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July 1996

State Roundups
Montana

Tribal companies explore private sector opportunities

A&S and other companies on Montana reservations that have relied on government contracts are now exploring production opportunities in the private sector with the help of the Montana Indian Manufacturers Network (MIMN). Located in Billings, MIMN was formed in 1990 to unite manufacturing firms on reservations in Montana and Wyoming in their efforts to secure contracts and develop business acumen.

"We are promoting commercial development and less reliance on government contracts," says MIMN director Leonard Smith. MIMN has developed programs for tribal companies in marketing, finance and management, and acts as a clearinghouse for training and other resources. MIMN uses the concept of "training the trainer," where a network member learns a skill and then trains other member companies. "If a company has a strength in an area, it will share that information," Smith says.

On a case-by-case basis, MIMN develops business models for tribal companies. For example, MIMN developed a business plan model for A&S, including a marketing strategy and an organizational structure. The model is now complete; MIMN will continue to assist in improving efficiency as it is implemented, Smith says.

MIMN also invites potential private sector partners to visit reservations. Large high-technology firms are considering operations on reservations due in part to a large pool of unemployed workers with manufacturing experience. The National Aeronautics and Space Administration has also indicated an interest in locating operations on reservations. "The reservations have very competitive business incentives that haven't been marketed effectively in the past," Smith says.

Aside from training and designing business models, MIMN plans to partner with area banks to establish a capital fund. "We received a tremendous response and quick response," Smith says, for the capital fund, which is still in its early stages.

—Rob Grunewald

Montana looks to Swiss-style banking
to sweeten the pot

Montana would become the first state in the nation to allow Swiss-style bank accounts if enabling legislation were adopted next January.

Legislation currently in the draft stage would be presented in the next state legislative session allowing numbered bank accounts to assure accountholders of confidentiality and anonymity in their transactions. These accounts would be offered only to nonresident aliens for purposes of investment, asset protection and safekeeping.

Proponents of the legislation say attracting foreign depositors and investors would be an economic plus for the state and perhaps encourage new investment dollars in Montana. While the institution would not pay corporate taxes, nor the depositor taxed directly, it is anticipated that a small percent levied on large-dollar accounts would bring in substantial tax revenue to a state with about 800,000 residents.

The depository institution would not engage in lending, and investments would be restricted, says Stephen Maly, a Montana legislative research analyst charged with drafting the legislation. Also embedded in the legislation would be protections against illegal activities, such as money laundering.

Although the state intends to hold the charter of the bank that would offer such accounts, federal banking officials and US Justice and Treasury department representatives have expressed concerns about compliance with regulations. Legislation will be written to answer those concerns, Maly says. "In order for this to work, state banking authorities will have to be quite stringent," Maly says.

Don Hutchinson, Montana's banking commissioner, agrees with Maly that oversight will need to be rigorous. And he says it would likely take a large foreign or US financial institution with international expertise to successfully establish such an institution.

If the enabling legislation were written to everyone's satisfaction and passed by the state Legislature, the market would take over. "The success or failure will rest on market forces," Maly says.

Admitting that offshore banking operations are proliferating around the world, Maly says, Montana's institution would be the first in North America—and would offer financial and political stability not found in many other countries.

—Kathy Cobb