Can Bob Gillam’s millions protect Bristol Bay?
BOB GILLAM IS AS COMFORTABLE behind the controls of a floatplane as he is before a computer, analyzing ups and downs of the world’s stock exchanges. He has amassed considerable wealth for himself at the latter, and considerable appreciation for Alaska’s natural resources at the former. Born and raised here, Gillam is among a cadre of businessmen unique to this part of the world who manage to keep one foot in the office and the other in Alaska’s backcountry. Now Gillam’s worlds are clashing, forcing him to choose between preserving a place he loves and the pro-development principles that helped make him a rich man.
Known as a reclusive conservative and arguably the richest man in Alaska, Gillam has allied himself with conservationists, sportsmen, commercial fishermen and Natives to challenge an international mining consortium and Alaska’s pro-development establishment. For the mining companies in this fight, the stakes are high—billions of dollars. For Gillam and his allies, what is at stake is the future of the fi sh, forests and rivers of Alaska’s Bristol Bay region, which they believe are in imminent danger of destruction.
Gillam’s critics say he is just trying to protect his fishing and hunting lodge from the Pebble Mine, which is proposed for development on a 20-squaremile parcel of state land that would include—according to a water-rights application filed with the Alaska Department of Natural Resources—a four-square-mile open pit, the world’s largest earthen dam at 4.3 miles long and 700 feet high, and miles and miles of mining waste storage areas including a 10-square-mile containment pond to hold back billions of tons of mine waste.
The mining companies from England and Canada say 40 million ounces of gold and 42 billion pounds of copper wait, making it one of one of the largest copper deposits on Earth.
Estimates of Pebble’s value prior to the global financial crisis: more than $345 billion. But Bob Gillam says the area’s wealth of salmon and wilderness that have sustained the regions Native people for more than 11,000 years are worth infinitely more. The mine’s arsenic, mercury, acid drainage and copper tailings could destroy salmon habitat, he said, and the dam proposed to contain it in the earthquake-prone region is not enough protection.
NO STRANGER TO RICHES
Gillam is the president of McKinley Capital Management, an international investment firm he founded in 1990. Its success has earned Gillam, who grew up in Anchorage, Fairbanks and Juneau, the title of Alaska’s richest man.
Gillam claims not to care about rankings. But plenty of other people do, including Worth magazine founder W.Randall Jones, who interviewed Gillam for a book about how to amass wealth. Published in 2009, The Richest Man in Town is a collection of profiles and money management strategies. Gillam made the cut based on McKinley’s success, as well as its philosophy and practice of investing, refined by Gillam and executed today by a fleet of young traders—Gillam calls them “Alaska kids”—working banks of computers from a Midtown Anchorage office tower. The firm also has an investment office in Manhattan and client service offices in Connecticut, Minnesota, Texas and Seattle.
“(Gillam) has proven,” Jones said, “that you can successfully manage money anywhere in the United States and make millions with just a little technology, a lot of smarts … (ultimately) becoming not only the richest man in Anchorage but also the richest in Alaska.” When asked if he really is the richest man in Alaska, Gillam responded bluntly, “I don’t know, and I don’t think he knows.” Had he known the book’s title, Gillam said, he would have turned down Jones’ request for an interview.
The wealth that concerns Gillam today is not in his pocket but in the backyard of his family’s summer home: Lake Clark National Park and Preserve.
By Gillam’s estimate, the 300 to 400 jobs that Alaska might gain annually if the Pebble Partnership follows through on its mining plans is more than offset by the risk to Bristol Bay’s “red gold”— salmon that are among the last commercially harvested wild runs on the Pacific Coast. According to a 2007 University of Montana study on the economics of wild salmon watersheds, nearly 7,000 jobs depend on the salmon fi shery, worth nearly $300 million per year.
|LINDSAY KLEPPIN/PEBBLE PARTNERSHIP|
Critics say Gillam is the most well heeled not-in-my-backyarder of them all, willing to spend whatever it takes to preserve the value of his nine-bedroom, 14,000-square-foot lodge. Gillam said that’s not true. It’s about the world’s greatest salmon runs, clean water and the subsistence lifestyle of his neighbors and friends in Bristol Bay, he said, and conserving the economic treasure of the renewable salmon runs is worth far more than profits of foreign mining companies. “This is about this mine in this place,” said Gillam, who is ordinarily a supporter of mining.
|LINDSAY KLEPPIN/PEBBLE PARTNERSHIP|
Gillam claims to be baffled by the NIMBY label. “Bob isn’t trying to buy Alaska,” he said, dismissing the slogan of an anti-Gillam Web site. Rather, “Bob’s trying to defend Alaska from foreign mining companies that want to buy Alaska.” By his own estimate, he has poured several million dollars into campaigns to stop the development of Pebble Mine—and that’s an after-tax sum, he likes to point out, not subject to write-off. “I’m doing this,” he said, his voice lowered, “because it’s the right thing to do.”
On a late summer morning, Gillam is flying west from his hangar near Anchorage’s Campbell Lake to his lakeshore home on an inholding within Lake Clark National Park and Preserve. From the planes that make up what Gillam calls his Department of Transportation, he has selected a leather-seated Piper Navajo twin-prop specially outfitted with state-of-the-art navigation equipment to reduce the risk of flying through Lake Clark Pass, which is notorious for winds that Gillam likes to say will rip the numbers off a plane.
It’s an hour-long flight to the lodge on 10 acres at the tip of Keyes Point, a finger of land developed during Alaska’s oil-rich mid-1980s by Native-owned Kijik Corp. Gillam had already fished and hunted around Lake Clark and Bristol Bay for about 10 years when Keyes Point parcels went on the market in 1985, so he bought early. In addition to the lodge parcel, Gillam owns several hundred acres inland and said he plans to leave them untouched, to buffer against development. His first summer home on Lake Clark, built 25 years ago, was a two-bedroom shack. The newer building, constructed over several years in the 1990s, is anchored by a three-story, lake-rock fireplace with a massive grate bearing his initials. High ceilinged rooms are appointed with polished brass ashtrays, and trophy mounts that his wife of 23 years, Mary Lou, has banished from their Anchorage home. A spacious deck takes in a view of Lake Clark, and a bedroom is affectionately named in honor of former U. S. Sen. Ted Stevens, an occasional guest.
Gillam met Mary Lou, who was raised in Nome, when he was an Anchorage- based partner for Boettcher and Co., a regional investment-banking firm, and she was an economist managing municipal bonds for a local bank. The couple has three children, a 23- year old son and 22-year old twins: a son and a daughter. Gillam also has a son and a daughter from an earlier marriage, and four grandchildren. Two children have followed in his footsteps and attended The Wharton School— the University of Pennsylvania’s famous business school—and a third is considering law school.
From the Navajo’s cockpit, Gillam studies the miles of glacier-carved mountains, gray-blue lakes and oxbow rivers below; in every direction, landmarks trigger stories. There’s the time Gillam had bulldozers driven 85 miles to Lake Clark in temperatures as low as 25 below zero. The time he counted 60 brown bears during one of the 400-plus trips he has made through Lake Clark Pass. The day he used 10,000-pound test line—cable to be more accurate— to stalk a fabled 18-foot sturgeon, Lake Clark’s legendary monster. “What the heck, nobody told me you couldn’t do it,” Gillam said. “It’s my lifetime motto.”
At 63, Bob Gillam is among an elite group of Alaskans who, having quickly sized up the state’s frontier economy and limited competition, rose from working-class roots and earned a fortune. Gillam’s twist on the archetype was to lose it and then earn it back several times over. He has lived quietly but very, very well. “He’s an example of what I always believed,” said Rick Mystrom, former Anchorage mayor and an advertising agency owner who counts Gillam among his longtime business acquaintances. “If you take all the money away from guys who have it, 15 years down the line the same people will have money again.”
While his longhaired peers were challenging authority and protesting the Vietnam War, Gillam applied the discipline he picked up during a summer at the Culver Military Academy in Illinois. He graduated from West Anchorage High School in 1964 and set his sights on a business degree. Concerned that his grades weren’t strong enough to get him into a good school, he traveled to Philadelphia to lobby for admission to Wharton. He got in, in part, because of an interest he shared with the interviewer: soapbox derby racing. During the first year of statehood, 1959, Gillam won the state’s first soapbox derby at the age of 13 in a racer he built out of Brazilian ironwood. So, with his father’s help and savings from a job with a moving company, Gillam moved out of the quarters he shared with his dad in a liquor store warehouse and went on to graduate from Wharton in 1968 as a classmate of another future billionaire, Donald Trump.
The following year, Gillam earned a master’s degree in business administration from the University of California at Los Angeles and then took a series of financial management jobs with firms based in Seattle and Denver.
Gillam lost his early millions in the mid-1980s when the oil money that had superheated Alaska’s economy began to dry up. Crude was abundant worldwide, and oil prices were dropping. Alaskans were stunned in 1986 to see the price of North Slope crude slide to just under $10 a barrel—less than half its value a year earlier. Caught in the ripple effect were several Anchorage banks that had specialized in real estate loans that fell in value along with the price of a barrel of oil.
Among the era’s dozens of casualties was Home Savings, a savings and loan that Gillam joined in 1985 as chairman and chief executive. He had invested his fortune—about $4 million— in the bank, and when federal regulators took over in 1988 he was one of three bank officials to accept a share of a $265,000 severance package authorized by the board before its members resigned. In 1995, after federal investigations, Gillam signed a consent decree admitting no wrongdoing at Home Savings, gave back his share of the severance, and agreed not manage a federally insured bank in the future without approval from the Treasury Department. After Home Savings tanked, Gillam sold his pricey sports car and used the money to start McKinley Capital Management, setting out to restore his millions, along with his good name.
“I’ve been vilified unfairly,” Gillam said as he unwrapped a Subway sandwich at the kitchen table of his Lake Clark home and discussed campaign-finance violations filed against him in 2009 by the international partnership behind development of Pebble Mine.
“I contributed to just about anyone who was trying to tell the truth and oppose the Pebble Mine,” Gillam said. “I can’t help what people think.”
|COURTESY BOB GILLAM|
After an overcast morning spent flying a photographer and reporter from Anchorage to the sprawling lodge, Gillam was ready to switch from gracious host to educator and talk about why people shouldn’t think what they think: That he’s a turncoat, a longtime supporter of conservative politics who has allied himself with conservationists, of all people. That after 20 years of avoiding reporters since the Home Savings fallout, he has joined the public speaking circuit, presenting to organized business groups state-wide, preaching the case against Pebble.
“People say, ‘How can you oppose Pebble?’ I oppose Pebble because it is bad for Alaska,” Gillam insisted. “My objective is to publicize Pebble, to have people around Alaska take notice of it and the destruction of the last great salmon run on Earth.”
Gillam said he paid for every one of the 80,000 anti- Pebble Mine bumper stickers sported on cars across Alaska.
“My job has been to get people interested,” he said, pausing to point out a bald eagle surveying Lake Clark from atop a nearby spruce. Several major newspapers including The Washington Post, The Los Angeles Times and The Wall Street Journal have reported on the potential hazards of Pebble mine at his urging, Gillam said. “If I were to pass away tonight, opposition to Pebble Mine would continue.”
Gillam is happy to tell anyone willing to listen the three reasons he thinks the Pebble mine is bad for Alaska.
|COURTESY BOB GILLAM|
Reason One: Copper Mining History and Science. Any review of the 20 largest operating copper mines worldwide shows that they all have ongoing pollution issues. “We must adopt a zero pollution tolerance at Pebble” said Gillam. Studies have shown that even the slightest increase of copper in freshwater will cause salmon to become disoriented and lose their way to the spawning beds. Cyanide leakage, acid drainage and mercury pollution could all cause the eventual decline and elimination of Bristol Bay’s huge salmon runs, Gillam said. Dam failures, volcanic events, torrential rains or earthquakes all could result in a catastrophic release of pollution from the mine.
Reason Two: Business. Bristol Bay’s salmon runs can perpetually provide hundreds of millions of dollars in incomes by supporting nearly 7,000 fishing-related jobs annually. Why risk these jobs for 300 to 400 mining jobs that would last only 40 to 50 years? Unlike the Red Dog Mine in northern Alaska, which is owned by a Native corporation that would keep mining profits in Alaska, Pebble would be owned by foreign corporations, so profits would go abroad, not to Alaskans, Gillam said. While oil royalties can reach 25 percent, mineral royalties range from three to seven percent, according to the State Department of Natural Resources. As a professional investor, Gillam believes the best business decision is to preserve the Bristol Bay fishery and thus guarantee wealth for future generations of Alaskans.
Reason Three: It’s culturally the right thing. “Alaska’s first citizens have relied on the salmon resources of Bristol Bay for at least 10,000 years,” Gillam said. “My neighbors in Nondalton will see their village destroyed by Pebble if developed.” And no one can live next to an open pit mine for very long, he added. In November 2009, an area-wide poll showed that more than 80 percent of local residents were opposed to Pebble, and in December of 2009 the Bristol Bay Native Corporation voted to oppose the mine.
Developers reject such criticism, and the Pebble Partnership’s Web site emphasizes the results of ongoing studies rather than what might occur based on the mining industry’s poor track record elsewhere. For instance, the Web site points out that studies haven’t yet determined how fish, habitat and a working mine might coexist: A primary goal, developers say, is to limit side effects and mitigate those that occur.
John Shively, Pebble’s Anchorage- based chief executive, would not speak on the record, but in a 2008 The New York Times article he stressed that if fishing could not be protected, “we don’t have a project.” Mine developers say that 50 years of oil and gas exploration demonstrate that Alaska can develop its resources responsibly and that Alaska mining has a record of enhancing fi sh habitat and protection.
But local Dena’ina Athabascan people say the mine project, years away from extracting its first ore, is already disrupting their lives and disturbing the resources. The noise from helicopters ferrying crews, and the placement of exploratory rigs, are disrupting caribou migration, causing hunters to range farther for winter meat, said Jack Hobson, a tribal leader. In addition to mine runoff that could pollute nearby rivers, locals worry that game may grow scarce if the industry added hundreds of new residents, some of whom are sure to hunt. And they worry about more mining in the future. Pebble watchers are quick to point out that 500 square miles of terrain are under mining leases in the region. While some local village corporations whose members are employed in Pebble’s exploration phase are supporting development, the Bristol Bay Native Corporation, representing 8,500 Native people who reside or have roots in the region, voted in December to oppose the mine.
“It’s not just Pebble,” said Anchorage biologist Carol Ann Woody. A former federal fisheries and conservation scientist, Woody agrees with Gillam that Pebble development is risky. “He’s a fisherman,” Woody said. “Of course he cares about his house, but he put his money in because more than anything he cares about protection of the resources.”
The Pebble dispute isn’t just a Western Alaska issue. Mining groups spent some $15 million on the 2008 campaign to defeat Ballot Measure 4, a statewide referendum that would have imposed stricter clean-water standards on large-scale metallic mines—restrictions that would have specifically hindered Pebble’s development. By the time ballots were counted and the measure was defeated, parties on both sides of the issue had spent a combined $17.8 million, making it the most expensive political campaign in state history.
Ballot Measure 4 dredged up bedrock Alaska issues: What do we value more, development or wilderness? Clean water or opening Alaska for business? Paycheck jobs or subsistence hunting and fishing? Which would contribute more to our economy, resource development by foreign corporations or longstanding, family run commercial fishing? While some pre-election polls showed Ballot Measure 4 had been leading by a small margin, voters rejected it 57 percent to 43 percent. Gillam and other proponents blamed then- Gov. Sarah Palin who, a week before the election, declared that she was “taking off her governor’s hat” to say that she would be voting no. “It’s not a level playing field,” Gillam said. “There are very few people who can oppose them.” Not that he didn’t try.
Gillam has become a lightning rod for the Pebble Mine issue. Google Bob Gillam, and the first hit is www.bob-gillam-cant-buy-alaska.com, a site whose anonymous author claims to have been affiliated with the Juneau branch of the Alaska Miners Association. The site claims to exist to answer one question: “Can one very rich man use his money to subvert Alaska’s political and regulatory processes, wound its economy, and hurt Native people throughout the state just to protect his vacation home?” The answer depends on the Alaska Public Offices commission, a state agency that oversees election laws.
“No fines have been levied against me,” Gillam said. “Of the eight charges against me, all but two have been dropped. These two are still pending, but five-figure fines have been proposed against a group of foreign mining companies who support the Pebble Mine Project for failure to report almost $4 million spent on Ballot Measure 4 on time.”
Dig deeper in the Google search results, and you’ll find Gillam’s Web site for The Gillam Foundation, which provides scholarships to high school seniors in Alaska who show entrepreneurial talent. “We have helped send Alaska (students) to perhaps hundreds of colleges and universities.” Gillam said. “We need more entrepreneurs and fewer investment bankers.”
Gillam believes the APOC complaints were filed by m ining interests intending to intimidate him. Instead, he said, the case prompted him to start talking publicly.
“(My opponents) have made it personal,” he said, claiming to have lost business since his anti-development stance became headline news in the state. “I’ve certainly taken a lot of flak.”
Gillam does not deny donating money to stop Pebble, but he rejected suggestions that it was done illegally. According to an APOC report, Gillam gave $1 million two months before the 2008 vote to Virginia-based Americans for Job Security, a group that keeps its membership secret. The investigation claimed that, based on the sums donated and the timing, most of Gillam’s contributions went from AJS to Alaskans for Clean Water, which used it for the Ballot Measure 4 campaign. The report alleged that Gillam’s contributions were a deliberate strategy to veil Gillam as the main source of funding to support Ballot Measure 4. Subsequent APOC documents state that the mining companies opposed to Ballot Measure 4 failed to properly report millions of dollars they spent.
A FUTURE GOVERNOR?
Sitting behind the desk in his McKinley Capital office, where four computer monitors displaying financial charts partially block his view of the snowy Chugach Mountains, Gillam is waiting for the next step in the APOC case. Charges against others accused of being part of the Gillam group were dropped in November, but complaints targeting Gillam are moving ahead.
So, too, are his plans to finance another statewide initiative against mining in Western Alaska. This one would ask voters to adopt standards for the Bristol Bay Fisheries Reserve, a zone approved by state lawmakers in 1972 and aimed at protecting waters that sustain the region’s salmon and trout fishing.
Gillam acknowledged that enhanced regulations would threaten development at Pebble. “The water is everything,” he said. “Our goal is to ensure it remains pristine.”
He said he was undecided about a run for governor, adding that his friends are thinking about it for him. He doubts the temperament that made him successful would transfer neatly to public office. And, he said, exactness demanded by campaign finance disclosure forms a huge disincentive to anyone with complex business holdings.
“It’s an accounting nightmare,” Gillam said. “I can’t imagine why any wealthy person would do it.”
Still, he agreed that Alaska could use an executive with corporate experience, say, managing a wildly successful multinational investment business.
Whether Gillam runs for public office or continues his fight from the private sector, he shows no signs of backing down. Though he has put his considerable wealth behind his efforts to bring the potential impact of the mine to light, it is a small amount compared to the money behind the Pebble Mine.
The stakes are high. On the one hand, there are potentially billions of dollars in profits for the foreign mining companies. And on the other hand, there is the preservation of an ecosystem unlike any other on the planet.
It’s an uphill battle, but Gillam is a man with a knack for success and for meeting adversity head on. This fight isn’t over.
- Northern Dynasty’s Application for water rights on Upper Talarik Creek
- University of Montana report - “Economics of Wild Salmon Watersheds: Bristol Bay, Alaska
- Alaska Public Offices Commission memorandum
Anchorage writer Rosanne Pagano wrote about quirky Alaska burial practices in the May 2008 issue.