State investigation finds ‘no violations’ with sole-source contract issued to grandson of Dunleavy donor

JUNEAU — An Alaska Department of Law investigation found “no violations of state law or regulations” after a state-owned corporation awarded a sole-source contract to the grandson of a major contributor to Gov. Mike Dunleavy’s 2018 election campaign.

The department’s conclusions were outlined in a Jan. 29 memo from Attorney General-designee Treg Taylor to Dunleavy’s chief of staff, Ben Stevens. The memo reviewed the contract with Clark Penney, grandson of developer Bob Penney, who gave more than $350,000 to a political group that supported Dunleavy’s election in 2018. The memo was released after a public records request from the Daily News.

In 2019, the Alaska Industrial Development and Export Authority, or AIDEA, awarded Clark Penney’s company, Penney Capital, a contract worth $8,000 per month to work with a new economic development team formed by the Dunleavy administration.

The contract was not publicly advertised or opened to competitive bidding.

The memo says state attorneys investigated AIDEA to determine “how the procurement came about, the contractor selection process and whether AIDEA complied with the procurement process.”

It does not say how long the investigation took or who was interviewed, or provide other details about its scope.

Alan Weitzner, head of the corporation, said the contract took place before he became director. The director at the time, Tom Boutin, said he wasn’t aware of the memo and didn’t have anything to add.

“Whatever (the Department of) Law says, I’m sure they must’ve looked at it pretty thoroughly because quite a long time has gone by since Clark Penney ended the contract,” he said.

The state extended the contract once, but Penney canceled it in March 2020, saying that he had become a distraction.

While the attorneys found no violations of existing rules, they recommended that AIDEA consider changing its procurement rules to require more disclosure.

The memo was written 11 months after Dunleavy said his administration would perform a “deep dive” into the contract. A pair of Democratic legislators had raised questions about the legality of the contract, which was signed in March 2019 and first reported in May that year by the Alaska Landmine website.

Those legislators, Reps. Jonathan Kreiss-Tomkins of Sitka and Zack Fields of Anchorage, each said they were unaware of the memo until provided a copy by the Daily News.

Fields declined immediate comment.

Kreiss-Tomkins said he would like to hear more from the Department of Law and could bring up the matter during Taylor’s confirmation hearings.

He said he is dissatisfied with the detail provided by the memo and would like to know how the corporation concluded that only Penney had the qualifications needed to justify a sole-source contract.

“It just elicits new questions in my mind,” Kreiss-Tomkins said.

Assistant Attorney General Maria Bahr, a spokeswoman for the Department of Law, declined a request to speak to the person who investigated the contract.

“Investigations conducted by the Department of Law are often conducted and vetted by a team of attorneys. The investigatory process, materials, and participants are normally confidential; however, depending on the nature of the investigation, a final report is sometimes made public,” she said in a written statement.

In this case, the memo is the final report, she said.

The memo identifies Taylor as the state’s deputy attorney general. It was written the same day that Attorney General-designee Ed Sniffen resigned. Dunleavy subsequently nominated Taylor to become attorney general, and he is awaiting confirmation.