The 13th Regional Corporation
Encyclopedia
The 13th Regional Corporation, is one of thirteen Alaska Native Regional Corporations
created under the Alaska Native Claims Settlement Act
of 1971 (ANCSA) in settlement of aboriginal land claims. It was incorporated in Alaska
on December 31, 1975.. The 13th Regional Corporation is a for-profit corporation presently headquartered in Seattle, Washington
, with approximately 5,500 Alaska Native
shareholders of Eskimo, American Indian
, and Aleut descent. Its original enrollment was of Alaska Natives who were no longer resident in Alaska
.
Unlike the other 12 Alaska Native regional corporations, The 13th Regional Corporation and its shareholders received only monetary compensation, with no land conveyance, in settlement of aboriginal land claims.
's passage in 1971. Its creation was dependent upon how many of approximately 78,000 Alaska Native people eligible for enrollment under ANCSA voted "yes" on Section 22 of the official enrollment form, which read, "Do you elect to establish and be enrolled in a 13th Region?" The initial determination of the Bureau of Indian Affairs
was that an insufficient number of enrollees voted for creation of a 13th regional corporation, and each of the "yes" voters was instead designated as a shareholder in one of the original 12 regional corporations.
However, a 1975 U.S. District Court
ruling by Judge Oliver Gasch overturned the Bureau of Indian Affairs. The 13th Regional Corporation was created under Alaska law as a private for-profit corporation on December 31, 1975.
, each of whom received 100 shares of corporate stock. The corporation currently has approximately 5,500 shareholders. As an ANCSA corporation, The 13th Regional Corporation has no publicly traded stock and its shares cannot legally be sold, bartered, or traded. With very limited exception, they can only be passed to the descendants of Alaska Natives.
As important as the first two compensations of A)Cash and B)Land were, without questions the most critical and financial sustaining to all other ANCSA Corporations (Both Region and Villages) was the final compensation of C) 7(i) program. The 7(i) program provided all other ANCSA Corporations with an annual recapitalization worth millions of dollars to each of the 12 ANCSA Region. It has been said that without the annual supply of 7(i)recapitalization funds, at least 8 of the 12 regional corporation would be insolvent today. The fact that the 13th Regional Corporation lasted more than 30 years without any access to 7(i) funding in any form is nothing short of amazing. It is also noteworthy that in the year that the 13th became insolvent with an outstanding obligation of approximately $2.5 million, if it had participated equally with the other 12 regions, it would have received approximately $5 million in 7(i) funding and not have been insolvent.
Unlike the other corporations created under ANCSA
, The 13th was denied by Congress from receiving ANCSA land as was provided the other 12 regions. If Congress had not inexplicitly denied the 13th land, their entitlement would have been approximately 1.2 million acres. Because the 13th shareholders did not receive a just an equal entitlement of land they have been denied any share in 7(i) revenues generated through sales of minerals, timber, and other valuable resources or development of selected lands through the revenue pooling provisions of ANCSA, as do the original 12 corporations and their shareholders. This difference has created two generations of 13th shareholders who feel that they have been unfairly and inequatably disregarded by Congress and their close relatives in the other 12 regions. The question for Congress and the 12 regionals is was it ANCSA's intention that each Alaska Native would receive a "fair and equitable settlement" of aboriginal land claims. Can it be said that a "fair and equitable settlement" was achieved if 5,000 Alaska Natives have been denied what has been annually provided to 75,000 of their relatives, for 40 years?
, the 13th Regional Corporation "still can't say exactly what happened to the remaining $27 million of land claims the corporation kept—records are incomplete. Present management [as of 1998] and past management both say mismanagement by administrators or the board of directors was to blame for the 13th's early losses." The Juneau Empire followed with, "Lawyers looked into the corporation's books. They determined that there may have been enough evidence of dubious activity to pursue lawsuits but proceeding with litigation would have cost more than would be recouped, [1998 Chairman Kurt] Engelstad said."
MLK's minority owner, with 49 percent interest, was Michael Kennedy. In 2004, The 13th Regional Corporation bought out Kennedy's shares of MKC for $2.2 million, thus making MKC a wholly owned subsidiary of the 13th. Kennedy went on to form a new corporation in June 2004, Kennedy Services LLC, also focused on construction contracts. However, it was not disclosed to shareholders that Norm Ream, who resigned from The 13th around the same time, was named as part owner and treasurer of the new venture, an apparent conflict of interest given his involvement shortly before as president and director in The 13th's buyout of MLK. Former MLK employee Jimmy Mortensen was named as a third partner. Complicating the matter was the fact that MLK had only two years remaining to its eligibility in the 8(a) program, which would presumably lower its value, throwing into question its valuation at $4.4 million at the time Kennedy was paid $2.2 million to buy out his shares. Shareholders questioned if $4.4 million was an accurate market value, or if improprieties had occurred.
, which would later become UPS Stores. He, along with Bent Peterson (from Montana), was managing the building of the northwest franchise base for Mail Boxes, Etc. While at the same time drawing salaries (which were not reported in annual reports to shareholders), the two received increasing ownership interests in the franchiser operations, then known as NW Business Services Group LLC. The Board of Directors during this period, however, authorized loans for hundreds of thousands of dollars to Engelstad and Peterson, to finance their increasing share of ownership of the operations. These loans were not fully disclosed in annual reports to shareholders. In 2004 the two bought out the 13th's last 66% interest in the operations.
The last Audited Financial Statement available to the public (for 2005) reported a net loss of $1,850,166 on net losses of $869,936 on construction contracts, net losses of $185,428 on contract electrical services, and net losses of $794,802 on corporate operations. Revenues for construction and electrical contracting went from $31,835,643 in 2004 to $8,968,568 in 2005. Private quarterly reports detailing continued operations since December 2005 are available to shareholders upon request by calling 206-575-6229 and identifying yourself as a shareholder and requesting the latest quarterly statements.
2004 Audited Financial Statements revealed that in 2004 several checks, most signed by the then CEO (Ken Krajewski) and the office administrative assistant (Suzy Villegas) —and totaling over $2.2 million—left the company over several months in a deal that The 13th's Board of Directors claim that the then-acting CEO Krajewski "had no authority to enter into". Also in 2004, the former CEO "claimed breach of contract and discrimination upon his termination. The 13th settled with the CEO in January 2005 and the settlement amount has been accrued at December 31, 2004."
Other highlights in the 2004 Audited Financial Statements include: $130,000 moved from trust for missing shareholders into "operating cash accounts in 2004"; Deficit in operations with Dick Pacific, Ltd., joint venture of almost $375,000, and a reduction of venturers' equity of about 20% in a joint venture with Chugach Support Services (related to another ANCSA corporation).
The 13th's subsidiaries include:
Alaska Native Regional Corporations
The Alaska Native Regional Corporations were established in 1971 when the United States Congress passed the Alaska Native Claims Settlement Act which settled land and financial claims made by the Alaska Natives and provided for the establishment of 13 regional corporations to administer those...
created under the Alaska Native Claims Settlement Act
Alaska Native Claims Settlement Act
The Alaska Native Claims Settlement Act, commonly abbreviated ANCSA, was signed into law by President Richard M. Nixon on December 23, 1971, the largest land claims settlement in United States history. ANCSA was intended to resolve the long-standing issues surrounding aboriginal land claims in...
of 1971 (ANCSA) in settlement of aboriginal land claims. It was incorporated in Alaska
Alaska
Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...
on December 31, 1975.. The 13th Regional Corporation is a for-profit corporation presently headquartered in Seattle, Washington
Seattle, Washington
Seattle is the county seat of King County, Washington. With 608,660 residents as of the 2010 Census, Seattle is the largest city in the Northwestern United States. The Seattle metropolitan area of about 3.4 million inhabitants is the 15th largest metropolitan area in the country...
, with approximately 5,500 Alaska Native
Alaska Natives
Alaska Natives are the indigenous peoples of Alaska. They include: Aleut, Inuit, Tlingit, Haida, Tsimshian, Eyak, and a number of Northern Athabaskan cultures.-History:In 1912 the Alaska Native Brotherhood was founded...
shareholders of Eskimo, American Indian
Native Americans in the United States
Native Americans in the United States are the indigenous peoples in North America within the boundaries of the present-day continental United States, parts of Alaska, and the island state of Hawaii. They are composed of numerous, distinct tribes, states, and ethnic groups, many of which survive as...
, and Aleut descent. Its original enrollment was of Alaska Natives who were no longer resident in Alaska
Alaska
Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...
.
Unlike the other 12 Alaska Native regional corporations, The 13th Regional Corporation and its shareholders received only monetary compensation, with no land conveyance, in settlement of aboriginal land claims.
Creation of the 13th Regional Corporation
Initially only 12 regional corporations were created after ANCSAAlaska Native Claims Settlement Act
The Alaska Native Claims Settlement Act, commonly abbreviated ANCSA, was signed into law by President Richard M. Nixon on December 23, 1971, the largest land claims settlement in United States history. ANCSA was intended to resolve the long-standing issues surrounding aboriginal land claims in...
's passage in 1971. Its creation was dependent upon how many of approximately 78,000 Alaska Native people eligible for enrollment under ANCSA voted "yes" on Section 22 of the official enrollment form, which read, "Do you elect to establish and be enrolled in a 13th Region?" The initial determination of the Bureau of Indian Affairs
Bureau of Indian Affairs
The Bureau of Indian Affairs is an agency of the federal government of the United States within the US Department of the Interior. It is responsible for the administration and management of of land held in trust by the United States for Native Americans in the United States, Native American...
was that an insufficient number of enrollees voted for creation of a 13th regional corporation, and each of the "yes" voters was instead designated as a shareholder in one of the original 12 regional corporations.
However, a 1975 U.S. District Court
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
ruling by Judge Oliver Gasch overturned the Bureau of Indian Affairs. The 13th Regional Corporation was created under Alaska law as a private for-profit corporation on December 31, 1975.
Officers and directors
A current listing of The 13th Regional Corporation's officers and directors, as well as documents filed with the State of Alaska since The 13th's incorporation, are available online through the Corporations Database of the Division of Corporations, Business & Professional Licensing, Alaska Department of Commerce, Community and Economic Development.Shareholders
At incorporation, The 13th Regional Incorporation enrolled 4,537 Alaska NativesAlaska Natives
Alaska Natives are the indigenous peoples of Alaska. They include: Aleut, Inuit, Tlingit, Haida, Tsimshian, Eyak, and a number of Northern Athabaskan cultures.-History:In 1912 the Alaska Native Brotherhood was founded...
, each of whom received 100 shares of corporate stock. The corporation currently has approximately 5,500 shareholders. As an ANCSA corporation, The 13th Regional Corporation has no publicly traded stock and its shares cannot legally be sold, bartered, or traded. With very limited exception, they can only be passed to the descendants of Alaska Natives.
A landless corporation
With the sole exception of the 13th Regional Corporation, all other ANCSA Corporations received three separate methods of compensation in settlement of their Alaska Native land claims. Those three compensations were A)Cash[the initial capitalization], B)Land [Land was intended to be a primary revenue sustaining resource] and C)a revenue sharing program called 7(i)[7(i) was created to provide an annual recapitalization for all ANCSA Corporations excluding the 13th Regional Corporation]. The 13th Regional Corporation only received A)Cash [the initial capitalization](There is the misconception that the 13th received more cash per capita than the other corporations. The 13th received the same amount per capita as all others). ANCSA does not provide an explanation as to why the 13th Regional Corporation and its more than 4,000 Alaska Native Shareholders were denied equal treatment.As important as the first two compensations of A)Cash and B)Land were, without questions the most critical and financial sustaining to all other ANCSA Corporations (Both Region and Villages) was the final compensation of C) 7(i) program. The 7(i) program provided all other ANCSA Corporations with an annual recapitalization worth millions of dollars to each of the 12 ANCSA Region. It has been said that without the annual supply of 7(i)recapitalization funds, at least 8 of the 12 regional corporation would be insolvent today. The fact that the 13th Regional Corporation lasted more than 30 years without any access to 7(i) funding in any form is nothing short of amazing. It is also noteworthy that in the year that the 13th became insolvent with an outstanding obligation of approximately $2.5 million, if it had participated equally with the other 12 regions, it would have received approximately $5 million in 7(i) funding and not have been insolvent.
Unlike the other corporations created under ANCSA
Alaska Native Claims Settlement Act
The Alaska Native Claims Settlement Act, commonly abbreviated ANCSA, was signed into law by President Richard M. Nixon on December 23, 1971, the largest land claims settlement in United States history. ANCSA was intended to resolve the long-standing issues surrounding aboriginal land claims in...
, The 13th was denied by Congress from receiving ANCSA land as was provided the other 12 regions. If Congress had not inexplicitly denied the 13th land, their entitlement would have been approximately 1.2 million acres. Because the 13th shareholders did not receive a just an equal entitlement of land they have been denied any share in 7(i) revenues generated through sales of minerals, timber, and other valuable resources or development of selected lands through the revenue pooling provisions of ANCSA, as do the original 12 corporations and their shareholders. This difference has created two generations of 13th shareholders who feel that they have been unfairly and inequatably disregarded by Congress and their close relatives in the other 12 regions. The question for Congress and the 12 regionals is was it ANCSA's intention that each Alaska Native would receive a "fair and equitable settlement" of aboriginal land claims. Can it be said that a "fair and equitable settlement" was achieved if 5,000 Alaska Natives have been denied what has been annually provided to 75,000 of their relatives, for 40 years?
Problems with corporate management
Initially, the corporation was provided $52 million in settlement money, half of which was disbursed to shareholders. The corporation for investment on behalf of its shareholders retained the remainder. However, the corporation's early losses led to charges of mismanagement of corporate assets. According to a 1998 special report by the newspaper Juneau EmpireJuneau Empire
The Juneau Empire is a newspaper in Juneau, Alaska, United States. Mark Bryan was appointed publisher in 2009.-External links:* *...
, the 13th Regional Corporation "still can't say exactly what happened to the remaining $27 million of land claims the corporation kept—records are incomplete. Present management [as of 1998] and past management both say mismanagement by administrators or the board of directors was to blame for the 13th's early losses." The Juneau Empire followed with, "Lawyers looked into the corporation's books. They determined that there may have been enough evidence of dubious activity to pursue lawsuits but proceeding with litigation would have cost more than would be recouped, [1998 Chairman Kurt] Engelstad said."
M Kennedy Construction
Kurt Engelstad and former President Norm Ream both figured prominently in the "rebuilding" years of the 1990s to 2004. Ream was instrumental in the 13th's purchase of 51 percent ownership in M Kennedy Construction, Inc. (MKC). MKC had been founded in 1979 as a sole proprietorship company and was incorporated in 1992. With The 13th's purchase of 51 percent ownership, MLK became a majority-owned subsidiary of the 13th, making it a "minority and economically disadvantaged business enterprise[s]" under the Small Business Administration's (SBA) 8(a) program., and giving it a significant advantage in competing for government contracts.MLK's minority owner, with 49 percent interest, was Michael Kennedy. In 2004, The 13th Regional Corporation bought out Kennedy's shares of MKC for $2.2 million, thus making MKC a wholly owned subsidiary of the 13th. Kennedy went on to form a new corporation in June 2004, Kennedy Services LLC, also focused on construction contracts. However, it was not disclosed to shareholders that Norm Ream, who resigned from The 13th around the same time, was named as part owner and treasurer of the new venture, an apparent conflict of interest given his involvement shortly before as president and director in The 13th's buyout of MLK. Former MLK employee Jimmy Mortensen was named as a third partner. Complicating the matter was the fact that MLK had only two years remaining to its eligibility in the 8(a) program, which would presumably lower its value, throwing into question its valuation at $4.4 million at the time Kennedy was paid $2.2 million to buy out his shares. Shareholders questioned if $4.4 million was an accurate market value, or if improprieties had occurred.
Mail Boxes Etc.
Kurt Engelstad, on the other hand, was instrumental in bringing The 13th Regional Corporation into the world of Mail Boxes Etc.Mail Boxes Etc.
Mail Boxes Etc. is a global retail chain of business service centers. The locations offer pack and ship services, couriers, office services, document production, shipping, packing materials, printing, copying, postal services and some other business services.Mail Boxes Etc., Inc...
, which would later become UPS Stores. He, along with Bent Peterson (from Montana), was managing the building of the northwest franchise base for Mail Boxes, Etc. While at the same time drawing salaries (which were not reported in annual reports to shareholders), the two received increasing ownership interests in the franchiser operations, then known as NW Business Services Group LLC. The Board of Directors during this period, however, authorized loans for hundreds of thousands of dollars to Engelstad and Peterson, to finance their increasing share of ownership of the operations. These loans were not fully disclosed in annual reports to shareholders. In 2004 the two bought out the 13th's last 66% interest in the operations.
The last Audited Financial Statement available to the public (for 2005) reported a net loss of $1,850,166 on net losses of $869,936 on construction contracts, net losses of $185,428 on contract electrical services, and net losses of $794,802 on corporate operations. Revenues for construction and electrical contracting went from $31,835,643 in 2004 to $8,968,568 in 2005. Private quarterly reports detailing continued operations since December 2005 are available to shareholders upon request by calling 206-575-6229 and identifying yourself as a shareholder and requesting the latest quarterly statements.
2004 Audited Financial Statements revealed that in 2004 several checks, most signed by the then CEO (Ken Krajewski) and the office administrative assistant (Suzy Villegas) —and totaling over $2.2 million—left the company over several months in a deal that The 13th's Board of Directors claim that the then-acting CEO Krajewski "had no authority to enter into". Also in 2004, the former CEO "claimed breach of contract and discrimination upon his termination. The 13th settled with the CEO in January 2005 and the settlement amount has been accrued at December 31, 2004."
Other highlights in the 2004 Audited Financial Statements include: $130,000 moved from trust for missing shareholders into "operating cash accounts in 2004"; Deficit in operations with Dick Pacific, Ltd., joint venture of almost $375,000, and a reduction of venturers' equity of about 20% in a joint venture with Chugach Support Services (related to another ANCSA corporation).
Business enterprises
Under federal law, The 13th Regional Corporation and its majority-owned subsidiaries, joint ventures and partnerships are deemed to be "minority and economically disadvantaged business enterprise[s]" (43 USC 1626(e)).The 13th's subsidiaries include:
- Alindeska Electrical Contractors (AEC). Headquartered in Tukwila, WashingtonTukwila, WashingtonTukwila is a city in King County, Washington, United States. The northern edge of Tukwila borders the city of Seattle. The population was 19,107 at the 2010 census.-History:...
. Wholly owned subsidiary. Union contractor specializing in private and government electrical construction services. - M Kennedy Co., Inc. (MKC). Headquartered in Bremerton, WashingtonBremerton, WashingtonBremerton is a city in Kitsap County, Washington, United States. The population was 38,790 at the 2011 State Estimate, making it the largest city on the Olympic Peninsula. Bremerton is home to Puget Sound Naval Shipyard and the Bremerton Annex of Naval Base Kitsap...
. Wholly owned subsidiary. Management construction company, (80% of work is subcontracted; 20% of the job is performed by company employees), with federal government contracts. MKC was founded in 1979 as a sole proprietorship company and was incorporated in 1992. In 1997, The 13th Regional Corporation purchased 51% ownership to meet qualification in applying for government contracts through the minority/disadvantaged element of the Small Business Administration (SBA) 8(a) program. The 13th Regional Corporation bought out the remaining 49% ownership in 2004. - North Star Industrial Contractors (NSIC). Headquartered in Bremerton, WashingtonBremerton, WashingtonBremerton is a city in Kitsap County, Washington, United States. The population was 38,790 at the 2011 State Estimate, making it the largest city on the Olympic Peninsula. Bremerton is home to Puget Sound Naval Shipyard and the Bremerton Annex of Naval Base Kitsap...
. Wholly owned subsidiary. Management Construction Company. - North Star Research and Technology (NSRT). Headquartered in Bremerton, WashingtonBremerton, WashingtonBremerton is a city in Kitsap County, Washington, United States. The population was 38,790 at the 2011 State Estimate, making it the largest city on the Olympic Peninsula. Bremerton is home to Puget Sound Naval Shipyard and the Bremerton Annex of Naval Base Kitsap...
. Certified scientific and technical services consulting firm serving federal government clients. - NW Business Services Group. This subsidiary formerly held franchiser operations in the Pacific NorthwestPacific NorthwestThe Pacific Northwest is a region in northwestern North America, bounded by the Pacific Ocean to the west and, loosely, by the Rocky Mountains on the east. Definitions of the region vary and there is no commonly agreed upon boundary, even among Pacific Northwesterners. A common concept of the...
for Mail Boxes Etc.Mail Boxes Etc.Mail Boxes Etc. is a global retail chain of business service centers. The locations offer pack and ship services, couriers, office services, document production, shipping, packing materials, printing, copying, postal services and some other business services.Mail Boxes Etc., Inc...
(now The UPS Store), but was bought out in 2004. NW Business Services Group is now a majority partner (60% ownership) with another Native company, Four Winds Services, Inc. (FWSI) of Altus, OklahomaAltus, OklahomaAltus is a city in Jackson County, Oklahoma, United States. The population was 19,813 at the 2010 census. It is the county seat of Jackson County....
, engaged in postal management services. - Cold Bay Development Corp. Oversees 12.5 acres (50,585.8 m²) owned by The 13th at Cold Bay, AlaskaCold Bay, AlaskaCold Bay is a city in Aleutians East Borough, Alaska, United States.Cold Bay is one of the main commercial centers of the Alaska Peninsula, and is home to Cold Bay Airport.-History:...
on the Alaska PeninsulaAlaska PeninsulaThe Alaska Peninsula is a peninsula extending about to the southwest from the mainland of Alaska and ending in the Aleutian Islands. The peninsula separates the Pacific Ocean from Bristol Bay, an arm of the Bering Sea....
. In partnership with an AnchorageAnchorage, AlaskaAnchorage is a unified home rule municipality in the southcentral part of the U.S. state of Alaska. It is the northernmost major city in the United States...
company, Denali Biotechnologies, an attempt is being made to grow blueberries on the property for their anti-oxidant properties.
Non-profit
- The 13th Regional Heritage Foundation. A tax-exempt, nonprofit providing scholarships to shareholders and their descendants.
External links
- The 13th Regional Corporation (official website).
- 13th Accountability (Shareholders' website, not officially affiliated with corporation).