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  • Wednesday, February 13, 2008

    Republican Corruption in Alaska: VECO and Republican bedfellows

    I have reported many times about how the Republican Parties in Ohio, Missouri and Kentucky were about the most corrupt political establishments in America. One that I have been missing is the Alaska Republican Party. I think it is time I turn northward to discuss what is going on in Alaska.

    At the epicenter of Alaska corruption seems to be the Alaska oil services company Veco Corp. Veco, until its recent buyout, was an oil pipeline service and construction company. Perhaps Veco would like to be best known for the fact that it carried out a great deal of the clean up efforts after the Exxon Valdez oil spill. But this is not the only thing they were known for. They were known for illegal influence on Republican politicians.

    In 2006 the FBI served some 20 search warrants on the offices of six Alaska state legislators: Sen. John Cowdery (R-Anchorage), Senate President Ben Stevens (R-Anchorage) (son of US Senator Ted Stevens), Rep. Vic Kohring (R-Wasilla), Rep. Bruce Weyhrauch (R-Juneau), Sen Don Olson (D-Nome), and Rep. Pete Kott (R-Eagle River). Also named in the search warrants were VECO officers Bill Allen, Rick Smith and Pete Leathard.

    Then in 2007, Pete Kott, Vic Kohring and Bruce Weyhrauch were arrested and charged with bribery, extortion, fraud in connection with allegations of soliciting and receiving money and favors from VECO chief executive officer Bill Allen and chief lobbyist Rick Smith in return for their votes on an oil tax law favored by VECO.

    Ben Stevens has not been indicted so far, but has been implicated in the scandal. But his father, US Senator Ted Stevens, is also under investigation by both the FBI and IRS in connection with the remodeling of Ted Stevens' home in Girdwood, Alaska. This remodeling was actually supervised by VECO, and invoices for the work were first sent to VECO before being sent to the Senator. The remodeling done by VECO wasn't just a minor job, but actually doubled the size of the house to 2471 square feet, now valued at about $441,000...which seems awfully cheap to a New Yorker like me. Maybe I should be buying a home in Alaska!

    Who paid for what aspects of the remodeling, why VECO, an oil services firm, was involved in the first place, and what they got in return are all under investigation. In July, 2007, the FBI and the IRS raided Stevens' house. Interestingly, this occurred soon after VECO execs Bill Allen and Rick Smith plead guilty in U.S. District Court in May, 2007. Did they rat out Ted Stevens, leading to the search of his remodeled house?

    To quote the TPM Muckraker:

    Here’s the straightforward arrangement: oil company decides to remodel senator's house, oil company finds contractor, contractor creates new first floor in senator's house, contractor sends invoices to oil company, oil company reviews bills, oil company faxes bills to senior senator, senior senator pulls cash from a special account set up specifically for the construction and pays contractor, senior senator never speaks to contractor. The arrangement looks fairly questionable on its face. And it looks even more questionable when you take Veco's track record into account. The person from Veco who hired Paone was Veco CEO Bill Allen. Allen happens to have just plead guilty this month to federal conspiracy and bribery charges for “giving things of value” to local lawmakers. In a court document accompanying his guilty plea, the Anchorage Daily News noticed a seemingly irrelevant description of what the company did not do while he was in charge: "Veco was not in the business of residential construction or remodeling." So far Stevens has refused to explain the arrangement. But it has piqued the FBI’s interest and investigators are looking into it.


    Of the original 6 Alaska state lawmakers who had their legislative offices searched at the beginning of the whole scandal, only State Senator Don Olson (D-Nome) (the ONLY Democrat to have been investigated) has not been implicated in the scandal.

    But the Republican VECO scandal doesn't stop there. In addition to one of its US Senators, Alaska's only Congressional Rep is ALSO implicated in the VECO scandal. Representative Don Young (R-AK) is under federal investigation for accepting bribes from VECO. Because of this, it seems Don Young must now spend much of his campaign money on legal feels. In 2007 alone, his legal fees reached $854,035. Note that Don Young's campaign could practically buy Ted Stevens's VECO remodelled house twice over with that money.

    You can read more here, here and here.

    So what's the bottom line for Alaska? Well, there is the embarrassment of being listed as one of the four most corrupt states in the country, along with Ohio, Kentucky and Missouri. But it also is spoiling the business climate in Alaska. At the end of 2007, MidAmerican Energy Holdings Co. decided not to bid for a contract working on a natural gas pipeline in Alaska, citing these scandals as one main reason. From Scripps News:

    "As you are painfully aware the ongoing corruption investigations coupled with previous indictments, guilty pleas and convictions draw into question virtually every major Alaskan project participant and governmental levels from State to Federal," says the letter from MidAmerican CEO David Sokol. "Obviously your administration had no involvement in these previous shenanigans nor did we; however, you and we alone cannot develop the pipeline project through AGIA's expected process."


    So Republican corruption is bad for business. And that is bad for Alaska and bad for America. Let's remember, Republican corruption is partly responsible for Democrats winning big in 2006 and 2007 in Ohio and Kentucky. Will Missouri and Alaska be the next states where Republican corruption is voted out of office? You can help out by donating here to turn Alaska blue.

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