A subsidiary struggles
As North Island prospered, things fell apart at Sentinel Industries.
On Sept. 30, 2008, White resigned. She said MTNT had breached her contract by using an outside consultant to “second guess my decisions.” Her resignation triggered provisions in the employee agreements she had approved for her brother and sister, obligating MTNT to pay them hundreds of thousands dollars.
In a lawsuit filed in September 2009 in Anchorage superior court, MTNT accused White and her siblings of fraud, alleging they paid themselves extravagantly, hid some of their activities from MTNT and provided misleading information to the SBA.
The lawsuit said White never told the SBA about key provisions in the lucrative employment agreements for her and her siblings. MTNT also alleged that White’s agreement effectively guaranteed her more than half of the subsidiary’s earnings, which violated federal rules. Although SBA officials are aware of the case, they said they did not view it as an enforcement matter.
“As far as SBA knows, this situation was an internal management dispute between an ANC company and one of its owners,” said Meadvin, the agency spokeswoman. “At no point did anyone involved come to the SBA with allegations of fraud or general misdoings related to the ANCs participation in government contracting programs.”
The case was settled later in 2009, and the participants signed nondisclosure agreements. MTNT came away with total control of Sentinel Industries.
The firm continued to work with Centennial despite the fact that Centennial was also working with its competitor, North Island. Centennial chief executive Mark Bailey defended his company’s work with the Alaska native subsidiaries. He said the profits it has made are “a reward for the cost of mentoring and helping small business grow and develop.”
Bailey said Centennial was “in complete compliance with the SBA rules and regulations” while helping to prepare Sentinel to do business on its own.
“That’s exactly what the intent of the program is,” he said. “We’re very proud.”
But the reality for Sentinel Industries is not so clear-cut. Although it enabled MTNT to pay thousands of dollars to each of its native shareholders over the years, the subsidiary is struggling to make it on its own. After recent layoffs, it has only two employees, down from a high of 23.
Executives at MTNT said they are determined to grow the business, with new management. They said they have several promising prospects, including multimillion projects to bid on in the Northwest and Midwest.
“We were taken advantage of,” MTNT chief executive Vicki Otte said. “When we realized what was going on, we took the company back.”