Alaska lawmakers jump into Hawaii dry dock dispute

Honolulu Star Bulletin

July 13, 2004


Associated Press



Alaska's congressional delegation is getting involved in a disputed Hawaii dry dock acquired

three years ago by the Native village corporation of St. Paul.


The dispute lies in whether Tanadgusix Corp. bought the surplus Navy dry dock with the promise that it would move the dock to Alaska.


The General Services Administration said Tanadgusix officials deceived the agency and the

company planned all along to keep it in Hawaii.


"It's just a big scam," said Bill Clifford, chief executive of Honolulu-based Pacific Shipyards

International, which competes with the dry dock and which filed a lawsuit last year alleging

that Tanadgusix and Marisco Ltd., a Hawaii-based ship repair company, conspired to make false

statements to obtain the dry dock. "They knew it had to be used in the state of Alaska."


The GSA has proposed to bar a Tanadgusix subsidiary from federal contracting work because of

the alleged fraud.


Rep. Don Young, R-Alaska, inserted language in the House version of a national highway bill

that calls for terminating all lawsuits related to the dry dock.


On the Senate side, Sen. Ted Stevens, R-Alaska, says he is trying to find a compromise that

would send the dry dock to Samoa.


This month, a conference committee of House and Senate members will begin writing a final

version of the bill. The committee will decide whether Young's language stays or goes.


Tom Schlosser, attorney for Tanadgusix, said the GSA debarment is misguided and would destroy the company. Tanadgusix earns about 50 percent of its revenue from government contracts to clean up oil spills and military bombing ranges.


Tanadgusix's shareholders are the Native residents of St. Paul, a village of 700 people on a

remote Bering Sea island.


The Native company is the main economic enterprise on St. Paul, but with limited options on the

remote island, it has invested elsewhere to create revenue and jobs. The company acquired the

Hawaii dry dock in 2001 through a federal surplus program.


The floating dock, the length of almost two football fields, was built in 1944 and required

significant cleanup and repairs.


Tanadgusix Chief Executive Ron Philemonoff signed a "transfer document" that promised the

corporation would not "sell, trade, lease, lend, bail, cannibalize, encumber or otherwise

dispose of the property, or remove it permanently for use outside the state."


He also wrote a letter of intent to the Alaska state official who handled surplus property on

behalf of GSA, saying the company planned to put the dry dock to use immediately.


He attached a letter from Marisco that Philemonoff said would rehabilitate the dry dock so it

could be "safely transported any long distances."


Neither the transfer agreement nor the letter mentions anything about moving the dry dock to

Alaska, though.


Schlosser said that's because Tanadgusix never planned to do so and never tried to dupe anyone

into thinking otherwise.


"It was perfectly clear to GSA's officers," Schlosser said. "St. Paul Island isn't really in

the shipping lanes."


The reference in the letter to safely transporting the dry dock over a long distance did not

mean it was to be moved from Hawaii, according to Kevin Kennedy, Tanadgusix's director of

marine operations.


"I drafted the phrase 'transported long distances' ... with the intent of keeping TDX's future

options for using the (dry dock)," Kennedy said.


U.S. District Judge Ralph Beistline of Anchorage ruled by summary judgment in late 2002 that

Tanadgusix had violated its transfer agreement with the federal government by keeping the dry

dock in Hawaii.


Tanadgusix appealed the decision and a three-judge panel heard arguments in the case last week

in Anchorage.


In a separate case, the Justice Department is seeking $15 million in damages from Tanadgusix

under the False Claims Act. The department alleges that Tanadgusix signed an agreement with

Marisco several months before obtaining the dry dock from the GSA, a violation of the transfer



Philemonoff said Tanadgusix was never convinced GSA's policy would require the dry dock to be moved.


Sen. Daniel Inouye, D-Hawaii, wrote to the Senate chairman of the highway bill conference

committee in late April objecting to Young's proposed solution.


"Aside from undermining and interfering with ongoing legal proceedings, (the House language)

establishes bad legislative precedent that undermines the respect for the rule of law in our

legislative and legal system," Inouye said.