Despite growing pains, federal Native claims act succeeds

The selection of business corporations as holding companies to take distributions under the Alaska Native Claims Settlement Act, or ANCSA, was one of several key features of the act given light critical review as the 1971 Congressional session drew to an end. The provision that surrendered all claims to aboriginal hunting and fishing rights also received insufficient scrutiny, a point of later regret among Native communities. But the choice of the corporate form, and not hunting and fishing, has been at the root of subsequent conflicts within the Alaska Native community.

From time immemorial, Alaska Natives governed through a council of village elders or a chief. Tribally based, regional governments did not exist. Faced with too many villages to negotiate a comprehensive settlement, the federal government looked to regionally based organizations, formed for whatever reason, and new associations, created with the help of Cook Inlet Native Association, focusing on land claims alone. Regional associations were formed, usually through the energy and knowledge of a younger generation of Alaska Natives, sometimes bypassing elder participation. With the adoption of ANCSA, these associations evolved into regional corporations administering the act's benefits.

The resource base, the "subsurface estate" of lands selected under ANCSA, together with supplemental land selection rights, were given to these entirely novel organizations, the regional corporations. The size and shareholder base in regional corporations, compared to the villages, allowed each to operate closer to the standard, business corporation model. But the standard model was an imperfect fit for a settlement governing heritage lands. Alaska Native culture included a land-based personal identity. The profit-seeking, business corporation often worked at cross-purposes with the complexities of village life. The task of determining what was to be done with vast lands and money assets tended to overwhelm a population with scant business experience or education.

During the previous half century, Alaska Natives had become generally familiar with democratic elections through watching and increasingly participating in state and municipal government. Knowing little or nothing about corporate governance, the novice shareholders mistakenly viewed their business corporations' elections like municipal elections.

Corporate elections bear little resemblance to the rough and tumble of popular democracy. Board elections require various personal official disclosures. Statements made during the election are held to an exacting standard of truth, sometimes preventing the truth from being spoken. Various reports must be filed. A run for corporate office requires legal advice and money.

Incumbent blocks of directors have this advice and are ordinarily re-elected through the use of the corporate machinery. Successive re-election of incumbents can lead to a loss of accountability and increased shareholder frustration.

The normal business corporation is controlled by an owner or controlling interest shareholders who change leadership at will. Each ANCSA shareholder owns only a small, unmarketable interest, making change more difficult and giving incumbent leadership a more secure tenure.

Shareholders can feel like pawns. Village corporations are usually more democratic, since everybody knows everybody else with few secrets about what is going on. Unfortunately, few villagers knew how to run a corporation and had little background in the economic decision-making forced on them by the act. Small corporations are common but not with hundreds of shareholders. Routine management tasks ate up the funds allocated to villages under the profit-sharing sections of ANCSA.

In retrospect, at the beginning, some unique structure should have been designed for managing these heritage assets, with profit-making entities held through a subsidiary arrangement. Various other changes might have made the ANCSA format more amenable to individual Alaska Native interests, but power, once established, content with its status, generally holds the gate on change. Regional corporations have established successful nonprofit subsidiaries.

Whatever its imperfections, the act has created billions in wealth, hundreds of jobs, dividend flows important to many Alaska Natives and expenditures supporting markets where corporate money is spent. Mistakes were made in the beginning but congressional attention is fickle. Legislative opportunities have their hour. Those who contributed to the act and its passage deserve the thanks of all Alaskans.

John Havelock was attorney general of Alaska at the time ANCSA was passed and has represented many ANCSA shareholders and corporations since.