Bad News

Illustration by Sam Buchanan

Alaska Dispatch News owner Alice Rogoff Rubenstein has made dramatic changes to the face of news media throughout the 49th state. By no coincidence, she now wields even more political influence over Alaskan, American and global politics; she has enough power and money to win over candidates from pretty much every persuasion. But just who is Alice Rogoff Rubenstein and why is she shaping up to overtake policy making and journalism in the Last Frontier? That's something every Alaskan should take notice of, because Alice and her inner circle have a vision for all of us, and it may not coincide with the vision the vast majority of residents have for the state's future.

Alice's reported path to Alaska was well within the range of normal. Supposedly in 2001 she visited the state and fell in love, then longed to return and call the place home. In reality her family's dealings with Alaskan politics date back 20 years earlier, to the mid 1980s. Nonetheless Alice subsequently purchased a home on the Anchorage Hillside-one of many she owns and splits her time between. Her D.C. political connections are significant, and she has spent the majority of her life residing in Bethesda, Maryland. The island of Nantucket claims to hold her interest throughout the summer and she has a swank pad in the elite ski town of Beaver Creek, CO.

Alaska is more or less Alice's playing field of private interests and in the last 10 years she has very much made herself at home here. For her own ulterior motives, she has been extremely vocal in wanting to do away with the permanent fund dividend distribution program. Last week she authored a commentary titled "Alaska will pay dearly if we don't act on budget now" which was published in the ADN.

Oddly, Alice doesn't talk about balancing the budget at all in her commentary, rather she presumes the state's budget will be balanced by raiding the permanent fund. Instead the entire piece advocates reducing the PFD to $1,000 this year and further limiting payments for future years to come. Without legislative intervention this year's PFD check will likely be close to double that amount. Alice's concern is about the amount of money the fund will lose in terms of future compound interest if the 2016 dividend payout continues as scheduled. It is in essence a different way of saying the fund won't gain as much in 10 years' time if you plebeians take such a big cut of today's earnings.

Alice herself has not kept a balanced budget in any of her Alaskan endeavors thus far and it seems a little odd to be taking advice from someone who-using her words-clearly can't keep her own house in order. She concludes the piece with this statement: "Legislators, there is no justification for wasting so much of our state's precious savings" (by paying out the 2016 dividend according to schedule). It's easy to dismiss the impact of the dividend as "wasted" throughout Alaska if you happen to be married to a multi-billionaire with a huge stake in the state's wealth. It's also ironic that she considers herself to be in "investment mode" as ADN continues to lose money hand-over-fist.

Regardless of how you feel about the PFD, and the current budget debacle, it's worthwhile for Alaskans to take up issue with a filthy rich baroness peddling her influence to cut it in half, or take it away altogether. Let's face it, it's a complicated issue. The PFD is money which helps many Alaskans offset the high cost of living here, and it's money many households and businesses have come to depend on to meet basic expenses. Last year the PFD paid out $1.33 billion in dividends at $2,072 per resident. Entitled or not, that money helps a lot of families make ends meet, and a great deal of it circulates throughout local economies statewide.

But most troubling is that nowhere in Rogoff Rubenstein's piece does she highlight her own family's corporate stake in Alaska through the Carlyle Group, a mega company owned by her billionaire husband David Rubenstein. Aside from managing a portion of the permanent fund's principal, Carlyle's interests in Alaska's rich natural resources and "budding" arctic economy are huge. The amount of PFD principal controlled by the Carlyle Group totals $750 million. About half of that money is directed to private equity, the rest is intended to be invested in one of Carlyle's mega subsidiaries in the energy, mineral, or natural resource sectors. Rubenstein receives significant compensation for managing this portion of the fund, totaling multiple millions in fees and commissions. Not to mention he then chooses what private interests to support with that money (i.e. those millions could likely be invested in China).

If you don't understand what the Carlyle Group actually does as a business, you're not alone. It's mind numbing how one company alone could own so many other huge companies, buying, renaming, dissolving and selling them constantly. The Carlyle Group website touts headings like "Illuminate," "Citizenship" and "Creating Value" which explain little in terms of how Carlyle actually operates. The "Our Business" heading offers this explanation: "We are one of the world's largest and most diversified alternative asset management firms. We manage 125 distinct funds and 164 fund of vehicles that invest across four segments, 11 core industries and six continents. Our global size, scale and brand enable us to access opportunities in virtually every market around the world." So they basically run the world, doing something with their fund of funds.

Carlyle Group owns 275 well-known-and many not so well-known-companies in every major sector of of the global economy. They are into some really cutting edge, futuristic and Orwellian pursuits, and primarily focus on defense, aerospace, transportation, resource exploitation, energy, data collection (ie Edward Snowden's former employer, Booz Allen Hamilton), healthcare, retail, real estate, etc. They manage $178 billion in global assets and have extensive dealings worldwide.

Like a shell game they shift, overlap, merge, and then, miraculously, these companies often quadruple in value before they are resold again. Carlyle's sleight of hand works by building up brands through relationships, under adages like "it's all about who you know" and "it takes money to make money." But where did Rubenstein get his money to begin with from rags to riches on his brilliance and motivation alone? Not exactly. He made his first millions exploiting relationships with Native Alaskans back in the 1980s in what became known as the Great Eskimo Tax Scam. Though it was never deemed illegal, it was a brilliant scam and David Rubenstein used his established Alaska connections way back then to pull it off.

Still to this day, exploiting tax loopholes is much the bread and butter of Carlyle Group's private equity business model. They make money by buying low, selling high, offsetting gains and losses, and taking a huge cut of the profits. The Carlyle Group today exploits a similar tax structure (in favor of billionaires) in a controversial loophole defined as "carried interest." Basically, Rubenstein pays far lower taxes on his earnings, which push $200 million a year. And returns in the private equity field have been known to push the 20 percent mark while the stock market yields roughly 7 percent and individual savings accounts a pathetic 0.06 percent.

Given current economic conditions, one has to wonder how a 20 percent return in any investment is even possible. With this promise of huge returns, Carlyle has also gotten ahold of Alaska's cash PFD assets. The Rubensteins' incentive to maintain control of that money-now and in the future-is way more money than any Alaskan family could possibly make collecting a lifetime of PFD dividends. That is if the PFD program survives the current assault by Alice Rogoff Rubenstein and her friends, including Governor Bill Walker.

It was subtle how Rogoff Rubenstein's news monopoly came to be, but from the beginning there were red flags everywhere as to where things were headed. When Alice bought the original Alaska Dispatch back in 2009 the online news site was about as homegrown Alaskan as they come, and money was clearly lacking. Alice offered the only life raft, and bought the fledgling business from Tony Hopfinger and his then wife Amanda Coyne, who had been operating out of their home. Alice pumped the Dispatch full of cash, beefing up the staff and significantly expanding the online news source. For a while the result was very effective and informative journalism, and it came much at her own personal expense. Still after many years the site continued to lose money.

It was a charitable thing Alice did for Alaska, and perhaps one she came to regret as Alaskans-and the rest of America-became better informed about issues affecting the state. In the name of furthering journalistic excellence, she came to acquire the Anchorage Daily News for roughly $34 million in 2014. She merged the two outfits into one, and would go on to fire all but one of the main players from both outfits in under two years. (Survivor David Hulen still dutifully serves as managing editor). Alice then dissolved, divided and renamed the two companies and has been in litigation with the former owners of both outfits (McClatchy and Hopfinger) as well. Both deals were penned on napkins.

Where the pen is often considered mightier than the sword, Alice has wielded both to accomplish this cleansing of the state's news coverage. Many long time Alaskan journalists and editors fell victim to her sword. One glance at today's ADN reveals, not much is left in terms of any real news. The paper and the online site have largely become Alice Rogoff Rubenstein's pulpit of shallow propaganda. She dropped her contract with Associated Press, thereby further limiting the flow of information in and out of the state. Her new website is powered by the D.C.-based Washington Post, which was recently purchased by Amazon founder and CEO Jeff Bezos, the fourth richest man in the world and a personal friend of hers.

Take heed Alaska, this is far from over. There is way more going on here than most people realize and quantifying the complexities of it all would be a daunting task. Throughout the years the Rubensteins have set a precedent of slighting the people of the United States out of billions in tax revenues and hoarding their wealth for themselves. Their charity is directed at furthering their own self interests and largely lacks contributions to humanitarian causes, demonstrating little compassion for those less fortunate-or cunning-than themselves.

What will become of the 2016 dividend and just who else is going to pay dearly for the budget shortfall has yet to be determined. Every legislator who doesn't vote the Rubenstein way can look forward to D.C. mega-lobbyist Carl Forti's Black Rock Group waiting in the shadows next election season to oust them from their seat. GCI/KTVA owner Ron Duncan, currently ADN's landlord, just secured the contract. This is exactly the sort of takeover tactics that Carlyle Group specializes in, and it's already well underway.

At the very least, Alice Rogoff Rubenstein should be required to register with the state as the influential lobbyist that she is. This would lend some transparency to her activities and give more reason for Alaskan's to question her conflict of interest in advocating policy changes through the state's largest newspaper. Better yet, Alaska should put her failing paper under and give back the printed voice to the pool of now independent bloggers who fell victim to her wrath. Otherwise, it's more bad news for Alaska.

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