Sen. Stevens' Defense: Feds' Key Witness to Gain $40 Million for Cooperation

Sept. 23, 2008— -- As jury selection continues today in the corruption trial of Alaska's Republican Sen.Ted Stevens in Washington, D.C., court documents filed Monday shed light on a key element of Stevens' defense: the credibility of the government's star witness, Bill Allen.

Lawyers for Alaska's senior senator characterize Allen, who prosecutors say showered Stevens with illegal gifts, as a man who stands to lose $40 million from the sale of his former company, Veco, if he does not cooperate. "Forty-million dollars is no small incentive to testify in a manner acceptable to the government," defense court documents filed Monday night contend.

Allen sold Veco, an oil contracting concern to another company, CH2M Hill, with a stipulation that no one from the company would be indicted in the broader ongoing corruption investigation in Alaska.

"Defense counsel have recently learned that Mr. Allen stands to gain an additional $40 million of a total of $70 million in 'hold back' cash from the sale of Veco to CH2M Hill if he continues to cooperate with the government and if Veco continues to avert indictment," the documents, which were obtained by ABC News, state.

"If Mr. Allen fails to cooperate, or if his cooperation does not achieve its desired result of preventing a Veco indictment, then Veco must indemnify CH2M Hill for any losses up to the amount of the hold back," documents filed in the case Monday night noted.

During the trial, the government and defense are expected to call former Veco employees who are now employed by CH2M Hill. But the company lawyers are resisting the subpoenas, reportedly saying they amounted to to a fishing expedition.

In September 2007, CH2M Hill acquired Veco and had options in the contract to withhold payments if Veco were targeted in criminal proceedings. The case against Stevens and other public corruption investigations gained momentum in May 2007 after two top Veco executives, Allen who was the CEO, and Richard Smith, a former vice president of community affairs and government relations, pleaded guilty to illegally shuttling more than $400,000 to various elected officials in Alaska. Last September, state legislator Peter Kott, the former speaker of the state House, was convicted by a jury on public corruption charges for accepting funds to use his government position to benefit the company.

Alaska's public corruption probe has resulted in eight convictions so far, including Allen's. There are three outstanding cases, including the one against Stevens. The other cases involve John Cowdry, a current member of the Alaska state Senate, and Alaska House member Bruce Weyrauch, an attorney and member of the Alaska state House from 2002 to January 2007.

Monday's court filings seek to obtain information about current CH2M employees considered key in the defense of Stevens. "The subpoenaed documents will be relevant to impeach other CH2M Hill employees who are expected to testify for the government. These witnesses' livelihood depends in no small part on their employer averting an indictment," the filings claim.

Judge Emmett Sullivan could rule on the issue of the subpoenas Tuesday as jury selection in the trial continues. Opening arguments in the case are expected to begin later this week.

Stevens' defense team plans to call as many as five U.S. senators, including Sens. Patrick Lahey, D-Vt., and Ted Kennedy, D-Mass., and former Secretary of State Colin Powell.