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Energy

Korean agencies spent over $75K on Gov. Walker and officials on Asia trip

  • Author: Alex DeMarban
  • Updated: December 2, 2017
  • Published December 22, 2016

Gov. Bill Walker and other state officials received more than $75,000 in travel and lodging from South Korea sources while promoting the Alaska natural gas project to the Asian market, state records show.

In late September, the Korean Ministry of Foreign Affairs provided the governor, his wife and a member of the governor's security detail with about $22,000 for travel to Seoul and hotel rooms in the South Korean capital.

Then, in early October, the Future Consensus Institute, a South Korea think tank oriented to industry that seeks to improve livelihoods in Asia, provided about $55,000 for flights and lodging as a "gift to the state," according to ethics disclosure forms that must be filed under state law.

The governor also reported receiving meals and "protocol" ceremonial gifts totaling $1,530, including a small box with mother of pearl inlay for $85. It came from Joo Hyung-hwan, Korea's Trade, Industry and Energy minister.

Walker, recovering from prostate cancer surgery, was not available for comment.

His office has said the sponsored trips aren't conflicts of interest because the entities that provided the money aren't companies that would buy North Slope natural gas or invest in the Alaska LNG project. Walker has said a gas line project will bring the state billions of dollars and has vowed to finance it with investors or on the basis of gas-purchases, not state funds.

In accepting the foreign support, he said he was conserving government spending in line with Alaska facing multibillion-dollar deficits.

"The governor has often said there's no drive-up window to the Asian LNG market, meaning you have to work on these relationships" to foster business ties, said Grace Jang, the governor's communications director. She said having the governor and key staff on the trips sends a strong message that the state is serious.

The efforts to save the state money include first lady Donna Walker, who attended the first trip to South Korea, which included an initial visit to Singapore. The Korean government covered her travel and lodging.

"Bottom line, the state of Alaska did not pay for any part of the first lady's travel to Singapore and Korea," said Grace Jang, the governor's communications director.

As for the governor, the state spent about $1,500 for the trip to Singapore and Korea, officials said. The state treasury covered additional costs for travel by officials, and the state gas line corporation paid $25,000 for marketing opportunities at an LNG conference in Singapore where the governor spoke.

Natural Resources Commissioner Andy Mack and Walker's top oil and gas adviser, John Hendrix, were among additional officials who were not sponsored by either of the foreign entities.

Republican leaders say the gifts raise questions about the givers' intentions and whether the donations will undermine the state's negotiating power as it pursues commercial partners from Asia.

"It compromises your independence and it just looks bad for the Alaskan government and officials to accept those kinds of gifts," said Tuckerman Babcock, chair of the Alaska Republican Party.

Walker quit the Republican Party to run for governor as an independent.

Sen. Cathy Giessel, R-Anchorage, said the Korean government, looking after its citizens, will want local utilities to buy Alaska gas at low prices, if it ever becomes available.

"When I hear about Korea's Ministry of Foreign Affairs funding our travel, I am concerned about what is being asked of our government," Giessel said.

But Larry Persily, an occasional critic of Walker's attempts to get Slope gas to market, said he doesn't see any red flags.

"These aren't gifts in the sense of personal enrichment," he said.

Persily, the oil and gas adviser to Kenai Peninsula Borough Mayor Mike Navarre, said it's not uncommon for groups to extend such "diplomatic courtesy" to top state leaders.

The donations aren't from potential gas clients or investors, and likely will not affect negotiations if the project ever reaches that stage, he said.

"I would say who paid for the travel on this is the least of the project's problems," Persily said.

The $55 billion Alaska LNG project calls for construction of an 800-mile pipeline to move gas off the Slope, a terminal in Nikiski, plus a plant to superchill it into a liquid for the trip to Asia and another to process gas and remove impurities.

Exxon Mobil led the project. But the energy giant, along with ConocoPhillips and BP, are turning it over to their state partner, the Alaska Gasline Development Corp. The oil companies are backing off over concerns about its competitiveness, with prices for liquefied natural gas low and the world awash in LNG projects.

The gas line agency hopes to lower costs in part by securing federal tax waivers.

Since September, Walker has stepped up the state's outreach on the Asian continent, making three trips, including to the large LNG Producer-Consumer Conference in Tokyo in late November. The expenses from that trip are expected to be covered by the state, said Jang.

So far, the trips have produced no deals with potential partners, officials say. Pursuing those will be a focus for the gas line agency next year.

On Sept. 22, the Korean ministry covered the round-trip business-class flights to Seoul on Korean Air for Walker, his wife, and a member of the governor's security team, records show. The ministry also paid four nights of lodging for them at the Shilla Hotel in Seoul along with ground travel and an interpreter. The total came to $21,996, the records show.

The sponsorship was part of a South Korea program inviting select U.S. governors to the country to meet with government officials and businesses on important issues, Walker's office has said.

There, the governor and staff promoted the project in meetings with companies such as state-owned KOGAS, the world's top LNG buyer. KOGAS President Lee Seung-hoon gave the governor a porcelain tray with a wood display valued at $50, the disclosures show.

On that trip, the governor met people who invited him to return to South Korea to speak at the Future Consensus Institute's forum in Seoul. The think tank was launched by a wealthy businessman, Cho Chang-gul, founder of Hanssem, Korea's largest furniture maker.

Keith Meyer, AGDC president, said it was important to attend because Alaska gas can help provide regional security in Asia. But there were concerns about incurring more state costs with the second trip, he said.

Ultimately, the institute offered to foot the bill. "They said, 'Well look, what if we pay for the travel?' " Meyer said.

Days after returning to Alaska from South Korea, Walker, Meyer and Jang were headed back, along with a member of the governor's security detail.

On Oct. 7, the institute chartered a flight from Anchorage that met Walker in Kodiak, where he was attending meetings. The flight cost $39,501 so the group could meet a Korean Air flight in Las Vegas. The institute also sponsored Walker and Jang on the round-trip, business-class flight to Korea, and provided their rooms for three nights at the Westin Chosun Hotel, adding $15,225.

Meyer said there was no ethical conflict. The state gas line agency reimbursed the institute $6,585 for the business-class flight and paid for Meyer's lodging, but not his seat on the chartered flight.

The meeting focused on Asian policy, with representatives from Russia, Japan, the United States and other countries discussing long-term energy needs, relations with North Korea, and other issues, he said.

"It was an honor for Alaska to be there," Meyer said. "The fact that they were willing to pay for the travel was gracious of them."

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