"The Ute Paradox" was well-written and thoroughly researched (HCN, 7/19/10). However, I have devoted 22 years of my working life to the Southern Utes' success, and must respectfully disagree with some of Jonathan Thompson's conclusions.

The article states that "Mr. Jurrius ... brought capital from a huge private equity firm with which the tribe was able to buy more energy production and distribution companies." I wish to correct this statement because it might encourage other tribes to make business deals that are not prudent.

First, the Southern Utes have never used money from a private equity firm to buy assets for the tribe. The typical private equity company has many characteristics that make it a poor partner for an Indian tribe. As Mr. Thompson pointed out, an Indian tribe can manage resources for the long term. This is a competitive strength for a tribe, which doesn't have to pump up next quarter's earnings like a publicly held company and doesn't have to sell the company in three to five years like a private equity company must.

The typical private equity company promises its investors a high rate of return and its management team a big payday if they develop an asset quickly and then sell it for a big profit. This results in enormous pressure to develop a project as quickly as possible, whether or not rapid development is appropriate.

In addition, in private equity companies, the management team gets rich if the deal works. If the deal fails, the investors are stuck with the tab. This encourages stupid risks because there is little downside to failure for decision-makers. Again, this is not consistent with a tribe's priorities.

So the implication that an infusion of private equity capital into the Southern Utes' investment efforts early on was integral to their early success is simply not true.

As for the allegation that the tribe has lost $573 million on off-reservation energy exploration, in aggregate, the tribe has actually made money there. Any enrolled tribal member has the right to review our audited books to see that for themselves. Finally, I am a petroleum engineer, not a geologist.

Bob Zahradnik,
operating director of the Southern Ute Growth Fund
Durango, Colorado