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OceansAlaska Admits Financial Problems

By | June 18, 2014

OceansAlaska, a Ketchikan-based shellfish seed producer, is in a financial mess. Officials with the nonprofit admitted as much during Monday’s Ketchikan Gateway Borough Assembly meeting. They asked the Assembly for more time to reconcile their accounts related to a borough grant, along with enough borough funding to keep the doors open through the end of July.

Last year, Ketchikan’s Borough Assembly approved a two-year grant to OceansAlaska, totaling $338,000. That’s $144,000 per year that was to be used for operational expenses.

Oyster spat grows at OceansAlaska.

Oyster spat grows at OceansAlaska.

In addition, the Assembly approved a $50,000 grant, to be used specifically for a business plan and a schematic design for the facility’s future operations. How that money actually was spent remains in question – at least partly.

Here is OceansAlaska’s new facility manager, Steven Lacroix, explaining that only $6,000 of that $50,000 grant was spent on its stated purpose.

“As near as we can determine, and we’re fairly confident of it, and we have the bookkeeper here to verify it, it was spent on operational costs, instead of on what it was designed to be spent ,” he said.

Local bookkeeper MJ Cadle was brought in recently by OceansAlaska to figure out how much was spent, on what and when. She’s gone through a lot so far, but, she said, the filing system was inadequate and it’s been challenging to find all the receipts to show where the money went.

“Every day I come upon new receipts,” she explained. “Where I don’t have receipts, I have vendor names and I’ll be contacting vendors if that’s the shortest way to get to those receipts. What I’m attempting to do is make sure that the receipts that were given were correct. To be quite honest with you, checks were written and appear to have not been sent so I can’t find those checks. Not huge checks, but checks were written to pay bills, which made them reimbursable, but the checks were not mailed.”

So, Cadle said, it’s going to take a little time.

Assembly Member Glen Thompson asked whether Cadle has seen evidence of malfeasance. She said it doesn’t look that way to her.

“My initial review was that somebody was operating way above their skill level. And stuff happens,” she said.

Cadle added her opinion that the new board and staff at OceansAlaska want to move forward with the mission, which is to enhance and improve the shellfish industry in Alaska.

One of those new board members is Eric Riemer, a commercial diver who also works with the Southeast Alaska Regional Dive Fisheries Association. He said that shellfish farming is important to the future of the shellfish industry, and a source of shellfish seed is a key part of the process.

“You look at the salmon industry here in Southeast, and the only reason we have a sustainable salmon fishery is because of the hatcheries,” he said. “As far as shellfish goes, there’s farms out there … and there’s going to be a lot more of them coming online, especially after OceansAlaska gets up and running.”

Assembly Member Mike Painter noted that the state’s salmon hatcheries are paid for at least in part by a tax that commercial fishermen imposed on themselves. He said shellfish farmers and divers should contribute to OceansAlaska in a similar way.

Reimer agreed, adding that some kind of industry funding is likely in the future.

Following the presentation by OceansAlaska, Borough Manager Dan Bockhorst asked whether the Assembly wanted him to approve invoices from OceansAlaska for the $20,000 left in this year’s grant.

Assembly members were concerned about providing more money to a potentially failing enterprise. But they also worried about not giving the organization the chance it needs to succeed.

Here is Assembly Member Bill Rotecki, who has been a supporter of OceansAlaska: “You can imagine I have a lot of egg on my face. I’ve been trying to push this, and the discovery of mismanaged funds is not very easy for me to accept. But reality is reality.”

Rotecki added that he wanted to continue funding for this year, in hopes of seeing a good plan that would justify future support.

Assembly Member Alan Bailey then asked Cadle whether the doors would close if the $20,000 were not appropriated.

“At this point, I’m still operating with somewhat incomplete information, but basically, yes,” she said.

With Bailey, Rotecki, Phillips and Jim Van Horne raising their hands, the Assembly agreed to continue this year’s grant funding. But each member warned that they would want answers, a good plan for the future and a lot of checks and balances installed before they would consider approving funds for next fiscal year.

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