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The daughter of US private equity billionaire David Rubenstein has resigned from Alaska’s $80bn sovereign wealth fund board following accusations she sought to steer state investment assets to friends and family members.
Gabrielle Rubenstein, 36, said in a board meeting on Wednesday that she would step down as a trustee of the Alaska Permanent Fund effective August 1, three months after leaked emails showed fund officials complained about her aggressive push to have them work with private equity groups with ties to her. The allegations about Rubenstein were the subject of a story in the Financial Times in May.
“I think there have been many times where it has been misconstrued,” she said during the meeting of the “internal tension” on the board as a result of her initiatives.
“The scope and pace of change necessary to fully institutionalise the fund are not compatible with the demands of leading my private equity firm,” Rubenstein said in a statement issued through her spokesman, Chris Ullman. She is the founder of Manna Tree, a Colorado-based private equity firm.
Her departure capped several months of controversy involving leaked email exchanges among fund officials accusing Rubenstein of setting up meetings between fund staff and her father and other asset managers connected to her. There were also concerns about her efforts to increase the fund’s exposure to alternative investments known for higher risks and lower liquidity.
The fund manages assets accumulated from Alaska’s oil resources and provides most of the state’s funding for roads, schools and police. The controversy has divided the fund’s board, with some members calling for a probe into Rubenstein’s conduct and others focused on preventing future email leaks.
Jason Brune, the fund’s newly elected board chair, defended Rubenstein, saying “everything she did was above board and followed the proper process”.
“Ellie is the exact type of person we should want on the permanent fund. She has the connections. She understands the industry. She frankly has more knowledge about the industry than the other trustees combined,” Brune said. “I am sad to see her go.”
Zachary Christensen, managing director of the Reason Foundation’s Pension Integrity Project, said Rubenstein’s departure underscored the importance of having “a heightened level of scrutiny” over public fund board members. “The interests of the fund go above all other interests, including personal interests,” he said.
A spokesperson for Alaska governor Mike Dunleavy said Rubenstein “brought invaluable fresh perspectives and energy to the Alaska Permanent Fund, setting it up for continued success for all Alaskans”.
Since the email leak, Rubenstein has headed the board’s governance committee that has proposed measures to improve transparency for investment referrals from trustees to staff.
While Rubenstein is leaving, tensions at the fund remain. After the board elected Brune as the new chair on Wednesday, board member Craig Richards called the outcome “a coup”, in comments during the meeting, since Rubenstein was allowed to cast a vote despite her pending departure.
“That kind of dynamic shows you that there’s still distrust and real negative interactions between board members,” said a person close to the fund. “It’s unfortunate that they continue to not deal in some ways with the underlying problem.”
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