Bill seeks to ban state doing business with company at center of Dunleavy administration controversy
- Mark Sabbatini
- 17 hours ago
- 4 min read
Proposed law targeting DigitalBridge might be first of its kind if enacted, senator sponsoring measure says
By Mark Sabbatini
Juneau Independent
A proposed law banning Alaska’s state government from doing business with a single company embroiled in a controversy about an investment involving a former revenue commissioner could become the first of its kind — if it gets past the Legislature and possible legal challenges on constitutional grounds.
Senate Bill 221, introduced on the second day of this year’s session by Sen. Bert Stedman, R-Sitka, targets the Florida-headquartered digital infrastructure investment company DigitalBridge. The controversy involves a now-cancelled plan to invest up to $75 million of the state’s budget reserve fund with the company, and what Gov. Mike Dunleavy’s involvement may have been in that move by former Department of Revenue commissioner and gubernatorial candidate Adam Crum.
A report from a law firm hired by Dunleavy raises "significant concerns about whether (Crum) met his statutory fiduciary duties" with the "non-routine" investment, but "has not identified any criminal wrongdoing by Mr. Crum." One reason the investment was controversial is the Constitutional Budget Reserve, currently valued at about $2.9 billion, is supposed to be quickly available if the state needs it, while the first-ever investment of funds from that account in private equity could have restricted access for years.
Among the report’s recommendations is not allowing a single person to have complete authority over investment decisions involving the budget reserve fund, with Dunleavy issuing an administrative order Jan. 19 he says implements the recommendations.
Stedman’s bill seeks to go well past that limitation.
"I think the company’s — I don’t want to say crooked — they were marketing unsuitable investments to the client and I'd say that's unethical," he said. "And the question I have for them is where is their compliance department?"
"When we have billions of dollars we want firms to do business with the state that have high integrity. I question this company's integrity."
The bill’s title states it restricts "a fiduciary of a state fund, the Alaska Retirement Management Board, and the Alaska Permanent Fund Corporation Board from investing or doing business with DigitalBridge Group, Inc., or an affiliate of DigitalBridge Group, Inc."
Inquiries about the bill sent by the Juneau Independent on Wednesday to DigitalBridge did not receive a response as of early Thursday afternoon. Jeff Turner, a spokesperson for Dunleavy, declined to comment on the bill, and the Alaska Department of Law did not respond to questions about the legality of SB 221 and if any similar statute exists.
Crum, when asked about Stedman’s bill, reiterated a prepared statement previously issued about the controversy.
"Any time you challenge the status quo, some people are going to resist," the statement notes. "But the independent investigation makes the facts unmistakably clear: I acted lawfully, within my authority, and solely in the best interests of Alaska's taxpayers. There was no wrongdoing, no conflict of interest, and no personal gain. Period. This decision was about responsibly investing and growing taxpayer dollars for the long term. Leadership isn't about doing what's easy; it's about doing what's right, and knowing what I know today, I would still pursue responsible ways to grow Alaska's assets for the long term."
DigitalBridge’s involvement with the Dunleavy administration extends beyond the reserve fund controversy, with the governor seeking agreements with the company involving the building of data centers in Alaska, The Alaska Current reported earlier this month. The report notes Dunleavy declined to comment on the matter, including confirming if a meeting on his public calendar in November 2024 with the company and Crum indeed took place.
Stedman, a legislator since 2003 and current co-chair of the Senate Finance Committee, said SB 221 might be the state’s first law specifically banning a single company if it is enacted. Sen. Jesse Kiehl, D-Juneau, a staffer at the state Capitol from 2000 until taking office in 2011, said he also is unfamiliar with any such law, and noted there are some constitutional and other legal doctrines that restrict such actions.
Among those are the Bill of Attainer clause in the U.S. Constitution that prohibits states from inflicting punishment on corporations (and individuals) without a judicial trial, the constitution’s Equal Protection Clause that prohibits unequal treatment without just cause, and the Dormant Commerce Clause that prohibits laws that unduly burden or discriminate against interstate commerce.
At the very least, the bill gives Stedman — who noted the proposal will go through legal reviews and possible amendments in the committee process — an opportunity to express his strong disapproval of the actions of both DigitalBridge and Crum.
"I think he did go way over the top on this," Stedman said, adding that while the law firm’s report found no criminal violations "my impression with that is he may be personally liable for breaching that fiduciary duty."
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
