Pebble, foes play high-dollar hardball

ldemer@adn.comMay 18, 2013 

The Upper Talarik River, whose headwaters are near the proposed Pebble gold mine site in the Iliamna Lake area of the Alaska Peninsula.

BOB HALLINEN — ADN

Four years ago, a disgruntled contractor for opponents of a proposed Pebble mine sold insider emails, donor lists, bank records and other information to the Pebble Partnership for $50,000, an arbitrator found -- setting in motion a chain of upheaval in the epic political war over the huge gold and copper prospect.

The fallout is still showing up in court cases from Anchorage to Los Angeles, including:

  • The contractor, Robert Kaplan, declared personal bankruptcy.
  • One of Alaska's most prominent political consultants, Art Hackney, who also worked for the mine opponents, said his business took a $1 million hit.
  • And the man bankrolling the anti-Pebble effort, multimillionaire money manager Bob Gillam, is accusing top players at the Alaska Public Offices Commission of trying to ruin him.

The mine developer, Pebble Ltd. Partnership, used the inside information from Kaplan, a Los Angeles-based professional fundraiser, as the framework for a complaint accusing Gillam of secretly funneling nearly $2 million into a 2008 clean water ballot initiative aimed at stopping the mine project.

With Pebble and mining groups pouring in far more money on the other side, the campaign -- at $12.5 million -- became the most expensive in Alaska history. The mining interests succeeded in defeating the ballot measure.

Pebble's purchase of information from inside the opposition camp was revealed to mine opponents in 2011, in a California business arbitration case, but only became known to the public last year, when the arbitration decision was filed in a related federal court case in Los Angeles.

Kaplan went to arbitration to try to recover nearly $800,000 in commissions and fees he contended were owed to him by Gillam, Hackney, the pro-ballot measure group, Alaskans for Clean Water Inc., and the nonprofit advocacy group, Renewable Resources Coalition Inc.

But the case backfired. Instead of Kaplan recovering money for a broken contract, the arbitrator ordered him to pay Hackney $5.6 million and the Renewable Resources Coalition $3.3 million. The retired judge who arbitrated the dispute concluded that Kaplan had "unclean hands" for selling anti-Pebble trade secrets to Pebble itself, and then being "intentionally untruthful" about it.

Kaplan maintains he did nothing wrong. In a telephone interview, he disputed that he sold the records to Pebble. He said the $50,000 was intended to help him go after the Pebble opponents in the arbitration case. Kaplan calls himself a whistle-blower, but acknowledges he didn't take his information to regulators directly:

"Clearly, I don't have the resources that the anti-Pebble folks have, or the Pebble folks. It's a fight between two giants, and I'm stuck in the middle. And I got dinged."



Big-money ballot fight

Back in April 2008, Hackney contracted with Kaplan's company, Fund Raising Inc., to raise money for the anti-Pebble ballot fight. Kaplan was the "2008 Fundraiser of the Year," according to the American Association of Political Consultants, and earlier had been named "America's Hottest Fund Raiser."

"We cannot turn to Bob Gillam to underwrite the majority of the initiative campaign because our opponents will make him the central campaign issue," Kaplan wrote on April 11 in an email seeking money from Bill Battles, owner of the magazines Fly Fish America and On Target.

The group pushing the Clean Water initiative had a $3.5 million budget and needed $285,000 by the coming Friday, Kaplan said in the email, using a figure higher than the $2.5 million that Hackney had told him.

"Bob (Gillam) has agreed (to) invite a limited number of people who contribute $35,000 or more to Alaskans For Clean Water to his private lodge for an exclusive retreat."

Battles wrote back that he couldn't donate money but had already done plenty to oppose the mine, including sending a crew to the Bristol Bay region for a story, according to emails that Pebble later bought and included in its complaint to the public offices commission.

Battles offered free website ads and free magazine subscriptions and promised to do whatever else he could.

Ultimately, almost 90 percent of the $2.9 million raised by Alaskans for Clean Water for the ballot initiative came either directly or indirectly from Gillam, APOC determined.

When it comes to the Pebble prospect, everything is huge. The possibility of a mine has been at the center of a fierce Alaska political and environmental conflict for nearly a decade. The deposit of copper, gold and molybdenum, which is used to make stainless steel, is one of the world's biggest, according to the Pebble Partnership, a joint venture of Northern Dynasty Minerals Ltd. and Anglo American, one of the world's largest mining companies.

The deposit straddles the headwaters of two key rivers in the Bristol Bay watershed, home to the biggest run of sockeye salmon in the world. Sport fishermen, commercial fishermen, hunters, lodge owners and many Alaska Native groups are fighting the mine. Pebble and its backers maintain that the mine can be developed without significant harm to salmon production.

Gillam is the founder and, through trusts, owner of McKinley Capital Management LLC, an investment company based in Anchorage whose clients include the Alaska Permanent Fund. He is a multimillionaire who owns a recreational compound at Keyes Point on Lake Clark near the proposed mine site. While it's sometimes called a lodge, he has said he doesn't charge guests to stay there.

Gillam was the instigator of the 2008 Clean Water initiative, he later told APOC. Commonly called Ballot Measure 4, it aimed to require state regulators to consider the health of salmon stocks in evaluating any new big mine proposal.

The measure failed 56 percent to 44 percent.



Inside the campaign

The emails that Kaplan was found to have sold to Pebble not only revealed the internal finances of the mining partnership's political enemies but also their maneuvering and, sometimes, their indiscretion.

One exchange concerned a shift in strategy to concentrate on Ballot Measure 4 and abandon a companion initiative.

"Bob's there -- but it will take two weeks to execute," Hackney wrote to Kaplan on April 22, 2008. "I told Ashley that the approach of telling Bob he's dumb if he doesn't listen ain't the way to go. Bob's now at the point that it's his idea. We just need to agree and continue to find reasons why he's a genius for coming up with this."

"Ashley" is lobbyist Ashley Reed, who has represented anti-Pebble groups in Juneau, including Alaska Wild Salmon Protection Inc. and Alaskans for Bristol Bay Inc. "Bob" is Bob Gillam.

A couple of weeks after the primary election, on Sept. 10, 2008, Kaplan emailed Hackney that he was still waiting for his next payment. "Hello ... anybody home?"

Hackney wrote back: "Sorry -- crazy with Congressional races. Never expected to win Don Young -- so it's a whole other ball of wax to deal with." Hackney said he expected to have a check out in the morning.

Then, on Sept. 18, another of the initiative leaders, Richard Jameson of the Renewable Resources Coalition, wrote Kaplan that they were canceling the fundraising agreement with him after just six months. The contract could have extended five years.

On Oct. 1, a surprised Kaplan wrote back that if the parties couldn't come to an agreement on his pay and contract, he would pursue "all legally available means."

By then, Hackney was consumed with other work, according to the emails Pebble filed with its APOC complaint.

"I'm just exhausted from what I'm trying to handle at the moment with Sen. (Ted) Stevens prepping for trial and with getting his and Congressman's Young's campaign put together AND fighting the mess of follow-up to Measure #4," Hackney wrote to Kaplan on Sept. 24. The bills were still coming in and Gillam was "not in a check-writing mood with the markets in the tank."

"In short -- until the election is over I'm not in a position to assess what, if any, next steps there will be -- other than that Jameson is kicking everyone who built RRC in the nuts, so however you want to deal with him is fine with me," Hackney wrote.

Kaplan never brought in any big donations, Hackney later testified in Kaplan's arbitration case, according to a legal brief filed in U.S. District Court in Los Angeles.

In October 2008, the contract with Kaplan's fundraising firm officially ended.



$50,000 from Pebble

Almost right away, Kaplan pursued arbitration over the broken contract. He also sought out an Anchorage lawyer, Thomas Amodio, who had represented mining interests, including the Council of Alaska Producers, and who pushed an APOC complaint by the pro-mining group, Alaskans Against the Mining Shutdown, during the Clean Water campaign.

Kaplan had documents from the anti-Pebble initiative backers that could be used in a formal APOC complaint against Gillam and others, Kaplan's brother, Allan Kaplan, told Amodio, according to a narrative laid out in the 2012 arbitration award decision by arbitrator G. Keith Wisot.

Would Pebble be interested in acquiring the documents, Allan Kaplan asked?

Let's see what you've got, Amodio replied in an email on Jan. 15, 2009. "If it's as good as you have suggested, I'm hopeful that we'll be able to reach a mutually agreeable arrangement," according to the arbitrator's recap of testimony and evidence in his decision.

Amodio met with the Kaplan brothers in Santa Monica, Calif. They showed him pages of records, according to a legal brief filed for Hackney and others in the arbitration case.

Amodio put the Kaplans in touch with a Pebble lawyer in Anchorage, Matthew Singer. Over the phone, Allan Kaplan told Singer he and his brother wanted $450,000 for the records, which included donor lists, bank account information and contact lists, according to the arbitration award.

When Singer said Pebble couldn't pay that, Allan hung up on him.

"And his tone of voice and his conduct by hanging up suggested that he was angry with me, and that was the end of the conversation," Singer testified in the arbitration case. The Kaplans wanted an amount that would at least cover the expenses in the arbitration case.

The parties eventually agreed on a payment of $50,000, wrote Wisot, the arbitrator, who referred to sworn testimony by Singer, Amodio, Kaplan and others.

On March 1, 2009, Kaplan met with Amodio and Singer at a swanky hotel in Santa Monica. Singer brought the check. Kaplan brought a binder of records. Amodio went through them first. Singer didn't want any documents that were marked confidential, he testified.

That didn't ultimately matter, the arbitrator wrote, because all the documents were proprietary or trade secrets. Later, a different California judge in a related case disagreed, ruling that Pebble was pursing a legitimate public interest in acquiring the documents for an APOC complaint.

While Kaplan claimed in sworn testimony that he only contacted Anchorage lawyers Amodio and Singer for help in resolving his pay dispute, the arbitrator determined that was a lie.

Kaplan reached out to the lawyers "to make good on threats to expose Gillam and respondents to public and regulatory review, and attempt extortion in ongoing settlement talks with Gillam," the arbitrator concluded.

At one point, when Kaplan was trying to get more money from Pebble for the documents, he left a message for John Shively, the Pebble Partnership's chief executive, according to the legal brief by Hackney and the anti-Pebble groups.

In an interview with the Daily News earlier this year, Shively defended buying the documents.

"I stand by what we did 100 percent," Shively said. "You've got to look at what went on here. This was a very conscious conspiracy to cover up campaign expenditures."



Massive APOC complaint

Less than three weeks after Pebble bought the documents, it and the Resource Development Council for Alaska filed a complaint with the public offices commission against Gillam, Alaskans for Clean Water, Americans for Job Security and the Renewable Resources Coalition. Their complaint included 132 pages of documents from Kaplan. Pebble listed Kaplan as "a consultant in this matter."

Pebble alleged that Gillam made nearly $2 million in secret contributions by funneling money through Americans for Job Security and the Renewable Resources Coalition, in addition to what he publicly reported giving directly to the APOC-registered Alaskans for Clean Water.

APOC's staff investigated. In a 42-page report, it confirmed much of what Pebble had alleged. APOC also filed its own complaints against Hackney and the heads of Americans for Job Security and the Renewable Resources Coalition. The staff wanted to hit Gillam, Hackney and the others with the biggest civil penalties allowed.

A long and expensive fight loomed over whether the initiative backers broke Alaska law. To avoid that, in February 2010, APOC settled with Gillam, Alaskans for Clean Water and the Renewable Resources Coalition for $100,000, and with Americans for Job Security for $20,000. It dropped the case against Hackney.

No one admitted illegal behavior. Still, in settling the case, Gillam, Alaskans for Clean Water and the Renewable Resources Coalition acknowledged an APOC warning that if they secretly shifted money in the same way in the future, they could be referred for prosecution.



A witch hunt?

Hackney says in court filings that his reputation was destroyed by the APOC investigation even though he was "exonerated." He went from 13 clients in 2006 to three in 2009 and four the year after, according to the arbitrator. Steady clients, including Northrim Bank and BP, dropped him. He lost an estimated $1 million in business.

Attorneys' fees and punitive damages swelled the arbitrator's award to Hackney to $2.8 million, under a November 2011 decision. The award doubled to $5.6 million after Kaplan's business failed to pay up, according to the final award decision last year. The Renewable Resources Coalition, which lost grant funds, was awarded somewhat less by the arbitrator.

Neither Hackney nor the Renewable Resources coalition has collected from Kaplan's company.

In December 2011, Kaplan turned to bankruptcy court in Los Angeles. He declared that his fundraising business was worthless and he owed millions to Hackney and the coalition. He wanted to wipe away the debt. Hackney and the coalition are contesting his effort to escape the arbitration award through bankruptcy, though they acknowledge that under bankruptcy law, Kaplan can't be held responsible for the doubled award, only the portion based on his conduct.

Meanwhile, in Anchorage Superior Court, Gillam filed a lawsuit in November against APOC executive director Paul Dauphinais and APOC chairwoman Elizabeth Hickerson. He claims that destructive remnants of the 2009 APOC case linger and the agency is out to get him.

Dauphinais complained to Curtis Thayer, deputy commissioner of the Department of Administration, which includes APOC, that the agency should never have negotiated a settlement of the cases, Gillam's attorneys say in court filings.

Dauphinais told Thayer in September that APOC needed another $100,000 in its budget, in part to investigate Gillam further, Thayer said in sworn testimony filed with Gillam's civil suit. A new complaint had been filed against Gillam only the month before.

If APOC could prove that Gillam improperly influenced an election, Dauphinais said, he could then go to the federal Securities and Exchange Commission, the federal agency that regulates stock traders, and bring down Gillam's money management business, Thayer said in his deposition.

"I felt he was out to get Mr. Gillam and McKinley Management," Thayer said. (Before he took the state job, Thayer, as well as Hackney, was one of the original board members of another Gillam-backed group, Alaska Wild Salmon Protection. Thayer also once stayed at Gillam's Lake Clark compound.)

A former APOC attorney, Martha Tansik, said in her exit interview in November that Dauphinais, his assistant director and Hickerson were on a witch hunt for Gillam, according to a record of the interview filed in court.

Another former employee, Vullnet Greva, said in a sworn statement that complaints against Gillam received special scrutiny by APOC.

Gillam is seeking to bar APOC from having a hand in a 2012 complaint filed by Pebble lawyer Singer on behalf of Port Alsworth resident Joel Natwick. The complaint accuses Gillam of various campaign violations in support of a 2011 Lake and Peninsula Borough ballot measure called Save Our Salmon.

Gillam, who says he fully disclosed his extensive contributions to that campaign, wants an investigator independent of APOC.

The matter is awaiting a decision from Anchorage Superior Court Judge Kevin Saxby.

Pebble opponents now are trying another approach with a new ballot measure. A group called Bristol Bay Forever Inc. is pushing an initiative that would require the Legislature to sign off on any big mine in the Bristol Bay region.

The initiative is being challenged by mining groups in Fairbanks Superior Court.

 

 


 

Reach Lisa Demer at ldemer@adn.com or 257-4390.

 

 

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