4

COMMITTEE ON INT ER IOR AND INSULAR AFF AIRS

HENRY M. JACKSON, Washington, Chairman

CL IN TO N P. AN DE RSON , New Mexico

ALA N B IB LE, Ne vada

FR AN K CH UR CH , Id ah o

FR ANK E. MOSS, Utah

QUEN TI N N. BU RD ICK, N ort h D ak ot a

GE OR GE Mc GO VE RN , So ut h D ak ot a

GAYLORD NELSON, Wisconsin

LEE METCALF, Montana

M IK E GR AV EL , Al aska

GOR DON AL LO TT , Co lorado 

LE N B. JO RD AN , Id ah o 

PA UL J. F AN NI N, Arizo na 

CL IF FO RD I’. IIA NS EN , Wyomi ng 

MA RK O. H A TFIE LD , Orego n 

TE D ST EV EN S, Al aska 

HE NR Y BE LL MO N, Oklah om a

J erry T. Verkler, Staff Director

Stewart French, Chief Counsel

William J. Van Ness, Special Counsel

Charles Cook, Mino rity Counsel

T he fo llo w ing proc ee ding s w er e co nd uc te d in ex ec utive session on Ja n u ary 18 an d 20,

1969, and re leas ed fo r pu bl ic at io n on Ja n u ary 22, 1969.

(ID w

«
NOMINATION OF GOV. WALTER J. HICKEL, OF ALASKA,

TO BE SECRETARY OF THE INTERIOR

SATU R D A Y , JA N U A R Y 18 , 19 69

U.S. Senate,

Committee on I nterior and I nsular Affairs,

Washin gto n, D.G.

The com mittee met, in executive session, a t 10 :12 a.m., in room 3112, 

New Senate Office Bu ild ing, Se na tor Hen ry M. Jackson (cha irm an ) 

presi din g.

Pr es en t: Se na tors Jackson, An derso n, Bib le, Church, Moss, B u rdick , McG overn, Nelson, Me tcalf, Gr avel, Allo tt, Jo rd an , Fan ni n, 

Ha nse n, Ha tfield , Steven s, and Bellmon.

Also p re se nt: Je rr y T . V erk ler, sta ff d ire ctor ; Stew art F renc h, ch ief 

counsel; Bi ll Van Ness, Jr. , special cou nsel; Ch arl es Cook, minor ity 

counsel; Dan Dreyfus , Ji m Gam ble, De nny Miller, Por te r W ar d, a nd 

Roy W hitacre, pro fes sio nal staff members.

The Chairm an. Th e co mmittee will come to order.

Th is me eting is called pu rsua nt to the ann ounce ment by th e Cha ir 

yesterda y afternoo n, th at we wou ld mee t at 10 o'clock in executive 

session, to go over th e fina ncia l sta tem ent of Governo r Hickel.

A fter the me eti ng yeste rda y, it came to my attenti on th at Go vern or Hicke l ha d filed for an oil lease in 1953, inv olv ing 2,560 acres, 

and th at t hi s leas e ha d expir ed—upon fu rt her checkin g, which 1 will 

come to in a m oment—in 1963, by opera tio n of law.

Th is is to say, the lease expir ed m 10 y ear s. App ar en tly because he 

did not p ay t he a nn ua l fees. I do not hav e all of the de tails. I will ask 

Mr. Van Ness to comm ent on th is in a mom ent.

Then, we were also advised th at Mr. an d Mrs. Hic kel and one of 

his busin ess en tities, un de r the nam e of “H ick el Ent er pr ises ” ha d 

filed a n um ber of l ease applic ati ons a gg re ga tin g in acre age som ewh ere 

between 90 and 100 thousan d acres, I believe. Th is rep res ented some 

40 to 50 separa te filings.

Wh en th is in fo rm ation came to ou r attentio n— I fou nd ou t about 

it per son ally about 7 o’clock las t ni gh t—M r. Van Ness had alread y 

sta rte d che cking on it to find o ut th e sta tus . To sum it a ll up, in c hecking with the BL M office in An chorage an d in Fa irb an ks —we te le ­

pho ned the An ch orag e office—we were adv ised, Mr. Van Ness was 

advised, th at the a pp lic ati on s inv olv ing th e t op filing s h ad all ex pired 

by opera tion of law , one way or anoth er. Th is is to say, the Bu reau 

had gran ted lease s in some instanc es—I cannot say in every ins tan ce— 

to a p rio r filer.

Th e inform ation th at we had as of la te la st nigh t was t ha t th e 2,560- 

acre lease, wh ich h ad been actua lly issued an d was in exis tence fo r 10 

(35 7)
358

years, to Mr. Hickel or to one of his wholly owned business subsidiaries, had expired by operation of law, and that all of the top filings 

had expired.

I asked the staff to check and see if he had filed on any State lands, 

and if he held any State leases. We have been advised tha t tha t information would not be available or we could not check on it at this 

time.

Mr. Van Ness, you take over at this point. I am ju st trying to give *

to the committee the summary of facts as they came to me.

Why don’t you add to or revise on the matters I have disclosed to 

the committee ? Bring it up to date.

Mr. Van Ness. Yes, sir. There were two telephone conversations be- •

tween myself and the Anchorage BLM office concerning this matter.

I posed a number of questions and asked them to check the questions 

out and to reply by telegram in the form of a report on the matters 

tha t I had raised.

We have not yet received t ha t telegram, so the remaining conversations were telephone conversations. There were two of them. The 

information which Senator Jackson relayed to you is very fragmentary and the facts are not totally laid out on it.

1 have also requested that BLM follow the telegram reports with a 

detailed report by airmail-special delivery letter on this matter. The 

question as to whether there were any present or existing leases or 

applications to lease State lands has been raised, b ut we have not, as 

yet, asked the State for th at information.

The committee had asked yesterday by telephone and telegram to 

Mr. Thomas E. Kelly a clarification of the relationship between B ritish Petroleum and the State of Alaska in terms of how many leases 

are held, when they were entered into, their locations, and other relevant information.

This morning we received, r igh t before we came over, a telegram 

from Mr. Kelly, indicating th at-----

The Chairman. Read the wire.

Mr. Van Ness. “Information requested by Mr. Van Ness received.

Data in division of lands unavailable until Monday a.m. Will be happy 

to provide complete facts then to expeditiously obtain info. Suggest 

you contact B.P. USA LD 620 5th Ave New York NY Attn Mr.

C. P. B. Hardcastle President.” Signed “Thomas E. Kelly.”

The Chairman. Now, the point is th at a lease was issued involving *

2,560 acres, but this lease has expired by operation of law. This is 

the only known oil lease tha t we have any information on th at was 

in the name of the Hickels. The rest involved top filings, filing on 

existing applications that had been filed previously. We have been 

advisedT by telephone tha t no active applications were pending or 

leases issued, as I understand it, in the name of Mr. Hickel.

The Chairman. Senator Stevens.

Senator Stevens. There were a series of leases actually issued in 

this area of the Kenai Peninsula. Those leases were challenged by a 

lawsuit filed by Mr. Tallman. The chairman will remember that Ta llman challenged all of the leases on the basis tha t they had not been 

properly issued. So, there was a rush to file and practically all of the 

businessmen in the Anchorage area, in particular, top filed that area.

The reason was that if Tallman had won his lawsuit, those leases
359

alr eady issued wou ld have been decla red inv alid and th e top tili ng 

would h ave had the firs t prio rity to he issued.

Ta llm an lost his case—it went to the Supre me Cou rt—a nd when 

he lost th e case, the leases th at were issued were decla red va lid and 

the top filing app lic ati ons were all rejecte d.

The se ap plicati on s were all filed before Mr. Hickel even go t involved in elec tive office. To my knowledge, he has no t been in the 

oil business.

I have filed an oil and g as lease offer, inc ide nta lly. I h ave n ev er g otten a lease. W e do this in Alaska in o rd er to p rotec t ourse lves or to get 

the op po rtun ity fo r ou r first pr io rity in an are a th at looks lik e it has 

some promis e.

Th e Cha irm an. W ould you please expla in som ething? Yo u pa y a 

filin g fee whe n you top file, and you p ay —is it one y ea r’s re ntal un de r 

the BL M?

Se na tor Stevens. Yes.

The Cha irm an. One yea r’s rental ?

Se na tor Steve ns. You ge t the money back fo r the rental bu t you 

lose the filin g fee of $10.

Th e Cha irm an. You ge t the money back for the rental fo r th at 

firs t year, if th e pr io r lile r—i f you wan t to call him th at , pri or 

applican t—succeeds in ge tti ng the lease?

Se nator Stevens. That is correct.

Th e Chairm an. So w hat you do, you d o n ot have to pa y an a nn ua l 

ren tal th is way , if you top file. Th e Go vernm ent could no t collect 

fro m two ap plican ts at the same time.

Se nator Stevens. I t collects fro m the per son who actua lly ge ts 

the lease and refu nd s the money to the person who does not get a lease. 

A t lea st, that is th e way th ey did it wi th mine. I jus t go t the check back. 

I did not get the lease so 1 jus t go t the check back.

But the im po rta nt th in g is thi s filing w as a ra th er univer sal th in g 

in the An cho rag e ar ea because Ta llm an had conv inced a numb er of 

people t hat the or iginal leases were w rong fully issued. In th is instance, 

Se nator , the leases h ad been issued bu t were challe nged and th e Govern ­

me nt was in fact ge ttin g t he lease money from the lessee.

I f Ta llm an had won his case, the lease wou ld have been canceled 

an d the top filers would hav e received the lease, if the area had been 

leased non com pet itiv ely . Th ere was some que stio n abo ut th at , because by the tim e the Ta llm an case was ove r there was a discovery 

dow n the re and I seriou sly questioned wh eth er the y wou ld have go tten 

nonco mp etitive leases h ad t he Tallm an case been won.

Se na tor Moss. When did Gover nor Hicke l assume office?

Se na tor Stevens. Decembe r 1966.

(Record later ind ica tes December 5, 1966—staff inser t.)

Se na tor Moss. Th is was back in 1963, when these appli catio ns 

were made .

Se na tor Stevens. I do no t know when the top filings were made. 

Th e lease th at he had, he ha d one lease issued, he filed on in 1953 

and go t a lease and it e xp ire d in 1963. To my knowledge, he has not 

ha d any leases since he has been in office.

Se na tor Moss. Th e inform ation I had is about these appli catio ns 

fo r leases, bu t the dat es I ha d were Septe mb er and Octob er of 1963. 

So th at would hav e been before he took office, if he did make these.
360

Senator Stevens. Yes, and as Governor, he has had no leases.

The Chairman. The filing and the granting, I guess they were 

at the same time on the original lease that has come to our attention 

tha t he actually held. The filing on the valid lease was 1953. He held 

a valid lease from 1953 to 1963, and it expired by operation of law.

That is, at the end of 10 years, it was terminated. I assumed he made 

all of the payments and that sort of thing.

Then, on the 1963 applications, he top-filed on a number of existing 

applications for leases. This, in the aggregate, in the total filings, *

numbers somewhere between 40 and 50. The acreage involved is

between 90,000 and 100,000 acres, on which he made top filings. This 

is approximate. We are trying to get all of this confirmed, in writing 

or by wire, but we do not have that yet. *

Senator Anderson. Does he have a lease?

The Chairman. Now?

Senator Anderson. Yes.

The Chairman. No, not to our knowledge.

Senator Anderson. What about the holdings?

The Chairman. Of course, he could not hold and be Secretary, 

but the only reason this question is raised is that—and here is the 

question I asked. We have not gone all of the way through previous 

transcripts, but let me read from Wednesday’s transcript.

This is page 24 of the transcript of Wednesday, January 15. You 

will recall the Chairman asked certain questions at the outset. They 

were general, but I tried to cover the broad areas of the prehearing 

discussion of hi9 nomination. And I quote:

The Chairman. The second source, Governor—

I had asked a previous question but it is not pertinent to this—

of concern relnte s to the widely circulated press report th at you have personal ties 

with the oil industry. It has been alleged th at some of your financial affairs are 

involved in the curre nt oil development in Alaska and that you have close 

association with members of the oil industry. You have, I believe, appointed 

oilmen to some high positions in your State adm inistration.

Governor, would you please clar ify for the committee your relationship , if 

any, with Alaska’s emerging oil industry or with other oil interests?

Governor Hickel. Yes, Mr. Chairman. Senator Jackson, I am not in the oil «

business. I own no oil leases. I own no oil royalties. We just are not in what 

is known a s the oil business.

The Chairman. Rig ht at that point—

I bad interrupted—

right at that point, you do not have any intere st, financial interest, in anythin g 

connected with the oil industry?

Governor IIicke i.. Not directly. I would like to explain tha t, if I could. A 

number of yea rs ago, in 1959 or 19(50, when Anchorage was having—we were 

all trying to lower the cost of heating aro und Alaska, especially in the Anchorarea , we aske d for a franchise for the city of Anchorage. There were seven 

of us involved and we got a franchise to dis tribute gas in the Anchorage area 

from the sta ndp oin t of ju st household and whateve r industries were arou nd 

there.

We own no gas. We got the franchise. My intere st is very small as you will 

find when you get the hearings and look into that financial background. We 

buy gas from oth er people but it is strict ly a franchise to deliver na tural gas 

within the Anchorage area. We do not have any other inte rest nor do we own 

any gas fields or leases or anything like th at.
361

The Chairman. Now, th at company, as I understa nd, the original company 

that you referred to, going back to 1959, was lat er merged with a pipeline 

company.

Governor Hickel. Th at is right, Mr. Chairman.

The Chairman. Is tha t correct? And it is my understanding th at it is your proposal, and we will get into th at when we discuss your financial affairs, but this having been discussed publicly, I think it is important that these facts, and every matter rele van t to it, whether it was publicly discussed previously or not, should be mentioned on 

this ixrint. My understan ding is you plan to disi>ose of that.

a Governor Hickel. Th at is right, Mr. Chairman. Anything th at is in conflict

or you think is in conflict I am willing to dispose of no matt er how small it is.

Now, gen tleme n, wh at I see th at is relevant here is whe ther or not 

he should have mentio ned his pa st inter est and pa st ap pli catio ns

» fo r lease at the tim e he went back an d exp lained the hi stor y of thi s

An chora ge matter. It is cle ar th at if the facts are co rre ct— and we 

do no t have any inform ation to the co ntrary at this tim e—th at he is 

not now, an d has not held an oil lease since 1963, whe n th e ap plicatio ns fo r the othe r top tilings expir ed fo r one reason or anoth er.

We do n ot know those dates, do we ?

Mr. Van Ness. No; the y are sup posed to be confirm ed in the 

tele gram.

Th e C hairm an. We are su pposed to get th at later.

Bu t 1 r ais e this as it relate s to his d iscu ssion of a ny oil con nection . 

Obviously, if you have an oil lease you are not necessa rily in th e “oil 

business,” unless you have some arrang em en t with some body in connection wi th those oil leases. T hat is the relevance.

Se na tor McGovern. Does th at inc lud e the m atter Pe arso n and 

Ander son ra ise d thi s m orn ing ?

The Chairm an. Yes. How ever, we received this info rm ation th at 

we are now discus sing las t nigh t. I hav e no t seen this morning ’s Pea rson colum n. My stall’ pointed it ou t to me later, bu t I did no t ge t a 

chance to ge t th ro ug h th e paper.

Se nator Burdick. Does th at also inc lud e min era ls? You sa id he 

had no oil lease s or royalties. Does th at includ e min erals?

The C ha irm an. We did n ot ask the questio n on m inerals.

Se na tor Bible. Gold, o r silver.

* Se nator Chu rc h. He was res po nd ing to a question relatin g to oil.

The Cha irm an. Wc were ta lk in g ab ou t oil in the tech nical lea sin g

sense, of course, an d oil comes un de r m ine rals, un der t he L easin g Act.

Se na tor Bibl e. Migh t I ask a question, Mr. Ch airma n, ju st fo r

• clarification ?

Th e Chairm an. Yes.

Se na tor Bible. In view of the article. I ima gine it is fa m ilia r to 

most everybody.

Does th at inc lud e oil and gas leases in the name of the Hicke l 

Inv estme nt Co. o r o th er companies o wned bv G overn or Hickel ?

The Cha irm an. T he answer is th at Mr. Van Ness, in che cking th is 

out, when th is re port came to o ur atten tio n, asked the B LM office—the re 

is a 5-hour difference in tim e—as ked the BL M office in An chorage 

to check not ju st Mr. Hickel perso nally, bu t to check most of th e 

names which ap pe ared in the finan cial state me nt.
362

Mr. Van N ess. All of the corporations, partn erships, or business 

entities in which he had an interest, any name that looked to me like 

he had an interest in, I gave that name to the BLAI people, and asked 

them to run a check of both their current active files-----

The Chairman. Everything tha t he submitted. Does tha t include 

the hotel ?

Mr. Van Ness. It included everything in his financial statement and 

also included some of the note-holders who held obligations, owed by 

Hickel Enterprises or W alter Hickel. *

Senator Bible. What was the result of th at inquiry ?

Air. Van Ness. The result of the inquiry was tha t following what 

were admittedly very rapid checks on those names, they uncovered absolutely no indication that any of the Governor’s business entities or »

those which loaned him money, had any Federal oil interests.

Senator Bible. As of what date ?

Air. Van Ness. As of yesterday evening.

Senator Bible. No ; I mean over what period of time.

Air. Van Ness. Well, this is the problem. They have both active and 

inactive files. For example, an oil lease terminates and becomes an 

inactive file. They close the file and send it to the Federal Record Center in Seattle, as I understand it. So basically, they have just the active 

files in Alaska. How far they go back-----

The Chairman. How did they find the inactive ones, then? Did 

they have tha t information ?

Air. Van Ness. They did not have the full files on the inactive leases.

As I understand it, they do keep a card file system, which covers material tha t is not presently in their active file. They discovered some of 

these applications and the lease from that file. They have a file on the 

Tallman case, concerning the interests that were involved there, and 

the name Hickel apparently appeared in the Tallman case file. They 

discovered that.

Senator Stevens. The matter should not be too difficult because if 

you have more than a 10-percent interest in a corporation, you must 

file your disclosures and interests because there is a personal chargeability.

Senator Allott. At the time you file for a lease. *

Senator Stevens. Right. So they would have a reference in th at case 

file to any person who had more tha n 10-percent ownership in the 

corporation.

Air. Van Ness. That is correct. •

Senator Anderson. I suppose I have been in this situation a few 

times. One time I had a coal lease, with 2,560 acres, an option on about 

30,000 acres more. The railroad company went bankrupt and could 

not transport the coal and my structure was left. But the minute I 

was elected to Congress, I turned my coal interests in. You have to.

It was not a question of wanting to, I had to.

Late r on, I did some oil drilling, and we hit pieces of oil, mostly on 

State lands. One of my partners hit one other Federal area and had to 

drop me out of it because I could not participate.

So if he did have this oil lease and if he does not have i t now, I do 

not see any objection.

Senator Allott. But the important thing is tha t in filing for a 

BLAI lease, public land lease, even if it is filed in the name of let’s say, 

the Apex Corp., or if i t is filed in the name of a partnership, that the 

principals in the business have to be disclosed and BLAI requires it.
363

Now, Stu, do you want to expand tha t or correct me if I am wrong, 

in any respect?

Mr. French. You recall Senator Anderson had a hearing in Albuquerque several years ago, on the use of strawmen to avoid the acreage 

limitation. The expense of your acreage had to be disposed of. We 

had the F'eatherstone case where Featherstone was over the acreage 

and he had been divested of arbitrarily of certain valuable leases.

Senator Anderson. Featherstone just ignored it. He did not worry 

about it at all.

Senator Allott. This is one of the problems we had when we rewrote the Mineral Leasing Act in 1961, was how to avoid this.

The Chairman. Do not most of these development corporations get 

around the 10-percent provision by not having a full 10 percent in any 

one shareholder ?

Mr. French. Not having the full lease. They have a development 

contract, which is not considered a lease.

The Chairman. That is right. Senator Stevens.

Senator Stevens. Mr. Chairman, I have sent the letter of Jan uary 

12 back out to the Governor and asked him if any of these companies 

or any of the people listed here have had leases, State or Federal, while 

he has been Governor, and he says “No”.

I am sure he is prepared to answer this and it should be substantiated by the files.

The real problem th at we have here, gentlemen, I am sure you realize, both the State and Federal Governments use serial numbers. They 

do not use name indexes, so you have to be cross-indexed to the serial 

numbers of the leases, and you have to then go back to the case file and 

find out what disclosure was made.

So the leases th at were listed in the article this morning, of course, 

they should be fairly easy. They are old leases and ought to be in the 

Federal Record Center. It will take some time to get them out. There 

is no question those applications were filed but they were never issued, 

so they should have been placed in the Federal Record Center.

Senator Church. Mr. Chairman, the only question here, it seems 

to me, is whether or not in our own careful checking of the record, the 

Governor said anything that either misled the committee, or failed to 

make a full and open disclosure of holdings that he may have.

Now, that part of the record tha t you have read does not indicate 

any misrepresentation.

The Chairman. It is in the present tense.

Senator Church. Yes, it is in the present tense, and there is nothing 

here, or nothing tha t we have yet been able to uncover to date, that indicates the Governor did not tell us the complete truth.

The Chairman. Tha t is right.

Senator Church. The only question raised is whether he might have 

mentioned these earlier applications, but tha t seems to me stretching 

things, if presently he holds no leases of any kind.

I do think, though, tha t we ough t to be assured tha t the staff has 

made a careful perusal of the entire record.

The Chairman. We have not been able to do tha t in the limited 

time that has been available.

Senator Church. Several other Senators raised questions on this 

score, and we ought to be sure tha t w7e know just what the Governor's 

replies were. That is, if they do in fact conform with the facts.
364

The Chairman. Let us just discuss a procedual matter here.

I am wondering whether it would not be wise to go into public 

session and discuss this lease matter and then having completed tha t, 

come back and go over the financial statement.

Senator McGovern. Will the Senator yield ?

The Chairman. Senator McGovern.

Senator McGovern. With reference to th at column, Senator A llott, 

one thing that bothers me about it, and it may or may not be true, 

but Pearson and Anderson talk about making some long-distance calls 

themselves to check on the year 1963. Then they make the statement 

that “Time has not permitted investigation of other years, but the 

above should be sufficient to prove to the easygoing Senators tha t »

Ilickel has not been telling the truth .”

Well, I do not know, does that raise the question of whether there 

should be a careful check made by the staff on all of these leases? If 

this is right, th at they cheeked on 1963, but did not know about other 

years, should that not be checked out, or has it been checked out ?

The Chairman. Well, let me run the risk of just trying to speak 

from my general understanding of the situation.

It is my understanding that if you are going back, you are going 

back to check on prior filings that are no longer operational, not valid 

in any way, you would have to go to the record center in Seattle.

Am I correct ?

Mr. Van Ness. Yes, sir. That is correct.

The Chairman. And what the staff did, in the brief time we had 

last evening—the staff worked real late, because of the 5-hour time 

differential—was to pin down everything that is active.

How did they get the inactive information here?

Mr. Van Ness. The BLM office apparently retains a small card index 

tha t indicates transactions going back some time, and apparently the 

card index itself is not sent to the Federal Records Center at the same 

time that the closed files are. But portions of the card index are eventually sent down there. BLM indicated tha t some of this information was 

derived from the oldest p art of the card index, which would eventually 

be sent down to the Federal Records Center. «

Senator Stevens. I might clarify that, Mr. Chairman. There is what 

we call a serial sheet or book for each lease. There is a serial page and 

those are there from the first lease that was ever issued in that office.

They are never taken. So attorneys who want to check to find out *

what happened to a lease can go in and look at that serial sheet and if 

you need the case file, it would lie in the Federal record office.

But there should be in the Anchorage office, the complete listing of 

every lease that is ever issued and a cross index to those leases by name 

cards. But again, it is a monumental task to review all of those things.

But they are there. I think the Governor is prepared to tell you that 

there are none.

Senator McGovern. In other words, there is no active or valid ap plication now pending in the Governor’s name or the names of any of 

his company ?

The Chairman. Apparently not in the names of the companies that 

the staff gave to the BLM office in Anchorage. We took the names of the 

firms in which he has an interest. Those names were submitted to the 

BLM people for checking.
365

However, we have not had all of this confirmed as yet by wire. We 

have been waiting for the wire. We asked fo r confirmation in writing, so tha t we would have something official, other than just telephone 

conversation, to report to the committee.

Senator Hatfield. You have had an oral confirmation, I understand.

The Chairman. Yes, sir. Mr. Van Ness is the one who has been on the 

telephone.

Would you restate it again ?

Mr. Van Ness. The oral confirmation was with Mr. Burt Silcock, 

who, as I understand it, is the department head or the State director of BLM. H e did confirm this over the telephone, the serial number on these applications which were listed in the Pearson column this m orning. I had this information yesterday evening.

Senator Bible. Confirm in what words ? What did it say ?

Mr. Van Ness. Confirmed in the sense there were lease applications 

on file that had been filed under the signature of Walter J. llickcl, of 720 Gambell Road, or Drive. Appa rently, it would be the same in­ dividual now before us for confirmation. There is no indication other­ wise. He gave me the serial numbers on these and the dates on which they were filed and he also indicated t hat the files were now closed. As I understand the law on this, there is no present property interest in 

these lease applications. They are null and void. The reason the files were closed is th at the leases on th at particu lar land were issued to the prior applicant, and when the leases legally vested in the prior applicant all other subsequent applications were null and void. Any money, the first year’s rental is in a suspense account, or escrow, is then returned to the applicant and the $10 application fee which must accompany each application is retained by BLM as a 

processing or filing fee.

Senator Bible. Wh at was the date of the automatic cancellation 

because of exercise by the primary lessee ?

Mr. Van Ness. I do not have that information.

The Chairman. We have requested all of that.

Senator Allott. How did Mr. Pearson get the dates they expired 

in 1963, if we could not get it ?

Mr. Van Ness. I was informed it expired—it is not clear in my 

mind—I would like to see the telegram, as to whether these expired.

The Chairman. The applications were filed in 1963. They were filed 

between April and October ?

Mr. Van Ness. September and November in 1963, was my understanding.

The Chairman. I t would be unusual to have them all expire at the 

same time.

Senator Stevens. These were filed on top of existing leases, and 

therefore would be rejected.

The Chairman. These were filings?

Senator Stevens. Th e Tallman appeal was against the Bureau of 

Land Management for having rejected those applications and that is 

what made the Tallman case, and it went to the Supreme Court.

The Chairman. Th at was not decided until 1965.

Senator Stevens. The action taken by th e BLM was confirmed by 

the Supreme Court, so their action took place as of that date.
366

Senator J ordan. Made all top filing invalid as of tha t date.

Senator Stevens. Right.

The Chairman. As it related to that case. But tha t involved the 

question whether or not the Moose Range was open.

Senator Burdick.

Senator Burdick. The testimony shows tha t presently the nominee 

does not own leases or oil leases.

Now, a lease or royalty ripens from interest, and the interest is a 

mineral interest. I have some mineral interests because we own land 

out there on the homestead.

The point I am making is, Does he have any mineral interest? In 

my State, if a mineral interest is recorded, you can easily find it. The 

mere fact you have no lease, you have no royalty, does not mean 

you have no interest. It is a recordable interest. It might ripen into a 

lease or royalty.

Senator Stevens. We are strictly a public-land State and every 

thing is either owned by the State or Federal Government, as far as 

minerals are concerned. There is no recording. The recording is in 

the State office or BLM office.

Senator Burdick. Can I buy an interest in your State ?

Senator Stevens. We do not have private lands.

Senator Burdick. Can I buy mineral interests from the Government?

Senator Stevens. No, you cannot buy it. You can lease it.

Senator Allott. He cannot.

Senator Stevens. You cannot. If you were a homesteader before 

1957, you could have had a mineral interest. But afte r tha t date— 

correct me if I am wrong; that was 1957 ?

Mr. French. About that time.

Senator Stevens. There is a reservation of minerals in the State of 

Alaska and afte r that the Federal Government leases them or the 

State, depending on who has the title.

Senator Burdick. F or a short period of time in history you could 

have an interest.

Senator Stevens. Very short. In our State the minerals are owned 

by the State as a whole. Even hard rock minerals we lease, we do not 

get petroleum interests under State law.

Senator Burdick. We transfer by deed.

Senator Stevens. See, you have title. We do not.

Senator Moss. I f we follow the suggestion of the chairman to meet 

in open session to clear this up, will there be anything else that we 

need to ask the Governor about ?

I have a few questions t hat have to do w ith his trust arrangement 

while he was Governor.

The Chairman. Well, I think that we should go into all financial 

matters first in executive session, and then make a release on his financial affairs afterw ard. Otherwise, I do not think it would be fair to 

the nominee. We may get into areas th at have nothing to do with anythin g but his own, you know, purely private life. I want to see a full 

disclosure of the action taken by the committee, and the agreement we 

arrive at, and other matters. But I do not thin k it is in the public 

interest to release everything. There are certain rules of privacy tha t 

apply in considering a nomination.

Senator Bible. What does the chairman propose in this respect?
367

The Chairman. Tha t we not get into m atters tha t are, you know, 

wholly irrelevant and have no connection with his duties. T hat is all.

Senator Moss. I am willing to buy that. The second question is, 

then, W hat about the time factor?

The Chairman. Let me just put the problem, and I want to share 

this with you. I think we have a couple of alternatives here, gentlemen. One is to have a public meeting r ight now out in the public hearing room., on this question, to give the nominee a chance to respond.

The other is to go over until 10 o’clock on Tuesday ; to have a public 

session on this matter, to give the statf time to get all of the data, and 

to give the Governor an opportunity to get any information tha t he 

might need to support his position. I want to point out we do need 

to have the information covering the State filmgs and, if any, the 

State leases.

Senator Church. Right.

The Chairman. And we cannot get that until Monday. This is the 

problem we are up against.

Senator Hatfield. What about 11 o’clock Monday ?

The Chairman. The inauguration conflicts.

Senator McGovern. Could I ask a couple of questions?

The Chairman. Certainly.

Senator McGovern. Could there be a situation where you have a 

lease application tha t has been thrown out or held in abeyance, because of these native claims, or the withdrawal order tha t would 

automatically become active again if there were a change in either 

the withdrawal order or the status of the native claims ?

The Chairman. The answer is, I would assume, that if there is a 

lease application and it involves land tha t is subsequently withdrawn, and if the withdrawal order is issued, it immediately, has the 

effect of nullifying the applications.

Senator McGovern. If the Governor is involved in any applications 

of tha t kind that have been rejected-----

The Chairman. All the information, Senator McGovern, we have 

is on the basis of telephone conversation with the Anchorage office. 

It indicates the leases have been invalidated by operation of law.

I want to repeat this. All of the preliminary information tha t we 

have, and as far as we know this is final, though we do not have it in 

writing as yet, is that first: the Governor had an existing valid lease 

involving 2,560 acres from 1953 to 1963.

This expired after 10 years.

Senator McGovern. This has nothing to do with the native claims 

or withdrawal.

The Chairman. The information I have is th at it does not, because 

there was no claim pending.

Second, there were filings or applications made, what we have 

referred to as “top filings.” These were filed over applications made 

previously. The top filings were made in October and November and 

involve some 90,000 to 100,000 acres, and those applications are no 

longer valid. So he has n othin g pending as it relates to those matters.

Now, that is the information that we have. The question, I think, 

is whether or not we should take a statement from the Governor now. 

I th ink maybe the most orderly thing is to wait until Tuesday morning 

and get all of the facts, so tha t we can let him be fully apprised and 

have the information available.
368

Now, we can go out—w hatev er the com mittee wants to do—b ut I 

do not wa nt to ap pe ar t o be ru nn in g in, ru nn ing out. We can open a 

meeting, close it, and come back.

Se na tor Moss. Could not th e ch air man very well say to the press 

th at althou gh we have ora l ass ura nces conce rning these things , we 

think it is imp era tive f or the G ov erno r’s sake, as well as th e committee, 

th at we h ave verification in writing of a question th at has been raised ?

The Chairman. Right.

Se na tor Allott. Now, let me ask you this question. I f th is man— 

and I th in k every thi ng shows t h at he has been an exc ept ion al Governor—if th is man were to deal in a lease fo r him sel f aft er be became 

Secre tary of t he In terior , he would be in the most un ten able position 

th at anybody in the U nited St ates could possibly be in. lie c ould not 

possibly be in a more un ten able position.

I am satisfied wh at will happ en , wh at the result will be. Senator 

Stevens infor ms me if he ha d known these things ye ste rday, while 

we were at the com mittee he aring, he could have pu t in a phone call 

to Al aska an d gotten th is inform ation for the com mittee, bu t he was 

not inf orme d abo ut it an d ne ith er was I.

Th e Cha irma n. Let me say right there, I wa nt to make it very 

clear. When did you first find ou t about it, Bill?

Mr. Van Ness. Ap prox im ately 6 :30 p.m.

Th e Chairm an. 1 learned abou t it at 7 o’clock. We knew nothing 

abo ut it before then .

Se na tor Allott. I f th is quest ion ha d been raised yeste rday, the 

inform ati on could have been obtained.

Now, Se na tor Jackson an d I —an d I suppose I can spe ak abo ut 

these matters—had a meeting with him yeste rda y, a very sh ort one, 

conce rning his finan cial sta temen t and disclosure.

I th in k th at Senator Jack so n will say th at , he said, “I do no t care 

wh at it is, wh at the com mittee s ays, if they w an t me to dispose of this 

or th at , I will dispose of it, if they th in k there is a possible conflict 

down the road .”

Is th at no t wh at he told us?

Th e Chairman. T hat is rig ht .

Well, may I say— and I th in k it appeare d in one of the papers— 

I told the press th at he had agreed and he said it in the public hearing, 

too, if I recall the rec ord , th at “I will div est my self of wh ate ver the 

com mittee deems it necessary t o d ive st.”

I will make it clear again , he has agreed to enter int o an agree ­

ment whe reby none of his com pan ies—an d th at is wha t he has pri ­

marily in his assets, the y are who lly owned fam ily com panies—will 

eng age in any kind of b usiness with the F ed eral Gove rnm ent . You cannot go beyond tha t.

In ad ditio n, he will disp ose of stocks th at are in anyw ay—an d we 

have been down tha t list—in c onflict w ith his d uties a nd res pon sibilities 

as Secre tar y.

Se na tor Hatfie ld.

Se na tor H atfield. Mr. Ch airm an , I would like to point up one th ing 

here. I t seems t o me th at if we have a question relatin g to his financial 

relatio ns hip to any of these dealings, we c ould call him in and sat isfy 

our selves on th at po int now.
369

Second, it seems to me tha t we have in 3 days of testimony taken 

many statements from him on many controversial issues, and we have 

accepted his word on them and for them.

Now, this morning it appears to me we have oral confirmation 

answering our questions that have been raised most recently. To wait 

until Tuesday, until we can get written confirmation, seems to me a 

little out of keeping with what we have been willing to accept through 

3 days of many things, by his oral testimony.

I think to introduce at this point the requirement for written confirmation of things is a little bit out of keeping with what has been 

our regular procedure th roughout 3 days of hearings.

Now, is this a valid point or not?

Senator Metcalf. Mr. Chairman, I completely concur in that. Here 

is a man with many charges and the interrogation tha t has been made, 

and if a hearing means anyth ing at all, it means he comes before us 

and we take his word.

Now, he has been nominated by the President to head a great departm ent as a Cabinet Officer and we just have to accept th at he is 

an honorable man.

I think he underwent a grueling series of interrogatories, and as 

Senator Hatfield points out, we have accepted his word. It has been 

pointed out to us that he had these oil leases, or these applications, in 

1963.

Now, I am derelict, Mr. Chairman. I had tha t information at noon 

yesterday. I looked a t it and saw 1963, and they have expired. Are we 

going to say a man shall never be in the oil business to hold office in 

the Federal Government?

Maybe i f you feel we should publicly answer this, we should do it 

today. I think it would be detrimental.

Senator J ordan. Mr. Chairman.

The Chairman. Senator Jordan.

Senator J ordan. He says in answer to a question about the oil business “I am not in the oil business. I own no oil leases. I own no oil 

royalties. We just are not in what is known as the oil business.”

The Chairman. I t is all in the present tense. There is no question 

about it.

I only raise this question in that he did go back and discuss—going 

back to 1959—the genesis of the Anchorage gas.

Senator J ordan. Because he still has an interest in that, a present 

interest.

The Chairman. That is righ t.

Senator Anderson. I want to say, I think we ought to go ahead 

and vote as soon as possible. I have seen enough of this situation. 

People make certain charges and do not sustain them. They claim 

he is in the oil business and he says he is not in the oil business.

The Chairman. No; it is just a question; this information came to 

us before the article was out.

Senator Moss. It has not just boiled down to this question of oil. 

There are still a lot of things to be discussed.

The Chairman. We do have, of course, the matter of State leases, 

which we can ask him about. We can ask him about tha t in the open 

session.
370

I must say I was somewhat concerned. You recall my questions, I 

was somewhat concerned about the wire from Mr. Kelly, in which he 

said he had bought stock in British Petroleum afte r he took office as 

Commissioner. I thought it was important, and just a m atter of f airness, to keep the record straight whether or not he had negotiated any 

leases with them.

Now, I understand that because of the freeze, we got a general 

comment from someone t hat there is a question as to whether or not 

any leases have been issued during his term of office, negotiated or 

otherwise.

I do not know that.

Senator Stevens. Can I speak on this? I was the one tha t said that 

to you.

The Chairman. All right.

Senator Stevens. The problem is the State only has some six million 

acres today under patent and the balance are being help up because 

of the freeze. The Prudhoe Bay was the last series of leases which was 

issued up in the North Slope. Those w’ere issued before Mr. Kelly 

became commissioner. In my talks with him, he said he has not negotiated anything with them, the division of lands, which is a part of 

the department of natural resources in the State, which actually issues 

the leases. And it could be possible—he said he would be willing to 

check this—it could be possible that they could have picked up a lease 

which had expired and someone else had held and let go and they 

picked up. Now, in this circumstance, that would be a noncompetitive 

lease. There are no competitive leases that have been issued, and we do 

not issue negotiated leases. There are no negotiated leases under our 

system. It is either competitive or noncompetitive. The commissioner 

has the righ t to determine whether they are competitive on the basis 

of competitive interests.

So, as a practical matter, he has assured me.

The Chairman. Is that prohibited by State law ?

Senator Stevens. The negotiated lease?

The Chairman. Yes.

Senator Stevens. Yes; the State law provides for just the leasing 

system under the Mineral Leasing Act.

The Chairman. But under that act, it has to be competitive?

Senator Stevens. He determines whether it is competitive by virtue 

of the area. And the north slope was competitive.

The Chairman. Yes; well what I am saying is, if he determines it 

is not competitive, then-----

Senator Stevens. Then it is available on the first-come, first-served 

basis, and he has nothing to do with it. Whoever comes in first and puts 

the money down on the counter.

The Chairman. It is a priority filing?

Senator Allott. Tha t would be roughly equivalent then, Ted, as I 

understand it, to our situation in the BLM, where you are on a known 

geological structure, whether oil is being produced or not, it has to be 

a competitive bid ; is that correct ?

Senator Stevens. That is correct, only we do not follow th at system. 

The Commissioner makes the determination of whether it is to be competitive and where it is not to be competitive.
371

Basically, we have tried to issue all of our leases competitively, as 

the Governor said, because we get more rent.

Senator Allott. For general edification of the committee, so that 

we can understand this, under the BLM system, the Federal law, if you 

have an application for a lease on a known geological structure, 

whether oil is being produced or not, it must be a competitive bid.

Senator Stevens. That is right.

Senator Allott. It cannot be on a first-come, first-serve basis.

Senator Stevens. If BLM has any leases, they have got to meet it 

competitively or go to noncompetitive lease, on first-come, first-served 

basis, and no negotiation about it.

The Chairman. Well, gentlemen, any further discussion on this?

Senator McGovern. I do not want to ask anything of Mr. Ilickel 

tha t is not asked of other nominees, but does the financial statement 

ordinarily include the obligation and liabilities of a nominee, as well as 

his assets ?

The Chairman. Yes, we have all of that. It is not in the narrative 

form, but we have it in the financial statements which he submitted to 

the chairman, and which will be made available.

We have the statement here. They did not give us copies for every 

member of the committee, but we will have it available.

Gentlemen, I suggest tha t we go out and hold a public session on 

this question and we will see how long that takes. Then we can come 

back in here.

Now, we are going to be here most of the day if we do that.

Senator Moss. Would there be an opportunity of asking questions 

on another subject, not having to do with oil leases ?

The Chairman. It will be an open session. So you may ask anything 

tha t is pertinent to his nomination.

Senator McGovern. Do you pla n to vote today on his confirmation ?

Senator Allott. I want to say I think the chairman has been eminently fair in handling this thing. I have to state that publicly.

(Whereupon, at 11:20 a.m., the executive session was recessed, to 

reconvene following the open session, which convened immediately.)

(The committee resumed in executive session at 12:40 o'clock p.m.)

The Chairman. There are two remaining matters that need to 

be confirmed in writing, as I see it.

One relates to the British Petroleum matter that we have discussed, 

and I think there is no reason why tha t information cannot be obtained 

for us in writing from Mr. Kelly.

We have checked the matter of leases under the Governor’s name 

affecting Federal lands, and that wire is coming in, or was to have 

been sent, so we were informed, by the Bureau of Land Management.

The other matter is whether or not there are any State leases with 

the Governor. He said there are not. I think it would be useful to have 

this simply confirmed in connection with any matter tha t is going to 

be discussed on the floor.

Now, what I would suggest is th at we meet at 8 :30 on Monday, to go 

through this matter, and complete the financial discussion. I do not 

think this is going to be involved—the financial matter—because 

Governor Ilickel has been most cooperative. He has to me, personally, 

and he has in public session.

23 -6 54 — 69— pt. 2---- 2
372

Then we can act on it, so it can be reported one way or the other to 

the Senate that afternoon. It will have to lay over, because I understand there may be objection on the part of a couple of Senators, at 

least, not members of this committee, to the nomination being taken up 

on Monday.

Senator Anderson. Why do we not just approve him ?

The Chairman. We cannot just approve him. We have to go 

through the financial statement this afternoon, if you want to do that.

Senator Metcalf. Mr. Chairman, if we are convinced they are 

going to wait over, why not wait until Tuesday morning?

The Chairman. I thin k in fairness, the new administration wants 

to take up all of the appointments and swear them all in on Tuesday, 

the 21st, which is the day after Mr. Nixon assumes his duties as 

President. There is ample precedent for this. Some nominations will 

be taken up on Monday, because they were filed, and they are not 

objectionable from the standpoint of any one Senator objecting.

Senator Bible. I think also, Mr. Chairman, if you have reason to 

believe some objection is going to lie taken up, we had better be sure 

we have taken every possible step to be able to defend our committee's 

action on the floor, if the debate comes up on this.

The Chairman. I would rather have the record complete. That is, 

I do not question the Governor’s integrity on th is matter at all, but 

I would rather have the record show that the Governor has pointed 

these matters out, as he did today, has no pending interest in any oil 

lease or mineral lease and so on, and that that is corroborated by the 

officials in charge, as well; and that we had that information, the 

corroboration of it, at the time we acted on the nomination.

Senator Bible. You will have that at 8:30 Monday morning?

The Chairman. I have talked to Senator Stevens. He will get this 

information over the weekend, they can get it and get it in here, so 

we have it. We will meet at 8 :30, and I do not think we have to spend 

too much longer on his financial matters.

Senator Stevens. Mr. Chairman, I have got the Division of Lands 

on the phone now. He is prepared to send us a telegram. There have 

been no leases negotiated with British Petroleum, and he will go down 

personally and have within the hour the listing of outstanding British 

Petroleum leases in Alaska, because they are not that great.

The Chairman. Can we also cover any listings under the Governor?

Senator Stevens. I do not think the Governor ever had-----

The Chairman. The Governor said he did not. There is no doubt 

about it, but I want to have it in writing. 1 am trying to make the 

record clear.

Senator J ordan. Mr. Chairman.

The Chairman. Yes.

Senator Stevens. He says he has already answered the questions 

by your staff, that the Governor never had any leases.

The Chairman. Put it in a wire.

Senator Stevens. lie will send you the wire immediately.

The Chairman. Just so you understand, there are two things that 

are outstanding here, as of this moment. One is the Kelly matter, and 

this relates to any leases that may have been negotiated while he has 

been in office—because he had bought some stock in the British Petroleum Co.
373

But while you are doing that, get all of the leases, negotiated and 

nonnegotiated. #

. .

Senator Stevens. Leases issued since Kelly became Commissioner (

The Chairman. Yes. And secondly, whether there are any applications or leases or any other matters pending, listed under Hickel, 

and to their best knowledge, these companies that Governor Hickel is 

in, involving State mineral leasing, with mineral leasing meaning oil, 

coal, whatever it may be.

1 would just like to have corroboration.

Is there anything else now, while he has him on the phone?

All righ t, Senator Jordan.

(The following telegram was received on January 18, 1969, in response to inquiries by the committee staff on the matters refe rred to 

by the cha irm an:)

J uneau, Alaska, Jan uar y 18, 1969.

S en ato r H en ry M. J ackso n,

Old Senate Office Building,

Washington, D.C.:

Information requested by Mr. Van Ness received. Data in division of lan ds unavailable until Monday a.in. Will be happy to provide complete fac ts then to 

expeditiously obtain info. Suggest you contact B.P. USA LI) 620 Fifth Avenue, 

New York, N.Y., attention of Mr. C. P. B. Ilardc astle, president.

T h o m a s E. K el ly.

Senator J ordan. My suggestion was simply this. Why do we not 

proceed w ith the perusal of the financial statements, and get t hat out 

of the way so tha t we are only waiting for the information? Th at is 

the only th ing holding up the committee. Why do we not go forward 

and get our study of lus linances out of the way ?

The Chairman. I thought we could do tha t all in the morning. 

I mean on Monday morning, we will have the wires here, if they do 

not come in within an hour-----

Senator Burdick. I was just going to say, I have been holding off 

here for nearly an hour now, and it will be very difficult fo r me to get 

back this afternoon. I would much prefer to do it Monday morning.

Senator Bible. I move we do whatever the chairman suggests.

The Chairman. I want to act on this on Monday morning, so that 

we will clear the matter up one way or the other.

I see no need for any delay beyond that.

Now, I will repeat what I said regarding his financial situation. I 

think it falls into two parts. One relates to any stockholdings t ha t he 

has in companies and we go throug h those—we should have tha t list— 

is it complete now ?

Mr. Van Ness. I t is not. No.

The Chairman. Have the Governor come in now; I would like to 

talk to him.

Senator Allott. And ask Mr. Cremo to come in.

The Chairman. And, his administrative assistant, Mr. McMurray.

Senator Hatfield. Mr. Chairman, I would like to support the idea 

expressed by Senator Bible tha t you do this, set the rule on it, but 

I would like to ask just two or three questions.

What are the things that we are hung up on ?

The Chairman. We are hung up on the telegram.

Senator H atfield. All right, that is one.
374

The Chairman. I will know in a minute w hat else we are hung up 

on here. We will see if he has a complete listing of all of his stock.

Senator H atfield. Then, Mr. Chairman, let me ask you this.

If we got the telegrams in this afternoon, and you said it is going 

to take us most of the afternoon to go over his financial report, his 

statement, then we would have all of these matters tha t we have to 

make our judgment on here before this committee this afternoon.

The Chairman. We would.

Senator Hatfield. Therefore, I would like to ask the question; is 

tha t not correct?

The Chairman. I f we have all of his financial statements ?

Senator Hatfield. That is what I am assuming.

If we have all of his financial statements, we have the telegram 

from Alaska, what would be the purpose of having to lay over until 

Monday morning?

The Chairman. There would be no problem if you had all of that. 

But are you sure we will have all of th at?

Senator Hatfield. I do not know, I am saying if we do get all of 

that.

The Chairman. I personally feel we should have a confirming wire. 

I mean the information in writing on these two points tha t I just 

mentioned, before we report it out.

Senator Hatfield. All rig ht; we are not going report it out this 

afternoon anyway, are we?

The Chairman. We have not decided tha t yet.

Senator H atfield. My point is, can we not proceed with going over 

his financial statement and if the telegrams come in the meantime, we 

are finished.

The Chairman. Let me ask the Governor a basic question.

Governor, do you or your assistants have available-----

Senator Stevens. May I clarify one thing. Mr. Kelly said his staff 

was asked for this information. He does not know where the inquiry 

came from. I said this committee staff had asked for it.

He said his staff had asked for it; he did not know where the request 

came from.

The Chairman. Well, I do not think we had talked with him.

Senator Stevens. I just wanted to clarify this.

The Chairman. Governor, do you have available now a list of your 

stock, every stock of the companies that you have ?

Governor H ickel. I think so.

The Chairman. And, the name of the companies ?

Governor Hickel. Yes.

The Chairman. And the names of the stocks that are held by these 

various subsidiary holding companies?

Governor Hickel. Yes, I think we have everything we possibly 

could have.

The Chairman. You listed in part, in the holding, “Miscellaneous 

stocks and so on. But do you have a list—I want to make clear here, 

because there is a point—what we probably would need over the weekend, is a list of all of the stock you own individually, or through companies, and all of the stocks that any of your wholly owned subsidiaries 

own. Do you have that ?

Senator Bible. Right here in your hand now.
375

Governor Hickel. Do I have the stock with me ?

The Chairman. No, the names of them.

Senator Allott. Do you, Mr. Cremo? Do you have th at here?

Mr. Cremo. I think the Senator is referring to the miscellaneous 

categories.

Senator Bible. We are referring to everything.

Senator Anderson. We are talking about assets; what amount of 

money he has and how it is invested.

Governor Hickel. Everything is there.

Senator Anderson. How much is it, roughly ?

Se na tor Church. What is it, $5 million?

Govenor Hickel. $5 million—probably.

Mr. Chairman, everything is there.

The Chairman. I understand. As long as we know what we are doing here about your individual investments tha t are held by your 

wholly owned subsidiaries. You have all that ?

Governor H ickel. Right.

The Chairman. We do not want to start on tha t this afternoon, 

if you do not have it.

Mr. Cremo. Statements of the wholly owned subsidiaries, all of them 

are here, before you.

Senator Allott. Will you yield to me?

The Chairman. I yield.

Senator Allott. 1 think the one thing in here that is bothering the 

chairman, in one of these, there is a statement as to miscellaneous stocks 

of approximately $16,000.

Do I remember tha t righ t ?

Th e Chairman. Just a minute. I am trying to find it.

Senator Allott. Here is one, Governor.

I have here the Walter J. and Ermalee Hickel report and examination of balance sheet, December 31.

You list Alaska Interstate Barrow Realty and so forth and so on, 

then you have down below “miscellaneous, $2,794.”

Governor Hickel. I do not have any idea what tha t is. I t may be 

just one stock—what I am trying to do is line this up and see where 

the 2,000 comes in.

The Chairman. Then you will also look under Hickel Investment 

Co., and subsidiaries, and they have Northern Lights Shopping Center 

investments, and so on, and “ Other common stock, $16,091.47,” at cost, 

you see. Bear in mind, when you give the “cost,” I do not know the 

current value, that does not give any indication.

Governor I Iickle. Here is what it is. Tha t stock in Northern Lights 

Shopping Center, tha t started with a cost of—that is evidently the 

original capital cost.

The Chairman. It says, “investments at cost.”

Governor Hickel. Tha t would be 1951, roughly, and it was land. 

Tha t is what that would be.

The Chairman. But right under it-----

Governor Hickel. Oh, “other stocks.” Alaska State Development 

Corp.

The Chairman. No. “O ther common stocks.” “Other common stock, 

$16,000.”
376

Governor IIickel. It would have to be, Senator, some of my wholly 

owned companies, that would just have stock, because I do not have any 

stock in that company.

The Chairman. It says, “Other common stocks.”

Senator Allott. What he says is this “Other common stocks” would 

have to be—this is the Hickel Investment Co., common stocks are the 

other companies.

Governor Hickel. See, there is Travlers In n of Fairbanks, Inc. That 

is wholly owned and it had some stock. That is one we own. Then 

Mountain View Shopping Center, th at is in IIickel Investment Co.

The Chairman. What is the value, current value, of the “Other 

common stock ?”

Governor Hickel. It must lie real estate, and I am trying to 

think-----

Senator Allott. No, common stocks.

Governor Hickel. Would that not be common stocks we own in the 

corporation, that this company would own, 100 percent? It is not a 

marketable stock.

The Chairman. I understand. You can have a corporation you have 

stock in that owns real estate.

Governor IIickel. Travelers Inn of Fairbanks is a corporation, 

wholly owned by Hickel Investment Co., and I wholly own the Trav ­

elers Inn in Fairbanks. Mountain View Shopping Center is a much 

smaller N orthern Lights.

The Chairman. What is the value of Northern Lights Shopping 

Center ?

Governor H ickel. I would say with the debt and everything, $5 

million total investment, roughly.

The Chairman. The $125,000 figure-----

Governor IIickel. But it owes money, too.

The Chairman. I understand. What is the net worth of it ?

Governor H ickel. Well, it owes what, $2% million? Tha t would be 

at my cost when I built it.

In other words, I would not know what it is worth until I sold it. 

I would say it is free and clear, and if it were free and clear and you 

sold it, you might get 25 for it. But it is not free and clear.

Senator Anderson. Do you have a family holding?

Governor Hickel. No, everything we have is right here, just these 

various corporations.

The Chairman. You see my question here, I am not trying to nit 

pick.

Governor H ickel. I understand.

The Chairman. These are in at cost. And this $125,000 item is actually current value, at $2% million.

Governor Hickel. It is not valued a t th at. Because it would have a 

liability against the assets.

The Chairman. I asked for the net worth, and I thought you said— 

did you not say it was ?

Senator Church. If it were free and clear.

The Chairman. Wh at is the net worth after deducting for outstanding indebtedness?

Governor II ickel. I t would be what you can sell it for. I am just 

guessing, that you might sell it for, if it were free and clear, it might 

lie higher than $5 million. I am just guessing at it.
377

Senator Allott. You would not know until you sold it.

Governor H ickel. It has never been sold. I have owned it since 1951.

The Chairman. But there are current values locally, you can get an 

appraised value?

Governor II ickel. My point, Senator, for purposes of tax and bank 

statements, you do not really go around with what you think somethin g is worth. I could give you my net worth, I would thin k if I 

liquidated myself, everything, 1 would be probably worth $5 million. 

If I liquidated everything, that might be high a half a million or a 

million, o r low 1 million. You do not know what they will sell it for. 

I know I have got a couple of hotels I tried to sell and could not get 

a buyer. You know, you do not know. You have got to find someone 

to buy it.

The Chairman. I am just tryi ng to point out these figures here, and 

in going through the statem ents; the point is tha t Northern Lights 

Shopping Center is carried at $125,000. You see, you have not given 

any indication of what the current value is. You have given your own 

estimate of your own net worth. Is this most of your estate ?

Governor H ickel. What, Northern Lights?

The Chairman. Yes.

Governor IIickel. No, I own half of Northern Ligh ts and I mentioned the other, I have Travelers Inn of Fairbanks, Inc.

The Chairman. But you have no idea-----

Governor I Iickel. Wha t they are worth.

Senator Stevens. Mr. Chairman, it says right here on page 3, Northern Lights Shopping Center, $4,006,000 appraised value. It is listed 

here. But the accounts have carried it as they must at cost, for tax 

purposes.

Governor II ickel. It has to lie at cost.

The Chairman. I understand that.

Senator Fannin. This is an independent appraisal or is their appraisal or what?

The Chairman. This is by their certified public accountant.

Senator J ordan. I do not think it is pertinent.

Governor IIickel. This is what it says, appraised value.

Senator Stevens. $4.4 roughly.

Governor IIickel. Tha t is the appraised value.

The Chairman. W hat year are we talking about, appraised value?

Governor Hickel. The end of 1967.

The Chairman. At the end of 1967, $2,282,000 appraised value and 

the net book value, I see, is $1.8 million.

Senator Stevens. That is one-half. Tha t is 50 percent ownership 

that he has.

Senator Anderson. Who owns the other ?

Governor IIickel. Two other businessmen in tha t group.

The Chairman. The appraised value there is $2,228,173.24.

Senator Stevens. Fo r the 50 percent interest.

The Chairman. Tha t is just the 50 percent interest ?

Senator Stevens. Right.

The Chairman. I s there any interest over and above, as it is listed 

here, your 50-percent interest in “Northern Ligh ts Shopping Center, 

$125,000?”

Senator Stevens. That is at co,st.
378

The Chairman. Tha t is right. I am just trying to relate these 

figures. Because I raise that question, only to relate it to the question 

of common stock. But you say tha t $16,000 figure represents stocks 

tha t you own and the companies represented by those stocks are your 

own companies.

Governor IIickel. Right.

The Chairman. You do not know?

Governor Hickel. It could be Travelers Inn of Fairbanks, which is 

wholly owned. It could be Mountain View Sho pping Center. I know 

those two.

Senator Bellmon. But you do not own any oil company stocks?

Governor IIickel. No.

The Chairman. Have you listed any place here stocks that you own, 

tha t are on the board, sold over the counter, stocks and companies, 

which you have only relatively a minor or nonfamily interest in?

Governor Hickel. Right.

The Chairman. Where are they located?

Senator Allott. On page 5.

Governor IIickel. You know, I am not too much of an accountant 

and this financial statement, the only reason I have them is because 

they make me. The Alaska Interstate Barrow Realty, Trans-America; 

Trans-America, tha t has been sold. And while I was selling it, they 

declared a dividend, and I got fo ur or five shares at the time th at it was 

sold until I got it. So I got four or five shares there.

Alaska Pacific Corp., Alaska Ilorsebreeders, tha t is just a horse 

barn, and tha t would be part of that.

Valley Development Corp., I think it is all explained somewhere, 

that must be some real estate.

Wakefield, Seafood, 100 shares.

Senator Allott. Now you come down to the miscellaneous item of 

$2,794.50.

Mr. Cremo. May I offer a possible explanation here. For instance, 

in the statement of Northern Lights Shopping Center, Inc., 

I notice tha t the stockholder net is expressed not only in common 

stock, $250,000, for all four shareholders, but also there is some paid 

in surplus. $10,074.76.

Some place on Walter J. Hickel tha t paid in surplus has to be 

reflected, half of it only. There might be the same thing in other corporations, tha t easily could be collected by the accountant into a 

miscellaneous category.

Senator Anderson. T hat is paid possibly to Morris and Knudson, 

three percent.

Governor Hickel. Generally, when they leave a country, they leave 

Alaska. I bought this North Pipe & Supply and Alaska Plumbing 

& Heating about 1961, as I recall. They have a fine piece of real 

estate, but instead of them having an auction like big companies do 

and they sell stuff off, I agreed to take their inventory and buy their 

property, basically, it was bought for seven lots on Fourth and Fifth 

Avenue in Anchorage, which is the main part of town.

So in putting together the deal, it was what I called old inventory, 

not worth a heck of a lot. So rathe r than going in and taking a complete 

inventory, we worked out a 3 percent loan but I would take all 

of the junk and everything.

That is the way it is.
379

Senator Allott. All of the leftover stock and the lien?

Governor Hickel. That is right.

Senator Gravel. I remember the incident. A lot of it was junk.

Governor H ickel. I have still got it.

The Chairman. What other notes are owed to Morris and Knudson ?

Governor H ickel. T hat is th e one, is it not ?

Mr. Cremo. They are essentially one obligation, Senator, to Morris 

and Knudson, now expressed in three places.

The Chairman. What is the total obligation? “Walter J. Hickel 

and Mrs. Hickel, Statement” on the balance here.

Governor Hickel. I t started out about a million seven or eight, and 

I liquidated the stuff off and sold it the best I could and paid them off 

and kept it rolling, and got down to stuff I could not sell.

Mr. Cremo. Probably $440,000 outstanding. It was a pure money 

obligation.

The Chairman. All related to this one transaction ?

Mr. Cremo. Yes, but as a result of acquiring those assets, two corporations were formed. One was Alaska Heating Co., Inc., the other 

Northern Lights Shopping Center, Inc., and they both assumed portions of the debt. One hundred thousand of t hat debt was not assumed 

by either of those corporations, and Walter Hickel personally owned 

tha t one hundred thousand. Th at is the way it’s been.

The Chairman. But you had no other common stock, other than the 

ones listed ?

Governor Hickel. No, none at all. I would be glad to put in an 

affidavit.

The Chairman. I understand that.

Governor Hickel. Some of those I did not even know I had, but I 

have got them.

The Chairman. This is as of December 31,1967.

Governor Hickel. Some were sold.

The Chairman. I take it that there have been some changes, so as 

of the time we are now talking, this does not accurately reflect the 

current situation ?

Governor Hickel. Trans-American Corp, was sold, all except four 

or five shares, which I stated. I came in as a dividend was being declared, in between the sale.

The Chairman. And th ere are no other common stocks. The reason 

I ask again, this is December 31,1967, we are talkin g about here.

But now I am asking you about anything as of now.

Governor H ickel. I am saying tha t yes, there are no other common 

stocks.

The Chairman. All right.

Senator Metcalf. Mr. Chairman, where is it reflected, the value of 

your franchise, for distribution of natural gas in the city of Anchorage?

Governor IIickel. It would be Alaska Interstate Co. They own all 

of the stock.

The Chairman. Tha t is listed as “stockholding” on page 5.

Senator Metcalf. So the value of that special franchise is also listed.

Governor IIickel. It is in there.

Senator Metcalf. It is a holding company for that and/o r pipeline.
380

Governor Hickel. Whatever value tha t franchise would have would 

be reflected in the stock.

Senator Metcalf. That stock is pledged, but you will sell it.

The Chairman. Let us resume at 2 o’clock.

(Whereupon, at 1:15 o'clock p.m., a recess was taken until 2 o'clock 

the same day.)

AFTERNOON SESSION

The Chairman. The committee will come to order. We have distributed to each member of the committee a memorandum dated Ja nuary 18, which outlines the documents which Governor Hickel submitted to the chairman. It makes reference to the documents. They are 

all up front here. You have a copy, each member has a copy of the 

Walter J. and Ermalee Hickel statement. Then the financial statement 

of subsidiaries are all here and any Member of the Committee is 

welcome to read them. They did not furnish any extra copies of 

these, so they are all here.

I think, Governor Hickel, do you want to have a chair, and Mr. 

Cremo, if you will come up.

Mr. Cremo, if you would first identify yourself for the record.

Mr. Cremo. My name is Roger Cremo.

The Chairman. And what is your relationship with Governor 

Hickel ?

Mr. Cremo. I am an attorney of his.

The Chairman. You are his personal attorney ?

Mr. Cremo. Yes, tha t is one way to put it.

The Chairman. And have been for some time ?

Mr. Cremo. Yes.

The Chairman. You are familiar with the financial statements 

that have been submitted to the committee by Governor Hickel?

Mr. Cremo. T am generally familiar with them, yes.

The Chairman. I gather the Governor would ra ther tha t you proceed to explain these documents, not in every detail, but what they 

cover.

Mr. Cremo. Ho you want me to do that now, Senator ?

The Chairman. Yes. T thin k we ought to proceed on that basis 

first. The statement, I think, first to be taken up is the “Walter 

J. and Ermalee Statement,” which is a report of a balance sheet of 

December 31, 1967. We asked, as you know, fo r an up-to-date statement for December 31, 1968. It is my understanding that this is not 

vet available ?

Mr. Cremo. That is correct, and it is my understand ing that it will 

take several weeks. Normally from year to year the accountants for 

Walter TTirkel and his wife and the various corporations, whose 

names are Molitor, Doremus and Hanlin usually seem to be able to 

come out with those statements sometime in May or so. It just takes 

that long apparently but they have been asked to rush this year and 

they still say it would take several weeks to prepare a statement from 

all of the corporations and the two partnerships and for W alter J. and 

Ermalee Hickel.

Senator Anderson. H ow about when you pay your income tax ?

Mr. Cremo. Apparently they have to, if they do not have it ready, 

Senator, they have to obtain an extension in order to get their ac-
381

counting information. I notice in this particu lar year their coxeiing

letter is dated J uly 2. .

Senator Anderson. You are his personal attorney. ( an t you tel l.

Mr. Cremo. I am not his accountant, sir. 1 have kind of an at ­

torney’s general understanding of these statements and that is the 

extent of it.

Senator Anderson. Isn 't it possible ? This is May.

The Chairman. It is later than that. This one is dated July 2,1967.

Senator Anderson. Do you have any special rule for filing? Do 

you have an exemption every year ?

Governor IIickel. Special rule?

The Chairman. Do you have an extension every year on your income tax ?

Governor II ickel. Generally, and Senator, this has been going on historically I'd say about 15 years, as could be evidenced by, for ex­ ample, (he institutions have been working with us like Seattle First National, for example, they had some continuing thing to go on.

Senator Anderson. What is the firm ?

Governor I Iickel. Molitor, Doremus & Ilanlin.

Senator Anderson. I have to file every year.

Governor H ickel. We file every year.

Senator Anderson. And file on time.

Governor IIickel. The point is that this statement, the 1968 statement tliev are starting to work on at the end of 1968, and bring this up. I have really raised the question many times myself, and one of the real problems is getting them, when you need them in time, and I believe this can be verified through, for example, Seattle First which 

has always waited and you have the same problem.

Senator Allott. You have to pay interest on it every year ?

Governor I Iickel. Right.

The Chairman. Fi rst the Chair will include in the record at this point the letter from Governor IIickel dated Jan uary 12 setting fo rth the statement of the balance sheets of the various enterprises that Governor IIickel is involved in together with a confidential memo­ randum explaining the various matters relating to the Governor's assets, signed by the Governor, and tha t is included with—attached to—the letter of Jan uary 12. Accompanying the letter is a financial statement prepared by the Governor's accountants that have been referred to here as Molitor, Doremus & Ila nlin, covering the following 

statements: “Walter J. and Ermalee IIickel,” “IIickel Investment Co.,” “Alaska Plumbing & He ating Co., In c.” “Northland Pipe & Supply Co., Inc.,'’ “Travelers’ Inn of Fairbanks, Inc.,” “Northern Lights Shopping Center, Inc.,” “The Captain Cook Hotel,” “Travelers' Inn of Anchorage,” “C lark’s Painting & Decorating.’’ Now “Walter J. and Ermalee IIickel’’ is a statement of all of the assets, I believe, owned by you and your wife, Governor ?

Mr. Cremo. Statement of not only the assets, Senator, but the lia­ bilities and a determination not only at cost but at cost plus the ap ­

praisals referred to in the footnotes of net worth.

The Chairman. Yes, but the appraisals cover what dates ?
382

Mr. Cremo. The appraisals were made I believe in 1963. I read 

tha t before.

The Chairman. They reflect-----

Mr. Cremo. Or 1965.

The Chairman. Back a ways anyway. They are differing appraisal 

dates on differing items, are they not?

Mr. Cremo. Yes, some were made in 1963. Some were made in 1965.

(The data referred to follows, bnt the financial statements have been 

placed in the committee’s official files and are not reproduced.)

J anuary 22, I960. Hon. Henry M. Jackson,

Chairman, Interior and Insula r Affairs Committee,

U.S. Senate, Washington, D.C.

Dear Senator J ackson : As requested by you for your committee, a confidential 

statement of my business affairs is submitted herewith.

The statement is accompanied by financial statements prepared by my accountants fo r:

Walter J. and Ermalee Hickel.

Hickel Investment Company.

Alaskan Plumbing and Heating Co., Inc.

Northland Pipe and Supply Co., Inc.

Traveler’s Inn of Fairbanks. Inc.

Northern Lights Shopping Center, Inc.

The Captain Cook Hotel.

Traveler’s Inn of Anchorage.

Clark’s Painting and Decorating.

Respectfully,

Walter J. Hickel.

Statement by Gov. Walter J. Hickel, Secretary of tiie Interior-designate, to Senate Committeeon I nterior and I nsular Affairs

This statement is submitted fo r the purpose of providing information about my 

business affairs.

Presently my affairs are the subject of a tru st which was instituted when I 

became Governor of Alaska and which expires when I cease holding that office. 

Under the trust arrangement, various corporations and partnerships are engaged 

in the following businesses: hotel and motel, general contracting, mechanical 

contracting, paint contracting, shopping center development, wholesale plumbing 

supply, and residential construction.

A study has been made to determine whether there are any conflicts between the 

public interest and my private interests. Although there seem to be no conflicts, 

the following will be done to avoid any such possibility :

A. All of my business affairs will be conducted by a trustee in accordance with 

a tru st agreement which I will enter into immediately upon taking office. The 

tru st instrument will be filed with this committee. The trust, which will be 

irrevocable during my term of office, will require that all my businesses refrain 

entirely from doing any business with the Department of the Interior and with 

any industry regulated by the Secretary of the Interior. Furthermore, no investments will be made in the securities of companies which might have any dealings 

with the Department of the Inte rior and which might be regulated by the Secretary of the Interior. In addition my trustee will be prohibited from divulging to 

me in any way information concerning the activities of the trus t except to provide 

me with information needed fo r income tax return purposes; and I will be pro 

hibited from divulging to the trustee in any way information concerning the 

activities of the Department of the Interior.

B. My stock interest in Alaska Interstate Company, Transamerica Corporation and Wakefield Seafoods, Inc. will be sold promptly upon my taking office.

C. Hickel Investment Company, my wife, and I are engaged in an Internal 

Revenue Service proceeding involving only the technical question as to how 

casualty losses caused by an earthq uake should be treated. I propose to continue 

with the proceeding.

The following will further describe my business assets and activities.
383

Specific details as to amounts of stock owned by me and the dollar volume of 

business in each of the enterp rises mentioned below can be obtained from a complete set of financial statem ents for the period ending December 31, 1967, which 

has been filed with the Chairman of the Senate Inte rior Committee. Since the 

accounting is on a calendar year basis, no current financial statements are available. These are in the process of preparation and can be furnished to the Chairman within a few weeks.

(1) Hickel Investment Company is a corporation wholly owned by my wife 

and me. It is in the general construction business in Alaska, but does not do any 

work for the federal government. Also, it builds and operates shopping centers 

in Alaska.

(2) Alaskan Plumbing and Heating Co., Inc. is a corporation and a wholly 

owned subsidiary of Hickel Investment Company. Its principal business is 

mechanical contracting and its operates a retail plumbing supply store. It does 

business with the federal government and in the past occasionally may have done 

a small amount of business with some agency of the Department of the Interior.

(3) Northland Pipe and Supply Co., Inc. is a corporation and a wholly owned 

subsidiary of Hickel Investment Company. I t is in the wholesale plumbing supply 

business. I t does very little business with the federal government and I know of 

none with the Department of the Interior.

(4) Traveler’s Inn of Fairbanks, Inc. is a corporation and a wholly owned subsidiary of Hickel Investment Company. It is engaged in the motel business at 

Fairbanks, Alaska.

(5) Northern Lights Shopping Center, Inc. is a corporation an one-half of its 

stock is owned by Hickel Investment Company. Other shareholders are Milton W. 

Odom and Robert Winslow, of Anchorage. The corporation owns and operates a 

shopping center in Anchorage, Alaska.

(6) The Captain Cook Hotel is a partnership, one-half of which is owned by 

Hickel Investment Company. Reed and Martin, Inc. and Odom Co., in which I 

have no interest, are the other partners. The partnership owns and operates a 

hotel in Anchorage.

(7) Hickel Investment Company owns and operates the Parsons Hotel in 

Anchorage.

(8) Hickel Investment Company owns undeveloped residential and business 

property in Anchorage.

(9) Traveler’s Inn of Anchorage is a partnership engaged in the motel business 

in Anchorage. My wife and I are the partners.

(10) Clark’s Painting and Decorating is a partnership engaged in the paint 

contracting business in Anchorage. George Muir, of Anchorage, and I are the p art ­

ners. Although work is done for the federal government, I know of none t hat 

has been done for the Department of the Interior.

(11) Mountain Mining Co. is inactive. Its former activities consisted of a 

minor prospecting effort for minerals. A prospecting permit acquired for the purpose of discovering magnetite deposits expired over three years ago. The sole 

present property of this corporation, one unpatented mining claim, will be disposed of and this corporation will be dissolved.

(12) Life Insurance Company of Alaska is a domestic life insurance company 

in which I own an insignificant amount of stock. Also, I own a small amount of 

stock in Alaska Pacific Corporation which is a holding company for Life Insurance Company of Alaska, its only subsidiary.

(13) I own a very small amount of the stock of Transam erica Corp. I had 

previously disposed of most of the Transamerica Corp, stock listed in the financial 

statement.

(14) Alaska Interstate Company is a conglomerate. I own approximately 2% 

of its stock.

(15) Barrow Realty Corp, is a corporation which owns a commercial building 

in Anchorage. I own one-third of its stock. The other shareholders are Messrs. 

Odom and Winslow, mentioned above.

(16) Wakefield Seafoods, Inc. is a corporation in which I own a small amount 

of stocks. It processes crab and halibut.

(17) Valley Development Corporation is a corporation in which I own a 

small amount of stock. It owns some undeveloped real estate in the Matanuska 

Valley near Anchorage.

(18) Presbyterian Community Hospital Association, Inc. is a corporation engaged in the hospital business in Anchorage. I am one of its bondholders.
384

(19) Alaska Horsebreeders Association is a corporation in which I own stock 

together with several other persons. The corporation operates a small horse barn. 

(Essentially, this is not a business but a recreational activity.)

(20) In my individual capacity I own undeveloped residential and business 

property in Anchorage and Fairbanks.

(21) Matanuska Valley Bank is a state bank with offices in Anchorage and 

Palmer, Alaska. My children own an insignificant amount of its stock.

Neither my wife nor my children has any business affairs except as mentioned 

above.

My wife and I also own non-business property such as our home in Anchorage, 

furniture, automobile, and boat.

Respectfully submitted. Walter J. Hickel.

Report on Examination of Balance Sheet, December 31, 1967, of Walter J. 

and Ermalee Hickel

Molitor, Doremus & Hanlin, 

An ch or ag e, A la sk a, J u ly 2, JD68.

Walter J. and Ermalee Hickel,

Anchorage, Alaska:

We have examined the balance sheet of Walter J. and Ermalee Hickel as of 

December 31, 1967. Our examination was made in accordance with generally 

accepted auditing standard s and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in 

the circumstances.

Investments are stated a t values which reflect the increase in appraised values 

over cost of land and buildings owned by Walter J. and Ermalee Hickel and by 

(heir wholly-owned corporations. The investment in Hickel Investment Company 

and its subsidiaries also is adjusted to give effect to the consolidated retained 

earnings of the companies at December 31,1967.

In our opinion, subject to the foregoing comments relating to the valuation 

of investments as explained in notes to the balance sheet and supporting schedules, the accompanying balance sheet presents fairly the financial position of 

Walter J. and Ermalee Hickel a t December 31, 1967, in conformity with generally 

accepted accounting principles applied on a basis consistent with tha t of the 

preceding year.

Report on Examination of Consolidated Financial Statements, Year Ended

December 31, 1967, of Hickel Investment Co. and Subsidiaries

Molitor. Dor em us & H an li n, 

Anchorage, Alaska, June 4. 1068.

IIickf.l Investment Co.,

A nch o rage, A la s ka:

We have examined the consolidated balance sheet of Hickel Investment Company and subsidiaries as of December 31, 1967, and the related statement of 

consolidated income and retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and 

accordingly included such tests of the accounting records and such other auditing 

procedures as we consider necessary in the circumstances.

We did not examine the financial statements of The Hotel Captain Cook, a 

joint venture in which Hickel Investment Company owns a 50% interest, but 

we were furnished with the report of other certified public accountants on their 

examination of the financial statem ents of the joint venture for the year. Our 

opinion expressed herein, insofar as it relates to the amounts included for The 

Hotel Captain Cook, is based solely upon such report.

In our opinion, the accompanying consolidated balance sheet and statement of 

consolidated income and retained earnings present fairly the financial position 

of Hickel Investment Company and subsidiaries at December 31, 1967, and the 

results of their operations for the year then ended, in conformity with generally 

accepted accounting principles applied on a basis consistent with tha t of the 

preceding year.
385

Report on Examination of Financial Statements, Year Ended December

31, 1967, of Northland Pipe and Supply Co., Inc.

Molitor, Doremus & Hanlin, 

Anchorage, Alaska, June 4, 1968.

Northland Pipe & Supply Co., Inc.,

Anchorage, Alaska:

We have examined the balance sheet of Northland Pipe and Supply Company, Inc., as of December 31, 1967, and the related statement of income and retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of income and retained earnings present fairly the financial position of Northland Pipe and Supply Company, Inc., at December 31, 1967, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles 

applied on a basis consistent with that of the preceding year.

Report on Examination of Financial Statements, Year Ended December 31. 

1967, of Northern Lights Shopping Center, I nc.

Molitor, Doremus & IIanlin, 

Anchorage, Alaska, May 24, 1968.

Northern Lights Shopping Center, I nc.,

Anchorage, Alaska:

We have examined the balance sheet of Northern Lights Shopping Center, Inc., as of December 31, 1967 and the related statement of income and retained earn ­ ings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered 

necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of income and retained earnings present fairly the financial position of Northern Lights Shop­ ping Center, Inc., at December 31, 1967, and the results of its operations for the year then ended in conformity with generally accepted accounting principles 

applied on a basis consistent with that of the preceding year.

Report on Examination of Financial Statements, Year Ended December 31, 

1967, of Alaskan Plumbing & Heating Co., I nc.

Molitor, Doremus & IIanlin, 

Anchorage, Alaska, June 4> 1968.

Alaskan Plumbing & Heating Co., Inc.,

Anchorage, Alaska:

We have examined the balance sheet of Alaskan Plumbing and Heating Com­ pany, Inc., as of December 31, 1967, and the related statement of income and retained earnings for the year then ended. Our examination was made in accord­ ance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of income and retained earnings present fairly the financial position of Alaskan Plumbing and Heating Company, Inc., at December 31, IJXJ7, and the results of its operations for the year then ended, in conformity with generally accepted accounting prin­ ciples applied on a basis consistent with th at of the preceding year.
386

Report on Examination of Financial Statements, Year Ended December 31,

1967, of Travelers Inn of Anchorage (a Partnership of Walter J. and

Ermalee Hickel)

Molitor, Doremus & Hanlin, 

Anchorage, Alaska, April 20, 1968.

Walter J. and Ermalee Hickel,

Anchorage, Alaska:

We have examined the financial statements of Travelers Inn of Anchorage (a 

partnership of Walter J. and Ermalee Hickel), as listed in the accompanying 

index, for the year 1967. Our examination was made in accordance with generally 

•accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the 

circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of Travelers Inn of Anchorage at December 31, 1967, and the results 

of operation for the year then ended in conformity with generally accepted 

accounting principles applied on a basis consistent with tha t of the preceding year.

Report on Examination of Financial Statements, Year Ended December 31, 

1967, Clark’s Painting & Decorating (a Partnership)

Molitor, Doremus & Hanlin, 

Anchorage, Alaska, February 28,1968.

Clark’s Painting & Decorating,

Anchorage, Alaska:

We have examined the balance sheet of Clark’s Painting and Decorating, a 

partnership, as of December 31, 1967, and the related statements of partners’ 

capital and income for the year then ended. Our examination was made in 

accordance with generally accepted auditing standards, and accordingly included 

such tests of the accounting records and such other auditing procedures as we 

considered necessary in the circumstances.

In our opinion, the accompanying balance sheet, statement of partners’ capital 

and statement of income present fairly the financial position of the partnership 

at December 31, 1967, and the results of its operations for the year then ended, 

in conformity with generally accepted accounting principles applied on a basis 

consistent with t hat of the preceding year.

Report on Examination of Financial Statements, Year Ended December 31, 

1967, of Travelers I nn of Fairbanks, I nc.

Molitor, Doremus & Hanlin, 

Anchorage, Alaska, June If, 1968.

Travelers Inn of Fairbanks, Inc.,

Anchorage, Alaska:

We have examined the balance sheet of Travelers Inn of Fairbanks, Inc., as 

of December 31, 1967 and the related statement of income and retained earnings 

for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the 

accounting records and such other auditing procedures as we considered necessary 

in the circumstances.

In our opinion, the accompanying balance sheet and statement of income and 

retained earnings present fair ly the financial position of Travelers Inn of Fairbanks, Inc., a t December 31, 1967, and the results of its operations for the year 

then ended in conformity with generally accepted accounting principles applied 

on a basis consistent with that of the preceding year.
387

F inancial Statements of th e Hotel Capta in Cook (a J oint Venture), at

October 31, 1967

Yerion & Gkund iiausek,

Anchorage, Alaska.

Hotel Captain Cook,

(A joint-venture)

Anchorage, Alaska:

The accompanying balance sheet of The Hotel Captain Cook, a joint-venture, 

as of October 31, 1967, and the related statement of income and joint venturers’ 

equity for the ten months then ended, were not audited by us and we therefore are unable to express an opinion on the overall fairness of the accompanying 

financial statement. The balance sheet reflects only those assets and liabilities of the joint-venture 

in its operations of the Hotel Captain Cook. The statements do not reflect any Federal or State income taxes due thereon of each individual joint-venturer.

December 1,19 67 .

The Chairman. Now, the first question here, the Hickel Investm ent 

Co., is that a partnership or a corporation ?

Mr. Cremo. It is a corporation, Senator.

The Chairman. It does not so reflect in this letter, just “Ilickel In ­

vestment Co., but there is no “Inc.” af ter it, but it is a corporation ?

Mr. Cremo. Hickel Investment Co. is the full name of the 

corporation.

The Chairman. All right, and it is incorporated ?

Mr. Cremo. Yes.

The Chairman. Who owns the stock of the Ilickel Investment Co. ?

Mr. Cremo. Walter J . and Ermalee Hickel.

The Chairman. And no one else?

Mr. Cremo. No one else.

The Chairman. Alaska Plumbing & Heating Co., Inc. Who owns 

the stock in that, all of the stock of that company ?

Mr. Cremo. Hickel Investment Co.

The Chairman. And the Hickel Investment Co. in turn is wholly 

owned by Governor and Mrs. Hickel ?

Mr. Cremo. That is correct, Senator.

The Chairman. Northlan d Pipe & Supply Co., Inc. Who owns the 

stock in that company ?

Mr. Cremo. Hickel Investment Co.

The Chairman. Again the Hickel Investment Co. owns all of the 

stock ?

Mr. Cremo. That is correct, Senator.

The Chairman. Travelers’ Inn of Fairbanks, Inc. Who owns the 

stock in that company ?

Mr. Cremo. Hickel Investment Co., sir.

The Chairman. All of the stock ?

Mr. Cremo. Yes, sir.

The Chairman. No one else owns any stock ?

Mr. Cremo. No one else owns any Stock.

2 3 -6 5 4 — 69— pt. 2------3
388

The Chairman. Northern Lights Shopping Center, Inc. Who owns 

the stock in that company ?

Mr. Cremo. Three persons. One-half of the stock is owned by Ilickel 

Investment Co., Inc.

The Chairman. And again Ilickel Investment Co., Inc., is wholly 

owned by Governor and Mrs. Ilickel ?

Mr. Cremo. Yes, sir.

The Chairman. All right.

Mr. Cremo. The other half of the stock is divided between two shareholders whose names are Milton W. Odom and Robert Winslow, both 

of Anchorage. I think each owns one-qnarter but I am not sure.

The Chairman. Do you know, Governor?

Governor Hickel. I think that is tru e; yes.

The Chairman. So that no one person has control of that company ?

Governor H ickel. No.

Mr. Cremo. No, it is a standoff corporation.

The Chairman. The Captain Cook Hotel. Is it a corporation?

Mr. Cremo. No; it is not.

The Chairman. It is not a corporation. Who owns the Captain 

Cook Hotel ?

Mr. Cremo. The hotel, the physical thing, the hotel is owned by the 

Captain Cook Hotel, which is a partnership, although you will see 

it referred to here in the financial statements by the accountants as 

a joint venture.

The Chairman. I s it a limited partnership?

Mr. Cremo. No ; it is a general partnership.

The Chairman. A general partnership, and there are articles of 

partnership, written articles of partnership?

Mr. Cremo. The attorney who formed tha t partnership has its file, 

its orignal file, and I can only assume—his name is Wallace Aiken, he 

practices from Seattle and I can only assume that he prepared articles.

The Chairman. Is it a limited partnership? I do not know what 

the Alaska law provides, but you file, of course, with the appropriate 

official in the State, if it is a limited partnership. We do in the State of 

Washington.

Mr. Cremo. You are correct, Senator. We both have the Limited 

Partnership Act.

The Chairman. All right, is this a limited partnership ?

Mr. Cremo. N o, sir.

The Chairman. It is a general partne rship ?

Mr. Cremo. Yes, sir.

The Chairman. And there is nothing filed in Alaska on that to your 

knowledge ?

Mr. Cremo. There would be nothing filed.

The Chairman. It is not required when it is general partnership?

Mr. Cremo. Tha t is correct, Senator.

The Chairman. Tell us, Governor or Mr. Cremo, the nature of this 

partnership. Who owns what ?

Mr. Cremo. Hickel Investment Co. owns one-half of the partnership. One-quarter of the partn ership is owned by a corporation, Lee 

Martin, Inc. And another quarter of it is owned by Odom Co., another 

corporation. The principals of those corporations are the same Mr. 

Odom whom I mentioned before, and a Mr. Martin of Honolulu.
389

The Chairman. So it is again a standoff.

Mr. Chemo. Yes, sir.

The Chairman. A standoff corporation, I mean partnership?

Mr. Cremo. Yes.

The Chairman. The Travelers’ Inn of Anchorage, who owns that ? 

Is that a corporation ?

Mr. Cremo. That is a partnership.

The Chairman. Th at is a partnership ?

Mr. Cremo. General partnership.

The Chairman. How is the partnership divided ?

Mr. Cremo. Walter J. Hickel and Ermalee Hickel are the only 

partners.

The Chairman. So it is a sole-----

Senator J ordan. Wholly owned.

The Chairman (con tinu ing). Partnership, husband and wife 

partnership?

Mr. Cremo. Yes; husband and wife partnership.

The Chairman. So that is entirely theirs. There is no one else involved in that, Governor, is that correct ?

Governor Hickel. Th at is right.

The Chairman. Clark’s Paintin g & Decorating, Inc., is that a corporation or a partnership?

Mr. Cremo. Partnership .

The Chairman. And who owns the partnership ?

Mr. Cremo. Walter J. Ilickel one-half and George Muir the other 

half.

The Chairman. Is it the Hickel Investment Co., did you say ?

Mr. Cremo. No, sir; W alte r J. Hickel, individually, not Mrs. Ilickel. 

The Chairman. Governor Hickel individually owns one-half?

Mr. Cremo. Of that partnership.

The Chairman. And Mr. Muir owns the other half?

Mr. Cremo. Yes, sir.

The Chairman. Alaska is not a community property State?

Mr. Cremo. It is not.

The Chairman. Not a community property State ?

Mr. Cremo. We don’t have the community property laws. We have 

a statuto ry dower that replaced the common law dower.

The Chairman. Do you own any other business, Governor, any 

other enterprise-----

Governor Hickel. Yes.

The Chairman (con tinu ing). Other than the ones-----

Mr. Cremo. The Governor just mentioned, sir, the Parsons Hotel 

which is not an entity in itself. It is a property of Hickel Investment 

Co., and is covered in the confidential statement under-----

The Chairman. No ; it is not listed in the letter.

Mr. Cremo. Because there is no financial statement for it. I t has no 

liabilities. It isn’t an entity. It is just a property.

Governor I Iickel. A business.

The Chairman. In the narrative statement what is the name of it? 

Mr. Cremo. Parsons Hotel.

Senator J ordan. Listed on page 3.

The Chairman. I see it top of the page. “Parsons Hotel.” Are you 

sole owners?
390

Mr. Cremo. Ilickel Investment Co. owns the Parsons Hotel.

The Chairman. Hickel Investment Co. owns the Parsons Hotel, 

and it is just a. sole ownership?

Mr. Cremo. No, sir. I t is a sole ownership by the corporation.

The Chairman. It is a wholly owned subsidiary of Hickel Investment Co. ?

Mr. Cremo. I beg to differ, it really isn’t, Senator. It isn’t a corporation. I t isn 't a subsidiary in any sense.

Senator J ordan. Ju st a piece of property ?

Governor Hickel. A piece of property.

The Chairman. Who owns the piece of property ?

Mr. Cremo. Hickel Investment Co.

Senator B urdick. Same as the trailer court.

The Chairman. It is prop erty belonging to the Hickel Investment 

Co. then. The Governor does not own it individually ?

Mr. Cremo. You are correct, Senator.

The Chairman. All righ t, now what else? We are tryi ng to get it 

all out here.

Governor Hickel. Hid you mention Mountain View Shopping 

Center which is the same thing. It is owned by Hickel Investment Co. 

It should be in there someplace.

Mr. Cremo. One of the properties of Hickel Investment Co. is 

known as Mountain View Shopping Center, but it is jus t a property. 

It is not an entity in any sense.

The Chairman. And tha t is owned by Hickel Investment?

Mr. Cremo. Yes.

Senator Jordan. It is listed on page 3, leased to others.

The Chairman. What was the name of that ?

Senator J ordan. Mountain View, page 3.

The Chairman. Wait a minute.

Senator J ordan. Prop erty leased to others.

The Chairman. You are looking on this other.

Senator A nderson. That is a p retty substantial firm, isn’t it, Mountain View, half a million or more ?

Governor H ickel. Yes.

The Chairman. Appraised value is $680,000.

Senator Anderson. That is not a trifle.

The Chairman. But you own that exclusively ?

Governor Hickel. Yes.

Mr. Cremo. Hickel Investment Co.

The Chairman. You own Hickel Investment, no one else.

Senator Bible. What is it, Governor, a motel ?

Governor IIickel. A shopping center. It is actually just one store 

and they are expanding it now.

The Chairman. “Rental property, Third Avenue.” Th at is Third 

Avenue what, Anchorage?

Mr. Cremo. Yes, sir.

The Chairman. And tha t in turn is owned by Hickel Investment. 

That is n ot in this other list either. Hoes Hickel Investment own all 

of it ?

Governor Hickel. Yes, Third Avenue property.

The Chairman. You own all of it ?
391

Governor II ickel. It is vacant lots and a couple of old houses. 

That is what it is. There is no income.

The Chairman. And Parsons Hotel ?

Governor Hiokel. Yes, Parsons Hotel we just went over, Senator.

The Chairman. Tha t is the previous one. The ‘‘Tra iler Court.”

Governor Hiokel. I can explain that. It was adjacent to Mountain 

View Shopping Center, and it was purchased to expand Mountain 

View Shopping Shopping Center. I do not know how much, what part 

of the trailer court they used to expand the shopping center. They 

are doing that now. But that is what it is. It is owned by IIickel In ­

vestment Co.

The Chairman. No one else has an interest in it?

Governor Hiokel. No.

The Chairman. Now, what other enterprises do you own? Is tha t 

all of it now ? Have you listed all of it, other than the stock list that 

you have over on another page here? We will come to that.

Mr. Cremo. There are all of the things covered-----

The Chairman. I am re ferring to interests other th an the stock on 

page 5

-

Mr. Cremo. There are all of the things, Senator, covered in the 

statement. There are 18 things listed there. For instance, the Governor 

owns, is one of the shareholders of Presbyterian Community House, 

Inc., in Anchorage. It is not stock.

Governor Hickel. It is a bond proposition that the community got 

together to help build this hotel, I mean hospital.

The Chairman. That is just a community enterprise ?

Governor Hickel. Yes.

The Chairman. Tha t is a bond, isn’t it ?

Governor Hickel. Right.

Mr. Cremo. It is a $1,000 bond.

The Chairman. Wha t about the Valley Development Corp.?

Mr. Cremo. The best I can determine, Senator, is the Valley Development Corp, is a corporation which owns some unimproved real 

estate near Anchorage in a place known as the Matanuska Valley 

maybe 50 miles away.

Senator Anderson. Wh at do you own there?

Mr. Cremo. Undeveloped real estate, farmland probably.

Senator Anderson. Is there a dam?

Mr. Cremo. No, no dam. There is a hydro project many miles 

from there but no dam in the M atanuska Valley, Senator.

Senator Anderson. The Matanuska Valley results from pouring 

some water through there, doesn't it?

Mr. Cremo. Yes.

Senator Anderson. We approved a project several years ago for 

that.

Mr. Cremo. I am not familiar with it, Senator.

Senator Anderson. You are not the authorized person to testify 

then, are you?

Mr. Cremo. On that point you are correct.

The Chairman. Governor, can you explain this?

Governor IIickel. Is the Senator thinking of E klu tna Dam?
392

The Chairman. 1 think Senator Anderson is probably referring 

to the Matanuska project, you know, back in the 1930’s.

Governor Hickel. In 1935.

The Chairman. That was started I think by Secretary Ickes. This 

was an effort to get farming underway in the Matanuska Valley. The 

Ekl utna Dam is a Bureau of Reclamation dam.

Mr. Dreyfus. It is on the opposite side of Cook Inlet. There is 

no Federal project in the Matanuska Valley.

Senator J ordan. No irrigation . •

The Chairman. The “Wakefield Sea Foods’’ of course is a well 

known company, and I understand on th at you are going to dispose 

of your stock. The other items remaining, what about Barrow Realty ?

I do not think we have covered that. You have 10,000 shares in •

Barrow Realty.

Governor IIickel. I can explain it.

The Chairman. Will you explain that ?

Governor IIickel. Yes. It is righ t across from a shopping center 

and it is owned by the three same principals, Barrow Realty, myself 

a third, Mr. Odom and Mr. Winslow. It has a frame building on it 

tha t they rent out. They have got a store in there and some little 

offices.

The Chairman. That is a corporation?

Governor IIickel. Yes.

The Chairman. Do they lease to any of the Federal agencies?

Governor IIickel. No.

Senator Allott. On that while we are at it, is this a straight 

third across ownership in the corporation?

Governor IIickel. Yes.

The Chairman. Alaska Inte rsta te Co. You have 2 percent of 

its stock or 32,316 shares?

Governor IIickel. We will dispose of that.

The Chairman. You will dispose of that. I am going down this 

list on page 3 here. Trans-America. You are in the process, von have 

already disposed of some of that?

Governor IIickel. All but about four or five shares which came 

back as a dividend' and I will dispose of that.

Senator Allott. There isn’t any reason really he has to dispose 

of tha t, is there, Trans-America?

Governor IIickel. I got t ha t through a merger of a title company.

We started many years ago. «

Senator Allott. What possible conflict could there be?

Mr. Cremo. It is a conglomerate, Senator.

The Chairman. They are in real estate, I mean they are in 

everything.

Governor IIickel. Everything.

The Chairman. Banking?

Governor IIickel. No problem. I will be glad to sell it.

The Chairman. The Alaska Interstate Co. You have 32,316 shares 

and you are disposing of that?

Governor Hickel. Tha t will be disposed of.

Senator Allott. Could I ask a question on that. What percentage 

of the company, about 2 percent?

Governor II ickel. About 2 percent. Alaskans own about 14 to 

sta rt with and there are about seven guys.
393

Senator Allott. The disposal of tha t does not constitute a m arket 

problem, does it?

Governor Hiokel. I do not think so.

Senator Aijlott. Or does it?

Governor Hickel. No, I would not thin k so.

Mr. Cremo. I thin k if it had to be done in a moment perh aps yes, 

but in a few days, no problem.

The Chairman. Over a period of time?

Governor Hickel. Yes, no problem.

Senator Stevens. Has there been any time limit discussed?

The Chairman. We have not come to that. I am just going over 

these individual items. The Mountain Mining Co. was discussed in 

the open hearing. This is to be disposed of ?

Governor Hickel. Liquidation.

Air. Cremo. Dissolved, yes.

The Chairman. It is to be dissolved or otherwise disposed of. Now, 

have we left anything out, Governor?

Governor Hickel. I did not mention Alaska Horse Breeders. It 

is just nothing.

'fhe Chairman. Twelve shares.

The Chairman. I do not see any point in that one at all. It is only 

the ones we are talking about. W hat about “Miscellaneous” here now?

Mr. Cremo. We are going to obtain tha t information.

The Chairman. Will you supply tha t to the committee?

Mr. Cremo. Yes, Senator.

The Chairman. T hat involves $2,700 at purchase price.

Governor H ickel. Whatever it is, we are trying to recollect it and 

I do not know, but whatever it is, if there is something wrong with it 

we will get rid of it.

The Chairman. Now on the “Miscellaneous” the other miscellaneous 

items tha t you have, you have Used $1,201. Was that the purchase 

price? Then you have another figure. I see, that is the other two combined. Well, you will get the information on that, too.

I)o you see that one ?

Governor Hickel. Rig ht here?

The Chairman. Underneath.

Senator Bible. The lower one.

Mr. Cremo. I suspect that that is the Presbyterian bond.

The Chairman. Would yotu get th at to the committee, please. That 

is a small item together with the $2,794.50 miscellaneous item.

Now, are there any others?

Mr. Cremo. I do not think you have covered Life Insurance Co. of 

Alaska and Alaska Pacific Corp. Senator.

The Chairman. I s that owned individually ? Who owns that ?

Mr. Cremo. It is Domestic Life Insurance Co.

The Chairman. I understand that, but in whose name is the stock, 

“Life Insurance Co. of Alaska, Domestic Life” ? It is not listed under 

the investments and securities of Walter and Ermalee Hickel. Who 

owns it?

Mr. Cremo. The stock of Life Insurance Co. o f Alaska is owned by 

Alaska Pacific Corp, in part and W alter Hickel and others also owns 

some stock in the Life Insurance Co., in Life Insurance Co. of Alaska.

The Chairman. Why isn't that listed in the statement of W alter J . 

and Ermalee Hickel ?
394

Se nator Bible. Maybe that is m isce llaneous stock.

Governor I Iick el. It could be.

Mr. Cremo. I think I made a misstate me nt, Senator , if I may— 

I think probably all of the stock of Li fe Insuranc e Co. of Alask a is 

owned by its ho lding com pany and in tu rn W alter J. IIi ck el stock 

is in Alaska Pacific Co.

Th e Chairm an. Where does Alask a Pacific—I see it the re, 1.000 

shares ?

Mr. Cremo. Yes.

The Chairm an. So the stock th at lie has in the Li fe Ind ura nce 

Co. of Al aska is rep res ented by his own ers hip of stock in Alask a Pacific 

Corp. Alask a Pacifi c Corp, owns all of the stock, or su bs tantially all 

of the stock of Life Ins urance Co. of Al aska ?

Mr Cremo Yes, si r; th at is my un de rstand ing of the co rporate 

arrangeme nt. I do not rep resent th at corporati on . I have never seen 

the stock, bu t th at is my un de rstand ing of the arr angeme nt.

The Chairman. I do no t see w here t h at c ompan y—a re they eng age d 

in any Government business?

Governor I Iick el. No: it is a sma ll com pan y, fo ur or five fellows 

got tog eth er an d sta rte d out this Alask a Pacific Corp., just as the 

Domestic L ife In suranc e Co.

Mr. Cremo. Alas ka only has two dom estic life insurance companies.

The Chairm an. W ha t all does Alask a Pacific Corp, own?

Governor I Iick el. I t hink ju st a life in suranc e company.

Th e C hairm an. Th at is all ?

Go ver nor ITick el. A s fa r as I kno w th at is all they own.

Th e C hairm an. You are a share holde r?

Gover nor IIick el. Yes.

Th e C hairm an. Do you know ?

Go ver nor I Iick el. I think tha t is all the y own.

Th e Chairm an. All rig ht, now wha t—an y oth er com pany?

Mr. Cremo. No other com pany as such, but item 20 on pag e 4 

of the sta tem ent, Senator, covers va rio us reside ntial and busin ess 

prop erty.

Th e Chairm an. Pa ge 4, item 20: “I nd ividua l cap acity, u ndevelo ped 

reside ntial and busin ess pr op erty in Ancho rage and Fa irba nk s.” 

W ha t is the value of th at ? Is it lis ted ? I t should be listed in the 

W alter—who owns this? It says in yo ur ind ividual cap acity. Tha t 

should show up in the W alter J. an d Er malee IIic kel statem ent . I 

see o ver here we have some unim proved lan d. The appra ise d value of 

it is $60,500 in An chora ge and $125,000 in Fa irb an ks , t ota l of $205,000. 

Tha t is just unim proved lan d ?

Gover nor IIick el. One in Fa irba nk s is c ontiguous to the T rave lers’ 

Inn. It was boug ht in 1955 and it is there for future exp ans ion to 

expand if it w ants to expand .

The C hair man. All rig ht, now is t he re a ny othe r? Do you own any 

bond s, ot her th an the Pr esby teria n bond ?

Gover nor TTtckel. No. Ther e is one lease here. I was ju st t ry in g to 

th ink, th at 7 acre s—no, th at is no t it. Th e 60 acres an d Camp bel l 

Road, I think 40 acres of th at was l eased in 1954 to the FA A to pu t 

radio tow ers on. Th ey came to me an d wa nte d to know if I owne d th at 

prop erty. I t was ou t there at a po in t of lan d. I t ha d a 10-year lease
395

and a 10-year option with the FAA. They built these radio towers on it. 

It expires in 1974. They leased the land, 40 acres.

The Chairman. It is a lease entered into when?

Governor IIickel. 1954.

The Chairman. And it runs until ?

Governor IIickel. 1974.

The Chairman. With an option to extend ?

Governor IIickel. No; there was two, 10-year leases and the last 

10 years runs out—they renumbered the option in 1964 and now it runs 

out in 1974.

The Chairman. I do not see any problem on that.

Governor Hickel. A nominal rent.

The Chairman. Wh at is it annually ?

Governor I Iickel. I think they pay me now $350 a month or somethin g like that for the 40 acres. Tha t is what they pay me. It is a 

matter of public record and I do not know the exact dollars.

The Chairman. All right. Anything else?

Senator Allott. There is one item in here, and I just bring it up for 

the record, and that is his home, boat-----

The Chairman. That is not listed.

Senator Allott. It is here somewhere because I saw it.

Mr. Cremo. On the last page.

Senator Bible. Page 4 of the letter.

Mr. Cremo. There is bank stock I think you omitted, Senator.

The Chairman. “Residential property and business property in 

Anchorage.” Is that reflected in your financial-----

Governor Hickel. It says nonbusiness property.

The Chairman. No.

Senator Bible. Nonbusiness property.

Governor Hickel. Nonbusiness.

The Chairman. I quote: “In my individual capacity I own undeveloped residential and business prop erty in Anchorage and Fa irbanks.”

Governor Hickel. Th at is listed.

The Chairman. You have already covered that?

Governor Hickel. Th at is right.

The Chairman. Matanuska Valley Bank is a State bank with offices 

in Anchorage and so on. I quote : “My children own an insignificant amount of its stock.” It is a 

State bank.

Governor IIickel. It is 150 shares. I paid $10 a share and I gave 

each one of the children 150 shares.

The Chairman. I do not see any problem about that. It is a State 

bank ?

Governor Hickel. Yes.

The Chairman. State chartered ?

Governor Hickel. I will be glad to sell it if there is any conflict.

The Chairman. When was the bank chartered? How long ago?

Governor II ickel. 1959 or 1960. The bank was chartered in 1953.

The Chairman. Sometime ago ?

Governor Hickel. Yes.

The Chairman. Anything else?
30(1

Se na tor Bible. 1 thin k Se nator Allott wanted to clarify the last 

sentence—“ home, non-business property.*

Th e Chairman. ‘‘Fu rnitu re, automobiles.”

Se na tor Bible. It does not bother me nt all.

Se na tor Allott. No, it does not lx>ther me.

Se na tor Bible. You raised the question.

Se nator Allott. Yes. I did.

Se na tor Bible. Anti lie did not seem to respond.

Se nator Ali/»tt. Th at is rig ht, but jus t since we were going over 

this, this was one ma tter th at had not l>een men tioned, and I knew 

I had seen this in the statem ent somewhere. And when the re is one 

iHissibility, since we are talk ing rou ghly about assets a nd any thing else, 

life insurance might constitute an asset if you have life insurance.

Governor H ickel. I have about a ha lf million in life insurance. I 

have had it for, oh, roughly ha lf of it in the early 1950s, and the othe r 

ha lf about 8 or 9 years ago or so mething like th at rou ghly.

Th e Chairman. What is the cash value?

Governor H ickel. I wish I knew.

Se nator Allott. Ar e they life jwdieies?

Governor Hickel. They are ordina ry life policies.

Se nator Allott. Or dina ry life ixdicies?

Governor Hickel. Or dina ry lire policies basically.

Se na tor Allott. So you would have a certain amount of cash value?

Gover nor Hickel. A certain amount. One of them 1 borrowed on a 

numb er of years ago, but I cannot remember.

Se na tor Burdick. Gentlemen, aren ’t we going fa r afield when we 

go in to life insurance?

Se nator Allott. Well. I think we are, but since this is a stateme nt 

of assets, that is technically an asset.

Th e C hairman. Th at is right.

Se nator Ali/ mt. The cash value.

Se nator Bible. Cash surre nder value.

Se na tor A li/ h t. No Gove rnm ent bonds ?

(Governor H ickel. No Government bonds.

The ( 'iiaikm an. You list cash $.3,982.19. T ha t is as of December .31, 

1967?

Governor H ickel. Miscellaneous?

Th e C hairman. ‘‘Walt er J .” Th is is from your balance sheet.

Gover nor H ickel. Th at is a lot of cash to have. I am always borrowi ng money. I am not being funny .

Th e C hairman. No money in savings banks?

Go ver nor H ickel. No.

Mr. Cremo. Senator , your question almut life insurance, you might 

look at Hickel Investment Co.’s statem ent. Amo ng its investments at 

cost to you will find the last item, cash value o f life insurance $117,000, 

a jM»licy ap pa rently owned bv the cori mra tion on the life of Walter 

J. Hickel.

The Chairman. Cash value of life insurance $117,000. That is 

owned by th e corporati on ?

Mr. ( 'remo. Yes, sir.

Th e Chairma n. On the life of Walter Hick el. and of course this 

company is wholly owned by Gov ernor and Mrs. Hickel ?

Mr. Cremo. Yea, sir.
397

The Chairman. Tha t is for purposes of covering, I suppose, any 

liability. But the cash is on hand in what, a checking account? This is 

on page 2 of your balance sheet, “Walter J. and Ermalee Hickel.’*

Governor Hickel. It would be in a checking account.

The Chairman. But there is no money in—is tha t a checking 

account ?

Governor Hickel. Yes.

The Chairman. $3,900 in a checking account. And nothing in savings banks?

Governor Hickel. No. We do not have any in savings banks, no.

The Chairman. Any other item now on anything that you own? 

Does anyone have any questions on this particu lar point that we are 

now on ?

Senator Bible. Only one question.

Mr. Chairman, I thin k the Governor of Alaska has been overly 

honest in disclosing everything that he has. But this is 1967 and your 

net worth has not changed much between December 31, 1967, and 

today? It is approximately the same?

Governor H ickel. Yes.

Senator Bible. You are worth $5 or $6 million net worth, something like that ?

Governor Hickel. Yes. I would like to liquidate it.

Senator Bible. That is a pretty nice balance sheet. The only place 

von and I resemble each other is the amount we have got in our checking accounts. We are both broke there. Beyond that the resemblance 

ceases, but I have no questions at all except it has not changed markedly from December 31,1967.

Governor Hickel. They are expanding that Mountain View Shopping Center now.

Senator Bible. You are worth approximately $5 to $6 million. So 

what?

The Chairman. Any other questions on this point ?

Senator Gravel. Not on this point. I would like to raise something 

else.

The Chairman. I want to dispose of these items first if we can. 

There is agreement, you understand. Is there any disagreement on the 

suggested disposal here that we have covered—what he is supposed 

to sell ?

Senator Allott. I have only one suggestion, Mr. Chairman, and 

tha t is that these suggested disposals be placed in writing and given 

to him.

The Chairman. Tha t is right. We will ask the staff to go through 

the record, I do not want to try to summarize it now. 1 think the best 

way is to go through the record. We have covered them item by item, 

what you are going to dispose of.

If there is no objection, the committee will give Governor ITickel 

a list of the properties of every kind, nature, and description that he 

should dispose of, in the judgment of the committee. These are not 

necessarily, but possibly in conflict. We have gone through them, but 

I think we have to go through the record and we will go through them 

item by item, and each committee member will be given a copy.

Senator Allott. I think this is the only way to do it, Mr. Chairman.

Senator Bible. Who makes that final determination, the chairman?

The Chairman. I will get it together.
398

Senator Bible. I delegate the authority to the chairman to make 

the final determination. I am satisfied.

The Chairman. We will go through the record here and see if there 

is any dispute about any item. Each member will be advised of what 

is lieing disposed of, with a copy of the list.

Senator Anderson. Are we going to report this ?

This Chairman. We are going to meet at 8:30 on Monday.

Senator Anderson. I do not think we need to reveal the financial 

statement.

The Chairman. I think in fairness to the Governor I should advise 

the press as to what is being done. I t is publicly known what he owns. 

I am not giving the value of anything, but what he is going to dispose 

of, and he will dispose o f certain stocks th at he owns, and then we 

will come to the next point. To what extent this record should be 

sanitized and released I think we can decide on Monday. We will have 

a copy available.

Air. Cremo. Senator, may I comment?

The Chairman. Yes.

Mr. Cremo. You are listing what will be disposed of. I would like 

to state tha t the Governor has advised me tha t he is willing to make 

the list the other way around and say tha t he will keep whatever 

relates to hotels and shopping centers and land tha t might eventually 

be developed for those purposes, and dispose of everything else, the 

way he has explained it to me.

The Chairman. I do not feel tha t he has to dispose of everything. 

That is not our responsibility. I think our responsibility relates only 

to what in the judgment of the committee might be a possible conflict, 

not just what is actually a conflict, but what might potentially be a 

conflict, and we try to be fairly broad in that.

I will come to the next point.

Senator Bellmon. Before you leave this there was some discussion 

about the time element in disposing of the Alaska Interstate shares?

The Chairman. Yes, I think there should be a reasonable time so 

tha t he can sell the stock so as not to necessarily depress its value. 

I do not see why 4 or 5 months—tha t would be ample time, I would 

think, to dispose of it. We have always done that in connection with 

problems of a substantial nature coming up in the Armed Services 

Committee, where there is quite a bit of stock held. There will be no 

problem on that.

Senator Allott. We do not want to depress him, either.

The Chairman. All right, now we understand, and we have got 

throu gh—I think we have covered every item, have we not, that 

requires disposition?

Mr. Van Ness. There a re others.

The Chairman. I am talking about things tha t he should sell, and 

they are either corporate stock matters or they relate to some business 

interests, where it is in the form of stock or individually owned.

Now, the Chair would like to make this suggestion. That the 

Governor enter into an agreement not to operate, personally operate 

his business during his term of office, nor to be involved in the direct 

operation. That does not mean he cannot be consulted and so on, but 

I am talking about active management. The agreement will provide 

tha t he has divested himself of active management responsibilities.
399

Senator Allott. Let me ask the C hair a question.

The Chairman. 1 think this is in our own interest.

Senator Allott. For my own information, I do not think the Governor has any objection to this, bu t is there precedent for asking a man 

to divorce himself from his business, which is not connected with the 

Government ?

The Chairman. 1 do not know whether there is or not, but this is 

an unusual situation where he is the sole owner.

• Senator Allott. Even so, are we getting outselves into—there is 

no quarrel among any of us, there is not any quarrel with the Governor 

about divestiture if anything that could possibly b ring a conflict of 

interest, but aren’t we going pretty far to tell, I am looking at the

• future, to tell a man, look, you have got to divorce yourself from your 

business, completely ?

The Chairman. Well, I have no objection if you leave th is out, but 

I would think the Governor would like to have it. I do not know. 

What 1 am talking about is where he is involved in the actual operation 

of the business.

Governor Hickel. It would be a physical impossibility, Senator.

The Chairman. I know but i f you do not want to have it in I don’t 

care.

Senator Burdick. Mr. Chairman, we were holding the hearing on 

the Postmaster General, and he was in the contracting business, and 

he had had contracts with the Federal Government. In his case he 

just agreed tha t his corporation would do no further business with 

the Government.

The Chairman. I will come to tha t in a minute. Do you want to 

waive that? Tha t is up to the committee. I would think, i f I were the 

Governor, I would want to be able to point to the fact tha t I have 

agreed not to be involved in the actual operation. That is a vastly 

different thing.

Senator Allott. Have we asked this of anybody else? Did we ask 

it of Secretary Udall?

Senator Bible. He did not have any business.

Senator Allott. He had a law firm.

* The Chairman. Who?

Senator Fannin. A law firm, and his son worked for him.

The Chairman. Did he keep practicing?

Senator F annin. I think it is a very unfair request.

* The Chairman. What is the wish of the committee? I don’t want 

to spend a lot of time on it.

Senator Hatfield. Mr. Cliainnan, I would like to say tha t if he 

were in a business where there was the possibility of doing business 

with the Government as a contractor or something like that, that might 

be one thing. But where he just has a business tha t is not directly 

related to the Government or a business with the Government, I question the precedent. Since I am not an attorney, I raise questions about 

some people who are still practicing law, as my colleagues, and I think 

tha t if there is going to be a conflict of interest given out as the reason 

for this, then we are going to have to start reviewing some of our own 

household practices.
400

The Chairman. I do not think a Senator or a Congressman—it is 

up to them. I have never had any earned income from any business or 

profession since I have been in office.

Senator Church. Mr. Chairman, I thin k the gentlemen on the opposite side of the table are making a good case here. I think Mr. Ilickel 

will find when he becomes Secretary that he is in a goldfish bowl. 

He will find tha t attending to the duties of this office will take all of 

his time. As a practical matter he won’t be able to devote much time 

to his private affairs, and if he were to do so, he would soon be the 

subject of very severe criticism by those who will be watching through 

that goldfish bowl. So I think t hat if we include such a provision in 

the understanding between the Governor and the committee, we have 

set a precedent, and I think it would go beyond anything tha t I know 

of in connection with other Secretaries in the past, and I don’t think 

that it is warranted in this case. There is no justification for it, and 

I would hope th at we wouldn’t take that step.

Senator Anderson. In the early days you could say a man should 

not take part in these ventures but here is a man who does take part 

in ventures right stra ight through. But I wouldn’t worry a bit 

about-----

The Chairman. I am not going to press it. I was just trying to be 

helpful to the Governor.

Governor ITickel. I have an open mind on it.

The Chairman. I gather the committee does not wish to have any 

provision of that kind.

Senator Burdick. Put a limitation in it that none of these companies 

do any business with the Government.

The Chairman. We will come to tha t point. That is the next one.

Senator Bible. As Secretary of the Interior he is not going to have 

much time le ft over. I think that is a valid point.

Senator F ann in. I t should be voluntary on his part.

Senator Bible. I should think he should be the judge because they 

are going to be watching him pretty closely.

The Chairman. There are two other points tha t remain. One is a 

prohibition against any of your wholly owned companies, either individually owned, corporately owned, or in partnership with anyone 

else, doing business with the Federal Government. I think this is something tha t should be made known to the committee in the form of a 

letter, a le tter to us. We can work out those details, and with instructions to the employees.

Senator Hatfield. Can Federal employees go to his hotel ?

The Chairman. We went into tha t before. A Federal employee who 

rents a room is not acting for the Fede ral Government. He is acting 

individually and he is reimbursed individually. But if he should lease 

out the downstairs to the Government, a Government agency, I think 

he is then doing business with the Government. I do not thin k he 

wants to be in th at kind of a position.

Senator Allott. Let me ask this question. I do not know the situation up there, but suppose the Agricultu re Department, or the Soil 

Stabilization or somebody has a meeting up there and wants to rent a 

room in one of these hotels or motels for that, for that one meeting. 

Does this constitute doing business with the Government?
401

Senator J ordan. Suppose a Senate committee is up there on business and stays a t one of his hotels?

Senator Allott. As a committee.

The Chairman. The Senate to my knowledge does not, and the committee does not rent rooms. Indiv iduals rent them. I do not think that 

is going to be any problem. There has been enough discussion in the 

record on that.

Mt.Verkler. You pay the fair market price for services rendered 

the same as anybody else. That cuts out the Government rate.

Governor Hickel. I wouldn’t give you a rate then because that 

would be influencing the committee.

Mr. Verkler. There goes our Government rate.

The Chairman. Of course we broadened it. Init ially it was suggested tha t your business limitation apply only to the Inte rior Department. I think it should apply to any of the Federal agencies 

within the Federal Government.

Senator Allott. While you are on that, Scoop, would you refer to 

the two documents which control tha t, because this is all on the record. 

One is the Senate resolution.

Mr. Verkler. House concurrent resolution.

The Chairman. Well, it is House Co ncurren t Resolution 175.

Senator Allott. House concurrent resolution.

The Chairman. Let me read the p ertinent part on this.

Senator Allott. I think as long as they are referred to specifically.

The Chairman. I know, but let us put it in the record at this point. 

There are two things. There is an Executive order pursuant to a 

statute.

Governor Hickel. I just have a note here, Mr. Chairman. 

Joe Keenan, who is the State land man, “Wire has been sent.” I t relates tha t I did have a State oil and gas lease which was dropped in 

1965. BP has no leases issued since 1966.

The Chairman. Th at is British Petroleum ?

Governor Hickel. British Petroleum.

The Chairman. But you had a State lease?

Governor Hickel. Yes, I did not know about it. It says I had a 

State lease which was dropped in 1965.

Senator Bible. You became Governor in 1966.

The Chairman. Is this one t hat carried over? Why wouldn’t you 

know about th at? I do not understand?

Governor Hickel. It probably could have been a—I don’t know-----

The Chairman. You see, we run into the same thin g in connection 

with the question asked about the leases in 1953 to 1963.

Governor Hickel. I am bringing it up because-----

The Chairman. I know, bu t don’t, you see why I want it? I tried to 

be as fair as I could be.

(Discussion off the record.)

The Chairman. The House concurrent resolution was passed as 

House Concurrent Resolution 175, passed July 11, 1958, providing for 

a code of ethics for Government service. The code provides to all Government employees including officeholders. Section 7 provides:

Any person in Government service should engage in no business with the Governm ent, eith er direc tly or indirectly, which is inconsistent with the conscientious performance of his Government business.
402

And an Executive order. The concurrent resolution is adequate to 

point out the need on not doing any business with the Federal Government because it is explicit, it is unambiguous and completely unequivocal, so I think we have covered that now. The staff has prepared 

a memorandum on some of the relevant conflict of interest laws and 

we will insert that for the record.

(The memorandum referred to follows:)

Memorandum on Con flict-of-I nterest Law •

There are a number of provisions of law which are releva nt to any potential 

conflict of inte rest questions or question of management of i>ersonal assets which 

normally face persons nominated or appointed to positions in the Federal government. The major provisions of thi s body of Federal law are set out below: «

H. Con. Res. 175, passed July 11,1958:

“code of eth ic s for government service

“The code applies to all government employees, including office holders.

“Subsection 7 provide s:

“Any person in government service should :

“7. Engage in no business with the government, eith er dire ctly or indirectly, 

which is inconsistent with the conscientious performance of his government 

duties.”

18 U.S.C. 208 (a ) provides as follows :

“§ 208. Acts affecting a personal financial interest.

“ (a) Except as perm itted by subsection (b) hereof, whoever, being an officer 

or employee of the executive branch of the United States Government, of any 

independ ent agency of the United States, or of the District of Columbia, including a special Government employee, par ticipates personally an d substantially 

as a Government officer or employee, through decision, approval, disapproval, 

recommendation, the rendering of advice, investigation, or otherwise, in a ju ­

dicial or oth er proceeding, application, requ est for a ruling or other determination, con trac t, claim, controversy, charge, accusation, arrest, or other par ticular 

matt er in which, to his knowledge he, his spouse, minor child, partner, organization in which he is serving as officer director, trustee , pa rtn er or employee, 

or any j>erson or organizatio n with whom he is negotiatin g or has any arrang ement concerning prospective employment, has a financial intere st—”

Subsection (a) is discussed in a Memorandum of the Attorney General Regarding Conflict of Interest Provisions of Public Law 87-849, Febru ary 1, 1963,

28 F.R. 985. The memorandum is printed following 18 U.S.C. 201.

Ex. Ord. No. 11222, May 8, 1965, 30 F.R. 6469, Standard s of Ethical Conduct 

for Government Officers and Employees sets out th e F ederal Government’s curre nt *

requ irem ents for Fe dera l employees.

While all of the Executive O rder is relev ant, the portions of pa rticu lar concern 

are set out below (the Executive O rde r is printed following 18 U.S.C. 201 (1964 

Supp. I l l ) ) :

Subsection 201 (c) : •

“ (c) It is the intent of this section th at employees avoid any action, whether 

or not specifically prohibited by subsection (a ), which might res ult in, or create 

the appearance of—

“1. Using public office for priva te gain ;

“2. Giving pr eferential treatm ent to any organization or pe rson ;

“3. Impe ding government efficiency or economy;

“4. Losing complete independence o r im partia lity of action ;

“5. Making a government decision outside official channels ; or 

“6. Affecting adversely the confidence of the public in the inte grity of the 

Government.”

Section 203:

“Employees may not (a) have direct or indirect financial inte rests th at conflict sub stan tially, or appear to conflict substan tially, with their responsibilities 

and duties as Fed eral employees, or (b) engage in, directly or indirectly, financial transa ctions as a result of, o r prima rily relying upon, info rmation obtained 

thro ugh their employment Aside from these restrictions, employees are free to 

engage in lawful financial transa ctions to the same extent as private citizens.
Agencies may, however, further restrict such transactions in the light of the 

special circumstances of their individual missions.”

There are, of course, other provisions of law which are relevant to potential conflict of interest questions or questions involving the management of assets owned by employees of the Federal government. The major provisions a re codified 

in 18 U.S.C. 201 through 219. ______

January 18.

Burt Silcock,

Department of Interior, Anchorage Alaska: This wire confirms our telephone conversations of yesterday January 17 con­ cerning a check of all BLM files and information on any oil leases or oil appli­ cations held or in the pas t held by Walter J. Hickel and a number of related 

business interests. This information was requested under the direction of Senator Henry M. Jackson, Chairman, Senate Interior Committee.Want full report by wire to Senator Jackson. Want detailed background report by airmail special delivery 

letter at earliest date. William J. Van Ness, 

Special Counsel, Senate Interior Committee.

The Chairman. I would suggest tha t Mr. Cremo and members of the staff here get together on the form that we want to have to cover both of these items, the disposition of the stocks and the unde r­ standing with reference to the agreement not to operate any of these businesses so as to involve any business with the Federal Government.

Is there a further question on this point ?

Senator Bible. Have you covered one point tha t is raised every now and then on some of the appointees I have had. Do you have any tax litigation with the Department of Inte rnal Revenue ?

Governor IIickel. Yes. You know about that.

Senator Bible. Because somebody might raise the question.

The Chairman. Th at was covered in the open hearings.

Senator J ordan. He mentioned it here in the statement.

Senator Bible. I understand, about an earthquake problem. T hat is 

the only one you had.

Governor Hickel. Th at is the only one.

Senator Bible. You do not owe Uncle Sam a lot of money for unpaid income tax?

Governor Hickel. No.

Senator Bible. You have paid all your taxes regularly?

Governor Hickel. I assume they have.

Senator Bible. We do have tha t arise.

The Chairman. Right. Can you supply that fo r the record, in case it 

is not fully covered now, when this lease was entered into?

Governor Hickel. That State lease ?

The Chairman. On State land ?

Governor Hickel. Yes, I can get that. I sure do not know.

Senator Stevens. I have already asked for that.

The Chairman. You have already asked for that ?

Governor Hickel. I t could not be one of those top filed.

Senator Stevens. It could have been State land in that top filed area ?

Governor Hickel. I just do not go around buying leases.

Senator Stevens. I t may have been land that was top filed.

The Chairman. Suppose we have that inform ation on Monday when 

we meet ?

Senator Gravel ?

23 -654 — 69— pt . 2
404

Se na tor G ravel. I do no t wa nt to tak e t oo much time . I hav e a sim ila r int ere st as does Se na tor A llo tt th at Govern or H ick el go in with no 

cloud over his head. Rig ht af te r the pu blic me eting there was a 

questio n raised con cer nin g the New Yo rk Insuranc e Co. an d St ate 

employees. I think it should be n aile d dow n—the ce rta in v agari es th at 

were s tated the re— fo r yo ur own benefit.

Gover nor H ickel. I t hi nk the teleg ram sh ould do it.

Senator Gravel. Th e coincidence still rem ain s, be th at as it may. 

Th e telegram on ly covers the fac t t hat it refers to a pr io r ad m in istration. All the telegram says as I read it is th at Go ver nor Eg an , yo ur 

predecessor, was fac ed with a sta tem ent fro m New Yo rk Li fe th at 

rates have e ith er g ot to go up or we have to decrease service. No thing 

else was done. And I can recall at the time th at this occurred I spoke 

to Gove rno r E ga n, an d he was of a m ind at th at tim e no t to do an ythi ng 

about it, and he did no thing . App aren tly yo ur ad minist ratio n did do 

som eth ing abo ut it in the m onth of May. Pri or to M ay, as I u nd ersta nd 

it, the loan fr om New Y ork L ife took p lace in Ja nu ar y, and you became 

Go ver nor in December, so th e tele gra m which you plac ed in the rec ord 

has no releva ncy to the sequence of events which crea tes the coincidence. 

Th e press is te ar in g you ap art and will te ar Mem bers ap ar t if the 

sequence is not pr op erly c leared up . Th e docum ent t hat I t hi nk would 

solve yo ur problem an d all of our problems imme dia tely wou ld be if 

you ha d the com mitment let ter of the pr io r year, sho win g th at you 

ha d a com mitment fo r the money before you wer e elected Governor, 

and I th in k that wo uld dispel any co incidenc e involved.

Go ver nor H ickel. Do you have t ha t ?

Mr. Cremo. Yes.

Se na tor Gravel. I th in k the c ommitment le tter sho uld be placed in 

the record so it can be cle arl y seen he acquired a loan, he ha d a commitm en t fo r a loan un related to the fact th at he became Governor.

Th e Chairm an. Gover nor, I th in k Se na tor Gravel has a ve ry im po rtant, po int here, because the record is cloudy on th is po int, the way it 

sta nds.

Se nator Gravel. It is a question they ask th e c hairm an. I heard yo ur 

interv iew .

Th e Chairm an. Th at is righ t.

Se na tor Gravel. T hi s is the firs t th in g they seized upo n, were you 

satisfie d with the Go vernor’s answer to th is coincidence, and was 

Se na tor McG overn satisfied. I think the press w ill delve into th is sub ­

ject un til the y get a pos itiv e anwser. Th e sim plest form wou ld be t his 

letter of comm itment.

Th e Chairm an. Go ahead , Mr. Cremo. W ou ld you pro vid e it and 

res po nd t o the po int ma de by Se nator Gr avel?

Mr. Cremo. Yes, Senator . Senator , first of all my knowledge of 

th is comes in par t fro m wha t I can rea d here a nd in part from h av ing 

wo rke d, ha ving done some of the legal wo rk in connection with the 

loan .

For instan ce, th e co lla ter al fo r th e loan co nsisted in par t of na tio nal 

leases, leases wi th Mo ntg om ery W ar d an d leases wi th Safew ay. I 

reviewed those leases. Th ey were p repa red bv th ei r com pan y’s counsel, 

but I ha d an op po rtu ni ty to wor k on those . I also w orked on the loan 

pa pe r direc tly .
405

The Chairman. Did they involve an assignment of the leases?

Mr. Cremo. Yes, sir.

The Chairman. To New York Life ?

Mr. Cremo. Yes, sir.

The Chairman. As collateral ?

Mr. Cremo. As collateral. I also worked, I imagine I drew both the 

promissory note and the deed of trust which was used. The original 

commitment dated August 1G, 1966, in the sum of $2,535,000 had an

• interest rate of 6i£ percent, that is here.

Senator J ordan. August 16,1966 ?

Mr. Cremo. August 16,1966.

Senator Stevens. You say it is here. Let us file it. Th at is what they

• want.

Mr. Cremo. All right.

(The data referred to follows:)

New York L if e I nsuran ce Com pany

Mortgage L oan Com mitmen t

August 16,1966.

Nort her n Lig ht s Sho pping Cen te r, I nc.,

Anchorage, Alaska.

New York Life Insu ranc e Company will make the first mortgage loan, identified 

below and herein referre d to as the “Loan,’’ based on the representatio ns made 

in your mortgage loan application, subject, however, to your compliance with 

each of the term s and conditions set forth herein prior to date of closing of the 

Loan.

TH E LOAN

Mortgagor : Northern Lights Shopping Center, Inc.

Loan Amt.: $2,535,000 (to be made in two advances—first advance of $1,740,000 

to be m ade not lat er than October 1, 1966—final advance of $795,000 to be made 

not later than March 1, 1967). Int. Ra te: 6*4% per annum. Term : 18 years 0 

months.

Repayable: Monthly installm ents of $19,940 including inte rest, the balance of 

principal, if any, to be paid on m atu rity of the Loan. Monthly installm ents shall 

be due and payable on the first day of each month.

Required De posits : Monthly deposits of %2th of the ann ual taxes and hazard 

insurance premiums as estim ated by us to accumulate for such charges when 

due. No intere st shall be payable on such deposits.

« Pre pay ment Pri vilege: No privilege is reserv ed to prepay principa l in whole

or in p art, dur ing the first nine (9) loan years. Beginning with the tenth (10th) 

loan year, and upon sixty (60) days wr itten notice, privilege is reserved to pay 

up to twen ty per cent (20%) of the original indebtedness on any intere st date in 

any one loan year; and to pay th e loan in full on any inte res t d ate, upon payment

• of a prep ayment charg e of thre e per cent (3% ) if the loan is paid in full during 

the tenth (10th) and eleventh (11th) loan year, such prepayment charge to decline one-half of one percent (V2 of 1%) per year beginning with the twelfth 

(12th) loan yea r through the fourteenth (14th) loan yea r with a prepayment 

charge of one per cent (1%) the reafter . The prepayment charg es ar e to be computed on the sum of (1) the unpaid prin cipa l balance at the time of any such 

prepayment and (2) any other prepayment or prepayments of prin cipa l made 

during the loan yea r in which payment in full is made.

THE SEC URITY

The evidence of indebtedness shall lie secured by a mortgage or deed of tru st 

which shall be a first lien on the marketable fee simple absolute title to the real 

property, the appurtenanc es thereto, and the improvements to the prop erty described herein and in the mortgage loan application (herein collectively called 

the “Real Propert y” ) and such other security as is hereinaf ter described, subject 

only to such encumbrances as shall be acceptab le to us a nd free of the possibility 

of any prior mechanics’ or materialm en’s liens or special assessment for work 

completed or und er construction on the date of closing.
406

The Real Property

Location: 1200 Northern Lights Boulevard, Anchorage, Alaska.

Plot Size: Irregular, containing approximately 463,167 sq. ft. (10.63 acres).

General Description of Improvements: Existing one and two-story, masonry 

and frame Shopping Center containing 6 stores with an approximate rentable 

area of 61,136 sq. ft. Entire 61,136 sq. ft. to be remodeled to accommodate 

Caribou-Montgomery Ward. New 1 sty. masonry supermarket containing 34,231 

sq. ft. and proposed 1 sty. and unfinished 2 sty. building containing 5 stores to 

contain 36,346 sq. ft. plus a tire, battery and accessory store of approximately 

14.644 sq. ft. Paved parking area (ratio 2.4 to 1). Total rentable area 146,357 sq. ft.

Occupancy Leases.—Each lease of any pa rt of the Real Property shall be *

executed in form satisfactory to our Office of the General Counsel and assigned 

to us as additional security for the Loan. The assignment shall be recorded and 

notice thereof served on the tenants. As to each lease to be assigned, the lease 

shall be in full force and effect, there shall be no rental offsets or claims or 

defenses to enforcement of the lease, the tenant shall have accepted its premises, •

confirmed commencement of the lease term, and shall have acknowledged that 

it is in occupancy and paying rent on a current basis. Evidence to that effect sa tisfactory to us shall be furnished us. The substance of all leases affecting any 

part of the Real Property shall be satisfactory to us, including the term, the 

tenants, and the rent payable. Within a reasonable time prior to date of closing, 

you shall meet our requirements as to which leases, if any, shall be made superior 

and which shall be made subordinate to the mortgage.

GENERAL CON DITIONS

1. Approval of General Counsel—The form and substance of each and every 

document evidencing the Loan and the security therefor or incident thereto, and 

any proceedings incident thereto, and the title and evidence thereof must he 

satisfactory to our Office of the General Counsel.

2. Hazard Insurance.—Policies, in form and issued by companies satisfactory 

to us, of fire and extended coverage as we may require, are to be delivered to us 

(and maintained during the term of the Loan) with acceptable mortgage clauses 

in our favor and, where required by us. waiver of subrogation clauses attached, 

in the amount of a t least $2,300,000, together with evidence of payment of premiums thereon. An insurance schedule for our approval must be submitted at 

least 15 days prior to closing.

* * * * * * *

4. Commencement and Completion of Construction.—Construction of 1 and 2

story building containing 5 stores and 2 story T.B. Store shall be completed on or 

before January 1, 1967, subject to unavoidable delays as herein defined. Failure 

so to do, unless time for commencement and/or completion is extended by us in 

writing, shall be deemed a default hereunder. If by reason of unavoidable delays 

construction shall not be completed prior to Jan uary 1, 1967, the time for such »

completion shall be extended by a period equal to the period of such delays, hut

in no event for a period in excess of six months unless we shall have otherwise 

agreed in writing. The term “unavoidable delays” shall mean only delays due 

to strikes, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion, fire or similar causes provided such simi- »

lar causes are beyond your control. A report from our appraiser, confirming compliance with the condition of completion in accordance with the plans and specifications as appraised, must be furnished us p rior to date of closing.

5. Changes in Final Plans and Specifications.—No change of any substance shall 

be made in the final plans and specifications approved by us pursuant to General 

Condition 4 without prior written approval by us. The making of such change 

without our prior written approval and its incorporation into the structure shall 

be deemed a default hereunder. Two copies of final plans and specifications and 

any changes thereto shall be furnished us.

6. Standard of Construction.—The buildings and all other improvements contemplated by this commitment, including grading, landscaping, and all other onand off-site improvements, shall be made and completed of first-class materials 

and in a good, substantial and workmanlike manner in accordance with the 

plans and specifications approved by us and shall be fully equipped with firstclass equipment, and we shall be furnished with evidence satisfactory to us that 

all of the aforesaid a re paid for or that adequate provision is made therefor. Any 

work or materials not directly noted in the plans and specifications but necessary
407

fo r th e pr op er carr yin g ou t of th e in te nti on th er eo f ar e to be im plied an d are 

to be pr ov id ed fo r as if specifica lly de sc ribe d. In co rp or at io n in to th e im prov emen ts of a ny w or k or m ate ri als o r eq ui pm en t wh ich do n ot c on form to su ch st andard s a t an y tim e duri ng th e co ur se of th e work sh all be dee me d an im med iate 

defa ult her eu nd er .

7. A rc hit ect’s Cer tificate.— P ri o r to d ate of clo sin g a fin al ce rt if ic at e of com ­

pletion by th e m ort gag or’s arc h it ect C ritten den , C as se tta, W irum & Ja co bs sh all 

be de liv ered to us ce rt if yin g th a t th e bu ildi ng s an d im pr ov em en ts ha ve been 

complete d in ac co rd an ce w ith th e fin al pla ns an d sp ec ifi ca tio ns ap pr ov ed by us 

an d in ac co rd an ce w ith ap pl ic ab le law, on a form of a n h it e c t' s ce rt if ic at e fu rnish ed by us.

8. A udit.— T he mor tgag e do cu m en ts sh al l co nt ai n a co ve na nt re quir in g the 

m or tgag or , w ithout ex pe ns e to us, to fu rn is h an an nua l audit of th e op er ation 

of th e Rea l P ro per ty , sh ow ing in re as on ab le det ai l to ta l re nts rece ived an d to ta l 

ex pe ns es to get her w ith annual bal an ce sh ee ts an d pr of it an d loss st at em en ts , 

pr ep ar ed an d ce rtified by a ce rtified pub lic ac co unta nt, w ith in 120 day s aft er 

th e clos e of ea ch fiscal ye ar , and su ch in te ri m bal an ce sh ee ts an d pr of it an d loss 

st at em en ts a s m ay be r eq ui re d by us.

9. W ai ve r o f R ed em pt io n. — I f t he s ta tu te s of th e st ate in wh ich th e Rea l Pr op ­

ert y is loca te d pr ov id e a ri g h t of re de m pt io n but per m it th e m ortga go r to wa ive 

th a t righ t, su ch pr ov ision sh al l be in co rp ora te d in th e mor tgag e do cu men ts.

10. No M at er ia l Change.— Exc ep t as m ay be ot her w is e pr ov id ed her ei n, th e 

Lo an , th e inco me an d ex pe ns es of th e R ea l Pro pe rt y, th e oc cu pa nc y leas es , an d 

al l oth er fe atu re s of th e tr ansa cti on sh al l be as re pr es en te d in th e m or tg ag e loa n 

ap pl ic at io n w ithout m at er ia l ch an ge .

P ri o r to d ate of clo sin g no p a rt of th e R ea l Pro pert y sh al l ha ve been da mag ed 

an d no t re pair ed to our sa tisf ac tion , nor ta ken in co nd em na tio n o r oth er si m ilar 

proc ee ding , nor sh al l an y such pr oc ee di ng be pe nd ing. N ei th er th e m or tgag or 

no r an y te n an t under an y leas e to be as si gn ed as se cu ri ty no r an y g u ara n to r of 

th e Lo an or any su ch leas e sh al l be th e su bj ec t of an y ba nk ru ptc y, re org an iz atio n, or inso lven cy proc eeding . No defa ult sh al l ha ve oc cu rred an d be co nt in ui ng 

in th e per fo rm an ce of an y ob lig ation in th e in st ru m en ts ev iden cing or se cu ring 

th e L oa n or in ci den ta l th er eto.

IL T it le In su ra nce .— T itle in su ra nce in form an d issu ed by ti tl e co m pa ny(i es ) 

sa ti sf acto ry to us . in th e am ou nt of th e Lo an sh al l be de liv ered to us, in su ring 

us as a ho ld er of th e in de bt ed ne ss se cu re d by th e first mor tg ag e or de ed of tr u st 

pr ov id ed fo r her ei n, su bj ec t on ly to su ch ex ce pt io ns as sh al l be ap pr ov ed by ou r 

Oflice of th e G en er al Co unsel. The ti tl e policy sh al l show no del in quen t ta xes 

an d as se ss m en ts af fe ctin g th e Rea l P ro p ert y or an y p art th er eo f on th e dat e of 

clo sin g.

12. Co mplianc e w it h La w.— Evi de nc e sa ti sf acto ry to us sh al l be fu rn is hed 

ce rt if yin g th a t al l im prov em en ts an d th e ir us e com ply fu lly w ith all ap plicab le 

zo ning an d bu ildin g law s, or din an ce s and re gu la tion s, an d all oth er ap plic ab le 

fe de ra l, sta te an d m un ic ipal laws an d re qu irem en ts. The Loa n an d o u r mak ing 

or purc has e th ere of sh al l be in all re sp ec ts leg al an d sh al l not vi ol at e an y ap plica ble law o r o th er re qu irem en t of any gov er nm en ta l auth ori ty .

13. Surv ey .— W ithi n a re as on ab le ti m e pri or to dat e of clo sin g a su rv ey of a 

lic en sed su rv eyor sa ti sf acto ry t o us an d th e ti tl e c om pa ny pre par ed a fte r com ple ­

tio n of im pr ov em en ts an d dat ed no t m ore th an 30 da ys pri or to clos in g sh al l be 

fu rn is hed us. The s ur ve y sh al l sho w dim en sion s an d to ta l sq uar e fo ot are a of t he 

Rea l P ro p ert y ; in te ri o r lo t lin es, if a n y ; dim en sion s an d lo ca tion of im prov em ents ; park in g a re a s; ea semen ts, if a n y : loca tio n of ad jo in in g str e e ts : an d th e 

di st an ce to an d na mes of nea re st in te rs ecting str e e ts : and such oth er det ai ls as 

to t h e R ea l P ro pert y a s m ay be r eq ue st ed by us.

14. Estop pe l.— If we are to ac qu ir e th e Lo an by as sign m en t, we m us t be fu rni sh ed w ith estopi>el aff ida vit of th e m ort ga gor or in te ri m m ortga ge e st ati ng 

th e am ou nt th en unpai d on th e ev id en ce of in de bt ed ne ss an d th a t no de fens es 

or se to ffs exis t w ith resp ec t th er et o. A ce rt if ic at e as to dis bu rs em en t of th e fu ll 

am ou nt of o u r Lo an an d such oth er do cu m en ts a nd ce rtific at es a s we sh al l re quir e 

sh al l al so be fu rn is he d.

15. S tr eet Ded icatio n.— All st re ets nec es sa ry fo r access to th e Rea l Pro per ty 

m ust b e c om pl eted , de dica ted, an d ac ce pt ed fo r m ai nt en an ce a nd pu blic u se by th e 

appro pri ate go ve rn m en ta l auth ori ti es an d sa ti sf acto ry ev iden ce th ere of subm itte d to us.

16. A ss ig nability.— N ei th er th is co m m itm en t no r the Lo an pr oc ee ds sh al l be 

as si gn ab le w it hout our pri or w ri tt en co ns en t an d w ithout such co ns en t th er e
408

sh al l be no ri ght to de sign at e a pa ye e of su ch Lo an pro ceeds. Any att em p t a t 

as si gn m en t w it hout su ch co ns en t sh al l be vo id. I t is un de rs to od , ho wev er, th a t 

co ns en t will no t be w ith he ld to a ss ignm en t of th e co mmitm en t to a ba nk or oth er 

fina nc ial in st it uti on fo r th e pu rpos e of obta in in g in te rim fin ancin g. T his com ­

m itm en t ca nn ot be ch an ge d, di sc ha rg ed , or te rm in ate d or al ly but on ly by an in ­

st ru m ent in w ri ti ng signed by th e part y a gain st wh om e nf or ce m en t o f a ny c ha ng e, 

di sc ha rg e, or te rm in at io n is soug ht.

17. Exp en se s.— You r ac ce ptan ce of th is co m m itm en t sh al l const itute you r unco nd itio na l ag re em en t to pa y all fee s, ex pe ns es , and ch ar ge s in re sp ec t to th e 

Lo an, or it s m ak in g or tr an sfe r to us or in any w ay co nn ec ted th er ew ith in cl uding, w ithout lim itin g th e g en er al ity ther eo f, th e fees a nd ex pe ns es of lo ca l co un se l 

sh ou ld loc al co un sel be em plo yed by us in co nn ec tio n w ith th is tr ansa cti on, ti tl e 

in su ra nc e an d su rv ey costs, reco rd ing an d filing fee s, mor tg ag e ta xe s, do cu ­

m en ta ry stam ps , and any oth er ta xe s, fees an d ex pe ns es pa ya bl e in co nn ec tio n 

w ith th is tr ansa cti on. W e sh al l not be re quir ed to pa y an y pr em ium or o th er 

ch ar ge o r an y br oke ra ge fee o r comm ission o r si m il ar co mpe ns atio n in co nn ec tio n 

with th is tr an sa ct io n, and by yo ur ac ce pt an ce of th is co mm itm en t you ag re e to 

de fen d, inde mnify , and ho ld us har m le ss ag ain st an d fro m an y an d al l clai m s 

fo r an y fees, ch ar ge s, comm iss ion s, taxe s, an d co mpe ns ation in co nn ec tio n w ith 

th e Lo an o r its m ak in g or tr an sf er to us o r in any w ay c on ne cted th er ew ith. Y ou r 

ob lig ati on fo r su ch exi>enses, fees, ch ar ge s, co mpe ns atio n, an d ta xes sh al l be in 

ad di tion to y ou r ob liga tion to p ay t he am ou nt of liqu id at ed da mag es , if a ny . her ein aft er re fe rr ed to.

18. Liq ui da te d Dam ag es.— In co ns id er at io n of our m ak in g th is co m m itm en t 

an d ho ldin g ou rs el ve s will ing an d re ad y t o ac quir e th e Lo an w ithin th e tim e h ere ­

in aft er st at ed , an d in fu rt h e r co ns id er at io n of th e su bst anti al se rv ices which 

we as pr os pe ctiv e m or tg ag ee ha ve re nd er ed and wi ll l>e re qu ired to re nder an d 

in cu r in pre para ti on fo r th e clo sin g, an d in view of th e dif ficult y of a sc ert ain in g 

th e am ou nt of da m ag es whic h wo uld lie su st ain ed by us shou ld th is Lo an no t be 

ac qu ired by us, your ac ce pt an ce of th is co m m itm en t sh al l const itute your unco nd iti on al ob liga tion to pa y New York Life In su ra nce Co mp any as liquid at ed 

da m ag es th e sum of $25,350 on ou r de m an d if t h e Loa n has no t been ac qu ired by 

us on or lie fore th e ex pir ati on dat e of th e co m m itm en t as he re in se t fo rt h in fu ll 

co mplianc e w ith th e co nd iti on s of th is co mm itm en t. If th e Lo an has no t be en 

ac qu ired by us by th e sa id ex pi ra tion date o r if you ha ve de fa ulted pri or to sa id 

dat e in an y of th e t erm s or co nd iti on s of t his c om m itm en t, un less w e ha ve waive d 

such defa ult in w riting , our ob lig atio ns here under sh al l cease as of said ex p ir ation date or as of su ch earl ie r dat e bu t your ob lig atio n fo r th e pa ym en t of dam ­

ag es by reas on of su ch def au lt sh al l su rv iv e unti l fu lly pa id an d satis fie d. You r 

ac ce pt an ce of any oth er loan co mmitm en t w ith resiiect to th e Rea l P ro per ty 

ex ce pt f or sa id i nte ri m f inan cing sh al l lie d eemed a d efa ult h er eu nd er .

1!). Sec ur ity Dep os it.— Con cu rren tly w ith your ac ce pt an ce he reof , an d so long 

as th is co mm itm en t sh al l re m ain in effect, yo u sh all m ai nta in on de po sit w ith us 

as se cu ri ty fo r th e pe rf or m an ce of your obl ig at io ns her eu nder $25,350 in ca sh, 

whic h we sh al l ho ld but no t in tr u st an d w ithout in te re st . If fo r an y re as on th e 

tr ansa cti on c on te m pl at ed he re by is n ot con su m m at ed a nd t he Lo an is no t ac qu ired 

by us w ith in th e tim e her ei n se t fo rt h fo r su ch co ns um m ation an d ac qu is itio n 

by us, we s ha ll hav e th e righ t, in our ab so lu te d is cr et io n, a nd w ith out th e re quir emen t of an y no tic e to you, to ap pl y sa id am ount in pa ym en t of th e liquid at ed 

da m ag es pr ov ided fo r in th e prec ed ing ji ar ag ra ph. It is f u rt h er un de rs to od th a t if 

th e Lo an he re in co nt em pl at ed sh al l ha ve been ac qu ir ed by us as he re in pr ov ided , 

we sha ll re tu rn t he a fo re sa id dep os it to y ou.

20. E xpir ation D at e— D at e o f Closing.— The ac qu is itio n of th e Lo an by us 

sh al l ta ke plac e as soon as all of th e co nd itio ns of th is co mm itm en t ha ve been 

met bu t in no ev en t la te r th an Marc h 1, 1907 unl es s th is c om mitm en t is ex te nd ed 

by u s i n w riting .

You r ac ce pt an ce of th is co mmitm en t m us t lie in di ca te d by yo ur si gn in g an d 

re tu rn in g to us th e en clo sed counte rp art w ithin 10 da ys fro m th e d ate he re of . 

U nt il re ce ip t th ere of by us, we will ha ve no ob liga tion he re un de r. T his co m m itm en t su pe rs ed es any an d all pr ev ious co m m itm en ts w ith re sp ec t to th is tr a n sac tion an d may be mo difie d only in w riting sign ed by th e part ie s he reto .

New York Life I nsurance Company,

By A. II. Attlerey, A ss is ta nt Ma na ger.
409

To New York Life In suranc e Company:

The undersigned hereby unconditionally accepts the foregoing commitment in accordance with the terms and conditions therein containe d and agree s to be bound thereby, and in accordance therewith agree s tha t the mortgage loan which you have agreed to make (or purchase ) will lie accepted (or sold) by the und ersigned on the terms and conditions set fortli herein.

Da te: Aug. 22, 1966.

Northern Lights Shopping Center, Inc.

By Walter J. IIickel.

SUPPLEMENTARY CONDITIONS

21. A first advance of $1,740,000 shall lie made not later than October 1, 1966 

subject to the following : (A) There shall be leas es in existence with the following ten ants on the 

following te rm s:

Ten ant

Safeway .............................................................................................................................

Caribou-Ward •................................................................................................................

Rexall.................................................................................................................................

Je welry ..............................................................................................................................

Giftshop.............................................................................................................................

T o ta l.....................................................................................................................

Term of Square feet Annual

lease area rent

15 34,231 $110,000

10 49, 525 138. 000

4 7,197 25 ,909

2 1,6 80 7,05 6

. . . . 1,661 6,97 6

____ 94,294 287,9 41

■ Guaranteed by Montgomery Ward & Co.

22. A second and final advance of $795,000, shall be made not later tha n 

March 1,1967 subject to the follow ing: (A) Compliance with Conditions 4, 5, 6 and 7 of the General Conditions. (B) There shall be leases in existence with the following tenants on the 

following te rm s:

Tenant

Term of Square feet Annual

lease area ren t

S afe w ay...........................................................................................................................

Ca rib ou -W ard1

................................................................................................................

Rexall Drug (fran ch ise)................................................................................................

Gift Shop...........................................................................................................................

Je welr y..............................................................................................................................

Tota l......................................................................................................................

15 34,231 $110,000

10 75 ,780 180,0 00

5 18,204 65 ,0 00

5 2,870 12,054

1 2,050 8,610

133,1 35 37 5,66 4

• Guaranteed by Montgomery Ward & Co.

Senator Gravel. And the subsequent loan was for how much ?

Mr. Cremo. The subsequent commitment, which ties to that commitment, and I will explain, is dated December 12,1966. The first commitment which I handed to the chairman is for $2,500,000 and something, 

$2,535,000, is it?

The Chairman. $2,535,000, 6 ^ percent, 18 years, dated August 16, 

1966.

Mr. Cremo. The next commitment is for $2,740,000. In other words 

it picks up tha t amount. I t amends that amount by adding $205,000.

The Chairman. But it is not in addition to ?

Mr. Cremo. Not in addition to.

The Chairman. This is the new figure ?

Air. Cremo. It is still a first mortgage on the same property is what 

we are talking about.

The Chairman. All right.
410

Mr. Cremo. The interest rate, however, New York Life was very 

difficult about, and they raised the interest rate just for the additional 

$200,000. They raised it to 6%.

The Chairman. On the $200,000?

Mr. Cremo. No, sir.

The Chairman. For the whole business?

Mr. Cremo. The whole thing.

Governor Higkel. We had a battle with them on that.

Mr. Cremo. In other words, it cost the Governor about $30,000. I n 

addition to that, Sir-----

Senator Stevens. Let us file that now.

Mr. Verkler. Dated December 12,1966.

(The data referred to follows:)

New York Lif e I ns ur an ce Com pany

Mortgage Loan Com mitmen t

December 12, 1966.

Northern Lig hts Sho pping Cen ter, I nc.

Itox 1100, Anchorage, Alaska:

New York L ife Insurance Company will make the first mortgage loan, identified 

below and herein referre d to as the “Loan.” based on the representatio ns made 

in your mortgage loan application, subject, however, to your compliance with 

each of the terms and conditions set forth herein prio r to the date of closing 

of the Loan.

th e loan

Mo rtgago r: Northe rn Lights Shopping Center, Inc.

Loan Am t.: $2,740,000; Int. Rate 6%% per an nu m; Ter m : 18 years.

Repayable : Monthly insta llments of $21,749.16 including interest, the balance 

of principal, if any, to be paid on matu rity of the Loan. Monthly installmen ts 

shall be due and payable on the first day of each month.

Required De posits: Monthly deposits of l /1 2t h of the annual taxes and hazard 

insurance premiums as estim ated by us to accumulate for such charges when 

due. No in terest shall be payable on such deposits.

Prepay ment Privile ge : No privilege is reserved to prepay principal in whole or 

in part, during the first nine (9) loan years. Beginning with the tenth (10th) 

loan year, and upon sixty (60) days wr itten notice, privilege is reserved to 

pay up to twenty i>er cent (20%) of the original indebtedness on any intere st 

date in any one loan year; and to pay the loan in full on any int ere st date, 

upon payment of a prepayment charge of three per cent (3%) if the loan is paid 

in full during the tenth (10th) and eleventh (11th) loan year, such prepayment 

charge to decline one-half of one i>er cen t ( of 1%) i>er year beginning w ith the 

twelfth (12th) loan year through the fou rteenth (14th) loan year a prep ayment 

charg e of one per cent (1%) therea fter. The prep ayment charges are to be computed on the sum of (1) the unpaid principal balance at the time of any such 

prep ayment and (2) any other prepayment or prepayments of principal made 

during the loan year in which payment in full is made. It is understood and 

agreed th at the tenth (10th) loan yea r stated herein commences on the expir ation of nine (9) yea rs from the d ate of the first required amortization payment.

T H E SE CURIT Y

The evidence of indebtedness shall be secured by a mortgage or deed of trus t 

which shall be a first lien on the marketable fee simple absolute title to the 

real property, the appurte nan ces thereto, and the improvements to the property 

described herein and in the mortgage loan application (herein collectively called 

the “Real P rop erty” ) and such other security a s is h ere inafter described, subject 

only to such encumberances as shall be acceptable to us and free of the possibility 

of any prior mechanics’ or materialmen ’s liens or special assessments for work 

completed or under construction on the date of closing.
The Real Property

Location.: 1200 Northern Lights Boulevard, Anchorage, A laska Plo t Size: Irregu lar, containing approximate ly 420,539 s.f. (9.65 acre s). General Description of Imp rovements: Existing one and two-story, masonry and fra me Shopping Center con tain ing six stores with an app roximate rentable are a of 61,136 sq. ft.—entire 61,136 sq. ft. remodeled to accommodate CaribouWard s, Inc. New one story, masonry Sup erm ark et containing 34,231 sq. ft. and proposed one- story and pa rt two-story building containing six stores with approxim ately 36,646 sq. ft. plus 3,000 sq. ft. semi-linished second floor sto rag e area, and a Tire, Ba tte ry and Accessory Store of approxima tely 14,644 sq. ft. Paved par kin g area 

(ratio 2.1—1). Total rentable area 149,657 sq. ft.

Occupancy Leases.— Each lease of any pa rt of the Real Pro per ty shall be executed in form satisfactory to our Office of the General Counsel and assigned to us as additional secu rity for the Loan. The assignment shall be recorded and notice thereof served on the ten ants. As to each lease to be assigned, the lease shall be in full force and effect, the re shall be no ren tal offsets or claims or de­ fenses to enforcement of the lease, the ten ant shall have accepted its premises, confirmed commencement of the leas e term, and shall have acknowledged that it is in occupancy and paying rent on a current basis. Evidence to th at effect sat is­ factory to us shall be furnished us. The substance of all leases affectin g any part of the Real Property shall be sat isfactor y to us, including th e term, the tenants, and the ren t payable. Within a reasonable time prior to d ate of closing, you shall meet our requirements as to which leases, if any, shall be made superior and which shall be made su bordinate to the mortgage.

GEN ERA L CONDITIONS

1. Approval of General Counsel.— The form and substance of each and every document evidencing th e Loan and the security therefo re or incident thereto, and any proceedings incident thereto , and the title and evidence thereof must be satisfactory to our Office of the General Counsel.

2. Haza rd Insurance.— Policies, in form and issued by companies satisfactory to us, of fire and extended coverage and such other haz ard insurance (including wa r damage insurance, if available, from the U.S. Government or any agency thereo f) as we may require, a re to be delivered to us and (an d maintaine d during the term of the Loan) with acceptab le mortgagee clauses in our favor and, where requ ired by us, w aive r of subrogation clauses a ttached, in the amount of at leas t $2,300,000, together w ith evidence of payment of premiums thereon. An insurance schedule for our approval mu st be subm itted at least 15 days prior to closing.

* * * * * * *

4. Commencement and. Completio n of Construction.—Construction shall be diligently prosecuted, and shall be completed on or before Janu ary 1. 1967, subject to unavoidable delay s as herein defined. Failure so to do, unless time for com­ mencem ent and/o r completion is extended by us in writing, shall be deemed a defau lt hereunder. If by reason of unavoidable delays, construction shall not be completed p rior to Janu ary 1, 1967, the time fo r such completion shall l>e extended by a period equal to the period of such delays, but in no event for a period in excess of six months unless we shall have otherwise agreed in writin g. The term “unavoidable delay” shall mean only delays due to strikes, acts of God, inability to obtain labor or materia ls, governm ental restrictions, enemy action, civil com­ motion. fire or similar causes provided such causes are beyond your control. A rep ort from our appraiser, confirming with the condition of completion in accord­ ance with plans and specifications as appraised , must be furnished us prior to 

date of closing.

5. Change in Final Plans and Specifications.—No change o f any substance shall 

be made in the final plan s and specifications approved by us pursu ant to General Condition 4 without prior written approval by us. The making of such change witho ut our prior writte n app rov al and its incorporation into the structure shall be deemed a default hereunder. Two copies of final plans and specifications and 

any changes thereto shall be furni she d us.

6. Standard of Construction.— The buildings and all oth er improvements Con­ templated by this commitment, including grading, landscaping, and all other on- and off-site improvements, shall be made and completed of first-class materials and in a good, sub stantial an d workmanlike manner in accordance with the pla ns and specifications approved by us and sha ll be fully equipped with first-
412

cl ass eq uipm en t, an d we sh al l fu rn is h w ith ev iden ce s ati sf acto ry to us th a t all the 

afo re sa id are pa id fo r or th a t ad eq ua te pr ov ision is m ad e th er ef or . An y work 

or m ate ri als n ot di re ct ly n oted in th e pl an s a nd spe ci fica tio ns bu t ne ce ss ar y fo r th e 

pro per carr yin g ou t of th e in te ntion th er eo f are to he im plied an d are to be 

prov id ed fo r as if specifically de scrib ed . In co rp ora tion in to th e im pr ov em en ts of 

an y work or m at er ia ls or eq ui pm en t wh ich do no t co nf or m to such st an d ard s a t 

an y tim e duri ng th e co urse of th e work sh al l be de em ed an im m ed ia te defa ult 

he re un de r.

7. A rc hitec t'8 Ce rti fic ate.— P ri o r to da te of clo sin g a fin al ce rtific at e of co mp letio n by th e m or tg ag or ’s arc hit ect Critten de n, C as se tta, W ir un & Ja co bs sh al l be 

de liv ered to us ce rt if yin g th a t th e bu ild ings an d im pr ov em en ts liaVe been co mpleted in ac co rdan ce w ith th e fin al pl an s an d sp ec ifications ap pr ov ed by us an d 

in a cc orda nc e w ith a pp lica bl e law , on a for m of a rc h it ect’s c er tifi ca te f urn is hed by 

us.

8. Audi t.— The m or tg ag e do cu men ts sh al l co nta in a co ve na nt re quir in g th e 

mor tgag or, w ith ou t ex pe ns e to us, to fu rn is h an annual audit of th e oper atio n of th e Rea l Pro per ty , sh ow ing in re as on ab le deta il to ta l re nts rece ived an d 

to ta l e x c u s e s tog et he r w ith an nual ba lanc e sh ee ts an d pr of it an d los s st at em en ts , 

pr ep ar ed an d ce rti fie d by a ce rtified pu blic ac co unta nt, w ithin 120 days a fte r 

th e d o se of ea ch fiscal yea r, an d such in te rim bal an ce sh ee ts an d pr of it an d los s 

st at em en ts a s may be r eq ui re d by us.

9. W ai ve r of Red em pt io n. — If th e st atu s of th e sta te in which th e Rea l P ro per ty is loca ted pr ov id ed a ri g h t of rede mption bu t per m it th e m ortga go r to waiv e 

th a t righ t, such pr ov isio n sh al l be in co rp or at ed in th e m or tg ag e do cu men ts.

10. No M at er ia l Ch ange.— Exc ep t as ma y be oth er w is e pr ov id ed he re in , th e 

Lo an, th e inc om e a nd ex pe ns es o f th e Re al Pro pe rty, th e o ccup an cy lea ses, an d al l 

oth er fe atu re s of th e tr an sa cti o n sh al l be re pr es en te d in th e m or tg ag e loan ap ­

plic atio n w itho ut m ate ri al ch an ge .

P ri o r to date of c losing no p a rt of th e Rea l Pro pert y sh al l ha ve lieen da mag ed 

an d no t re pa ir ed to our sa tisf ac tion, no r ta ke n in co nd em na tio n or oth er si m il ar 

proc ee ding , no r sh al l any su ch proc ee ding be pe nd ing. N ei th er th e m or tg ag or or 

an y te nant under an y le as e to be assign ed as se cu ri ty nor an y g u ara n to r of th e 

Lo an or an y su ch leas e sh al l be the su bjec t of an y ban kru ptc y re or ga ni za tion , or 

ins olve nc y proc eeding . No defa ut sh all ha ve occ ur re d an d be co nt in ui ng in 

th e pe rf or m an ce of an y ob lig atio n in the in st ru m en ts ev iden cing or se cu ring th e 

Lo an o r i nc id en ta l th er et o.

11. T itle Ins ur an ce .— T it le insu ra nc e, in for m an d is su ed by ti tl e c om pa ny(i es ) 

sa ti sf acto ry to us, in th e am oun t of the Loan sh al l be de live re d to us. in su ring 

us a s a ho ld er of th e in de bt ed ne ss secu red by th e firs t m or tg ag e or deed of tr u st 

pr ov id ed fo r he rein , su bj ec t on ly to such ex ce pt ions as sh al l be ap pr ov ed by our 

Office of th e G en eral Co un sel. Th e title policy sh al l show no del in qu en t ta xes 

an d as se ss m en ts affe ctin g th e Re al Pro per ty or an y p a rt th er eo f on th e d ate of 

clo sin g.

12. Co mp lia nc e w it h Law .— Ev iden ce s ati sf acto ry t o us sh al l be fu rn is hed c ert ify in g th a t all im pr ov em en ts a nd th eir use comp ly fu lly w ith all ap pl ic ab le zonin g 

an d bu ildi ng laws, ord in an ce s an d regu la tio ns , an d al l oth er ap pl ic ab le fe de ra l, 

st ate and m un icipal law s an d requ irem en ts. Th e Lo an an d our mak in g or pu rc has e 

th er eo f sh al l be in all r'e spects leg al an d sh al l no t vio la te an y ap pl ic ab le law or 

oth er r eq ui re m en t of an y g ov er nm en tal auth ori ty .

13. Surv ey .— W ithi n a re as on ab le tim e pri or to d ate of clo sin g a su rv ey of a 

lic en sed su rv ey or sa ti sf acto ry to us an d th e ti tl e co m pa ny pr ep ar ed a ft e r completion of i m pr ov em en ts an d dat ed no t more th an 30 day s pri or to clos ing sh al l be 

fu rn is he d us. Th e su rv ey sh al l sho w dimen sion s an d to ta l sq uar e fo ot are a of th e 

Rea l P ro p e rty ; in te ri o r lo t lin es, if a n y : dim en sion s an d lo ca tio n of im pr ov emen ts : pa rk in g a re a s: ea se m en ts, if any: loca tio n of adjo in in g str e e ts ; an d th e 

di st an ce to an d na mes o f n eare st in te rs ec tin g str e e ts ; an d su ch oth er det ai ls as to 

th e Re al P ro pert y a s m ay be requ es ted by us.

14. Es topp el.— If we a re to ac qu ir e th e Lo an by as si gn m en t, we m us t be fu rnish ed w ith estopp ed af fida vi t of th e m or tg ag or or in te ri m m or tg ag ee st ati n g th e 

am ou nt then un pa id on th e e vide nc e of in de bt ed ne ss an d th a t no de fe ns es or se toffs e xi st w ith re sp ec t th er eo . A Certif icate as to dis burs em en t of th e fu ll am ou nt 

of ou r Lo an an d su ch o th er do cu men ts an d ce rtif ic at es as we sh al l re quir e sh al l 

also be fu rn ishe d.

15. Str eet Ded icatio n. — All st re ets ne ce ss ar y fo r accfees to th e Rea l Pro per ty 

m us t be co mplete d, ded ic at ed , an d acce pted fo r m ai nte nan ce an d pu blic u se b y th e 

ap pro pri ate go ve rn m en ta l auth ori ti es an d sa ti sf acto ry ev iden ce th er eo f su bm itte d to us.
413

1G. Ass ig na bi lity .— N eit h er th is co m m itm en t nor th e Lo an proc ee ds sh al l he as si gn ab le w ith ou t our p ri o r w ritten c on se nt a nd w ithout su ch co ns en t th ere s hal l he no ri gh t to des ig nat e a pa ye e of su ch Lo an proc ee ds . Any att em pt a t ass ig n­ men t w ith ou t su ch co ns en t sh al l be void. It is un de rs to od , ho wev er, th a t co ns en t 

wi ll no t be w ith he ld to as si gnm en t o f th e co m m itm en t to a ha nk or o th er finan ­

cial in st it uti on fo r th e pur po se of obt ai ni ng in te ri m fin an cin g. T his co m m itm en t ca nn ot be ch an ge d, dis ch ar ge d, or te rm in ate d or al ly bu t on ly by an in st ru m ent in w riting sig ned by th e p art y ag ai nst wh om en fo rc em en t of an y ch an ge , dis ch ar ge, 

or te rm in at io n is so ug ht .

17. Exp en se s.— You r ac ce pt an ce of th is co mm itm en t sh al l const it ute your u n ­ co nd itio na l ag re em en t to pa y all fee s, ex pe nses, and ch ar ges in re sp ec t to th e Lo an, or i ts m ak in g o r tr a n sfe r to us o r in an y way c on ne cted th er ew ith in cl ud in g, w ith ou t lim itin g th e g enera li ty th er eo f, th e fees an d ex pe ns es of loca l co un se l, shou ld local co un sel l>e em ploy ed by us in co nn ec tio n w ith th is tr ansa cti on, ti tl e in su ra nce an d su rv ey co sts, re co rd in g an d filing fee s, m or tgag e taxe s, do cu m en ­ ta ry stam ps , an d an y o th er taxe s, fees an d ex pe ns es pa ya bl e in co nn ec tio n w ith th is tr an sa ct io n. We sh all not be re qu ired to pa y an y pr em ium or oth er ch ar ge or an y br ok er ag e fee or co mmiss ion or si m il ar co m pe ns atio n in co nn ec tio n w ith th is tr ansa cti on, an d by y o u r ac ce pt an ce of th is co m m itm en t yo u ag re e to de fe nd , inde mnify , an d ho ld us ha rm le ss again st an d from an y an d al l cl ai m s fo r any fees, ch arge s, co mmission s, ta xe s, and co m pe ns atio n in co nn ec tio n w ith th e Loa n or its mak in g or tr a n sfe r to us or in an y w ay co nn ec ted th er ew ith. You r obliga­ tio n fo r su ch ex pe ns es , fees, ch ar ge s, c om pe ns atio n, and ta xes sh al l be in addit io n to yo ur ob lig atio n to pa y th e am oun t of liquid at ed da mag es , if an y, h e re in aft er 

re fe rr ed to.

18. Liq uid at ed D am ag es .— In co ns id er at io n of o ur m ak in g th is c om m itm en t and 

ho ldin g ou rs elve s w illing an d re ad y to ac qui re th e Lo an w ith in th e tim e h ere in ­ a ft e r st at ed , an d in fu rth e r c on si de ra tion of th e su bst anti al serv ice s whi ch we as pr os pe ctive m or tg ag ee ha ve re nde re d an d wi ll be re quir d to re nder an d in cur in pre par at io n fo r th e clos ing, an d in view of th e diffi culty of asc ert ain in g th e am ou nt of da m ag es whi ch wo uld be su st ai ned by us sh ou ld th is Loa n not lie ac qu ired by us, your ac ce pt an ce of th is co m m itm en t sh al l co nst it ute your u n ­ co nd itio na l ob lig atio n to pa y New Yo rk Life In su ra n ce Co mp any as li quid ate d da mag es th e sum of .$25,350, on our dem an d if th e Loa n has no t been ac quir ed by us on or l>efore th e expir ati on dat e of th e co m m itm en t as he rein se t fo rt h in fu ll co mplian ce w ith th e co nd itio ns of th is co mm itm en t. I f th e Lo an h as no t be en ac qu ired by us by th e sa id ex pir at io n d ate o r if yo u ha ve defa ulted p ri o r to sa id date in an y of th e te rm s or co nd iti on s of t his co mm itm en t, un less w e hav e w ai ve d su ch def au lt in w riting, our ob lig atio ns her eunder sh al l ce ase as of sa id e x p ir a ­ tio n dat e or as of su ch earl ie r d ate b u t your obl ig at io n fo r th e p ay m en t of d am ­ ag es by re as on of su ch defa ult sh al l su rv iv e u n ti l fu lly pa id an d sa tis fied . You r ac ce pt an ce of a ny o th er loan c om m itm en t w ith r es pe ct to th e R ea l Pro pert y e xc ep t fo r said in te rim fina nc in g sh al l be deem ed a defa ult he re un de r.

19. Securi ty D ep os it.— C on cu rren tly w ith your ac ce pt an ce he re of , an d so lon g 

as th is co mm itm en t sh al l re m ai n in eff ect, yo u sh al l m ai nta in on de po sit w ith us as se cu ri ty fo r th e per fo rm an ce of your obl ig at io ns her eu nder $25 ,35 0 (w e ha ve rece ived your check fo r su ch de posi t) in ca sh , which we sh al l ho ld but no t in tr u s t and w ithout in te re st . If fo r an y re as on th e tr ansa cti on co n­ te m pl at ed he re by is no t co ns um mated an d th e Ix»an is no t ac quir ed by us w ith in th e tim e her ei n se t fo rt h fo r such co ns um m at io n an d acq uis itio n by us, we sh al l ha ve th e right , in our ab so lu te di sc re tion , an d w ithout th e re ­ qu irem en t of an y not ic e to you, to ap ply sa id am ou nt in pa ym en t of th e liqu id at ed da m ag es pr ov id ed fo r in th e pr ec ed in g par ag ra ph. It is fu rth e r un de rs to od th a t if th e Lo an he re in co nt em pl at ed sh al l ha ve bee n acq uir ed by us as he re in pr ov id ed , we sh al l re tu rn th e af ore sa id de po sit to you .

20. E xpir ation D ate— D at e of Closing .— Th e ac qui si tion of t he Ix>an by us sh all 

ta ke plac e as soo n as all of th e co nd iti on s of th is co mm itm en t ha ve be en m et bu t no t earl ie r th an Ja n u a ry 15, 19G7 an d no t la te r th an M arch 1, 1967. O ur ob lig ation under th is co mm itm en t to mak e (o r purc has e) th is m ort ga ge lo an an d yo ur ob liga tion to ac ce pt (o r se ll) may be ex te nd ed by us be yo nd th e la s t men tio ne d date in w ri ti ng, from tim e to tim e, in our sole dis cr et io n, if th e co n­ di tion s of this c om m itm en t h av e no t been m et b y sa id d at e. Yo ur ac ce pt an ce of th is co mm itm en t m us t be in di ca te d by your si gnin g and re tu rn in g to us th e en clo sed counte rp art w ithin 10 da ys from th e d ate he re of . U nt il re ce ip t th ere o f by us, we will ha ve no ob liga tion he re un de r. T his co m ­ m itm en t su pe rs ed es an y an d al l pr ev io us co m m itm en ts w ith re sp ec t to t h is tr a n s-
414

actio n and may be modified only in writing signed by the partie s hereto. See 

jwige 4 for supplementary conditions which are inco rporated herein and made 

a pa rt hereof.

New York Life I nsurance Co.,

By It. II. Attlesey, A ss is ta nt Ma nager.

December 22, 196(5.

To New York Life Insurance Com pany:

The undersigned hereby unconditionally accepts the foregoing commitment 

in accordance with the term s and conditions therein contained and agrees to be 

bound thereby, and in accordance therewith agrees t ha t t he mortgage loan which r

you have agreed to make (or purcha se) will be accepted (or sold) by the und ersigned on the terms and conditions set forth herein.

Northern Lights Shoppin g Center, I nc.,

By Vernon W. Hickel, Pre side nt .

R. M. Winslow, Secretary. *

A ttes t:

SU PPLEM EN TA R Y COND ITIO NS

21. The re shall be leases in existence with the following ten ants on the following te rm s:

Tenant

Term of Squa re feet, Annual

lease area rent

Safeway Store s, Inc ..... ......................................................................................

Caribou-Wards, In c .. .. .......................................... ...........................................

Pay ’n S ave C o rp .. .................. ...........................................................................

Apparel S ho p.......................................................................................................

Shoe Sto re.................................................................. ......... ...............................

Gift Shop (B urt 's )...............................................................................................

Jew elr y..................................................................................................................

T o ta l. ............................... ............... ....................... ............... ...............

15 34,231 $110,000

10 75,780 180,000

10 22,000 87,000

5 4, 500 24,300

5 3,240 17,496

5 3,150 17,010

2 2,02 5 10,935

144,926 446,741

Senator Jordan. Pa rt of the original commitment ?

Governor Hickel. T hat is right. I was going to ask the question for 

someone to show me what good New York Life did me.

Mr. Cremo. If I may, Governor, they did you some other harm at 

the same time. The additional $200,000 was needed because one of the 

tenants, I think it was Montgomery Ward, decided that it wanted even 

more space than it had talked about in the first place. If I recall correctly, the whole requirement for additional funds was more like 

$400,000, but New York Life Insurance Co., was stubborn and would 

only loan $200,000 and Montgomery Ward itself loaned the other 

$200,000.

Incidentally, both of those rates were very much ball park rates in 

August and December of 1966, very much.

Senator Gravel. Mr. Chairman, I know the center from an economic point of view. It is a good center, well located. I was aware of 

the expansion and all this. I think the letter of commitment does lay 

to rest, because even the slight difference, forgetting the interest rate, 

the slight difference, tha t New York Life had a commitment.

The Chairman. What was the date of tha t commitment?

Senator Gravel. The first one was August 16.

The Chairman. I know, but was there a letter of commitment prior 

to th at ?

Governor IIickel. Negotiations.

The Chairman. It was finalized, but what was the date? I mean 

they normally give a letter.

Air. Cremo. Tha t is the commitment.
415

Senator Gravel. August 1G.

Governor Hickel. Commitment is August 1G.

The Chairman. This is the loan ?

Mr. Cremo. Th at is the commitment to loan, sir.

The Chairman. Mortgage, loan commitment ?

Senator Gravel. It is binding for that amount.

Governor Hickel. When we changed it they penalized us.

Senator Gravel. But the key th ing for the record, and also to be 

released to the press is t hat he got the commitment, the loan, before 

he became Governor.

The Chairman. Prior to his election or prior to his taking office.

Senator Gravel. The coincidence is not related. This is the point 

tha t should be made clear.

The Chairman. I think th at is very helpful.

Senator Allott. Senator, would you yield? I would like to ask you 

just one question. There is background to this. You did not just app ly 

for this ?

Governor H ickel. Oh, no.

Senator Allott. And get it on August 1G. IIow long in rough terms 

would you say you had been negotiating for th at loan?

Governor Hickel. On and off for a year.

Senator Allott. Fo ra year ?

Governor Hickel. Yes. They are tough to get those loans up in 

Alaska, oh, my. You have got to give all kinds of national leases, and 

they are tough.

Senator Allott. I think this is significant, as well as the very valid 

point the Senator made.

The Chairman. Any thing furthe r on this?

Senator J ordan. One other point.

You were not in the legislature, were you, Governor?

Governor Hickel. No.

Senator J ordan. You had no knowledge-----

Governor Hickel. No.

Senator J ordan (continuing). Of the insurance entanglement that 

confronted you after you took office in December?

Governor Hickel. Absolutely not.

Senator Jordan. You had no knowledge of that ?

Governor H ickel. No. We had been working with New York Life 

since 1960 I think it was.

The Chairman. I s there any further discussion on this point so we 

keep this record stra igh t ? Now the Chair was just handed by a clerk of the committee-----

Senator Gravel. I am sorry, sir. Could there be some wav to release 

this into the public record probably on Monday’s public hearing?

The Chairman. Which ?

Senator Gravel. This point of the letter.

The Chairman. Oh, yes. We are going to sanitize the record and 

go over as much of th is record as possible to be made public.

Senator Fannin. Mr. Chairman, we are not going to have a public 

hearing Monday, are we?

The Chairman. No, not so far. I said we are going to sanitize the 

record, because we have matters in here that will have to and should 

be made public in light of what was said in public.
416

The Chair just received the following wire from F. J. Keenan, 

director of State division of lands addressed to the Chair at the 

Senate Office Buildin g:

Anchorage, Alaska, January 18, I960.

Senator Henry M. J ackson,

Chairman Interior and Insular Affairs Committee,

U.S. Senate Office Iluildiny,

Washington, I).C.:

Alaska law does not permit a negotiated oil or gas lease. All leases are issued 

on a competitive or noncompetitive basis. Records indic ate that Wa lter J. Hickel 

had one noncompetitive lease which was dropped in 1965. Records fu rthe r reveal 

that no leases now exist in the name of Wa lter J. Hickel or Thom as E. Kelly.

British petroleum leases on North Slope acquired only for competitive bid.

P. J. Keenan,

Director of State Division of Lands.

This is on the North Slope, but we still do not have the answer, you 

understand, and that is signed by F. J. Keenan, director of State 

division of lands. We still do not have from them whether there were— 

wait a minute here. “British petroleum leases on the North Slope 

acquired only by competitive bid.” But what about elsewhere in 

Alaska ?

Senator Gravel. That is it. The only other thing we have would be 

offshore leases.

The Chairman. There is no other place where a lease could be 

made ?

Senator Stevens. There are State university grant lands tha t they 

might have a lease on but I do not think they have any. I can see 

there is a gap there.

The Chairman. Tha t is right.

Senator Stevens. And I will ask Mr. Keenan to close it. All those 

leases were issued in 1966 on the North Slope, and that was competitive bid.

The C hairman. Let us get the details in view of the previous testimony this morning. I think it is important that th is be filled out.

Senator Metcalf?

Senator Metcalf. Mr. Chairman, categorically and without equivocation Governor Hickel has said tha t none of the companies which he 

owned, wholly owned, or manages, have any oil or gas leases. This 

statement does not inchide any of these companies tha t we know 

about, and I th ink that if we are going to get a complete written record 

on it, would also find out whether any oil or gas leases are issued 

to the investment company or some of these other areas.

Governor Hickel. There will be no problem.

The Chairman. Senator Metcalf, this request that you have made 

was a request that I made to BLM. It has not been made of the 

State. I think the State ought to have tha t answered too so we have 

covered the whole area of possible financial interests that the Governor 

might have. And any details about any of them tha t show up. We 

ought to have that ready for Monday morning.

Governor H ickel. The only one embarrassing thing is when you 

asked me i f I had any State leases I really didn't know I had one. It 

is dropped. I do not have one now.

Mr. C remo. These are drawn out of a hat, Senator.
417

The Chairman. I understand, but don’t you have to pay something 

for them ?

Senator Stevens. $10.

The Chairman. I would know what I wofuld owe or have.

Senator J ordan. I would hate to answer any questions whether I 

had a State lease or not at any time.

The Chairman. This is 3 or 4 years ago.

* Senator J ordan. Whether I could recollect it over tha t long time. 

(Discussion off the record.)

The Chairman. Back on the record.

Are there any further questions?

* All right.

The committee will stand-----

Senator Allot’!'. Before the Senator does that, Mr. Chairman, and 

1 do not want to assume any of his prerogatives anyway, but I would 

like to make the motion here today that the nominee be confirmed.

The Chairman. The Chair would ask that that matter be deferred.

Senator Allott. There is nothing wrong with making the motion.

The Chairman. You can make the motion, I have it pending.

Senator Bible. Hold the motion until Monday morning.

The Chairman. I assume that you do not want to push it to a vote. 

It can be pending as a motion.

Senator Allott. I would like to have it go to a vote, but I understand what the situation is.

Senator Bellmon. Is it in order to second the motion ?

The Chairman. You can. It is debatable and discussable.

Senator Bible. Not to dispose of it today anyway.

The Chairman. Tha t is right. I told a couple of Senators who were 

away t hat we would take it up for a vote on Monday morning.

Senator Allott. We will take it up for a vote on Monday morning.

The Chairman. Tha t is righ t, 8:30, and the Senate convenes at 

10:30. There are 2 hours of time.

Mr. Verkler. I have requested the reporting firm to do their best 

to get us a record Sunday morning.

* (Whereupon, at 3:30 p.m. the executive session of the Committee 

on Interior and Insular Affairs was recessed, the committee to reconvene at 8 :30 a.m., Monday, January 20,1969.)

NOMINATION OF GOV. WALTER J. HICK EL, OF ALASKA, 

TO BE SEC RET ARY OF TH E INTE RIOR

M ONDAY, JA N U A R Y 20 , 19 69

* U.S. Senate, 

Committee on I nterior and I nsular Affairs,

'Washington, D .C.

The committee met, pursu ant to recess, at 8:45 a.m., in room 3112, 

New Senate Office B uilding, Senator Henry M. Jackson (chairman) 

presiding.

Present: Senators Jackson, Anderson, Bible, Church, Moss, Burdick, McGovern, Nelson, Gravel, Allott, Jordan , Fannin, Hansen, 

Stevens, and Bellmon.

Also present: Jerry T. Yerkler, staff director; Stewart French, 

chief counsel; Bill Van Ness, Jr., special counsel; Charles Cook, 

minority counsel: Dan Dreyfus, Jim Gamble, Denny Miller, Porter 

Ward, and Roy Whitaker, professional staff members.

The Chairman. The meeting will come to order.

Pending at the last hour was a motion to report the nomination. 

It will have to be modified at the appropriate point because at present 

there is no nomination before us, but tha t is a detail. The motion was 

appropriately seconded.

In addition, there were a number of matters tha t were to be clarified in connection with requests that had been made for information 

from Juneau and Anchorage on these leases.

I think the best way to keep things in proper order here would be 

to ask Mr. William Van Ness, special counsel, to give a summary of

* what has transpired since our last meeting.

Mr. Van Ness has been working with Mr. Cook, counsel for the 

minority, and with the Governor’s attorneys. You have all been in 

constant touch here on this matter as I understand it. Is tha t right,

* Mr. Cook?

Mr. Cook. That is right.

The Chairman. All righ t, Mr. Van Ness, why don’t you give the 

committee a summary of developments since our last meeting on S aturday morning and Saturd ay afternoon ?

Mr. Van Ness. Yes, sir. And Mr. Cook might comment on the summary. We met yesterday morning, Carl McMurray, the Governor’s 

administrative assistant, Roger Cremo, his attorney, Chuck Cook and 

myself, to discuss matters tha t were left unresolved on Saturday.

The first thing that you should be advised of is the three letters you 

have in fron t of you. The first one I believe is what we referred to as 

the “ addendum” letter. This letter refers to the letters of January 12 

sent to the chairman, in which the assets were listed, approximately 

(41 9)

23-65 4— 69—pt. 2
420

20 of them. There were two errors in there—relatively minor erro rs— 

and in addition there were two items th at they were not aware of at 

the time tha t was sent to the committee, and tha t they were not aware 

of on Saturday when the committee recessed.

They had been requested to provide additional financial information 

on questions that were not resolved in the financial statements, 

and in searching out this information they discovered tha t the Governor has an interest in a mining claim. A gold placer claim as I recall. I think it is called Fairview Mines. It was carried under one of 

these “other stocks” or open categories in one of the financial statements. Its value at cost was $200. It still is an existing right as I understand it. I t has not been extinguished. However, it is described in the 

letter and it is apparently a very speculative thing and, in th eir jud gment, is of no value.

The Chairman. I will interrupt at that point. You will recall that 

I thought it was important that we know what these miscellaneous 

items were in the financial statement, so th at we did not ru n into anything in the miscellaneous category tha t m ight raise some question of 

a technical conflict of interest. It does not matter whether or not it 

was a small sum of money. In fact, I think the total in the item that was 

included was only $1,200.

Go ahead.

Mr. Van Ness. The background on that, I think perhaps the Governor himself or his people could clarify. But, briefly, as I understand 

it, some person in Anchorage who was speculating in these mining 

claims encouraged approximately 90 or 100 people to each pu t in some 

money. The Governor put in $200. This person would apparently go 

out and stake the claims as agent for the principals who put forth the 

money. Then the principals granted the agent the right to subcontract 

assessment work.

There is some question as to whether the assessment work has been 

done in the last few years and the rig ht itself very well may be 

extinguished.

The second m atter relates to an interest tha t they discovered in an 

oil royalty, as I recall. I have not looked at the letter carefully, but 

in discussions of yesterday they said tha t to their best information a 

group of 78 people in Anchorage all filed for, as I understand it, one 

oil lease each in the amount of 2,560 acres.

Apparently they deeded the lease back to the partnership as an 

entity, so that they shared ownership in common in everybody else’s 

lease. If oil were ever found on one lease they would all share equally.

The Chairman. What was the total acreage, 2,560 per person ?

Mr. Van Ness. Per person. I think the total came close to 200,000 

acres as they described it.

Mr. Cook. Right.

Mr. Van N ess. At the present time it only applies as to 60,000 acres. 

Apparently the rental fees were not paid on some of the leases and 

they terminated. The interest was extinguished. But it was kept up as 

to 60,000 acres. There is some controversy as to who has rights in this 

60,000 acres now but apparently it was assigned to, I think they said, 

Pure Oil Co., who later assigned it to Humble or Union, or it was taken 

over by Union.

Senator Bible. It says Union.

Senator Allott. Yes, it says Union.
421

Mr. Van Ness. Th e 78 people retained an ove rride ro ya lit y, I guess 

the y ca ll it, o f 21^ perce nt.

Now ha lf o f the 214 percen t, iy 4

 pe rcen t, was vested in, as I un de rsta nd it, two ind ivi du als or the individu al Kos losk y. 1 th in k the re 

was anoth er ind ivi du al men tioned. Th ey held 50 perce nt of the remain ing ri ght and the othe r 78 perso ns pa rticip ated in th e iy±

perce nt th at was le ft over. T hat ri ght as fa r as they have been able 

to det erm ine is stil l a valid rig ht , bu t again it is th ei r un de rstand ing 

th at po tentially it is of no value.

I th in k they fin ally lo cated the records on t his a nd they ar e supposed 

to be i n a t ru st a ccount w ith a bank in Ancho rage. Mr. Cre mo says he 

could pu t his ha nd s on those instru men ts if fo r any reason the committee should need them and make th em availa ble an d su pp ly a more detaile d sta tem ent.

Se na tor Allott. Th is says here th at the y were suppos ed to expire 

in 1968, but there was a 2-year exten sion on them. So th at mak es one 

sev ent y-e igh th of one and a qua rter percent.

Mr. V an Ness. Tha t is r ight .

Se na tor Bible. Th e inter est is one sev ent y-e igh th of 1*4 perce nt 

royalty , is th at a c orrect stat em ent ?

Mr. Van Ness. Yes.

Se na tor Bible. An d he is qu it cla iming this. He offers to quit 

claim it?

Mr. Van Ness. He offers to dive st him self of th at .

Se na tor Allott. Chu ck tells me th at the re has been no activ ity 

there at all, so it probably is a qu it claim of nothi ng.

Mr. Van Ness. Yes. I th in k at one time there was an attempt to 

get activ ity an d the y set up a dev elopm ent unit. Tha t is ap pa rently 

how Pu re Oil an d Union Oil go t involve d, but no thing ever came 

of it.

In additio n there are two minor item s clarifie d there. Fir st , the 

Valley Development Cor p. We were inf orme d in th e letter 

of Ja nuar y 12 th at it held real estate. They have since disc ove red it 

does no t ho ld rea l estate. I t is a local development corporati on in 

whi ch there is stock. The y do gra nt loans and they do pe rfo rm the 

functio n of tryin g to pro cure E D A loans, and loans of th is na ture 

for com mu nity developm ent.

W ha t was the second th ing, Mr. Cook?

Mr. Cook. Ba rro w Realty. In stea d of ownin g one bu ild ing it 

owns two.

Mr. Van Ness. Yes, th at is on the first pag e, the second pa ra ­

gr ap h. It was for me rly item 15 of the Ja nu ar y 12 let ter . It owns 

two bu ild ings ra th er than one.

Th e second lette r—perh ap s we sho uld discuss this one las t, because 

Se na tor A llot t has some que stio ns on that. We can go to the th ird 

let ter . Th is is what they re fe rred to as the “d isp osati ve” letter, 

indica tin g the inten t of the Go vernor to dispose of the stoc ks listed 

un de r the three num bere d pa ragr ap hs . He includes withi n th at these 

two most rec ent interests th at cam e to lig ht, Kos losk y Dev elopment 

Co. and th e p lac er min ing claim.
422

(The letters referred to follow:)

J anuary 19, 1999.

Hon. Henry M. Jackson,

U.8. Senate,

Washinffton, D.C.

Dear Senator J ackson : This is to supplement the statem ent transm itte d to 

you by my letter of J anuary 12, 1969. In a contin uing effort to determine whether 

I own anything, regardless of its size, that might cause a conflict of interest, I 

have had my assistants scouring every available record. This search will continue, even beyond my taking office, to insure tha t nothing is missed. Particularly, 

the specific inform ation which you hav e requested, including year-end financial 

stateme nts, will be furnished. If any divestiture or other remedy is indicated, 

app rop riate steps will be taken.

Referring to the item numbered (15) in the above-mentioned statement, it has 

been learned that Barrow Realty Corporation owns two, ra th er tha n one, commercial buildings in Anchorage. Neithe r of these is occupied by a fede ral agency.

The information you requested with respect to the statem ent of assets contain ed in the Consolidated balance shee t of Hickel Investm ent Company and 

subsidiaries has been furn ished to you by teleg rams from my accou ntants. It 

re ad s: Hickel Investme nt Company and subsidiaries, report on exam ination of consolidated financial stateme nts, year ended December 31, 1967, prepared by 

Molitor. Doremus and Hanlin, Certified Public Accountant. The “other common 

stocks” in the amount of $16,091.47 listed in the balance sheet u nder investments 

at cost is comprised of the follow ing :

Alaska Pacific Corp_________________________________________ $19, 000. 00

Northern Plaza Development__________________________________ 4. 754. 86

Bush Lanes, Inc_____________________________________________ 1, 536. 61

Tota l ________________________________________________ 10, 091. 61

You will note that the $10,000 common stock in Alaska Pacific Corporation is in 

addition to the $10,000 common stock owned by W alter J. and Ermalee Hickel in 

the same corporation. The Investment in Northern Plaz a Development has been 

ret urn ed because a proposed pro ject was discontinued. The Bush Lanes, Inc. 

stock was received by the subsidiary, Alaskan Plumbing & Heatin g Company, 

Inc., in paym ent of an account. With respect to the statem ent of investments in securities contained in the 

financial stateme nt for Walter J. and Erm alee Hickel:

Walter J. and Ermalee Hickel, Report on E xamination on B alance Sheet, dated 

December 31, 1967, prep ared by Molitor, Doremus and Han lin, Certified Public 

Accountants. Investments in securities, common stock, at cost—the miscellaneous 

item of $2,794.50 is comprised of the following:

Mountain Mining Co--------------------------------------------------------------- $1, 857. 50

Captain Cook Hotel, Inc______________________________________ 40. 90

Life Insurance Co. of Alaska___________________________________ !"• 99

Cordova Investme nt Corp---------------------------------------------------------- 900. 00

T o ta l_________________________________________________ 2,794.50

Other, at cost—The miscellaneous items of $1,201.00 is comprised of the 

follow ing :

Pre sby terian Community Hospital Association, Inc------------------------ $1,000. 00

Fa irvi ew Mine s_________________________________________________ 200. 00

American Roofing____________________________________________ 1- 00

T o ta l_________________________________________________ 1,201.00

The $1,000 amount in securities of Presbyterian Community Hospital Association, Inc., refe rs to a bond previously mentioned. I under stand that the $200 

amoun t represents an inve stment in one or two gold plac er mining claims located 

wes t of Talkeetna, Alaska. The claims were not located by me but fo r me by one 

Fran k Brink or one Ann Van Dolah of Anchorage, probably more tha n ten years 

ago. This claim, togethe r with adjac ent claims, owned by eighty (80) other 

persons, are leased to Ann Van Dolah who, reportedly has faile d to perform 

annual assessment work, c ausing a f orfeiture of the claims. The $1 stock amount
423

represents a written-ilown investment of $100 in American Roofing, an Anchorage 

roofing company. A copy of this telegram has been sent you. Valley Development Corporation, mentioned in item number (17), of my statement transmitted to you on Januarj’ 12, is not the owner of undeveloped real estate in the Matanuska Valley but a local development corporation formed to coojierate with federal agencies in providing funds for business development 

in the Matanuska Valley. It appears tha t I am one of 78 persons who have equal interests in a 1^4 per­ cent royalty in oil leases owned by Pure Oil Company or its successor, Union Oil Company. The leases were obtained in approximately 1958 and were to expire in 1968. Apparently, because of a two year extension, they have not yet expired. Although originally there was a greater number of acres involved, I understand that the present acreage is either 60,000 acres or 78,000 acres. My interests, 

which is ^78 of the 1% i>ercent royalty probably has no value. There has beten some confusion concerning the trust arrangement which I made when I became Governor of Alaska. Enclosed is a copy of the trus t agree­ ment. At the same time that the agreement was made, I resigned in writing as an officer and director of all corporations. By the trust arrangement my trustee, Roger Cremo. in effect replaced my wife and me as shareholders. By voting the corporate stock, providing my personal guarantee in connection with financing, 

and otherwise, the trustee caused the business to continue. Your patience and understanding are appreciated.

Sincerely yours, Walter J. Hickel.

(Enclosures.)

J anuary 19,1969.

Hon. Henry M. J ackson,

U.S. Senate,

Washington, D.C.

Dear Senator Jackson : Based on the decision of your Committee, I have 

agreed to do the following: (1) Dispose of assets in accordance with my letter to you of even date. (2) Refrain entirely from doing any business with, and from making any investment in the securities of any company that does business with the Federal 

Government. (3) Execute and deliver such other instruments as may be necessary to effect 

the purposes of this agreement. (4) Refrain from divulging to managers, officers, employees, attorneys, and accountants, information concerning the activities of the Department of the 

Interior. (5) Provide the persons mentioned in the previous paragraph with instructions 

to abide by this agreement. I will be pleased to comply with any further suggestions or requirements tha t 

you may have.

Sincerely yours, Walter J. Hickel.

J anuary 19,1969.

Hon. Henry M. J ackson,

U.S. Senate,

Washington, D.C.

Dear Senator Jackson : Based on the decision of your Committee, I will accomplish the following within a reasonable time and not later than six months 

afte r taking office: (1) My stock in Transamerica Corporation, Alaska Interstate Company, and 

Wakefield Seafoods, Inc., will be sold. (2) To the extent tha t I may have an interest in the placer mining claims and Koslosky Development Company, referred to in my letter to you of Jan uary 19,1 will sell, quit-claim, or relinquish the same. (3) Mountain Mining Company will be dissolved and its sole asset distributed 

to the shareholder, La Vake Renshaw. In addition to the above, I have under active consideration the divestiture of all assets except undeveloped real estate and those relating to the hotel, motel, 

and shopping center business. Any assets located through the continuing efforts of my counsel and accountants will be reported to you and, where appropriate, promptly divested.

Sincerely yours,

Walter J. Hickel.
424

The Chairman. Can you elaborate on that, on the placer claim?

Senator Allott. That is the first one he discussed there.

Mr. V an Ness. A number of people in Anchorage put in $200.

The Chairman. I thought tha t was the oil.

Mr. Van Ness. No sir; tha t was as to the placer mining claim. We do 

not know, I do not believe they know, how much was put in on the oil.

The Chairman. That was on the public domain ?

Mr. Cook. Yes.

The Chairman. On Federal land ?

Mr. Cook. Yes, si r; they were mining claims.

The Chairman. Yes. Unpatented mining claims?

Mr. Cook. Yes.

The Chairman. What about the oil ?

Mr. Van Ness. I do not know whether any money was ever put in that 

venture. I assume probably not. What they were all tendering was their 

share in the oil leases that they had. They pooled them and I assume the 

developer, Mr. Koslosky, or whoever it was, then took all of the oil 

leases, and they were blocked up in a unit for development, and he 

bargained with Pure Oil or somebody else to go in and put down 

some wells or do geological work.

I do not assume th at there was any investment at all. They do not 

know and they said they will find th at out i f the committee deems it 

relevant.

Senator Anderson. Is there any provision about family holding 

corporations? Would this be troublesome?

Mr. Van Ness. These dispositive letters?

Senator Anderson. A family-owned corporation.

Mr. Van Ness. Not that I am aware, sir.

Senator Anderson. There are several million dollars, I believe. It is 

important, as I understand it.

Mr. Van Ness. I should thin k it would be. His attorneys could answer 

that question.

Senator Ali.ottt. What is the question, Clint ? I don’t understand it.

Senator Anderson. I don’t know myself, Gordon. I know that when I 

had a certain corporation and started out, my lawyers spread out more 

paper, up to 35 percent, which I gave to others. It was a family holding 

corporation.

Senator Allott. Isn ’t that for tax purposes?

Senator Anderson. Yes.

Senator Bible. Wh at would be the problem involved, Senator 

Anderson ?

Senator Anderson. I do not know that there is anything against a 

family holding corporation.

Senator Bible. I understand that. What is wrong with having a 

family holding corporation?

Senator Anderson. They give out all the dividends righ t quick.

Mr. Van Ness. I think Senator Anderson is referring perhaps to 

the retention of earnings within the corporation. There are corporate 

laws—I do not know how this would apply to the family corporation—but in a public corporation you cannot retain all the earnings of 

course.
425

Senator Bible. If he had a family corporation is it your point tha t 

he had to pay these dividents out ?

Senator Anderson. That is right.

Senator Bible. According to Federal law certain percentages each 

year.

Senator Anderson. That is right.

Senator Allott. I do not think he has to pay them out but insofar 

as they reflect profits.

Senator Bible. Yes.

Senator Allott. They would have to be reported in his income tax. 

Senator J ordan. There is a provision of the law if there are less than 

10 corporate stockholders.

Senator Anderson. I know.

Senator J ordan. Small business, reported as a partnership.

Senator Burdick. Mr. Chairman, can I ask Bill a question? In the 

thir d letter here I do not see any reference to the Union Oil leases. 

It is a very minor one, but there should be an agreement to dispose of 

whatever interest there is.

Senator Allott. That is in the Koslosky.

Senator Bible. I think that is Koslosky.

Senator Bible. I do not know whether you have clarified Senator 

Anderson’s inquiry yet.

Senator Burdick. It is not described as such in the first letter.

The Chairman. Tha t is why we want to nail these two points down. 

We have the placer mining lease and the oil lease.

Senator Bible. I do not think you have satisfied Senator Anderson. 

I am not completely clear myself as to the exact question he has, bu t 

I do not think he lias had a satisfactory answer as to what it is.

The Chairman. Let us just see if we can go through this again. 

Wh at is the name, so we will have it for the record. On page 2 of letter 

one, that is the three-page letter tha t is before us, what is the name 

of the entity that owns the oil leases?

Mr. Van Ness. The entity is Koslosky Development Co. As I understand it, it is a partnership composed of 78 individuals. Its assets 

consisted at one time of 78 oil leases covering approximately 200,000 

acres. At the present time the holdings of the partn ership consists of 

an interest of one and one-quarter percent in an oil royalty in 60,000 

acres remaining from those original 200,000 acres. The 60,000 acres 

currently are being held, as we understand it, by Pure Oil Co., or 

by Union Oil Co.

' Senator Allott. Excuse me, you did not finish. And his interest is 

one-seventy-eighth of that?

Mr. Van Ness. That is correct.

The Chairman. Why doesn’t th at appear in his books now?

Mr. Van Ness. It did not appear in his books because they had 

not discovered this information. It must have been discovered late 

Saturday evening, because they did know about it when we met at 

9 o’clock. We immediately discussed it.

The Chairman. Nine o’clock yesterday morning ?

Mr. Van Ness. Yes, 9 o’clock Saturday morning.

The Chairman. Sunday?

Mr. Van Ness. Sunday. I am confused on my days, sir.
426

The Chairman. But that was just one of those things that had 

eluded his records. I mean the records that we had here. And the current status of that lease ? Those leases have been extended for 2 years ?

Mr. Van Ness. Tha t was apparently new information they ascertained last night afte r I talked to them. Mr. Cook, is that correct ? I 

didn’t recall having-----

Mr. Cook. My understanding was that it would expire next year, 

Bill.

The Chairman. So it is active as of now ?

Mr. Cook. It is still active as of now.

The Chairman. It has not expired.

Mr. Cook. They have no control, Senator. The company pays the 

deferral rental, so when i t expires depends upon what the company 

decides to do.

The Chairman. What is this, a limited partnership ?

Mr. Van Ness. They don’t know, sir.

Mr. Cook. They do not know. They think, from the conversation, 

tha t Mr. Cremo had with Mr. Koslosky on Sunday, he said tha t Koslosky owned one-half of the royalty in his own name, and the rest of 

it was an equal participation in that other one-half interest. Now this 

came about as a result of a development agreement, and since tha t time 

the companies have let go 140,000 acres of it as not being prospective.

The Chairman. How was this discovered ?

Mr. Cook. Actually his people found it I think through discussion 

with some of the people on the street, because there is no record 

anywhere.

Mr. Van Ness. They apparently discovered it in telephone conversations with people up there. They are conducting a very intensive, a 

very diligent search to comply with the committees request tha t they 

supply all the information necessary to fill out the open portions of 

the financial statement and to pick up any of these other interests 

tha t may still be viable, but upon which he is not able to furnish us 

a record or does not have any personal recollection.

The Chairman. Is there any development work going on in 

connection with this?

Mr. Van Ness. My understanding is that there is not.

The Chairman. This leasehold area?

Mr. Van Ness. I do not recall that they said there was any there 

either.

The Chairman. We do not have that information yet, whether there 

is development work underway now on it?

Mr. Van Ness. Mr. Cremo, in light of subsequent discussions he 

has had with the people in Alaska, may be able to furnish more 

information.

Senator Church. May I ask a question?

The Governor is going to divest himself of tha t share in any event?

The Chairman. No question about that.

Senator Allott. Because it pertains to public lands and he would 

have to.

The Chairman. There is no question about that. The problem is 

tryi ng to get the record straight. I do not want to go to the floor 

finding myself in the situation that another deal or potential conflict 

of interest has been discovered even if it is a small amount. The
427

necessity here, as I see it, is to clarify this record. I t is like Saturday. 

I felt very strongly, it was jus t intuition, that it would be unwise and 

unfair to the Governor not to have a complete record. You remember, 

his statement tha t he did not have any interest in a lease, then it turns 

out that he did have. It is unfair to him to have an incomplete record. 

You know, that afternoon we got confirmation back tha t he had had an 

oil lease. So the last thing, I think, gentlemen, we want to do is to go 

on the floor with an incomplete record. A lot of questions may be 

asked. Senator Allott and myself, I assume, will be carrying the main 

burden of responding to questions, and I want to be in the position 

of being able to say t ha t the record has been thoroughly searched and 

contains the best information on all relevant questions. Now we will have a letter before the record is finished in which he 

will agree to divest himself of anything tha t does show a potential 

or real conflict of interest, but I think we must establish th at we have 

made that diligent search as a condition precedent to saying that we 

are now prepared to act on the nomination.

Go ahead.

Senator Burdick. Ju st a minute, Mr. Chairman.

The Chairman. Excuse me.

Senator Burdick. This information you have about this minor 

interest, did that come from the 'Hickel people?

Mr. Van Ness. T hat came from the Hickel people. They uncovered 

it with this diligent search that they have made, and they immediately 

disclosed it to us.

The Chairman. They have been most cooperative.

Mr. Van Ness. There is no question about that. In fact his attorney 

and Mr. McMurray to my knowledge were on the telephone most of 

the night, and I think tha t has been the case for the last four nights. 

They have been trying to run down and identify these things, and 

they have been doing an outstanding job. Of course there are ju st the 

two of them, and pa rt of the problem is on some of these things, as I 

understand it, the Governor has dealt with other attorneys on some 

of his transactions. He has dealt with a number of people in the 

Anchorage area of Alaska who do speculate in these types of things, 

and some of the interests have been very casual. It was described to 

me th at the reason there is no record is that the Governor probably 

gave someone $200 as a flyer, and did not think anything of it.

Mr. Verkler. As a grubstake.

Mr. Van Ness. Yes, and the other party retained all the records. 

This is why he does not know about it. I think this is the case 

with respect to one of the previously described interests. He gave $5,000 

to a young geologist to do some work on the development of a min ing 

interest.

Senator Anderson. An oil company on a grubstake basis ?

The Chairman. But it started out as a grubstake, you see. T hat is 

what he is saying. He pu t $200 in it.

Mr. Verkler. This might have been other than oil that he is talkin g 

about, Senator.

The Chairman. What is the other item that the placer-----

Mr. Van Ness. The second item begins at the bottom of page two.

The Chairman. Of the first letter ?

Mr. Van Ness. Of the first letter.
428

Th e Chairman. T he first letter c onsisting of three pages.

Mr. Van Ness. Re ferre d to as the “addendum” letter. He is here 

des cribin g the $200 en try above th ere beside F airview Mines. Th is was 

made ava ilab le to us ye ste rday in a copy of a tel egram fro m the 

cer tifi ed pub lic accountan ts th at pr ep ared the financ ial statem ents 

which were reviewed.

Th e Chairman. Fa irv iew Mine s?

Mr. Van Ness. Th at is $200.

Th e Chairman. T he Pr es by teria n Ho sp ita l, I see, Fa irv iew Mines 

is $200.

Mr. V an N ess. An d t he n at th e b otto m there sta rtin g with “I und er ­

stan d th at the $200 am ou nt,” the backgro und of th is tra ns actio n is 

described, continuing ove r to p age 3, four lines down. We did receive 

a copy of this tel eg ram ye ste rday, and the y adv ised me th is m orn ing 

th at a second telegram fr om the certified public ac countan t is c urrently 

in tran sit. I t also closes up a no ther one of these miscellaneous or ot her 

en tries t hat were in the financial statem ent. Th ey are cu rre ntl y wo rking try in g to close off any oth ers th at may exist.

Th e C hairman. W ha t is th e stat us of F airview M ines ?

Se na tor Bible. It tells in h ere. I t says “ fo rfeitu re.”

1 lie Chairman. H as th at been checked ou t th at there was a 

fo rfeitu re ?

Mr. A an Ness. As fa r as I know it has not, because the y became 

aw are of it again only on Su nd ay mo rnin g.

Th e C hairma n. Th at ha s to be checked ou t yet ?

Mr. V an Ness. That is correct, and the y are wo rking to check t hat 

out.

Mr. Cook. Senator , I un de rstand lie has agreed to div est that, too.

Th e Chair man. Yes, th ere is no question abo ut the div est itu re on 

any o f th ese matte rs. As I u nd ersta nd it , he will divest himself of these 

intere sts. I ju st w ant t o be sure we ha ve the com plete record of eve ryth in g tha t has come u p, so we can be responsive. O f c ourse one way to 

cover all these th ings f or th e fu tu re is t hat th ere will be a comm itment 

to dive st h imself of any th in g in which he has an i nte res t invo lvin g------

Se na tor Allott. The p ublic do main.

Se na tor Anderson. These figures here , th is is a mini ng company, 

$1,000, th e hotel $40, $17. H ere is a man with $5 m illi on and he is ta lk ­

in g about $17 inv estments.

The Chairma n. W ha t is t ha t? Can you com ment on tha t, Bill ?

Mr. V an Ness. Yes. Th e Mo untain Mini ng Co. was listed in the 

original ma ter ials, and it is one o f the thing s t h at h e h as agreed to get 

rid of. I think this is------

Th e Ciiatrman. Th at is the coal, the iron ore.

Mr. V an Ness. I thi nk th is re pre sen ts t he de pre cia ted value perha ps 

of th at origi na l inv est me nt, which I tho ugh was desc ribed to us as 

$5,000 given to a yo un g geologist. Th e second en try is Ca ptain Cook 

Ho tel, Inc . at $40. You will recall th at the Ca pt ain Cook Ho tel is a 

pa rtne rshi p. I t is listed in t he financial sta tem ent giv en to u s as a joi nt 

ventu re, b ut in fa ct is a pa rtn er sh ip with 50-percen t ownership in the 

Go verno r and tw o 2 5-p erc ent ow nerships as I un de rst an d it.

Th e Gover nor ha s an interest in the nam e “C ap tain Cook Hotel,” 

and the $40 ap pa rently r epres ents filing fees to pre serve this name. He 

ha s preserved i t in Aus tral ia , So uth Ame rica, an d other places.
429

The Chairman. But Captain Cook Hotel, Inc., has no assets.

Mr. Van Ness. No assets.

The Chairman. And the only thing he has put a value on-----

Senator Anderson. No assets ?

The Chairman. Captain Cook Hotel, Inc., as I understand it has 

no connection of ownership with the Captain Cook Hotel, which is a 

partnership. B ut he is doing this to preserve some copyright ?

Mr. Van Ness. A copyright on the name as I understand it. It is an 

asset in the event that he opened a chain of Captain Cook Hotels or 

something under this name. This process would preserve the name. 

The reason he did this, is tha t he is apparently very interested in Cap ­

tain Cook’s travels and has all his logs and records and has read up on 

it. The places where he has preserved the name bear some relationship 

to Captain Cook’s travels.

Senator Burdick. Mr. Chairman, one more question. The info rma ­

tion on the placer mines, did that also come from the Ilickel people?

Mr. Van Ness. Yet, it did. All of the information disclosed in this 

letter and which was not previously available has come from them. 

In addition to that there has been no effort on the part of any of the 

committee staff to seek out or try to develop new information, or conduct any form of investigation. I f we had questions we told them th at 

we thought they should clarify this for the record or check th at out. 

They were supplied a copy of a fairly long memorandum prior to 

Satu rday ’s meeting, some time ago in fact, questioning the other stock 

listings, these miscellaneous listings in the statements, and asking for 

clarification. This is the result I think of the ir search in response to 

tha t memorandum.

The ( ’iiairman. All righ t, let us turn to the next item.

Mr. Van Ness. One thing tha t you should know in connection with 

this letter. It confirms what the attorney told Mr. Cook and me yesterday, th at they would like to have the original trust instrument which 

governed his activities while he was Governor of Alaska made a p art 

of the files or hearing record, inasmuch as questions were raised on 

the nature of the instrument. They provided copies for the record 

and we have those copies. At the same time I believe they also requested that the proposed trust instrument, which was initially tra nsmitted to Senator Jackson on Janu ary 15, also be incorporated into 

the record if there were any questions concerning that. But that is no t 

stated in the letter.

The Chairman. All right.

(The instruments referred to follow.)

TRU ST AGRE EMENT

This trust agreement is made this day of Janu ary, 1969, between "Walter J. Hic-kel of Anchorage, Alaska, and his wife, Ermalee Hickel, hereinafter 

referred to as settlor and the co-settlor, respectively, and ,

hereinafter referred to as the trustee. The settlors hereby tran sfer to the trustee all of their interests in the assets described in the annexed Schedule A, in trust and subject to provisions of this 

agreement. The settlors agree to execute and deliver such other instruments as may be necessary or proper to effectively transfer to the trustee all of their interest in 

the property described in said schedule. 1. The trust hereby created shall be irrevocable and terminate at the conclu­ sion of the settlor’s service as Secretary of the Interior, or at his death, whichever 

first occurs.
430

2. Sett lor has taken office as Secr etary of the Interior. The purpose hereof is 

to avoid any confl icts between the private interests of the settlor s and the public 

interes t. Acco rdin gly and notwi thstanding any law to the contrary governing the 

adm inist ratio n of trusts, trustee sha ll manag e the property which is the subject 

hereof witho ut the partici pation of the settlo r or the co-settlor and without 

divu lging to the settlo r or the co-settlor, in any manner, informatio n concerning 

the existin g investme nts, contemplated investments, and activities of the trust. 

In addit ion the trustee, genera lly, shal l avoid all such conflicts and, par ticu larly, 

sha ll—

(1) ref rain from making investm ents in the securities of corporations 

which mig ht have any dealings wit h the Departmen t of the Inte rior and 

which mig ht be regulated by the Sec reta ry of the Interior, and

(2) as to controlled corporation and partnerships, require them to refra in 

from doing any business with the Department of the Interior and with any 

industry regulate d by the Secre tary of the Interior.

The settlor wil l refr ain from divulging to the trustee, in any manner, infor mation concerning the activitie s of the Dep artm ent of the Interior.

3. Sub ject to above-stated limitations , the trustee is empowered—

(1) to acquire by purchase, by exerc ise of options, or otherwise, or retain 

so lo ng as the trustee deems adv isable,' any kind of realty and person ality— 

or undivided interests therein—incl udin g stocks of any clas s, unsecured 

obliga tions, interests in investm ent trusts and discretionary common trust 

funds —all without diversification as to kind or amount, witho ut being restricted by any statute or rule o f law concerning fiduciary investm ents;

(2) to sell for cash or on credit (at public or private sa le), exchange 

gran t options to purchase or otherwise dispose of any real or personal 

pro per ty;

(3) to join in , consent to or become a party to any reorg anization, merger, 

consolidation, dissolution, read justm ent, exchange, or other trans actio n and 

any plan or action thereunder or in connection therew ith, to deposit any 

such property with any prote ctive, reorga nization or sim ilar com mitt ee; to 

delegate discretionary powers ther eto and to share in payment of its expenses 

and compensation and to pay any assessments levied with repsect to such 

property and to receive property under any reorganizatio n, merger, consolidation, dissolution, read justm ent, exchan ge or other transact ion whether or 

not the same be authorized by la w for the investment of trust fu nd s;

(4) to exercise all conversion, subscription, voting and other rights of 

whats oever n ature perta ining to any such property and to grant proxies, discret iona ry or otherwise, with respect the ret o;

(5) with respect to any real property (incl uding real property acquired 

on foreclosure or by deed in lieu thereof) at any time held hereunder, to 

sell, exchange, partition, lease, sublease, mortgage, improve, or otherwise 

alt er upon such terms as it may deem proper, and to execu te and deliver 

deeds, leases, mortgages, or other instruments relat ing thereto. Any lease 

may be made for such period of time, including a lease beyond a five-year 

period, as it may deem proper and without the approval of a ny co ur t;

(6 ) to extend the time of payment of any bond (or other obligation) 

and mortgage held by it, or of any installment of principal or interest or 

hold such bond (or other oblig ation ) and mortgage aft er maturity as past 

due; to consent to the alte rati on or modification of any terms the reo f; to 

foreclose any such mortgage or compromise or settle claims thereund er; to 

tak e over, take tit le to or manag e the property, or any part thereof affected 

by any such mortgage, eith er temporarily or perma nently , and in partial 

or complete satis faction of any claim thereunde r; to protect such property 

aga inst or redeem it from foreclosure or nonpayment of tax es, assessments, 

or other lien s; to insure, protect, main tain, and repair such prope rty; and 

gene rally without limi tatio n by the foregoing specifica tion to exercise with 

respect to such bond (or other obligation) and mortgage or such property 

all rights and powers as may be exercised by a person owning simil ar property 

in his own ri gh t;

(7) to borrow money fr om an y person or corporation for a ny purpose without resorting to the sale of any assets; and for the purpose of securing the 

payment thereof, to pledge, mortgage, or otherwise encumber any and all 

such property upon such terms, covenants, and conditions as it may deem 

proper and also to extend the time of payment of any loans or encumbrances 

which at any time may be encumbrances on any such property irrespective of
431

by whom the same were made or where the obligations may or should ulti­ mately be borne on such terms, covenants, and conditions as may deem 

proper. (8) to register property belonging to the t rust in the name of its nominee, or to hold the same unregistered, or in such form that title shall pass by 

deliv ery; (9) to abandon, settle, compromise, extend, renew’, modify release, adjust or submit to arbitration in w’hole or in p art and without the order or decree of any court any and all claims whether such claims shall increase or 

decrease the assets held hereunder : (10) to determine whether or to what extent receipts should be deemed income or principal, whether or to what extent expenditures should be charged against principal or income, and what other adjustments should be made between principal and income, provided that such adjustments shall not conflict with well-settled rules for the determination of principal 

and income adjustments: (11) to do all such acts, take all such proceedings and exercise all such rights and privileges, although not hereinbefore specifically mentioned, wr

ith 

relation to any such property, as if the absolute owner thereof, and in con­ nection therewith to make, execute and deliver any instruments and to enter 

into any covenants or agreements binding the trust.

4. Nothing contained herein shall require the trustee— (1) to retain any of the assets described in Schedule A, or (2) to cause any controlled corporation or partnership to retain any of its 

present assets. 5. The trus tee shall pay to the settlors the net income derived from the property which is the subject hereof at such times as it deems appropriate; but not less 

often than quarter-annually. 6. If the income of the trus t is insufficient to meet what the settlors in their judgment regard as important personal needs, the trustee shall, upon the written demand of the settlors, provide to the settlors out of trust principal such amounts in cash as they may have specified. No such invasion of trust principal shall be permitted by the trustee, however, if the trustee determines that to do so w’ould be detrimental to the trus t estate. Liquidity requirements and other factors deemed important by the trustee shall be relevant to such determination. 7. Upon the expiration of the term of the trus t the trustee shall, unless other­ wise provided by written amendment of the provisions of this paragraph, dis­ tribute all remaining trus t principal and any undistributed tru st income to the 

settlors jointly. 8. Notwithstanding any provision to the contrary contained herein, the settlors shall be provided by the trustee with all information needed by them for the preparation and filing of federal, state, or other income tax returns, including any information needed in connection with the audit thereof and any related 

proceedings. 9. The settlor shall have the right, with the consent of the trustee, to deliver additional property to the trustee which thereupon shall become a part of the trust, subject in every respect to the terms and conditions of this agreement. 10. The trustee shall be compensated by an annual fee, computed annually,

equal to of the market value of the principal of the trust.

11. The validity, construction and administration of this tru st shall be governed by the laws of the State of Alaska.

In Witness Whereof this trust agreement has been signed, sealed and delivered as of the date first above w ritten. Walter J. IIickel, 

Ermalee IIickel, 

------------------- , Trustee.

TRUST AGRE EMENT

The undersigned, Walter J. IIickel, of Anchorage, Alaska, has been elected Governor of the State of Alaska for a four year term commencing December 5, I960. Presently he is the owner of extensive business enterprises in the hotel, motel, shopping center, general contracting mechanical contracting, painting contracting, and other fields. In order that he will be able to function effec­ tively and fairly as Governor, without criticism or embarrassment and without actual or suspected conflict between the aforementioned private interests and the public interest, he desires to remove himself from and terminate his con­ nection with such private interests. Recognizing that divestiture of such interests
432

either is not possible or at least is impractical, he intends, nevertheless, by this 

instrument, to so sever his connection with the same that they will not demand or 

require his participation or attention during the period tha t he serves as 

Governor.

The undersigned, Walter J. Hickel, hereby designates Roger Cremo, Esq., 

of Anchorage, Alaska, as his trustee to serve in such capacity throughout the 

entire period tha t he holds the aforementioned public office. Generally, the subject of the trust shall be all property, real and personal, owned by Walter J. 

Hickel, alone or jointly for business purposes; and the trus t shall be governed 

and administered in accordance with the following provisions:

1. Legal title to the property which is the subject hereof, but only to the 

extent that it is necessary to enable the trustee to function in accordance herewith, is hereby transferred to the trustee. Nothing contained herein transfers 

to the trustee any equitable interest in such property.

2. The powers and authority hereby conferred upon the trustee shall terminate at the end of the period that "Walter J. Hickel holds office as Governor of 

Alaska, or, if he dies in office, a t the time of his death.

3. Nothing contained herein shall affect any bequest and devise, or the descent 

and distribution, of any of the property of Walter J. Hickel upon his death. 

If necessary to perfect their title, trustee shall tran sfer any legal interest acquired hereby to the legatees, devisees, heirs, and distributees of Walter J. 

Hickel.

4. The trustee is authorized for and in behalf of Walter J. Hickel to do the 

following:

(а) Vote corporate stock for the election of directors and for such purposes 

(including, without limitation, dissolution, reorganization, consolidation, merger, 

sales, and mortgages) as the directors may, from time to time, propose and recommend to stockholders.

(б) Guarantee payment of any indebtedness of any corporation, or any subsidiary of any corporation, or any partnership a member of which is any corporation, in which Walter J. Hickel, alone or jointly, owns forty per cent, or more 

of the outstanding common stock, but only when requested to do so by the directors of the corporation so owned.

(c) Agree to indemnify any bonding company which provides a payment, 

performance, or other bond for any such corporation or subsidiary or par tnership, but only when requested to do so by the directors of the corporation so 

owned.

(d) Request and receive from Walter J. Hickel any document furth er defining 

the authority conferred hereby.

(e) Request and receive from Walter J. Hickel any document separately stating any part of the authority conferred hereby.

(/) With respect to property which is not corporate stock, transfer, convey, 

mortgage, and otherwise deal with the same but only upon the request of and 

as directed by the directors of Hickel Investment Company, which will care for 

and manage the same as hereinafter provided.

(ff) With respect to partnership interests, such as the interest of the undersigned in the general partnerships Clark’s Painting and Decorating and Traveler’s Inn of Anchorage, tran sfer and otherwise deal with the same and exercise 

the authority of a partner, but only upon the request of and as directed by the 

directors of Hickel Investment Company, which will, for care and management 

purposes, function in his stead as hereinafter provided.

5. (a) Although it is for the trustee to determine how stock should be voted in 

elections for directors, it is the suggestion of the undersigned tha t the following 

persons be elected directors of the following corporations:

Hickel Investment Company, Vernon W. Hickel, Richard L. Silberer, and Roger

Cremo.

Northland Pipe and Supply Company, Inc., Vernon W. Hickel, Richard L. Silberer, and L. E. Jeffs.

Alaskan Plumbing and Heating Company, Inc., Vernon W. Hickel, Richard L.

Silberer, and L. E. Jeffs.

Travelers Inn of Fairbanks, Inc., Vernon W. Hickel, Richard L. Silberer, and

Hans J. Beckerwerth.

Northern Lights Shopping Center, Inc., Vernon W. Hickel.

Mountain Mining Company, Vernon W. Hickel.

Barrow Realty Corporation, Vernon W. Hickel.
433

(&) Although it is for directors to determine who should serve as president 

and general manager of such corporations, it is the suggestion of the undersigned tha t Vernon W. Hickel be elected to that position, and that Richard L. 

Silberer be elected vice-president and assistant general manager of such corporations.

6. Most of the property which is the subject hereof is corporate stock. As to 

tha t property which is not corporate stock, including, without limitation, partnership interests and real estate, Walter J. Hickel has heretofore provided for 

the care and management of t he same by an arrangement with Hickel Investment 

Company, one of the corporations in which he owns stock.

7. The undersigned has resigned as director and as president or other officer of 

several corporations. Nothing contained herein shall be deemed to require the 

trustee to seek, accept, or serve in, any office which is vacant because of such 

resignations.

8. The trustee shall incur no liability for loss, destruction, diminution in 

value, failure to insure, failure to pay taxes and assessments, inadequacy of 

profits, failure to correctly prepare and file income tax returns, inadequacy of 

management, and all other causes adversely affecting the property which is the 

subject hereof, and, in general, the aforementioned private interests; but nothing 

contained herein shall limit the responsibility of the trustee for his wilful misconduct. Nothing contained in this paragraph shall be deemed to enlarge the 

function or authority of the trustee.

9. Nothing contained herein shall prevent the current distribution of income 

to the undersigned.

10. The function of the trustee shall not include filing noncorporate federal 

and state income tax returns.

11. The trustee shall receive no compensation.

12. Acceptance of the authority conferred hereby is indicated by the execution 

hereof by the trustee.

13. Ermalee Hickel joins he rein: and all of the authority hereby conferred 

upon the trustee shall in all respects apply to her and her business property, 

including, without limitation, corporate stock and partnership interests.

Dated: December 1, 1966.

Walte r J. H ick el

E rma lee H ick el

R oger Cremo

United Stat es of A merica

State of Alaska, ss:

Walter J. Hickel and Ermalee Hickel appeared before me on the 1st day of 

December, 1966, at Anchorage, Alaska. I know them to be the persons described 

in and who executed the foregoing tru st agreement. They said they knew the 

contents thereof and acknowledged the same to be their act.

J oe S. Howard

Notary Public for Alaska.

My commission expires : Ja nuary 24,1968.

Mr. Van Ness. The other letter which was originally the thir d 

letter was what they called the “disposative” letter.

Senator Allott. What does tha t word mean? I never heard of it 

before.

Mr. Van Ness. Disposition of.

The Chairman. Disposal.

Mr. Van Ness. Perhaps there isn’t such a word.

Senator Church. There probably is a simpler word.

Senator Bible. Letter No. 2 ?

Senator Allott. Let ter two or three ?

Mr. Van Ness. It was lette r three.

The Chairman. As we have been going through them.

Mr. Van Ness. The second numbered pa ragraph, which is the third 

paragraph of the letter, confirms the statement in the January 12 

letter, indicating that he would dispose of stock in Trans-America 

Corp., Alaska Interstate, and Wakefield Foods, Inc. The second num-
434

bered pa ragr aph relates to the placer mining claim, and the Kosloskv 

Development Co.’s interest in the oil well, indicating tha t he will sell 

both.

The third relates to Mountain Mining Co., and indicates tha t that 

will lie dissolved.

The Chairman. There is going to have to be a catchall in here.

Mr. Van Ness. That is the final pa rag raph which is open-ended to 

take care of anything that might arise in the futu re in the natu re of 

a potential conflict of interest.

Senator Bible. How about the paragr aph immediately before the 

last ?

Mr. Van Ness. This wasn’t requested b ut I think Mr. Cremo indicated yesterday that it was his advice th at the Governor dispose of all 

his assets except the real estate and those relating to hotel, motel, and 

shopping center business. In effect, this would be the Alaska Plumbing 

and the Northland Plumbing. I think at tha t time it was made clear 

that the chairman of the committee and other members of the committee did not want the committee to direct that, but that was dependent on their own business judgment.

The Chairman. We discussed, I think, Mr. Van Ness, an election, 

and I discussed it with him personally. Either he could divest those 

businesses or he could-----

Senator Alixit. Instruct them.

The Chairman. Allow them to retain the business, but instruct 

them not to do business with the Federal Government. I think tha t is 

the way we discussed it.

Senator Allott. It is a matter fo r him to elect. I assume th at there 

well may be a problem for those firms to be prohibited from doing 

business with the Federal Government, because there is a lot of 

business with the Government in Alaska. I mean there are a lot of 

Federal undertakings, and it is pretty hard for a construction firm 

not be involved at some juncture in a substantial Federal effort. Anyway it is understood that that is his election.

Mr. Van Ness. The only remaining thing in the letter is in the 

first paragraph, he indicates he will accomplish any disposals necessary 

within a reasonable time and in any event not later than G months after 

taking office.

The Chairman. That was the date the Chair suggested, you will 

recall. I think G months is a reasonable period of time.

Senator Allott. Yes.

Mr. Van Ness. Letter No. 2, or No. 2 in the original package, the 

remaining letter. This was a letter tha t we had considerable difficulty 

with because it has not been decided what type of arrangements are 

going to be made. Mr. Cremo is currently talking in terms of a very 

broad power of attorney, apparently to him from the Governor, under 

which he would have authority to sell, manage, do anything necessary 

concerning the assets. I think he was talking in terms of including ail 

the assets within that, but I am not certain.

Senator Allott. May I ask a question there. That is as a result, I 

believe, of the comments of the chairman who dislikes any type of trust 

agreement, because he had tendered a trust agreement to the committee 

previously, and this new broad general power of attorney, this is an 

alternative to a trust agreement.

Mr. Van Ness. That is correct.
435

Senator Allott. Which the chairman has indicated he looks at in 

any instance with a jaundiced eye.

The Chairman. Well, I just question trust agreements that simply, 

you know, attempt to place the problem in a trust. I do not care what 

you call it. I think there should be, of course, in the best interests of 

the nominee and the public as well, an explicit understanding as to how they are going to manage their affairs. If they want to do it in a 

trust I won’t object to that. But I was saying earlier, tha t I do not think you can just tran sfer the problem and put it over here. One is a 

trust and the other is not.

Senator Allott. Wh at I was trying to explain, Scoop, was how the 

power of attorney th ing came about.

The Chairman. Right.

Senator Allott. It really came about because of your statements 

repeatedly, there is a lot to justify it I agree, tha t you did not like tru st 

agreements.

The Chairman. Go ahead.

Mr. Van Ness. Concerning the terms or the items of agreement th at 

the Governor and the committee are going to reach a mutual under­ standing upon, these are the five things listed here. We went through 

the transcript or rather I went through the transcript of Saturday's 

session, pulled things out tha t were referred to by members of the 

committee, and put those on a list. In addition we discussed the pro­ posed trust instrument and took things out of the tru st instrument that we thought perhaps should go into the letter or the agreement, and this 

is what we came up with, the five items listed here. Since then I have suggested a sixth one to Mr. Cremo, and while I am not sure it is appropria te, I will convey it to you. He thought it 

would be an appropriate clause. In light of the history of these assets involving speculative interests 

in mining leases or royalties, I suggested to Mr. Cremo tha t there perhaps should be a clause to cover an asset tha t—unknown to the 

Governor—might represent a conflict of interest and might later mature and have great value. I t would be, I think, embarrassing for him serving as Secretary to have this happen. So perhaps there 

should be a provision indicating tha t the proceeds or any increase in value would go to a charity of his choice or something like this. But 

that was just a suggestion subsequent to our discussions of yesterday.

The first paragraph here I dictated in substance to Mr. Cremo. I talked to Senator Jackson on the phone yesterday and indicated to him that we discussed another paragraph ; he made some suggestions 

to that, and this is the final form. I understand Senator Allott has some questions concerning the first 

para graph in its present form.

Senator Allott. I just have this suggestion, gentlemen. I think th at 

there is an aspect of degradation in that first paragraph.

Senator Bible. I th ink you are right.

Senator Allott. And I would suggest tha t we leave out pa rt 

of it and say “based on the decision of your committee I have agreed 

to do the following.”

Senator Bible. Knock out that other part.

The Chairman. Th at is all right.

Senator Bible. It h it me exactly the same way.

2 3 -6 54— 69 — pt. 2----- 6
436

Senator Allott. The same thin g is true of the first letter in the 

first paragraph.

Mr. Van N ess. Again I dictated this to him and indicated that it 

was my understanding that-----

The Chairman. The Chair used the word “conditioned.” I think 

you will find it in the transcript.

Senator Bible. Maybe you did.

The Chairman. That is righ t, so I am just trying to explain where 

the staff probably picked it up.

Senator Moss. Bill, in this search for all of these details, has examination ever been made of the Governor's income tax return ?

Mr. Van Ness. Not to my knowledge.

The Chairman. He has answered that.

Senator Bible. I asked the question myself and he said he had no 

problems and was completely current with them.

Senator J ordan. Except with respect to the earthquake.

Senator Bible. There was an earthquake problem.

The Chairman. There is some litigation pending on that, isn’t 

there ?

Senator Bible. That is what he testified.

Mr. Cook. The question of how to handle it, how it should be treated.

Senator Bible. A reportable loss on the income tax.

Senator Allott. That question is still pending.

Mr. Cook. T hat is still pending and it has been noted in your letters.

The Chairman. But I think in response to Senator Bible’s question, 

he did say that he was current. He had paid all his taxes.

Senator Bible. So he has no problems as of now. That is his 

testimony.

The Chairman. I remember this question came up with a nominee 

some time ago for one of the District of Columbia positions, wasn’t it?

Senator Bible. Oh, many of them. Fo r several years they just refused or forgot to file returns.

Mr. Van Ness. Para graph 2 of letter No. 2 does not contain the 

$10,000 de minimis rule, which I had conveyed to them. That was their 

decision to leave tha t out.

The Chairman. I suggested we have the rule; it has all been modified again, however, in connection with the Packard matter, but the 

Packard thing involves gifts to charity and so on. There is a $10,000 

de minimis rule.

Senator Allott. What is that?

The Chairman. Well, it is that he can invest in any company that 

does less tha n $10,000 worth of business with the Federal Government 

in a given year.

Senator Allott. Let me ask you this question.

The Chairman. This is just a thin g tha t started-----

Senator Allott. This is a tough one and it involves all of us in a 

way. The way this is stated in one of these letters, “In the securities 

of any company that does business with the Federal Government,” 

what do you do in other cases like tha t? For example, you p ut your 

money in mutual funds. Suppose some of those companies in those 

portfolios are doing business with the Federal Government. I s there a 

de minimis rule? Suppose he were to put—he had some money and he 

nut it in Allied Chemical. I do not know whether there is such a thing.

Senator Anderson. Oh, yes; very good.
437

Senator Bible. That is a good stock. Do you want us to check it ?

The Chairman. The chemical industry has been in bad straits right 

now for 5 or 6 years. Isn ’t it the question of control ? Isn ’t this the

key? t

.

Senator Allott. Isn’t there the question of the relationship of his 

investment versus the whole thing?

The Chairman. Yes. I think there are two different things here. 

One thing is for his wholly owned business.

Senator Allott. That is clear.

The Chairman. To be doing business. The other thing is the question of whether he will invest in securities, companies that are broadly 

held, over which he has obviously no control. lie has 100 shares or 300 

shares in something where there are several million shares outstanding.

Senator Stevens. Isn ’t that really the facility of the trust arrang ement in terms of the developments we are talking about right, now ? 

They could be made and the trustee could be authorized to invest in 

these types of stocks.

The Chairman. I thin k that is the way it should be done. I think it 

ought to be done by someone with instructions to avoid any investments th at would be in conflict with his duties as Secretary, and with 

the Federal Government. I do not know whether you want to apply 

the de minimis rule that they follow in the Armed Services Committee 

of $10,000.

Senator Bible. Would you spell th at out, Mr. Chairman? Spell out 

the $10,000?

The Chairman. Yes, and that is fairly stringent. I t may be unfa ir, 

I do not know. The rule is that they cannot invest or hold stock, that is 

in the defense industries.

Senator B ible. Any appointee subject, to Senate confirmation?

The Chairman. Th at is right, subject to Senate confirmation. Those 

that do $10,000 or less in business with the Federal Government, they 

can still hold those stocks or buy them. Now, I am afraid, as a realistic 

matter, it knocks out about every company.

Senator Church. I thin k we are pushing an open door. He has 

said in his letter tha t he would refrain entirely from doing any business with, or from making any investment in securities of any company that does business with, the Federal Government outside of Alaska Interstate. lie has very little nonfamily stockholdings of any 

consequence. The companies he owns are not likely to be involved with 

the Federal Government. Why don’t we just leave it up to him?

The Chairman. But I think he needs a guideline in fairness. You 

will have over $1 million here.

Senator Bible. U.S. bonds are a good investment.

The Chairman. I thin k he has a right to know from the committee.

Senator Church. Has he asked us for a guideline, Mr. Chairman?

The Chairman. No; he has not.

Senator Church. I thin k that nobody would ever raise a question 

if he had five shares of stock in Trans-America Corp, or something 

like that. I just do not think that this constitutes a realistic problem, 

and if we try to write a guideline, we could really get into trouble. I 

mean that is pretty difficult to do.

The Chairman. I would just suggest that as to his noncorporate 

businesses, that they follow the same general rule to avoid investments
438

in stocks or other types of investments that will be in conflict with 

his responsibilities and let it go at that. That should cover it.

Senator Church. lie said he would do that.

The Chairman. Obviously they are not going to go out and invest 

in Anaconda or other companies tha t are dealing specifically with 

the Department of Interior.

Senator Church. 1 think you have to leave it to his discretion, and 

it is very unlikely that he will invest in such a company after this experience. I think lie will be very careful.

The Chairman. 1 would just leave No. 2 there.

Senator Alllott. Except for the first paragraph.

The Chairman. Yes.

Senator Allott. I think it is all right.

The Chairman. I would just leave it that way.

Senator Church. Yes.

The Chairman. That covers it.

Senator J ordan. I think so.

The Chairman. Now we have these wires. Let us try to move along 

here, gentlemen, because we are going to have to-----

Senator Bible. What time do they convene ?

The Chairman. Ten-thirty. May I say it is my understanding, I 

talked to Senator Mansfield this morning, that we will be in recess 

until 3 o’clock. There will be a live quorum at 3 when they will start on 

some of the nominations.

Senator Allott. Oh, there will ?

The Chairman. Yes, sir. I t is going to be hard to get back here.

Senator Allott. I was supposed to go down and see the parade.

The Chairman. At 3 o’clock there will be a live quorum and there 

may be some rollcalls.

Senator Church. This afternoon, rollcalls?

The Chairman. Yes, sir.

Senator Bible. There may be a lot of activities.

The Chairman. I wanted you to know this. I talked to Senator 

Mansfield a little after 8 o’clock this morning. All right, let us move 

along here so th at we can get this thing along the road here.

Mr. Van Ness. The remaining items are telegrams received yesterday.

The first one is from the accounting firm of Molitor, Doremus, & 

Hanlin. At the request of th e Governor they clarified some of the matters which we had discussed Saturday on the financial statement. That 

telegram is, T believe, the same one that is in his letter No. 1.

The Chairman. Do you want to read it into the record ?

Mr. Van Ness. I think i t is already in the letter, and I think everyone has read it.

Senator Allott. It is in letter No. 1.

Mr. Van Ness. Yes.

The Chairman. That will go in the record.

(The telegram referred to follows:)

Anchorage, Alaska, Jan uar y Id, 1969.

Sen ator H enry M. J ackson,

Chairman, Senate Interior Committee,

New Senate Office Building, Washington, D.C.:

We submit the following info rmation as requested by Gov. Wa lter J. Hickel. 

Re Walter J. and Ermalee Hiekel, report on examination of balance sheet, 

dated December 31,1967, p repared by Molitor, Doremus & Han lin, certified public 

acco untants.
439

Page 5, inve stments in securities: Common stocks, at cost, the miscellaneous 

item of $2,794.50 is comprised of the fo llow ing:

Mountain Mining Co_________________________________________ $1,837.50

Captain Cook Hotel, Inc______________________________________ 40. 00

Life Insurance Co. of Alaska__________________________________ 17. 00 Cordova Investm ent Corp_____________________________________ 900. 00

T o ta l_________________________________________________ 2,79 4.50

Other, at cost, the miscellaneous item of $1,201 is comprised of the fol low ing :

Presbyterian Comm unity Hospital Association, Inc----------------------------$1, 000

Fairview Mines_________________________________________________ 200 American Rooting_______________________________________________ 1

T o ta l____________________________________________________ 1,201

Re Hickel Investment Co. and subsidiaries, rep ort on exam ination of consolidated financial statem ents, yea r ended December 31, 1967, prepared by Molitor, 

Doremus & Hanlin, certifie d public accountants. Balance she et: The “oth er common stocks” in the amount of $16,091.47 listed 

in the balance shee t und er investments at cost is comprised of the follow ing :

Alaska Pacific Corp_________________________________________ $10,000. 00

Northern Plaz a Development__________________________________ 4, 754. 86

Bush Lanes, Inc____________________________________________ 1, 336. 61

T o ta l________________________________________________ 16,091.47

Molitor, Dore mus & H a n lin ,

S. H. Molitor, P a rt n er.

Mr. Van Ness. The second telegram is from Mr. F. J . Keenan, State 

division of lands. This is dated Jan uary 19 and is a follow-up to the 

January 18 telegram that we had previously received.

The Chairman. Which we received on Saturda y afternoon. Now, 

let us read the two together.

Senator Bible. Why don’t you read both of them.

The Chairman. Read the* Jan uar y 18 first and then the January 

19th wire. This is important, gentlemen. If you will read the wire 

again that we received Saturday afternoon, just as we were breaking 

up.

Mr. Van Ness. Addressed to Senator Henry J. Jackson, chairm an, 

Inte rior and Ins ula r Affairs Committee, U.S. Senate Office Building, 

Washington, D.C.:

Alaska law does not perm it a negotiated oil or gas lease. All leases are issued on a competitive or noncompetitive basis. Records indicate that Walter J. Hickel 

had one noncompetitive lease which was dropped in 1965. Records fu rthe r reveal th at no leases now exist in the name of Walter J. Hickel or Thomas E. 

Kelly. British Petroleum Leases on North Slope acquired only by competitive bid.

F. J. Kee nan ,

Director o f Sta te Division o f Lands.

(The telegram referred to follows:)

Ancho rage A la sk a, J a n u a ry 1 8,1 969.

S e n a to r H enry M. J ac ks on ,

Chairman, Int erior and Insu lar Affairs Committee,

U.S. Senate Office Building, Washington, D.C.:

Alaska law does not perm it a nego tiated oil or gas lease. All leases are issu ed

on a competative or noncom petative basis. Records indicate th at W alter J. Hinkle had one noncompetitive lease which was dropped in 1965. Records fu rthe r 

reveal that no leases now exist in the name of Walter J. Hinkel or Tho mas E. 

Kelly.
440

British petroleum leases on north slope acquired only by competitive bid.

F. J. Keenan,

Director of Sta te Division of Lands.

Mr. Van Ness. The second telegram from the State is dated Ja nuary 19, addressed again to Senator Henry M. Jackson :

Pursuan t to request of Mr. Van Ness, counsel for Interior Committee, you are 

advised that the Alaska law does not permit a negotiated oil or gas lease. All 

oil and gas leases are issued on a competitive or noncompetitive basis. Records 

show tha t Walter J. Hickel acquired a noncompetitive or lottery type lease on 

April 1,1962, covering sections 5, 6, 7 and 8 TWP 25N r6W SM.—

Relating to Meridan. That is my insertion.—

Pursuant on application signed by Wa lter J. Hickel. The lease was issued on May 

1,1962 and terminated on May 1, 1965 due to nonpayment of rental.

Exploration in this area indicated no potential thus no drilling was undertaken. British Petroleum leases in Alaska total approximately four hundred 

and twenty thousand acres. British Petroleum has acquired no leases since the 

January 1967 competitive sale at which time fifteen thousand two hundred 

and fifty nine acres of the total was acquired on the North Slope. Therefore 

no leases have been issued to British Petroleum since Thomas E. Kelly has been 

Commissioner of Natural Resources Division of Lands, records reveal tha t no 

other lease has been issued to Walter J. Hickel and tha t no leases have been 

issued to the following: Ermalee Hickel, Hickel Investment Company, Hickel 

Enterprises. Alaska Plumbing and Heating. Northland Pipe and Supply Company, Inc, Travelers Inn of Fairbanks, Inc. Northern Lights Shopping Center, 

Inc. Captain Cook Hotel. Travelers Inn of Anchorage, Clarks Painting and 

Decorating, Thomas E. Kelly.

F. J. Keenan,

Director S tat e Division of Lands, Anchorage Alaska.

Mr. Chairman, those perhaps should be put in the record.

Senator Allott. The final wire clears it up.

(The telegram referred to follow s:)

Anchorage, Alaska, January 19, 1969.

Senator Henry M. J ackson,

Old Sen ate Office Building,

Washington, D.C.

Pursuan t to request of Mr. Van Ness, counsel for Interior Committee, you 

are advised tha t the Alaska law does not permit a negotiated oil or gas lease. 

All oil and gas leases are issued on a competitive or noncompetitive basis. 

Records show tha t Walter J. Hickel acquired a noncompetitive or lottery type 

lease on April 1, 1962, covering sections 5, 6, 7 and 8 TWP 25N R6W SM pursuant on application signed by Walter J. Hickel. The lease was issued on 

May 1, 1962 and terminated on May 1. 1965 due to nonpayment of rental.

Exploration in this area indicated no potential thus no drilling was undertaken. British petroleum leases in Alaska total approximately 420,000 acres. 

British petroleum has acquired no leases since the January 1967 competitive 

sale at which time fifteen thousand two hundred and fifty nine acres of 

the total was acquired on the North Slope. Therefore no leases have been issued to 

British petroleum since Thomas E. Kelly has been commissioner of natural resources division of lands. Records reveal tha t no other lease has been issued to 

Walter J. Hickel and that no leases have been issued to the following; Ermalee 

Hickel, Hickel Investment Company, Hickel Enterprises, Alaska Plumbing and 

Heating, Northland Pipe and Supply Company. Inc., Travelers Inn of Fairbanks, 

Inc., Northern Lights Shopping Center, Inc., Captain Cook Hotel. Travelers 

Inn of Anchorage, Clarks Painting and Decorating, Thomas E. Kelly.

F. J. Keenan,

Director, Sta te Division of Lands.

The Chairman. Let us finish. What is this last wire?

Mr. Van Ness. The th ird telegram is dated Jan uary 19, 1969, from 

Mr. Burton Silcock, State director of the Bureau of Land Management, Anchorage, Alaska. This is the telegram tha t was requested 

on Friday evening, again Satu rday morning and Saturday noon.
441

The Chairman. Who is this from ?

Mr. Van Ness. Mr. Burton W. Silcock.

The Chairman. Burton of the land management?

Mr. Van Ness. BLM, addressed to Senator Henry M. Jackson:

This acknowledges receipt of verbal request received at approximately 

2 :30 p.m. AST this date from William J. Van Ness, Jr., Special Counsel for 

the Senate Interio r and Insular Affairs Committee, acting under the direction 

of Senator Jackson, Chairman, the following information in supplied pursuant 

to Mr. Van Ness request:

1. Of the twenty-seven companies discussed in the phone conversation we did 

not find any oil and gas lease applications or leases in our active files.

2. There was only one instance where lease had been issued in the name of 

Hickel as follows Walter J. Hickel c/o Yakutat Development Company 439 Wyatt 

Building Washington 5, D.C. Serial Number A-025122. Application filed on 

August 3, 1953, lease issued April 11, 1956. Portion of this lease was late r segregated and a new lease issued in the name of Walter J. Hickel % Colorado Oil 

and Gas Corporation Denver Club Building, Denver, Colorado. Serial Number 

05893 effective J une 12 1962. Both of the above leases were closed on March 31, 

1963. Copies of serial pages being air mailed. Colorado Oil and Gas Corporation 

has oil and gas leases in Alaska and is actively exploring on the North Slope.

3. Roger Cremo we were unable to find any oil and gas leases in his name.

4. We are sending air mail copies of the serial pages purchased by Ken Smith 

on January 17, 1969 from the Anchorage Land Office. These offers in connection 

with these serial pages involving Hickel Investment Company and Walter J. 

Hickel were withdrawn and no leases issued.

That is tlie close of the telegram.

Let me clarify two points.

In our discussion with Mr. Silcock on the telephone I asked him to 

take a run through his files under the name of Mr. Roger Cremo 

because Mr. Cremo served as trustee while the Governor was in the 

office, and certain assets were held in his name. I felt it was appropriate 

to do so and I so advised Mr. Cremo.

(The telegram referred to was received on January 19, 1969, and 

follows:)

Bureau of Land Management, 

Anchorage, Alaska, January 17, 1969.

Senator Henry M. J ackson,

Chairman, Interior and Insular Affairs Committee,

Washington, D.C.

(Attention of William J. Van Ness, Jr.) :

This acknowledges receipt of verbal request received at approximately 2 :30 

p.m. A.S.T. this date from William J. Van Ness, Jr., special counsel for the 

Senate Interior and Insular Affairs Committee acting under the direction of 

Senator Jackson, chairman. The following information is supplied pursuant to 

Mr. Van Ness’ req uest:

1. Of the 27 companies discussed in the phone conversation we did not find 

any oil and gas lease applications or leases in our active files.

2. There was only one instance where lease had been issued in the name of 

Hickel as follows: Walter J. Hickel, care of Yakutat Development Co., 439 

Wyatt Building, Washington, D.C., serial No. A-025122. Application filed on 

August 3,1953, lease issued April 11,1956.

Portion of this lease was later segregated and a new lease issued in the name 

of Walter J. Hickel, care of Colorado Oil & Gas Corp., Denver Club Building, 

Denver, Colo. Serial No. A-058593 effective June 12, 1962. Both of the above 

leases were closed on March 31, 1963. Copies of serial pages being airmailed. 

Colorado Oil & Gas Corp, has oil and gas leases in Alaska and is actively exploring 

on the north slope.

3. Roger Cremo. We were unable to find any oil and gas leases in his name.

4. We are sending airmail copies of the serial pages purchased by Ken Smith 

on Janua ry 17, 1969 from the Anchorage Land Office. There offers in connection
442

with these serial pages involving Hickel Investm ent Co. and Walter J. Hickel 

were withdrawn and no leases issued.

Burton W. Silcock,

State Director,

Bureau, of Lan d Management.

Mr. Van Ness. A few minutes ago we received the special delivery 

mail package from the bureau of land management and included is a 

copy of the telegram which I had requested to be placed with the letter.

Senator Bible. The one you j ust entered into the record ?

The Chairman. Yes.

(The original copy of the telegram referred to for inclusion in the 

record at this point follows:)

Bureau of Land Management,

Anchorage, Alaska, J anu ary 17,11)69.

Senator Henry M. J ackson,

Chairman, Interior and Insul ar Affairs Committee,

U.S. Senate Office Building, Wash ington, D.C.

(Attention : William J. Van Ness, J r.) :

This acknowledges receipt of verbal request received at approximately 2 :30 

p.m. AST this day from William J. Van Ness, J r., special counsel for the Senate 

Interio r and Ins ula r Affairs Committee, actin g under the direction of Senator 

Jackson , chairm an. The following information is supplied pursu ant to Mr. Van 

Ness’ re qu es t:

1. Of th e 27 companies discussed in the phone co nversation we did not find any 

oil and gas lease applica tions or leases in our active files.

2. There was only one instance where lease had been issued in the name of 

Hickel as follows: Wa lter J. Hickel, c/o Yakutat Development Co., 439 Wy att 

Building, Washington 5, D.C. Serial No. A-025122. Application filed on August 

3,1953, lease issued April 11,1956.

Portion of this lease w as late r segregated and a new lease issued in the name 

of W alter J. Hickel, c /o Colorado Oil & Gas Corp., Denver Club Building, Denver,

Colo. Serial No. A-058593 effective June 12, 1962. Both of the above leases were 

closed on M arch 31, 1963. Copies of serial pages being air mailed. Colorado Oil &

Gas Corp, has oil and gas leases in Alaska and is actively exploring on the N orth 

Slope.

3. Roger Cremo. We were u nable to find any oil and gas leases in his name.

4. We are sending air mail copies of the serial pages purchase d by Ken Smith 

on Ja nu ary 17. 1969 from the Anchorage land office. These offers in connection 

with these serial pages involving Hickel Investment Co. and Wa lter J. Hickel 

were withdraw n and no leases issued.

Burton W. Silcock,

State Director, •

Bureau o f Land Management.

Mr. Van Ness. The second thing concerns copies of the applications 

for leases which terminated in 1963. The applications apparently were 

withdrawn by Governor Hickel.

Senator Bible. These are Thermofaxes of that?

Senator Stevens. The top filing ?

Mr. Van Ness. Yes. The th ird matter is a copy of the oil lease that 

was in fact issued and the serial numbers are again given.

Here is again another copy, and the note on it reads “As far as our 

records disclose, this is the only lease issued to Mr. Hickel.”

And then I also asked for information from their files on the 

Tollman, case.

You will recall tha t was how they initially ran on to the Hickel 

name in connection with the top filings. I told them it might be 

relevant to have a copy to show how they picked it up and they have 

provided the file.
443

The Chairman. These will all be eithe r filed or incorporated by 

reference, properly identified, and made a part of the committee 

records, so they are identifiable. (The materials referred to are in the committee’s official files.)

Is there objection ?

Senator Allott. You could do that in ink so they would always be 

identified with the record, couldn’t you ?

Mr. Van Ness. Yes, sir.

The Chairman. All right.

Mr. Van Ness. There are a couple of other matters tha t occurred 

over the weekend. We had trouble getting the telegram from BLM. We requested it initially Friday evening, but it was not received. Yesterday I had John Crow, associate director of BLM, get in touch with Mr. Silcock to take the telegram over the telephone and provide us with a signed transcrip t of it so we would have a copy in the event 

we did not receive the telegram.

The Chairman. We do not need to file that because we have the wires 

now.

Mr. Van Ness. Yesterday, prio r to meeting with Mr. Cook, Mr. 

Cremo, and Mr. McMurray, I had reviewed portions of the hearing record and I had other members of the staff, Mr. Dreyfus and Mr. Miller, go through the hearing record to pick out things tha t were not resolved, that perhaps required furthe r clarification, in the event questions were raised on the floor on some of these matters. In addi­ tion I had them go thro ugh a file, a relatively comprehensive file, of press clippings tha t we have maintained on this nomination and pull out any issues that were reported in th e press or any allegations made in the press concerning the Governor. I thought that material would be relevant information for the committee to have for purposes of 

complet ing the record. I have prepared a list of those things that either were not mentioned in the tran script to date or were only partially covered. I provided tha t list to Mr. McMurray and Mr. Cremo. and told them th at in my judgment they should be prepared to provide further information or clarification on those matters insofar as they could, and perhaps the Governor could be advised tha t some of these matters might be brought up and he could respond to them. That list consists of 13 items 

right now, I believe.

Senator Stevens. Mr. Chairman, I think I can clarify one of them 

raised to me on Saturday, the question was whether there was a recall petition filed against Governor Ilickel when he served on the city planning commission. I have a telegram here tha t is signed bv Mr. Vic Gill, who is a member of that commission now, Frances Mayer, a member, Donald K. Hill, a past chairman, and William J. Sheffield, past chairman, which states tliat no such petition was ever field, and 

it recites th at

A petition was talk ed about and may have been circulated ; however, it never was successful. The issue involved was an ojten space in downtown core open block versus parking structure on same site. Governor Hickel supp orted open- space concept. Several factions were opposed to his position. The matter was resolve by city of Anchorage voters at a general election and the open-space 

concept won out.

V. Gill, Member.

F rances Mayer. Mem ber.

Donald K. Hill, Pa st Chairman.

William J. Sheffiel d, Pa st Cha irman.
444

I would like to have that included.

The Chairman. Tha t will be included at this point.

(The telegram referred to follows:)

Anchorage, Alaska, January 18, 1969.

Senator Ted Stevens,

Washington, D.C.:

Confirming our telephone conv ersation regarding Governor Hickel’s service 

on Anchorage City Planning Commission. No recall petition was ever filed. A 

petition was talked about and may have been circulated ; however, it never was 

successful. The issue involved was an open space in downtown core open block 

versus parking str uctur e on same site. Governor Hickel suppo rted open-space 

concept. Several factions were opposed to his petition.

The matt er was resolved by c ity of Anchorage voters at a general election and 

open space concept won out.

V. Gill, Member.

Frances Mayer, Member.

Donald K. Hill, Past Chairman.

William J. Sheffield, Past Chairman.

Senator Stevens. May I ask if one of the items on Mr. Van Ness’ 

list is the Drew Pearson comment about the subcontract with the airport terminal?

Mr. Van Ness. Yes, sir, it is.

Senator Stevens. I have a telegram here from prime contractor, 

M—B Contracting Co., Inc., which reads:

We are the prime con tractor on the airport term inal expansion at Anchorage, 

Alaska. Mr. Drew Pearson has sta ted that the Hickel company, Alaskan Plumbing & Heatin g Co., Inc., was awa rded a subc ontract desp ite the fac t it was not 

orig inally the low bidder. I wish to advise you and your committee th at thi s 

sta tem ent is absolutely incorrect.

We received mechanical bids from several contractors, inclu ding C. R. Lewis, 

prior to submitting o ur bid to the Sta te of Alaska. Alaskan Plumbing & H eatin g 

Co., Inc., was the lowest of the bids we received. We used their figure in prepar ­

ing our bid to the Sta te and, subsequently, we awarded the mechanical subcontra ct to Alaskan Plumbing & Heating for only one reason, they were the low 

bidder. Mr. Lewis’s bid was not thrown out for any technicality, he simply was 

not low. Any inference th at you or your committee may dra w from Pearson’s 

column that the State of Alaska, Governor Hickel, or anyone else applied any 

pressu re on me or our company is unfounded. I personally made the award to 

Alaskan Plumbing & H eating based on the ir low bid.

M-B Contracting Co. I nc.,

J ohn I. Miller, President.

I would like to have that put in the record also.

The Chairman. Tha t will be included in its entirety at this point.

(The telegram referred to for inclusion in the record at this point 

follows:)

Seattle, Wash., January 11,, 1969. Hon. Theodore Stevens,

TJ.S. Senate, Wash ington, D.C.:

We are the prime con tractor on the airport term inal expansion at Anchorage, 

Alaska. Mr. Drew Pearson has sta ted th at the Hickel company, Alaskan Plumbing & Hea ting Co., Inc., was awarded a subcontract despite the fact it was not 

orig inally the low bidder. I wish to advise you and your committees th at this 

statem ent is absolutely incorrect.

We received mechanical bids from several contracto rs, including C. R. Lewis, 

prior to subm itting our bid to the Sta te of Alaska. Alaskan Plumbing & Heating 

Co., Inc., was the lowest of the bids we received. We used their figure in preparin g our bid to the Sta te and, subsequently, we awarded the mechanical subcontract to Alaskan Plumbing & Hea ting for only one reason, they were the low 

bidder. Mr. Lewis bid was not thrown out for any technicality, he simply was 

not low. Any inference that you or your committee may dra w from Pea rson’s
445

column that the State of Alaska. Governor Hickel, or anyone else applied any pressure on me or our company is unfounded. I personally made the award to 

Alaskan Plumbing & Heating based on their low bid.

M-B Contracting Co., I nc. 

J ohn I. Miller, P re si de nt.

Senator Stevens I may have answers to some of the rest of this.

The Chairman. Run down the list, the topics.

Mr. Van Ness. The topics are as follows:

The Chairman. The planning commission allegation has already 

been covered and discussed, but are there any further questions?

Mr. V an Ness. Information was requested on the Kuskokwim 

issue and that has since been submitted this morning by the Governor's 

people. The third allegation related to the Wickersham Fer ry purchase. 

There was an allegation th at the State paid approximately $1 million 

more than the offering price on the ferry a few months previously.

A fourth one related to the trust arrangement. One of the letters 

received this morning from the Governor requests tha t the tru st instrument be placed in the file, so that is resolved. The record does not disclose in my judgment a clear statement with 

respect to what the Governor’s interest was in Anchorage National 

Gas prior to the time it was merged into Alaska Interstate. I thought 

it was of some relevance because it was often referred to as 2 per ­

cent when it was the Anchorage National Gas and it remained 2 percent after the merger with Alaska Interstate. It was not clear how 

you could effectuate th at: merge into a larg er entity and still maintain 

the 2 percent. I thou ght the record should be clear because there was 

an extensive line of questioning by Senator Metcalf on th at point.

The Chairman. All right, let us move on.

Mr. Van Ness. I think Mr. Cremo, the Governor's attorney, could 

clarify th at matter for the committee.

Senator Anderson. The charge is that they had a certain amount 

of property and then raise-----

Mr. Van Ness. There was no charge or allegation whatever in connection with this. It just was not clear in the record, and there was 

extensive questioning on the point. I thought that perhaps the record 

should be clarified.

The Chairman. There was confusion over the percentage tha t he 

owned. He owned 2 percent in the smaller company as I understood it. 

The question was his percentage of ownership, was it not?

Senator Allott. In the original.

The Chairman. In the original company, and tha t was never clearly 

responded to.

Senator Allott. I do not know that it was ever asked him.

The Chairman. I should correct it. I do not know whether the question was ever asked. The information in the record apparently relates 

only to the percentage in the company in which he now holds stock, 

which is the merged company, the Houston Corp.

Go ahead.

Mr. Van N ess. The sixth item, in my judgment, was one tha t needed 

clarification for the committee more than any others. There was a 

press report t hat Mr. Michael T. Halbouty and Governor Ilickel were 

partn ers at one time. Halbouty you will recall is Mr. Kelly’s step-
446

father. In addition he is a person who has speculated in oil ventures 

and has been involved in a number of corporate arrangements throughout the West, in addition to in Alaska. The question was never brought 

up as to whether there is any present relationship or anything of this 

nature. I felt tha t it should be clarified both because o f the oil connection possibility and because of Mr. Kelly’s relationship. I am sure 

there is an explanation to this, and they have indicated to me what 

it is, but I would ra ther tha t they comment on that.

There were press allegations on the oil severance tax, and perhaps 

Senator Stevens or Senator Gravel can speak to this.

One of the allegations was tha t he had threatened to or attempted 

to dismiss a person serving on the North Pacific Advisory Fisheries 

Commission because this person had proposed an oil severance tax 

while serving in the legislature. There were other reports relating 

to what the Governor's position was on this, and the reports generally 

were to the effect that the Governor opposed an increase in or the 

imposition of any tax. The inference to be drawn from these articles 

was th at he was favoring the oil industry, and opposing the tax on 

that basis. I have no comment whatever on the inference to be drawn 

there, but that was the fair inference.

Senator Bible. What was he supposed to have done, threatened 

the man tha t he put on the Commission?

Mr. V an Ness. That is one news report, yes.

Senator Bible. News report ?

Mr. Van N ess. Threatened to remove him from an advisory commission. This man was also either a State representative or State 

senator as I understood it, and had advocated a larger or an increase 

in the oil severance tax.

Senator Bible. I understand the problem. I just wondered what 

he did.

Senator Gravel. He was a Republican legislator, chairman of the 

rules committee.

Mr. Van Ness. He was, yes.

Senator Bible. Is he still on the commission ?

Senator Stevens. Yes, he is still on the commission. lie is still a 

legislator and still chairman until the new legislature convenes.

Mr. Van Ness. The next question related to other press reports. 

As I understood it, the stories went this way: How can this man 

administer the mine safety laws and the other safety laws he would 

be charged with administering when he in fact constructed the Captain Cook Hotel in the middle of a very grave, a very serious 

earthquake fault tha t was reportedly dangerous.

The next one concerned news reports in connection with the rerouting of a highway after it initially had been established in or near 

Anchorage. This highway allegedly was rerouted to go past, as I 

understand it, some Hickel properties.

The next one-----

Senator Church. Ho you know anything about that?

Senator Stevens. This Minnesota bypass. It was not rerouted. 

It was reconstructed.

Senator Gravel. No th at is not the Minnesota bypass. I believe this 

is tha t acreage on Campbell Station Road. There was a move. The 

highway plan was to have one block off to parallel and have one-way
447

streets going in either direction and the allegation is that apparently 

the Governor and some other people, in this other financial statement 

of 60 acres wanted it furthe r down and tha t the departm ent of highways was ordered to move the highway down into tha t area as p art 

of this shuttle. It is an allegation and all I have noticed is that he has 

the 60 acres and I do not know of anything within the highway department in the way of orders or anything official to any degree. So 

at th is point its is nothing but an unsubstantiated allegation.

Mr. Van Ness. Tha t is right, all of these are unsubstantiated allegations. They are pulled out of the press clipping file.

Senator Church. The highway departm ent in Alaska-----

Senator Gravel. Everything in Alaska is subject to the Governors 

direction, so there can be no misunderstanding about that. We only 

elect one person. He is very autonomous and he appoints everybody.

The Chairman. Senator Stevens, do you have a comment ?

Senator Stevens. The Federal aid highway program is not completely subject to that. That is the one item t hat the Governor really 

does not have much control over.

Senator Bible. That is because it is the Bureau of Public Roads?

Sentaor Stevens. Right.

The Chairman. He has to comply with Federal laws in regard to 

standards, civil service, and some other things.

Senator Allott. Our Governor can tell you about that, and so can 

my colleague.

The Chairman. Any Governor can.

Senator Bible. Which is probably a fairly good thing.

The Chairman. W hat is the next item ?

Mr. Van Ness. The next item and I am not sure this is a proper 

descripton here, an allegation in connection with the consideration 

of the North Freight Road.

Senator Stevens. The N orth Slope Road.

Mr. Van Ness. The N orth Slope Road. The allegation is that State 

law requires a 50-50 contribution between the State of Alaska and p rivate industry in the construction of this road. The allegation is that 

the State financed the road insofar as it has been constructed, and I 

have no information on this, but tha t there was no private industry 

contribution as presumably directed by law.

Senator Gravel. Mr. Stevens was in the legislature at tha t time. 

Maybe he can answer. Was 50-50 required?

Senator Stevens. No, there is a mixup here in terms of the moneys 

appropriated by the North Commission and the moneys that the Governor has requested. This next legislature—he polled the next legislature and asked them if they would support the use of State funds to 

build this winter road to the north. It is an experimental road. It is an 

ice road as it is called, and they have indicated by poll, the majority of 

them, they will support it and tha t the monev coming from the next 

legislature is being spent out of the existing highway appropriations 

from this year, so there is a conflict there as to what they are talking 

about. The moneys that they are using are moneys tha t the legislature 

has committed in advance. It. is just strictly for a winter haul trail to 

the North Slope.
448

It is my understanding fu rther that the private companies are going 

to maintain that road, at least a portion of it. The S tate is constructing 

the whole thing. There are no Federal funds involved.

The Chairman. The next item ?

Mr. Van Ness. The final item is not an item that is raised in connection with any allegation or press report. It is just an item I have 

not had a chance to check out. Again, in connection with all of this, 

other th an at the direction of the chairman of the committee I have not, 

and no member of the staff has, been actively investigating and trying 

to trace down unsubstantiated allegations.

As they came to attention we have advised the Governor’s people 

concerning them and said t hat this may be a matter of interest to the 

committee; you may want to be p repared on it, and you are advised 

of it. It came to my attention tha t in connection with the oil lease 

tha t he did have, and a portion of which was later assigned to Colorado 

Oil & Gas Corp., I believe, or Development Corp. I had checked one 

thing out last week. I had gone over to the SEC and reviewed the prospectus on Alaska Interstate, and it is my recollection that one of the 

major holders in Alaska Interstate was Colorado Oil & Gas, it is 

Colorado something. I do not see any logical connection between those 

things, but I will clarify it if you think it is justifiable.

Senator Allott. I do not think there is. I know of the Colorado Oil 

& Gas Corp. I cannot think of the man who is president of it. They have 

been interested in Alaskan development a long time.

The Chairman. Senator Stevens.

Senator Stevens. The only relationship to Colorado Oil & Gas is 

on that one lease. It was assigned over to them, and it was obviously 

for a development purpose and their assignment could not have lasted 

more than 9 months as I recall the record because the thing terminated 

in 1963. That is typical of the development pattern in Alaska. Someone gets together and tries to put together enough leases to interest 

a company to come in and spend the money to invest in it, and it is obvious that they got it put together and assigned them, but then Colorado Oil & Gas did not carry throu gh, was not interested in the area 

apparently, because the lease expired within less than a year a fter the 

assignment was made.

Mr. Van N ess. Two things. If it is Colorado Oil & Gas th at is mentioned in tha t prospectus, it is probably totally coincidental tha t there 

would lie the three connections. F irs t the assignment of the lease, the 

fact that Colorado Oil & Gas is on the North Slope, and third, that it 

is a shareholder, if it in fact is, tha t owns stock in Alaska Interstate. 

But I did want to bring tha t to your attention, in the event you did 

want a further look at it.

Senator Allott. I fail to see the significance of it. I wish somebody 

would spell it out for me.

Mr. Van Ness. I thought the coincidence of the occurrence made 

it worth while to bring to your attention.

Senator Stevens. One of the first companies involved in Alaskan 

activities was Colorado Oil & Gas. It goes back to the time they were 

down in Kitella, but when you get into this thing on the North Slope 

there is every company involved on the North Slope, and I think you 

will find that the lease that you are talkin g about is one of a group
449

of leases that were put together and offered to Colorado Oil & Gas, and 

they took them and then dropped them. Tha t is it.

Mr. Van Ness. I d id w ant to make clear again t ha t other than looking at the SEC prospectus on Alaska Interstate, t hat no active effort 

has been made toward investigating these allegations other than material already a part of the record in connection with telegrams 

requested at the direction of the committee.

Senator Allott. But all of these things you talk about with Colorado Oil & Gas occurred 3 years before he became Governor ?

Mr. Van Ness. Yes sir. That is correct.

Senator Allott. And as a result of the lease or modifications of 

the lease th at he took in 1953 which expired in 1963. Is tha t right. 

Bill?

Mr. Van Ness. That is correct.

The Chairman. Any fu rth er questions on this point ?

Now, it also should be pointed out, of course, that the staff has not 

been able, obviously it would take a long long time, to go through 

the records, the old records on these leases that have expired. I see 

no need to do that if they are dead. The only files tha t ought to be 

checked now are the active files, and as I understand it the active 

files would show where there is an application pending, or where a 

lease has been issued. Would it show all current active leases? I just 

want to make the record here.

Mr. Van Ness. It would show all current active leases, and in this 

respect-----

The Chairman. Or would the dead files be ones where they might 

have to find any active lease ?

Mr. Van Ness. I want to point this out because we discussed it 

yesterday with Mr. Cremo. The Governor has in the past had a history of grubstaking people and making these casual investments 

that have since turned up. There may be others of this nature and I 

suggested to rM. Cremo tha t perhaps, on the Governor’s behalf, he 

check these out. They should go through the inactive files and see if he 

did have a mineral lease. Did it expire, and does he still have an interest in a commonly owned portion of some other leases th at have 

not expired, which he cannot recall, and that he is not now aware of ?

Senator Allott. Contingent interests.

Mr. Van Ness. Tha t would be the case with this override on the oil 

royalty. A pparently his lease had expired because they had no record 

at BLM on it. He should do it for his own protection.

The Chairman. I understand. We are trying to get all the facts 

out on the table on this subject. What I want to ask is whether it is 

necessary to go into the inactive files in order to find out whether 

or not there are still some active leases pending, or can they look 

in the active files. Is this where you would find all existing leases or 

applications that are still active ?

Senator Allott. Maybe one of our two Senators from Alaska can 

answer that.

Senator Stevens. I can answer that, Mr. Chairman.

The Chairman. Senator Stevens.

Senator Stevens. The file cannot be closed so long as there is any 

present interest in the file. This is true in either the State or the Fed ­

eral land office, and your wire from Mr. Silcock indicates tha t there
450

are no a pp lic ati on s and no leases in his Alaska office, no record of the m. 

Mr. Keenan says th ere a re no applicati on s, and there are no leases for 

either W alter j . Ilickel or the whole gr ou p, a nd so the same th in g for 

Mr. Silcock. Th e record is c lea r there is no prese nt inter est in any of 

thes e things othe r than the one th in g th at carries over on th at one 

roya lty from one-seventy-e ighth of one and a qu arter percen t, an d I 

know what tha t is.

The Chairman. Bu t the re could be, of course, even thou gh a check 

were mad e un de r Ilickel and all of his comp anies. Th ere conceivably 

could be an interest in an oil lease u nd er a no the r name.

Senator Stevens. Yes.

Th e Chairm an. Wh ich would not ap pe ar and still lie active.

Se nator Stevens. T ha t is tru e, like the Koslosk y Devel opme nt Co.

Th e C hairm an. T ha t is rig ht , whic h did no t show up excep t th roug h 

the coo per ation of his att orney, who pic ked it up fro m somebody, I 

guess, or go t some rep ort th at this m ight be an inter est th at he has. 

So we wa nt the reco rd clear on this. We now hav e a situation in w hich, 

as I un de rst an d it, a fa ith fu l check ha s been mad e with the Burea u 

of La nd Ma nag em ent office in Al aska, th e St ate office, che cki ng out 

every known refe rence to Hicke l or to any of his who lly owned companies. It disclosed no active interest in any oil lease or appli catio n 

othe r t ha n those which have been b ro ug ht ou t here.

Secondly, the St ate reco rds have been checked, an d the sam e th in g 

app lies . W hat the staff can not re po rt is th at he does not have an inter est in an o il lease o r an ap plication whi ch might ap pe ar un de r another nam e, some joint ventu re or some othe r busines s en tity th at is 

no t identified on the surf ace as Ilic ke l.

Se na tor Bible. He does not to his knowledge.

Th e Chairm an. To his kn owledge, th at is r ig ht , so I th in k th e mem ­

bers must un de rstand tha t. We have n othing more to go on ot he r than 

that. Ha ve I fa ir ly stated th e situ atio n now? Is that r ig ht , Mr. Cook?

Mr. Cook. Yes, I agree, Sena tor.

Se na tor Bible. Rig ht on th at subje ct and very quickly ri ght ou t in 

ou r S tate I ha ve a lot of good old prospector fri en ds an d I h ave h elped 

them and they put my name on a mining clai m or discovery. I do not 

know wh at claims I am on in N evada, bu t u p to now I a ssure you none 

of them ha s come in.

Se na tor Allott. Tha t is one th in g you are sure of.

Se na tor Bible. I t kind of makes the m feel good to have my name 

the re. Th ey hav e even nam ed mining claims af te r me, bu t they are 

de stitut e-l oo kin g claims.

Th e Chairm an. Gen tlem en, w ha t I wa nt to make sure of here 

before we decide what we are go ing to do is th at we have ev ery thi ng 

in the record. I do not wa nt to take th e nomination up on the floor 

un til th e rec ord is fully complete. I w an t to ask the staff, both m ajor ity 

and minority , wh at rem ains to be pre sen ted to the com mittee and 

wh at ad ditio na l testimo ny, if any, ma y be req uired in or de r to comple te the rec ord, so tha t we h ave a com plete record.

Se na tor Bible. Mr. Ch air man, I th in k you have done a gr ea t job, 

you and you r staff.

Th e Chairm an. I want to say the mino rity has coo per ated very 

well.

Se na tor Bible. I un derstand.
451

The Chairman. And the representatives of the Governor. They 

have worked the whole weekend.

Senator Bible. I understand what you are doing. I think you are 

doing a great job. You could give this to all the title companies in 

the world and they would not disclose any more. They would spend 

a lot of time and all they would insure their findings against is known 

defects.

The Chairman. First let me ask on these points tha t have been 

gone over. I)o we need to take testimony on any of the points tha t 

have been raised ?

Senator Bible. The only one that I would think is the one on th at 

partnership, the one tha t lie underscored as being a little fuzzy.

Mr. Van Xf.ss. I do not think it is necessarily fuzzy. 1 think it 

is clear in the Governor's mind. I understand that the Hickel Investment Co., Inc., which is the major holding corporation, was initially 

a Delaware corporation. I understand also that it was set up and the 

stock was perhaps wholly owned, perhaps not, by Mr. Michael T. 

Halbouty.

Later, that was transferred, registration was transfererd to the 

State of Alaska as I understand it, and again this is second-hand 

information conveyed to me by Mr. Cremo yesterday. He said the 

Governor knew the facts on it but that he did not. In any event, he 

has said tha t Mr. Halbouty is now entirely out of Hickel Development Co. and has no interest whatever in it. I told him that I thought 

the committee should go into tha t, should have it clarified, because 

it was reported in the press, and as I understand it, Mr. Halbouty, 

as indicated earlier, does speculate in oil.

The Chairman. I will tell you, gentlemen, there are a lot of things 

here that under ordinary rules of evidence would be entirely irrelevant 

and collateral to the issue, but we are in a situation where I would like 

to have the record as complete as possible.

Senator Allott. I do not care if you call him in, Scoop.

Mr. Van Ness. A wire just arrived.

The C hairman. Read the wire.

Mr. Van Ness. From Molitor, Doremus, & Hanlin, the certified 

public accountants. I indicated there was a telegram in transit addressed to Senator Jackson. It rea ds:

In addition to the information w ired to you yesterda y, we submit the following 

which was inad vertently overloo ked: Re Hickel Investment Co. and subsidiaries, 

report on examin ation of consolidated financial statements, yea r ended December 

31,1967.

The “Joint ventures oth er” in the amount of $6,061.38 liste d in the balance 

sheet und er “Investments at cost,” represent Alaskan Plumbing & Heating Co., 

Inc., equity in David Kyzer & Associates of which they have a 75-percent interest, December 31,1967. $6,061.38.

Signed Molitor, Doremus & Hanlin , S. IT. Molitor, partner.

(The telegram referred to follows:)

Anchorage, Alaska, Jan uar y 20,1900.

Se na tor Henry M. J ackson.

Chairman, Senate Interior Committee,

New S enate Office Building, Wash ington, D.C.:

In add itio n to the information wired to you yesterday, we subm it the following which was inad vertently overlooked. R e: Hickel Investment Co. and Subsidiaries , rep ort on exam ination of consolidated financial stateme nts, year ended 

December 31,1967.

2.3 -65 4— 69— pt. 2----- 7
452

The “joint ventures other” in the amount of $G,061.38 listed in the balance 

sheet under “investments at cost”, represents Alaskan Plumbing & Heating Co.,

Inc.’s equity in David Kyzer & Associates of which they have a 75 percent interest.

Moijtor, Dokemus & Hanlin ,

S. H. Molitob, Partne r.

The Chairman. Who is David Kyzer?

Mr. Van Ness. I have no idea, sir.

The Chairman. The Chair would suggest—and I have not had an 

opportunity to talk to the ranking member of the minority here—tha t *

will have everything in the record, will we not, at tha t time?

Mr. Van Ness. With the exception of the 1968 calendar year statements on his holdings and assets. The accountants are working on 

that, but they indicate it may be weeks or perhaps even longer to sup- ,

ply it. And in addition to that, I requested a short statement of any 

major transactions occurring from January 1 until the time tha t the 

statements were supplied.

The Chairman. You mean since December 31,1967 ?

Mr. Van Ness. Yes, sir. To date.

The Chairman. To date.

Senator Allott. Mr. Chairman, I preface my remarks again with 

this remark. I think the C hair has been eminently fair in this matter, 

and I know tha t there have been those interests who have tried to 

bring pressure on almost everybody imaginable. My personal feeling is that we have dragged this thing out as long as we should do it, 

and I th ink we ought to vote on it. I f it involves bringing in—if there 

are any questions tha t really are questions here, we can bring them in, 

but I think we should vote on this matter.

The Chairman. Senator Anderson.

Senator Anderson. I have tried to watch this as carefully as I could.

I had some interests in Alaska for a while up there. I think this fellow 

has been examined as much as he can be examined reasonably. You 

cannot trace every piece of property all the way through. For instance, I bought some shares of stock one time in a book publishing 

firm in New York. I held it for years. I t sold out to CBS. They said 

that, I had some stock in that for a while. On the oil properties they 

could not put this money away. I saw one day where somebody bought «

land in Mexico. I had a chance to grab it and I did grab it real quick.

They said 1 was going to grab Carlsbad Caverns. They had a lead on it.

This man is a person who dabbles. I would go crazy if I had investments as he did, but that is his business, not mine. I am going ♦

to vote for him.

Senator Bible. Mr. Chairm an, in deference to you, as you know, I 

think you have done a tremendous job under very difficult circumstances. What, is the purpose of your suggesting tha t we go over until 

tomorrow morning? W hat are the main points that are not cleared up ?

You have the sixth point.

The Chairman. That is right, and that is about it. I do not think 

there is anything more.

Senator Bible. Do we have anything on this last thing, the telegram suggesting interests in some Kyzer company?

Senator Stevens. I can explain what that is, Mr. Chairman.

The Chairman. That raises another one. I never heard of Kyzer in 

this thing.
453

Senator Bible. Neither did I. I was just wondering if there are any 

questions. 1 think in fairness we should dispose of it if we could, but 

1 will defer to what you want. If you want to meet a week from 

tomorrow that is all right.

The Chairman. No, I want to get this thin g over. Who doesn't.

What is this?

Senator Stevens. An investment in a small company that take equipr ment from the various contracting companies and refurbishes it and

sells it. It is again sort of a grubstake to a guy to set up a business 

of taking over Y-8 Caterpillars or something like that from the contractors after a job is through, refurbishing it and selling it. It is 

- considered just a minor holding for the amount of money that he put

in to get that thing started.

Senator Allott. That is not Henry Kaiser ?

The Chairman. No. it is another spelling, K-y-z-e-r.

Now, the item on this check list of major concern that Mr. Van Ness 

went through is item 6, the Ilalbouty matter. The other matters I 

understand can be taken care of by statements. Is there anything else 

that we are waiting to have in the record that is to be supplied? 

Especially from either the State land officials or the Federal offices in 

Alaska?

Mr. Van N ess. Nothing except the detailed report from BLM confirming the telegram.

The Chairman. But they have confirmed this?

Mr. Van Ness. Yes, sir.

Senator Burdick. H as the witness been asked about the Ilalbouty 

matter?

The Chairman. Well, there were some questions asked, but not 

specifically in detail about the Ilalbouty matter.

Senator Burdick. I s there evidence derogatory to the contrary ?

Mr. Van Ness. There is none. It is an allegation and is unsubstantiated.

Senator Allott. Do you see where it raises a question ? I cannot see 

where it raises a question.

• Senator Church. Wh at is the allegation again ?

Mr. Van Ness. The allegation generally-----

Senator Bible. Restate it.

Mr. Van Ness. As I understand it there are press reports alleging

• tha t Governor Hickel had or has oil interests in connection with Michael 

T. Ilalbouty, or Ilalbouty Alaska Oil Co., and that they have had a 

long history of business interests. Now the Governor's people have 

informed me tha t they were in fact in partnership at one time. They 

owned property in the city of Anchorage, and planned to build a hotel, 

I believe to be called Twin Towers .They had plans drafted I believe. 

They later decided t ha t they would not build it. They split up the 

partnership or the corporation, or whatever it was, and the Governor 

retained the real property. Michael T. Ilalbouty received a commercial 

radio station I am told and some cash. The Governor's people informed 

me that that was the only instance he was ever involved in with Mr. 

Michael T. Ilalbouty. but again that is second-hand through the 

attorney.

The Chairman. Can he supply a statement in which he reveals all of 

his connections in this regard, and have that in the record for us?
Senator C hurch. We rely upon his statement with respect to every 

other part. Why don’t we rely upon his statement with respect to this?

The Chairman. Why don’t we let him supply that, a complete statement, however, that we must have before we go to the floor?

Mr. Van Ness. On all of the open items ?

The Chairman. On all of the items mentioned he should provide a 

statement and an explanation.

Senator Allott. I think they are all covered except tha t one.

The Chairman. Well, on whatever is not covered in the record, 

he shall supply a statement.

Senator McGovern. Mr. Chairman, could I have a news column by 

Mr. Braden and Mr. Mankiewicz about this New York matter I 

asked about put in the record ?

The Chairman. Do you have it for the reporter ?

Mr. McGovern. It will be sent over in a minute.

(The article referred to by Senator McGovern for inclusion in the 

record follows:)

How Governor H ickel Helped His Banker

(By F ran k Mankiewicz and Tom Braden)

Washington.—Members of the Senate will doubtless want to know more 

about a curious sequence of even ts involving the business intere sts of Walter 

J. Hickel, Richard Nixon’s nominee as Secretary of the Interior, and the New 

York Life Insu rance Co. On Jan . 31, 1967, shortly af ter Hickel took office as Governor of Alaska, 

New York Life loaned one of Hickel’s businesses, the Northern Lights Shopping 

Center, the sum of $2.74 million in return for a mortgage on the property 

and an assignm ent of its shopping center leases.

Company officials claim th at the loan was approved in June, 1966. as Hickel 

was run ning for Governor. The original amount was for $2,535 million. But 

that December, after Hickel had been elected, an additional loan of $205,000 

was approved. The proceeds of the loan were not paid and the loan did not become effective, 

however, u ntil Hickel had taken office.

Possibly, the Governor did not know that the New Y’ork Life Insurance Co. 

held a con tract with the state of Alaska covering all state employes for group 

health. Possibly, he also did not know th at the company was complaining about 

losses unde r the contract.

If so, the dilemma which confronted him after his inaugu ration must have 

worried him considerably during the long Alaskan nights. The dilemma was 

as follows: He could term inate the agreement with New York Life—by now 

his banker—and put the contract out for competitive bidding. He could ask 

the Legislatu re to raise the sta te contribution so as to stabilize the benefits 

and prem iums charges to employes. Or he could rene gotiate the contracts so as 

to reduce th e benefits av ailab le to employes.

lie chose the las t named course. On May 25, without advance warning or 

consultation, all employes of the sta te of Alaska were notified th at their insurance benefits had been sliced by 24%. The deductible amount of their health 

insu rance was increased from $50 to $100. The family deductible went up to 

$300. In addition, the charges for room and board were cut to $45 per day for 

all types of accommodations, save intensive care. All this withou t reducing 

the premiums. In fact, reductions in benefits were equivalent to a 32% increase 

in employe premiums.

Naturally, Alaska sta te employes were up in arms. Members of the State 

Leg islature declared that if the Legislature had been advised it would have 

app ropriat ed extra money. The Alaska Sta te Employes Assn, called the decision 

“ar bitra ry .”

It affected approximately 5,500 employes and resulted in a reduction of 

benefits, without any consideration of eith er the effect or the wishes of those 

concerned, the association said.
455

Whatever else tha t episode demonstrates, it shows an appalling insensitivity to what is meant by conflict-of-interest. A man who will borrow nearly $3 million in a business venture after he has assumed public office, and then use the power of th at office to benefit his creditor, is one who is bound to raise questions about his fitness to administer the public lands of the United States. Hickel’s own comments since his nomination for the Interior Department post have worried those who care about the public lands. “If we set antipollution standards too high.” he has said, “we might even hinder industrial develop­ ment.” And again he has opposed what he called “a policy of conservation for 

conservation’s sake.” When Gov. Hickel was about to be nominated as a favorite-son candidate for President at the Republican National Convention last year, CBS’s Walter Cronkite turned to no one in particular and remarked, “I think we're about to hear more about Alaska than we want to know.” When hearings on his nominee for interior secretary begin, Nixon may hear more about Gov. Hickel than he

wants to know.

The Chairman. The previous motion made on Saturday has to be revised, because we do not have a nomination before this com­ mittee. As revised, the motion would authorize the chairman to order the nomination filed when it has been received and tha t will l)e this 

afternoon.

Senator Allott. Second.

The Chairman. All those in favor of reporting the nomination say 

“Aye.”

(“Ayes.”)

The Chairman. Those opposed ?

(Nays).

The Chairman. We will have a rollcall.

Senator Stevens. What is the file, Mr. Chairman ?

The Chairman. T o file it, you have to file it at the desk. I have to 

sign my name on behalf of the committee; you do not have to, but I do. for members of the committee. We do not have the nomination before the committee, so the motion has to authorize the chairman to file the nomination with the Senate when it is received, and it will be 

received-----

Senator Allott. Afte r the inauguration.

The Chairman. Afte r the inauguration presumably.

Senator Bible. The motion reads this way.

Mr. Van Ness. In connection with letter No. 2 supplied to us this 

morning, I indicated to you that in a discussion with the attorney, Mr. Roger Cremo, I expressed the view that perhaps they should consider a new item G as p art of the agreement. That proviso would be to put 

into a charitable organization or trust-----

The Chairman. I t is up to him if he wants to do so.

All right, before we vote, I want to say this. I want the record and all the information we have requested here today to be in the 

record before we go to the floor.

Senator Bible. I think that should be understood.

The Chairman. We have to have that. Therefore Governor Hickel 

and his people must supply the information on this Halbouty and anything else that remains.

Senator Stevens. Mr. Chairman, I would like to request tha t if 

there is anything holding up the record at any time tha t the staff 

contact me. I will get it.

Mr. Verkler. We have done it in record time.
456

The Chairman. The members should return, the staff informs me, 

their corrected remarks for the record.

Mr. Yerkler. If you have any that you want to correct, please 

let us know right away.

The Chairman. Call the roll.

Mr. Yerkler. Mr.Chairman.

The Chairman. Aye.

Mr. Yerkler. Mr. Anderson?

Senator Anderson. Aye. $

Mr. Yerkler. Mr. Bible?

Senator Bible. Aye.

Mr. Yerkler. Mr. Church?

Senator Church. Aye. *

Mr. Yerkler. Mr. Moss?

Senator Moss. No.

Mr. Yerkler. Mr. Burdick?

Senator Burdick. Aye.

Mr. Yerkler. Mr. McGovern?

Senator McGovern. No.

Mr. Yerkler. Mr. Nelson?

Mr. Nelson. No.

Mr. Yerkler. Mr. Metcalf?

The Chairman. Ave. I have his proxy here.

Mr. Yerkler. Mr. Gravel ?

Senator Gravel. Aye.

Mr. Yerkler. Mr. Allott?

Mr. A u /»tt. Aye.

Mr. Yerkler. Mr. Jordan?

Senator J ordan. Aye.

Mr. Yerkler. Mr. Fannin?

Senator Fannin. Aye.

Mr. Yerkler. Mr. Hansen?

Mr. Hansen. Aye.

Mr. Yerkler. Mr. Hatfield?

Senator Allott. I have his proxy in my pocket here, “Aye.”

Mr. Yerkler. Mr. Stevens? •

Senator Stevens. Aye.

Mr. Yerkler. Mr. Bellmon?

Senator Bellmon. Aye.

Mr. Yerkler. Fourteen “ayes” and three “nays.” *

The Chairman. The nomination will be reported in accordance 

with the motion.

That completes the m atte r and it will be brought up as soon as the 

record is complete.

Senator Allott. Tha nk you, Mr. Chairman.

(Whereupon at 10:25 a.m. the executive session of the Senate Committee on Interior and Ins ula r Affairs was adjourned, the committee 

to reconvene subject to the call of the Chair.)
AP PEND IX

* [On Sunday, January 19, 1969, Mr. Van Ness reported to Governor Hickel’s staff and attorney tha t a review of the hearing record to date disclosed tha t there were a number of unsupported, undocumented allegations and rumors which had been repeated in the press in some form or another, but which had not been dealt with or discussed in the hearing record. It was suggested tha t

• these matters be stated as questions and that Governor Hickel be prepared 

to respond to each. The Committee, meeting in Executive Session on January 20tli reviewed the questions and to insure as complete a record as possible on all related matters, directed that the Governor’s responses he incorporated into the hearing record. In addition, a question to clarify the record as to Governor Hickel’s interest in Anchorage Natural Gas prior to its merger with Alaska Interstate is included 

as the first question.]

Materials Submitted by Governor Walter J. IIickel in Response

to the Committee’s Questions

Question 1. What percentage of Anchorage Natural Gas Company did you

own before that company was merged with Alaska Interstate f

Answer. About two percent. Question 2. It is alleged that you tried to have Representative Clem Tillion removed from the American representation to the International North Pacific

Treaty Commission because he favored an increase in the severance tax. Answer. During the legislative session of 1967, I asked for, and the legislature 

created, the position of Director of International Fisheries in the Office of the Governor. As I recall it, I requested tha t Mr. Clarence Pautzke, Commissioner of Commercial Fisheries, Department of the Interior, who I understood made the appointments to the Treaty Commission, replace one of the two Republican legis­ lators I had recommended a year earlier—with the Director of International Fisheries. I recommended tha t Mr. Tillion be replaced because I believe the other incumbent representative. Senator Jay Hammond, was more knowledgeable about our North Pacific fisheries. I did not take this action on the basis of Mr. Tillion’s stand on the severance tax. In fact, Mr. Tillion’s voting record in support of my 

program was, I believe, substantially better than Senator Hammond’s.

J Question 3. It is alleged that you authorized the construction of an ice road to the North Slope oil field without legislative authorization to spend the funds. Answer. In 1967, the legislature appropriated $750,000 to be used for the de­ velopment, construction, and planning for the transportation needs of the far north. The appropriation was a continuing one and the funds did not lapse at the end of fiscal year 1968. Since this money was available, there were some con­ tention that I might use these funds for construction of a winter trail, in fact, 

the legislature had recommended this use at one time. I did not follow tha t course. In order to determine the support for the winter road among the legisla­ tors, I sent each of them a telegram asking if they would support the road by approving a supplemental appropriation to cover the cost of constructing the road.

I did not authorize construction until a substantial majority of them informed 

me they would support the program. Question It is alleged that the Wiekersham was offered at a lower price than

was paid by the State. Answer. It is my recollection that the State offered a lower price than that listed by the Swedish owner of the ferry now known as the Wiekersham. The final agreed price was. I believe, between the two and closer to the price set by 

the Swedish owner. I know of no basis, in fact, for this allegation. Question 5. It is alleged you have done little to help the unemployment situation among Eskimos and Indians in Alaska.

(457)
458

Answer. Nothing could be furth er from the tru th. I created a Rural Labor 

Task Force with predominantly native members to assist the Governor’s Economic Advisory Committee in the development of new programs to assist the 

unemployed native Alaskan. You may recall that all but one of the members of 

the latte r committee were killed in a plane crash a few weeks ago at Barrow,

Alaska, while review ing employment problems among the Arctic natives. I requested, and received, state fund s to tra in Indian workers fo r jobs in the lumber 

indu stry after a federally funded program was term inated. In this next session, 

a bill will be submitted th at allows entry into cer tain sta te civil service positions 

by persons who lack the necessary educatio nal and experience requirements, but 

show promise t ha t they can learn while on the job. ♦

Question 6. I t is alleged tha t you opposed the two percent severance tax passed

by the Alaska legislature in 1968.

Answer. I believe th at the best evidence that I did not disapprove the incre ase 

in principle is the fac t th at I signed the bill into law. My objection to the specific 

legislation as passed was th at it was based on conflicting and inadequa te data *

about the oil i ndu stry in Alaska, and its capacity to assume its share of the tax 

burden in the state. I did believe, and still believe t ha t some tax stru cture should 

be devised th at would provide for a sub stantially higher severance tax on 

unprocessed crude shipped out of Alaska. I asked for, and received, funds from 

the legislature to conduct a tax study of all taxable resources to determine 

what would be a fa ir and equitable distribu tion of the tax load in the state. I 

was afr aid that any finding calling for a severance tax rat e in excess of four 

percent would enable the oil companies to call “foul” at ano ther increase—a third 

in thre e sessions. I had previously requested an increase from one to two percent 

in the severance ta x at a special session in 1967.

Question 7. Wh at was the nature of your past business relationship with

Michael T. Tlalboutyf Did you ever own stock in Halbouty Alaska Oil Co.? Do

you have any present business relatio nship with him?

Answer. I was associated in business with Mr. Halbouty in the late 1950’s.

Our principle venture was the construction of a proposed twin tower hotel and 

office building in downtown Anchorage. Land was acquired for the site but the 

structure was not built. In addition, we had an intere st in a radio communications 

business in Anchorage. When we severed our business connection in about I960,

I kept the real estate and Mr. Halbouty the communication firm.

Neither during our business connection nor since have I had any interest in 

the oil side of Mr. Ila lbo uty ’s business activ ities, llis oil company is HalboutyAlaska.

Despite our business disconnection, Mike Halbouty and I continue to be good 

friends.

Question 8. It is alleged tha t you opposed the two percent severance tax passed

by the Alaska legislature in 1968.

Answer. I believe that the best evidence that I did not disapprove the increase 

in principle is the fact th at I signed the bill into law. My objection to the specific 

legislation as passed was th at it was based on conflicting and inadequa te data 

about the oil indu stry in Alaska, and its capacity to assum e its share of the tax 

burden in the state . I did believe, and still believe t ha t some ta x structure should 

be devised that would provide for a substan tially higher severence tax on unprocessed crude shipped out of Alaska. I askd for. and received, funds from the «

legislature to conduct a tax study of all taxable resources to determine what 

would be a fai r and equitable distribu tion of the tax load in the state. I was 

afraid that any finding calling for a severence tax rate in excess of four percent 

would enable th e oil companies to call “foul” at another increase—a third in thre e 

sessions. I had previously rquested an increase from one to two percent in the 

severence tax at a special session in 1967.

Question 9. It is alleged tha t you appointed Representative Harold Rtrandberg

to the position of Commissioner of Public Works in spite of a constitutional

provision prohibiting the appointment of legislators to posts for which the salary

had been raised during the ir tenure as a legislator?

Answer. The local question involved is not a simple one. The salary of Commissioner of Public Works was raised as pa rt of a routine sala ry increase for 

sta te employees and is the same as th at of other Commissioners in the State of 

Alaska. The Attorney General has developed what he feels is a stron g legal 

case sustaining the appointment. Attitudes among the members of the bar are 

divided. It may be th at the court will find th at Mr. Strandberg’s appo intment
459

was not properly made. However, I accepted the best advic e I could get and got the best man I could get for one of the toug hest jobs in the state. Question 10. Allegation: Department of Highw ays, S tate of Alaska, had couplet plan for Northern Lig hts Boulevard and 30th Avenue. Hiekel bought 10 acres at 30th for a shopping center and instructed the Department to reroute 30th

part of couplet to 30th. Response: The alleg ation is false. I simply have not done anythin g to change the plans for a Northern Lights-30th Avenue couplet. My staff has asce rtained from officials of the Departme nt of Highw ays that work on improvement of Northe rn Lights Boulevard is slated for the 1909 construction season. The same sources have advised my s taff that the 30tli Avenue portion of the couplet project has already been proposed to B.l’.R. and that preliminary surveying is in 

progress.

(Telegram which was not previously made as part of the record.)

J u neau, A la sk a, January 16, I960.

S e n a to r T ed Ste vens,

Old Senate Office Building,

Washington, D.C:

Van Ness called thi s a.in. represen ting council for Senate committee calling to obtain my personal portfolio. Thou ght interrogation by phone improper but his insistence that facts were necessary to clarify questions and show true Hiekel record devoid of conflict. T herefore acquiesced. Advised him I do not now or have ever owned any oil leases. Was previously employee of Halbouty, Alaska. Have no financial connection w ith company or Michael T. Halbouty. Interest relationship is personal. Mrs. Halbouty is my mother. Advised curre nt stock ownership of re­ source companies in Alaska is as follow s: Standa rd, New Jersey, one share 215,- 121 M. Outstanding British Petroleum 1.400 shares, 356,76OM, ou tstanding reserve O. & G. 532 shares, 74,111M outstanding, Anaconda 400 shares 21,871 M out­ standing. Cerro 111 shares 7.357M outs tan din g; no involvement in Alaska to my knowledge of. Those mining companies total investment approxim ately OOM: ownership in all companies acquired prior to State employment except B P T ; never considered my job in conflict with investme nts nor discussed ownership with W.J.H. as believed inconsequential. Advise any thing I own is open book. My 

record will speak for itself an d I welcome any furth er inquires.

T h om a s E. K el ly .

o