Corporation's Response to Recent Social Media Post and Statement by Sitting Director Ella Bennett
October 15, 2020
As fiduciaries of Kootznoowoo, Inc., the management team and Board are responsible for looking out for both the short and long-term interests of the Corporation. We are committed to building a strong foundation for shareholders that can provide opportunities and benefits beyond the 7j revenue sharing monies that we receive from Sealaska. It is vitally important that we prepare the corporation to have a versatile portfolio as the 7i revenue sharing is expected to be substantially lower than predicted and has been further forecasted to significantly diminish over the coming years.
As a part of Kootznoowoo, Inc.’s business development strategy, considerable time and effort have been invested in developing 8a government-contracting opportunities that can benefit the corporation in the long-term. Though the globe is currently in the midst of a pandemic, the goals and long-term vision of prosperity for Kootznoowoo, Inc. have not changed.
Recently, a statement written by a current sitting Director was made public on social media by a former director. This statement contained several allegations that are false, misleading, and omit facts that are necessary to provide an accurate narrative. The corporation has recently received several questions from a shareholder regarding this statement. In the spirit of transparency, the corporation has elected to make our response to these questions available to all shareholders.
Q: Why is “our” corporation seeking an SBA loan during uncertain pandemic time? I support Director Ella Bennett in asking questions about the SBA loan and the process, as she has 30 plus years board experience. And I question why this is a rushed process with little information given to board members prior to the special board meeting held on September 19th, 2020.
A: The Chair did not call a Special Board meeting to remove Director Bennett. The meeting was the regular Second Quarter Board meeting. The 2020 meeting schedule was approved by the Board in December 2019 at the same time the Annual Meeting Timeline was adopted, which also included the schedule for 2020 quarterly meetings. Director Bennett, who has served on the Kootznoowoo, Inc. Board of Directors for over 40 years is well-versed with this standard process.
At the December 7, 2019 regularly scheduled meeting, Management presented to the Board several avenues that could be used to help provide working capital to build new businesses and opportunities for the corporation. One option was with an SBA 7(a) loan guarantee. This loan guarantee provides favorable lending conditions that could potentially be in the best interest of the corporation. Since then, this matter has been discussed in depth at every significant meeting since, of which both Director Bennet and former Director Love were a part of. In addition to the information given it was also noted that this loan program was established through another Alaska Native Corporation that created this program specifically for corporations such as ours.
Unlike the allegations made in the statement that this has been a “rushed process”, there has been ample time for every director to ask questions, seek clarifying information, and even do their own research to learn more about this potential opportunity for our corporation. This has been a leisurely process that provided the Board with almost ten months to process. In addition, this is not an application for a loan, just a submittal to the SBA to determine if the corporation is qualified to apply.
As part of the determination of eligibility process, as fiduciaries of Kootznoowoo, Inc., each Director is required to provide an authorization for the SBA to complete background checks on each Director. It is a simple form and the corporation’s eligibility cannot be reviewed until all Directors submit that authorization. To date, all current Directors with the exception of Director Bennet have completed that form. It should also be noted that both Director Bennett and then President Love completed the same form for approval of the corporation’s SBA 8a company, Chatham Properties, LLC when they were directors of that subsidiary.
When Director Bennett and former Director Love continued to refuse to fill out and sign the background check form—thus providing a hard stop to exploring this opportunity on behalf of all the shareholders—Kootznoowoo’s General Counsel put together a memo about why all Directors have a fiduciary responsibility to the corporation to fill out and submit documents of this nature. As noted in the memo sent to the Director and former Director:
- "…the Bylaws require officers and directors to assist Kootznoowoo in its business endeavors and goals and to comply with the Code of Conduct. Section 184.108.40.206 of the Kootznoowoo Bylaws says, each director must be prepared and able to successfully complete any application for approval by a federal, state, or tribal agency that regulates a business or investment in which the Corporation is involved. A director who fails or ceases to meet these qualifications is subject to removal or sanctions.
- The refusal of directors to execute the necessary SBA forms described in this memorandum in the normal course of business is both a breach of the directors’ fiduciary duty to the Corporation and to the shareholders.”
Both the Board and Management have been extremely patient with allowing time for Directors to receive answers to their questions and even conduct their own research. No one has stifled or prevented any Director from being able to ask any questions. Board and Management have also made arrangements for Director Bennett to meet with the lending company as well as those directly involved to ask her questions.
Q: On what grounds does the Chair Melissa Kookesh, Director Frank Jack III and Director Jean Hogue believe they have to remove Director Ella Bennett? It seems like our board is split in this decision with Director Matthew Kookesh and Director Harold Frank, Jr. voting against the removal along with Director Cooney Starr not voting due to not being present at the special board meeting.
A: As stated above, Director Bennett’s refusal to complete the 8a forms violates Section 220.127.116.11 of the Kootznoowoo Bylaws and is a breach of Director Bennett’s fiduciary duty to Kootznoowoo and its shareholders.
The memo provided by Kootznoowoo’s General Counsel says the following regarding the action of the Board of Directors:
“The act of a majority of directors at a duly called Board meeting is the act of the Board. Kootznoowoo’s Code of Conduct, Sec. VI; Kootznoowoo Bylaws Section 3.12. A director must accept this process, unless the act of the Board is unlawful.”
Completion of the 8a forms by Directors and the Board of Director’s decision to achieve profitability from 8a contracts are lawful acts and do not increase officer’s or director’s liability. Moreover, the Bylaws require officers and directors to assist Kootznoowoo, Inc. in its business endeavors and goals and to comply with the Code of Conduct. It is also a lawful act for the Board of Directors to file a lawsuit to remove a Director for violation of Section 18.104.22.168 of the Bylaws.
Q: If the Chair Melissa Kookesh is successful in removing Director Ella Bennett, will the chair allow the 2020 third place election winner Sharon Love to be named to the board. Or will the chair appoint someone that is not elected by the shareholders to replace Director Ella Bennett?
A: The Board Chair and Board of Directors cannot remove a Director, only a vote of the Shareholders or an Alaska Superior Judge can order the removal. A majority of the Board voted to file a claim in the Alaska Superior Court at Juneau to remove Director Bennett for violation of Section 22.214.171.124 of the Kootznoowoo Bylaws and breach of fiduciary duty as described herein. If the Superior Court Judge orders the removal of Director Bennett, the Board of Directors will vote to appoint a new Director to replace Director Bennett, unless the Superior Court Judge orders otherwise.