Defendants answer Sitnasuak’s lawsuit, anonymous proxy solicitation at heart of litigation

Detail of the Sitnasuak Native Corporation building on Front Street in Nome. (File photo by David Dodman/KNOM)

Detail of the Sitnasuak Native Corporation building on Front Street in Nome. (File photo by David Dodman/KNOM)

Legal battle and controversy plague Sitnasuak Native Corporation ahead of its upcoming annual shareholder meeting Sept. 30.

The corporation filed a lawsuit on Aug. 16 against three current members of its Board of Directors and one non-director. The suit alleges the three directors were involved in distributing an anonymous proxy solicitation to shareholders, which violated provisions of the Alaska Securities Act.

“This group during the 2017 election, the June 3rd election cycle, failed to follow those rules,” said Sitnasuak CEO and President Bobbi Quintavell.

The three directors, Quintavell said, “failed to disclose a series of required disclosures, which includes your identity, how much you expect to spend on that solicitation, and who is actually paying for that solicitation.”

SNC’s lawsuit specifically names directors Charles Fagerstrom, Edna (Becca) Baker, Barbara Amarok, and recently added defendant Marie Tozier on Aug. 30.

The three directors are being sued for their alleged involvement in distributing an anonymous mailer to over 1,000 of SNC’s shareholders.

According to the official complaint filed with the Superior Court in Alaska this August, Fagerstrom allegedly drafted the anonymous mailer, while directors Baker and Amarok allegedly participated in the drafting and were aware of the mailer.

Due to the ongoing lawsuit and upcoming annual meeting, Baker and Amarok declined to comment at this time. However, on behalf of all four defendants, Fagerstrom and his hired attorney filed an answer to SNC’s allegations, which says the following:

“This litigation is a last-ditch effort by the current majority of the Sitnasuak board of directors to retain political control by silencing directors and shareholders speaking out against discretionary proxy voting practices. Through the concerted efforts of Answering Defendants and like-minded Sitnasuak shareholders, an increasingly large number of shareholders have refused to participate in discretionary proxy voting in recent elections.”

Fagerstrom continues to read from the defendants’ filed answer:

“While technically lawful under Alaska statutes and regulations, Sitnasuak shareholders are becoming increasingly skeptical of discretionary proxy voting practices, which have been used in the past to gain strategic advantage in elections and directly contradict and circumvent Sitnasuak’s corporate values rooted in the traditional values and ethical beliefs of Inupiaq and Alaska Native culture.”

The defendants’ publicly filed answer to Sitnasuak’s allegations also admits that Charles Fagerstrom did send the mailer to certain shareholders.

According to the mailer sent out in June, Sitnasuak Native Corporation board member Jason Evans used discretionary proxies to change the outcome of prior corporation elections.

The corporation, including its CEO and chairman, claim that allegation, and others listed in the mailer, are false.

Sitnasuak’s Corporate Affairs Vice President Ukallaysaaq Okleasik shared his input on the anonymous mailer.

“Because it benefited certain people with a secret identity and it also disparaged certain people, it made people look bad in another light. And that was unfair because it didn’t say who was doing it. It could’ve been Exxon Oil Corporation. I mean, we really didn’t know when it first came out, who did it, who was it? And that was a big question mark, and the State of Alaska didn’t know, either.”

SNC chairman Bobby Evans adds, “Every shareholder deserves a fair election. Every shareholder deserves that directors are truthful and honest, and when they’re not, we have to tell people.”

And weighing in again, Quintavell said, “To the best of what we’ve been able to uncover so far, we discovered that it breaches the fiduciary duties of these directors. When our directors come on board, they sign a code of conduct to uphold our ethical standards. There’s a number of issues related to that which are then crossed, not just is it fair. The anonymous mailer also says that, Sitnasuak, we have unfair hiring practices, we have questionable elections. These things are not correct.”

The anonymous mailer also references Sitnasuak’s past elections, when the Alaska Division of Banking and Securities investigated SNC for violating the Alaska Securities Act during their 2014 and 2015 elections. This Division is under the Alaska Department of Commerce, Community, and Economic Development.

According to court documents, on its 2014 and 2015 notices of annual meeting and proxy statements, Sitnasuak failed to disclose Trudy Sobocienski’s two year-long employment as chief executive officer of Deloycheet. The Native corporation was then ordered to cease and desist from “omitting mandatory disclosures in proxy solicitations.”

As a result, Sobocienski was subsequently elected to the Board in 2014 and is up for re-election at SNC’s annual meeting later this month.

For the most recent lawsuit Sitnasuak is involved in, SNC is seeking monetary compensation for the damages incurred in this incident as well as the removal of all three directors named in the lawsuit. According to the defendants’ answer, they deny that the Native corporation is entitled to the relief it seeks.

Court records state the defendants have been given their summons; however, a follow up court date has not yet been set.

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