September 22, 2008 -- As the trial of Alaska's senior senator gets underway in Washington this week, prosecutors are expected to paint a portrait of the allegedly cozy relationship between Republican Ted Stevens and one key oil company. Though the government has not charged Stevens with bribery or corruption, how the senator allegedly helped the Alaska-based VECO oil services company win contracts and earmarks will be at the center of trial.
As early as 1999, prosecutors allege in court filings, Stevens and his staff worked closely with VECO executives -- particularly CEO Bill Allen, who has pleaded guilty in connection with the probe -- and lobbyists to facilitate government contracts.
Among the key issues was a longstanding proposal for a natural gas pipeline in Alaska heavily support by VECO and Stevens. Federal law established in 2004 created a two part process for the pipeline: the first, requiring Alaska to negotiate a contract with oil companies and the second, requiring the federal government to review the agreement and issue permits. On Feb. 21, 2006, then Gov. Frank Murkowski announced that Alaska had reached an agreement but needed legislative approval.
To push this forward, VECO allegedly asked Stevens for help. The government intends to introduce a series of intercepted phone calls during January and June 2006 between Stevens and Allen. In them, the government wrote in court filings, Stevens said he would "take action to accelerate and 'whittle down' the federal permitting and review process after the state legislature passed the gas pipeline legislation." And, it said, Stevens pledged to get the Federal Energy Regulatory Commission to give the green light.
That's exactly what Stevens did, according to prosecutors. On July 7, 2006 Stevens appeared before the Alaska Senate Energy Natural Resources Committee and asked legislators to pass Murkowski's natural gas bill. Three days later FERC issued a report urging the same thing. (This proposal ultimately failed and was criticized heavily by Gov. Sarah Palin, who ran in opposition to the government's coziness to Big Oil and ultimately passed a different natural gas plan after her election.)
The pipeline was hardly the only issue on VECO's agenda. The company turned to Stevens when it ran into trouble with the Pakistani government over its promise to allow a subsidiary to build a pipeline to a power generation plant near Karachi. According to court filings, in a 1999 letter Allen asked Stevens to see if the World Bank would send a representative to upcoming meetings. A few weeks later, Stevens wrote a letter to then-president of the World Bank James Wolfensohm and asked the World Bank to lift sanctions against Pakistan, according to prosecutors' court filings.
It also asked for help to win a $40 million grant from the National Science Foundation in 1999. The next year the company won a $27 million contract from NSF.
And the company turned to Stevens when it needed help on immigration issues. In the 1990s VECO was involved in a series of oil production plants and refineries on Sakhalin Island, Russia. VECO sought to model these in Alaska but needed help from Russian workers, who the company wanted to train on American equipment. To do so, Allen asked Stevens, once again, for help to get a federally funded training program for the Russian workers, according to prosecution documents. Apparently it worked. And in 2004, when VECO needed more training money, an internal communication showed that Stevens was able to aid again.
"Bill got Ted to fund this a few years ago," the executive wrote, according to court filings by the prosecution. "Bill went back to Ted Stevens over the weekend to ask about more money. Ted found $3 million that is available. Stevens [staff] person is going to call [an oil company executive] next week to make the money available so that Exxon can get some good publicity."
Exactly how much influence these activities will have on the jury is an open question. The seven-count indictment against Stevens focuses on something much narrower: allegedly failing to report on Senate disclosure records $250,000 worth of gifts -- including a 1964 1/2 Ford Mustang and handmade stained glass window -- and renovations his Girdwood, Alaska residence that prosecutors say VECO paid for.
Prosecutors argue that the significance of the gifts – and of Stevens' reasons for concealing them on his disclosures -- is because of the longstanding relationship and favors the senator did for VECO, particularly with its CEO Allen.
Stevens, who forced the government to hold a trial less than two months after the indictment, maintains his innocence. "I have said I am innocent of the charges against me and I think the trial will show that," Stevens told reporters on Friday. (He's so confident that he asked the judge Monday to allow him not to be in court the whole time in order to campaign back in Alaska.)
But what the evidence appears to point to, said Josh Berman, a former federal prosecutor, is that "just because Alaska is not one of the contiguous 48 it doesn't mean businesses and politicians aren't as actively involved in the lobbying give and take as people down in Washington."
Indeed, said Jeffrey Jacobovitz, a D.C.-based white collar defense attorney: "It will cast a shadow on the state's relationship in Washington unless the other Alaskan members will be able to show that this is an isolated incident."
And showing otherwise may be hard indeed. Ten other state Alaska lawmakers, lobbyists and company officials have been charged in connection with the VECO bribery scandal. Questions have also been raised about the potential involvement of Steven's son Ben, whose office was searched as part of the probe. And Alaska's sole congressional representative, Republican Don Young, is reported to be under investigation in the probe.
The charges against Stevens are only the latest in a string of cases that have ensnared legislators and lobbyists inside the Beltway in recent years. Former Rep. Bob Ney (R-Ohio) pleaded guilty in 2006 in connection with the now-incarcerated lobbyist Jack Abramoff, a scandal that led to charges against more than a dozen individuals. Rep. Rick Renzi (R-Ariz.) faces a trial on a real estate kickback scheme. And Rep. William Jefferson (D-La.) is fighting charges of political corruption and bribery. Both have pleaded not guilty.