Alaska’s legislative auditor is reviewing a decision by former Revenue Commissioner Adam Crum to invest tens of millions of dollars from the state’s primary rainy day fund in a digital infrastructure firm, after the decision came under scrutiny by Alaska lawmakers.

Legislative auditor Kris Curtis told the Legislative Budget and Audit Committee on Wednesday that she is auditing Crum’s decision to invest at least $50 million from the Constitutional Budget Reserve in a digital infrastructure firm called DigitalBridge.

Crum’s decision has drawn scrutiny since Acting Revenue Commissioner Janelle Earls informed Curtis of the investment in September, weeks after Crum resigned from the Dunleavy administration to run for governor. Gov. Mike Dunleavy himself met with executives from DigitalBridge before the investment decision was finalized, according to his public calendar.

Curtis declined to assess Crum’s actions while the audit is ongoing, but pointed to existing investment policies for “non-routine” investments that appear not to have been followed. Those policies were implemented by the Department of Revenue after a 2020 audit conducted by Curtis that found faults in a former revenue commissioner’s investment decision.

The 2020 audit found that a decision by the Department of Revenue to loan up to $22.5 million to the Mustang oil field operators under the administration of former Gov. Bill Walker was “not appropriate.”

In response to that audit, the Department of Revenue implemented procedures for “non-routine” investment decisions, including a requirement for an evaluation from an external expert, and a requirement for the Department of Revenue to inform the chairs of the Senate and House finance committee of any decision to move forward with an investment.

Sen. Bert Stedman, a longtime chair of the Senate Finance Committee, said that the Mustang investment was “well-intended (but) misguided.” Stedman called Crum’s recent investment “gross incompetence.”

Crum said Wednesday that he did not watch the hearing and could not comment on what was said.

Stedman said the Department of Revenue acted incompetently when committing state savings to a long-term investment because lawmakers broadly agree that the $3 billion Constitutional Budget Reserve account will likely be needed in the coming years to fund state services, such as schools and roads, amid dwindling oil revenue. Because the need for that funding is imminent, the money in the account should be invested in highly liquid assets, Stedman said. Dunleavy himself, Crum’s former boss, called for lawmakers to spend half the money in the account earlier this year. Lawmakers ultimately shrank the budget instead.

Given that, Crum’s investment decision “doesn’t pass the test of reasonableness in any shape or form, under any compliance review, to put the state in that particular position,” Stedman said during the Wednesday committee hearing.

“I think we have an incompetence issue in the Department of Revenue,” said Stedman. “Gross incompetence is what we’re looking at here.”

The legislative auditor’s review is happening while Dunleavy is pursuing a separate independent review of his former revenue commissioner’s actions.

Attorney General Stephen Cox last month signed a $350,000 contract with national law firm WilmerHale to review Crum’s investment decision. Members of the Dunleavy administration previously said the review is set to be completed before the beginning of the coming legislative session, though the WilmerHale contract has a June expiration date.

Curtis said Wednesday that she has not been consulted by WilmerHale regarding its review.