Committee details justifications for firing Permanent Fund Corp. director

Committee details justifications for firing Permanent Fund Corp. director
Published: Sep. 28, 2022 at 6:40 PM AKDT
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ANCHORAGE, Alaska (KTUU) - The Legislative Budget and Audit Committee heard a presentation Wednesday detailing the events leading up to — and stated justifications for — the firing of former Alaska Permanent Fund Corp. Executive Director Angela Rodell.

The committee had commissioned a report from law firm Schwabe, Williamson and Wyatt, and Howard Trickey and Christopher Slottee presented their firm’s findings on what led up to Rodell’s firing. Slottee explained that much of their investigation centered around the questions of what process was employed by the Permanent Fund Corp.’s Board of Trustees, what were the reasons provided for firing Rodell, and was there any influence or consideration provided on the matter by Gov. Mike Dunleavy or his office.

Slottee and Trickey said that the process followed by the trustees in their review of Rodell’s performance as executive director deviated from the specific process outlined in their charter.

“The trustees did not follow their own charter provisions with regard for the process,” Trickey said.

Trickey noted that the trustees did follow a process for reviewing Rodell’s performance, but it was not the one outlined under their own governing documents. The reasoning for Rodell’s firing boiled down to a lack of confidence in Rodell from trustees.

Slottee said that the trustees stated lack of confidence “would be a legally sufficient reason to terminate an at-will employee.”

The report found that trustee board member Craig Richards alerted Dunleavy’s chief of staff that there were questions about Rodell’s performance. Richards was reported to have been told only to make sure the process was lawful and well-documented. However, no evidence was found that Dunleavy communicated with or directed trustees to fire Rodell.

The evaluation process for the corporation’s executive director changed numerous times in the past few years, including what evaluation instrument was used and who was provided with the anonymous survey.

The trustees provided a number of examples of when they lost trust in Rodell, including a June 2021 press release about potential negative impacts of an impending government shutdown and an August 2021 tweet about the numeric value of available funds that could be drawn on. Rodell’s tweet was in response to a presentation by Office of Management and Budget Director Neil Steininger to the House Finance Committee, who were discussing a proposal by Dunleavy to draw an additional $3 billion.

Trustees also told investigators that Rodell “manipulated the board to pursue her own agenda,” but were unable to provide any specific instances of said manipulation.

“Her agenda — which was never specifically identified as to what they believe her specific agenda was — was different than the trustees agenda,” Slottee said.

Additionally, the lack of trust and candor expressed by trustees was not backed up with any concrete evidence, according to Slottee and Trickey. Trustees felt that Rodell’s leadership could make it difficult to attract talented investment staff.

“The trustees felt and thought that there was a risk of losing some of the top investment talent that the fund had, and so that was a factor. And to that extent there was some objective support the (evaluation) scores were lower from the investment team than they were from the operations side,” Trickey said.

Slottee and Trickey direct much of the deterioration of the relationship between Rodell and the trustees to a board meeting in Kodiak in September 2021. Trustees describe a tense exchange between Rodell and Vice Chair Lucinda Mahoney, who was appointed by Dunleavy and worked as Dunleavy’s Department of Revenue commissioner. The exchange occurred off-camera and off the record, but was reported to have been about Mahoney’s motion to prevent an additional seven staff members — five investment staff and two operational staff — from being included in the budget.

Rodell also brought a mediator to the meeting in September 2021 to work with trustees in aligning their long-term vision for the corporation. However, as soon as Rodell’s mediator was introduced later in the afternoon, trustees questioned why the mediator was there and immediately dismissed the mediator.

“There was a big disconnect between what the executive director thought the board expected of her and what the board in fact was expecting of her, and I think that’s a result of deviating from following a standard evaluation process where there’s consistent feedback,” Trickey said.

Rodell also was reported to have advised against electing Mahoney as vice chair in Kodiak. Legislative Budget and Audit Committee Chair Sen. Natasha von Imhof recalled that no department commissioner had ever served as vice chair before, the position which directs the evaluation of the executive director.

Over the course of the changes in the evaluation of the executive director, Rodell’s evaluation scores technically improved between 2020 and 2021. Rodell felt that her performance should be evaluated on the growth of the permanent fund itself — which had increased by $30 billion during her time as executive director from 2016-2021 — but trustees felt differently.

“Most of the trustees placed little to no weight on the performance of the fund in terms of crediting the executive director for that performance,” Trickey said. “They saw it as a product of the investment team and the superior results of the fund’s performance were credit to the investment team and not any single individual, and that she was not directly responsible for that performance.”

During the hearing, legislators repeatedly questioned whether the trustees’ deviation from their own chartered process was illegal. Slottee and Trickey said that the process used to fire Rodell was not illegal and that lack of confidence was a valid reason to fire an executive director, despite the lack of evidence to support claims of improper behavior by Rodell.

“It does seem that there’s slightly a bit of excessive ire placed on pretty benign documents and a tweet,” von Imhof said. “I’m hearing again and again that the board has claimed assertions of conflict but they were unable to provide concrete evidence other than a tweet and the three pieces of evidence, a tweet, a press release and Kodiak. ... Is this a problem that people can make a verbal assertion and then can’t back it up?”

Rep. Andy Josephson claimed that the issue of the permanent fund’s use itself has “infected state politics” and believes that the fund also politicized Rodell’s position. Rep. Ivy Spohnholz questioned why members of the trustees were asked to “serve two masters.”

“We do have to look at ways of making that less political because it is so incredibly important,” Spohnholz said. “If the trustees of the Permanent Fund don’t believe that the CEO deserves to be recognized for the work product of her team, and the CEO believes that that’s the ultimate measure, that’s an inherent challenge, and inherent conflict that gets in the way of good governance and the boards’ lack of adherence to the charter.”

Closing the meeting, von Imhof’s assertion was that the evaluation process of the CEO should be more robust and potentially come before the Legislative Budget and Audit Committee every year. Von Imhof argued that the board should be expanded to seven seats, that the trustees should be appointed to five-year terms as a way to extend trustees past the tenure of a governor, that all future board seats should be confirmed by the legislature, that the governor should only be allowed to select one trustee and that the governor’s selected trustee may be any member of his cabinet. Von Imhof also asserted that two of the seven board members should be out-of-state seats, and that the evaluation process should be public.

“I don’t think the vice chair should ever be a governor’s employee,” von Imhof said. “That should be changed with the bylaws or statute.”

Following the hearing, all documentation on the investigation was posted to the committee website.

This article has been corrected to reflect that the Permanent Fund grew $30 billion between 2016-2021, not $30 million.