How a Risky State Investment in Seafood Cost Alaskans Millions and Left a Fishing Town in Crisis

The Alaska Permanent Fund invested $29 million in Peter Pan Seafood, a company that ultimately went bankrupt, resulting in a likely total loss for Alaskans. The investment was part of a $200 million in-state investment program aimed at supporting Alaska-based businesses. The Permanent Fund's leadership and its hired management firm, McKinley Capital Management, ignored or overlooked warning signs leading up to the deal. McKinley chose an entrepreneur with a troubled past to be a business partner in Peter Pan, who had pleaded guilty to a federal misdemeanor count in 2006. The failure of Peter Pan has had a significant impact on the community of King Cove, where the company's processing plant was located, resulting in job losses and a decline in school enrollment. The Permanent Fund's investment in Peter Pan was part of a larger effort to invest in Alaska-based businesses, but some trustees have questioned the wisdom of this approach. The fund's chair, Jason Brune, has stated that the fund's statutory responsibility is to maximize returns for the state, and that investing in Alaska-based businesses may not be the best way to achieve this goal. The failure of Peter Pan has also raised concerns about the risks of investing in the seafood industry, which is notoriously volatile. Despite this, some trustees, including Craig Richards, believe that the in-state investment program is still worth pursuing, citing the potential benefits of supporting Alaska-based businesses. The Permanent Fund has invested $56 million with McKinley, which has produced a 21% loss in value since 2021, the worst three-year return of any individual investment fund.