payment of legal fees under the contract.
Governor Dunleavy signed Administrative Order 362 to immediately enact all four recommendations. The AO will increase transparency of future investment decisions and protect Alaska’s constitutional rainy-day fund.
Last week the Department of Revenue notified the House and Senate Finance Committees it successfully sold the DigitalBridge private equity investment to a third party, terminating any contractual obligation the State had to invest additional funds from the CBRF.
Click here for a copy of the WilmerHale independent review, here for a copy of AO 362 and here for the letter to the finance committees.
