Highway measure could affect
members of Congress try to write a final version of a new national highway
funding bill this summer, they will ponder two small sentences with potentially
huge implications for the Native village corporation of
One sentence would declare, as a matter of law, that the Tanadgusix Corp.
owns an enormous old dry dock used for ship repair in
The other sentence would terminate all related lawsuits, and there are
At the root of all the disputes is one question: Did Tanadgusix officials dupe
the government into giving them the dry dock by falsely promising they would
move it out of
Rep. Don Young, R-Alaska, inserted the sentences in the House version of the
national highway bill to resolve the dispute in Tanadgusix's favor, according to
The Senate version lacks similar language. This month, a conference
committee of House and Senate members will begin writing a final version of
the bill. The committee must decide whether Young's language stays or goes.
The committee also might choose some other solution to the dispute, which
has largely been driven by complaints from a competing dry dock company in
Sen. Ted Stevens, R-Alaska, said Thursday he is trying to find a compromise
that would send the dry dock to
The fight over the dry dock is progressing on other fronts as well.
proposed to bar a Tanadgusix subsidiary from federal contracting work
because of the alleged fraud.
The GSA maintains that Tanadgusix officials deceived the agency into thinking
the dry dock would be moved to
keep it in
Tom Schlosser, attorney for Tanadgusix, said Tuesday that the GSA
debarment is based on a gross misreading of the facts. But if it sticks, he
said, the debarment would would have one clear result for Tanadgusix, which
earns about 50 percent of its revenue from government contracts to clean up
oil spills and military bombing ranges.
"It would destroy them," Schlosser said.
The chief executive of the competing Hawaiian company, Pacific Shipyards
said Bill Clifford. "They knew it had to be used in the
Tanadgusix was formed in 1973, with money and land provided by Congress
island of the same name.
Most islanders used to work for the federal government harvesting fur seals,
but that was shut down in 1985 and the corporation is the main economic
enterprise on the island now. It owns a hotel, an eco-tourism business, part
of a seafood processing business, the wind-diesel power plant and even a
cable TV and Internet provider. But, with limited local options and the crash
of opilio crab stocks five years ago, the corporation has invested elsewhere
to create revenue and jobs for shareholders.
Alaska Native corporations are eligible to receive certain property for free
through the federal surplus program. The government had decided it didn't
want the Navy dry dock, called the Ex-Competent, anymore. The floating
dock, the length of almost two football fields, was built in 1944 and required
significant cleanup and repairs.
Tanadgusix officials tried a two-track approach, one through the federal Small
Business Administration and one through the GSA. The SBA balked over
procedural and liability issues, but the GSA agreed to the deal.
In January 2001, 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."
wrote a "letter of intent" to the
surplus property on behalf of GSA, saying the company planned to put the dry
dock to use immediately to help shareholders. He attached a letter from
rehabilitate the dry dock so it could be "safely transported any long
Neither the transfer agreement nor the letter mentions anything about moving
the dry dock to
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.
really in the shipping lanes."
Schlosser, in recent legal documents, notes that another section of the
transfer document says the dry dock is to be conveyed "as is, where is" and
"delivery is made at the present location of the property." So the contract
clearly allows and even requires the dry dock to stay in
The reference to safely transporting the dry dock over a long distance was
not made to give agencies the false impression that it would be moved from
director of marine operations.
"I drafted the phrase 'transported long distances' ... with the intent of
keeping TDX's future options for using the Ex-Competent," Kennedy said. "We
did not want the dry dock if we could never move it out of
bankrupt, or our arrangement with Marisco fell apart."
Kennedy acknowledged that he initially was concerned about whether GSA
would require the dry dock to be moved to
asked him not to bring it to
Kennedy also said he found that GSA doesn't actually have any regulations
requiring "in-state" use. The law just requires that a donee follow its letter of
intent. And GSA has "several times allowed donated property to be used
outside the state of the transferring state agency for surplus property,"
The state officials handling the deal, Ken Browning and Jim Jobkar, "allayed
my concern by stating that the same issue had arisen before with other
transfers and had been successfully resolved," Kennedy said.
explanations after it became apparent that Tanadgusix wasn't planning to
move the dry dock out of
He ruled by summary judgment in late 2002 that Tanadgusix had violated its
transfer agreement with the federal government by keeping the dry dock in
Tanadgusix appealed that decision to the
three-judge panel, including Judge Andrew Kleinfeld of
arguments in the case last week in
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 clear violation
of the transfer document.
Philemonoff and Marisco's president, Fred Anawati, signed a letter in which
Marisco agreed to pay Tanadgusix $250,000 to "facilitate its interest" in using
the dry dock, the Justice Department said in a brief. Tanadgusix promised to
leave it at Marisco's shipyard for at least five years, according to the brief.
"Tanadgusix and Marisco did not inform GSA or the (state) of the October
agreement because both Mr. Anawati and Mr. Philemonoff knew that, if the
government were aware of the October agreement, Tanadgusix would not
receive the benefit of using and operating the Ex-Competent at its shipyard,"
the Justice Department brief states.
Philemonoff, in an interview, said that is untrue. The alleged agreement with
Marisco was not a lease and didn't encumber the dry dock, he said. "We
drafted it as a letter of understanding," he said. It was an "agreement to
agree at a future date."
At the time the letter was signed, Tanadgusix didn't even know whether it
would get the dry dock, he said.
He also said Tanadgusix was never convinced GSA's policy would require the
dry dock to be moved.
"That's all a bunch of crap," said Clifford, the Pacific Shipyards CEO in
"It's very clear that (the dry dock) is to be used for economic development in
leased to Marisco, but "there was a lease agreement."
Tanadgusix officials can't blame the
Jobkar, for misleading them about GSA's policies.
"The Alaska Native corporations certainly know how to use the surplus
property program," he said. "They knew (the dry dock) had to be used in the
Clifford said the GSA's in-state policy is a reasonable way to ensure that
surplus property given away for free actually benefits the people who have
been deemed needy enough to deserve it--in this case, the people of St.
"The people of
who are making money right now are lawyers."
Sen. Dan Inouye, D-Hawaii, wrote to the Senate chairman of the highway bill
conference committee in late April taking Pacific Shipyard's side and 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.
Calls to a Young spokesman last week were not returned.
Stevens, who is good friends with Inouye, said they are now looking at a
request from "some people in
increased activity out there from the fishing fleet."
"sort of looks after the interests of
The proposal could "derive some value from the dry dock that will satisfy part
of the claims of the Hawaiians and at the same time relieve the Alaskans of
the current liabilities they have," he said.
Philemonoff, the Tanadgusix CEO, said his company has more than $1 million
invested in the repair and cleanup of the dry dock.
If it can't obtain title, he said, he could envision a compromise where the
corporation's interest is bought out and the dry dock is sent somewhere else.
where would that be? Not
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