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Ahtna president wants name cleared on ship purchase

Posted: Sunday, November 19, 2000

ANCHORAGE (AP) -- The president of Ahtna Inc. has asked his board to investigate allegations that he and the head of an Ahtna subsidiary personally profited in a deal to purchase a ship.

The move comes after some board members at Glennallen-based Ahtna, one of the 13 Alaska Native regional corporations, raised questions about the deal.

An attorney for Ahtna president Darryl Jordan, as well as Ed Cronick, president of Anchorage-based subsidiary Clearwater Environmental Inc., denied any wrongdoing.

A financial officer for the companies said the dispute hinges on a misunderstanding of how the 210-foot research vessel Moana Wave was acquired and how it was accounted for on company books.

Jordan did not return phone calls for an interview by the Anchorage Daily News. In recent months, he has survived repeated split votes by the 13-member Ahtna board on whether he should continue as head of the company.

His attorney, John McCarron, said that Jordan had asked the board to look into the dispute and that Jordan could not speak publicly pending the outcome.

A state agency that administers surplus federal property also is investigating Ahtna's acquisition of the ship, as well as an airplane.

Ahtna acquired the Moana Wave last year for a $50,000 fee through a government surplus property program. The ship is a former Navy vessel that had been used by the University of Hawaii for marine research.

The vessel subsequently was transferred to Ahtna subsidiary Clearwater and is now being contracted out on marine research jobs in the Pacific.

Some board members questioned the transfer as a maneuver to benefit Jordan and Cronick, who together own 49 percent of Clearwater, with Ahtna holding 51 percent.

The board authorized a committee of its members to hire an independent counsel to investigate. In a report Oct. 25, the attorney, Bruce Gagnon, wrote that the ship transfer appeared to have wiped out what would have been ''substantial losses'' Clearwater would have recorded for 1999, and that ''Jordan and Cronick each made approximately $1.33 million in the process.''

They did because the ship was recorded in Clearwater's books as $5.44 million in revenue. The booking also kept Ahtna in the black for 1999, according to the company's annual report.

''While I am not an accountant, I have never heard of or seen a company reporting substantial income upon the acquisition of an asset such as the Moana Wave at nominal or no cost,'' Gagnon wrote. ''I have confirmed the irregularity of this sort of reporting with three different certified public accountants.''

Patrick Anderson, an attorney for Ahtna, said Gagnon is ''a very fine attorney'' but that he didn't have complete information.

Dennis Mandell, chief financial officer for Ahtna subsidiaries, said both he and Clearwater's auditor are confident the ship was properly booked as income.

''This is a very, very unique transaction,'' he said.

He cited accounting rules that essentially donated property like the Moana Wave should be recorded as income based on its fair market value. Clearwater had the Moana Wave appraised and that's where the $5.44 million figure came from, he said.

As for why the ship was transferred from Ahtna to Clearwater, said Mandell, it was always the intent that Clearwater end up with the ship and all Ahtna and Clearwater board members were so informed.

''It was Ed Cronick's vision and drive that landed this opportunity,'' Mandell said.

The ship originally went to Ahtna because the company had prior experience in acquiring surplus government property, he said.

However, due to surplus property rules particular to Native corporations, the ship, had Ahtna kept it, would have been confined to operating only in Alaska. That rule didn't apply to Clearwater, so the ship was transferred on the advice of government officials, Mandell said.

He agreed that Clearwater would have suffered a loss were it not for the Moana Wave income.

Some board members have said that Jordan has a conflict of interest in simultaneously owning part of Clearwater and heading Ahtna.

But that is negated because Jordan has made no secret of his interest in Clearwater and the board of Ahtna has not objected, Mandell said.



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