"When the oil boom came to Alaska, Congress promised new economic opportunities for native peoples like the Cape Fox Tlingit.

The Tlingit had wrested a subsistence life from the harsh coasts of southeast Alaska for thousands of years, only to see their villages destroyed, their resources exploited and their population wiped out by disease when white settlers came in the 19th century.

In 1971, Congress passed a law intended to right the historic wrongs and compensate natives for construction of a new oil pipeline through their ancient lands. The legislation allowed tribes and villages to form Alaska Native Corporations that would build businesses and pay cash dividends to the native shareholders.

In the 1980s, Congress gave the ANCs special privileges in a federal program that sets aside contracts for small minority businesses. Through the program, ANCs have received more than $10 billion in federal contracts in the last two years alone.

A ProPublica investigation found that very little benefit from these contracts has trickled down to native shareholders. Instead, much of the money has ended up in the hands of outside contractors, consultants and Washington lobbyists who earned generous compensation for themselves and, in some cases, for their families.

Perhaps nowhere have the abuses been more startling than in Saxman, where the Cape Fox Corporation represents 300 Tlingit natives. While other ANCs have been taken advantage of by one consultant or in a single subsidiary, lawsuits, investigations and audits allege fraud and self-dealing in five of the seven companies Cape Fox had in the program.

Cape Fox's experience shows how outsiders can easily co-opt the privileges afforded to ANCs, siphoning off large sums from taxpayer-funded contracts for themselves. The natives had almost no involvement or oversight of the companies. And when they went to regulators seeking help, they were turned away, told that the law didn't allow the agencies to intervene.

A new analysis by ProPublica quantifies the extent to which ANCs have come to benefit from the minority contracting set-asides, which are part of the Small Business Administration 8(a) Business Development Program -- a civil-rights era effort to help businesses gain experience."

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Rampant Fraud, Self-Dealing Alleged in Alaska Native Corporation (ProPublica 12/15)