25 years after ANCSA.

• Author: Forker, Jennifer
• Position: Alaska Native Claims Settlement Act - 1996 Native Corporation Review

Alaska's unique Native corporations have recovered from early setbacks to become one of the state's major business forces.

Alaska's Native corporations have come a long way since the passage of the Alaska Native Claims Settlement Act 25 years ago. Nearly $1 billion and 44 million acres of land passed from government control into Native hands, arguably the most generous settlement with Native Americans in U.S. history.

Instantaneous wealth did not create business acumen overnight. That came later, and in some cases it is only now being realized. While some of the 13 Native regional corporations created by the 1971 act of Congress have done well for themselves - look at Cook Inlet Region Inc., the envy of many - others have floundered, victims of business inexperience, financial swindlers and the state's mid-1980s economic burnout.

"Not only were they not businessmen but they didn't have an established business or product. Most companies are created to sell a product," says University of Alaska Anchorage economist Steve Colt. "These particular corporations, business was thrust upon them: 'Thou shalt make money.'"

William Hensley, commissioner of the Department of Commerce and Economic Development, say's people forget how new business was to Alaska Natives when ANCSA came along. As a former NANA Regional Corp. Inc. president, Hensley has been involved with ANCSA developments from the beginning.

"This is kind of an historic time," he says. "It's been 25 years since the passage of the act. My people fail to realize that when the act itself was passed, there was no business experience in the Native communities - literally, from one end of the state to the other. It had been a bartering community.

"It was very, very new ... selecting land at a time when business mentality was at its infancy in their own minds. They looked at land from a subsistence viewpoint. A mixture of natural resources hopes and subsistence fueled decisions.

"It was a challenge setting up the corporations: Infrastructures, boards, bylaws ... and there were great battles with the federal government over land regulations.

"When you look at today's progress with that backdrop, you get an idea of how far these corporations have come."

Colt, who is updating his 1991 report for the Institute of Social and Economic Research (ISER) analyzing the regional corporations' performance, says the 1980s were "a series of disappointments" for the corporations.

Bankruptcies, NOLs and Recovery

Inexperience led to unfortunate business deals, with Calista Corp. losing millions in the Sheraton Anchorage Hotel, and Bering Straits Native Corp. fending off lawsuits and reorganizing under bankruptcy in the mid-'80s after spreading into too many industries too rapidly. The 13th Regional Corp. barely stayed afloat after jumping into fishing just as that industry headed for a slump.

For these corporations and others, salvation came with the opportunity to sell the very losses that plagued them. The sale of net operating losses (NOLs) was allowed across the country during the early 1980s, giving U.S. corporations the opportunity to sell their paper losses to profitable companies, which could then offset their taxable income. When the practice was stopped in 1986, Congress allowed only Alaska Native corporations to sell NOLs. The special treatment was stopped in 1988, but the regional corporations took in $426 million from the sale of three years' losses.

Those years attending "the school of hard knocks," as Colt put it, appear to be over. "You see a fairly clear, positive trend into the black in the last couple of years," he says.

The corporations have "learned not to trust all the outside consultants and advisers that claimed to be looking out for them," Colt says. "A lot of carpetbaggers showed up on their doorsteps. Some sound business proposals too, but they paid inflated prices. I think in a lot of cases, you could trace a lot of their problems to that fact.

"Today, the corporations are more cautious in entering or buying a business. They've learned not to trust anyone but themselves."

Kris Lethin, chief executive officer for Aleut Corp., echoes that sentiment. "(The corporations) are able to judge risk a lot better than they have in the past."

Invest and Diversify

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