Corrupt Bastards Club Redux

These articles were first posted on the defunct galleonpoint.com in September 2006. I’ve recently been able to recover some of these older files and given the number of search queries on this issue decided to repost here.

ALASKA: The FBI is looking for hats or garments with the label of “Corrupt Bastards Club” or “Corrupt Bastards Caucus,” according to the search warrant.

That's the nickname given to 11 lawmakers in after a newspaper column written by a supporter of the so-called all-Alaska gas line listed the legislators' campaign contributions from VECO.

The Corrupt Bastards Club started as a barroom joke last spring among Alaska legislators whose names were linked to large campaign contributions from oil field services company VECO Corp.

A 12th lawmaker, Senate President Ben Stevens, the son of U.S. Sen Ted Stevens, was cited in reports as receiving generous consulting fees from VECO. Stevens has collected more than $240,000 from VECO since 2000. In a apparent attempt at self-deprecating humour, hats were even made with the initials “CBC” on them.

The FBI wasn't laughing when agents served a warrant at VECO's headquarters and raided the offices of six legislators this week, looking for financial ties between the company and lawmakers, and documents having to do with Governor Murkowski's proposed gas pipeline contract and a related rewrite of Alaska's production tax laws.

Included in the search were the offices of legislators associated with the Corrupt Bastards Club: state Senators Donny Olson of Nome, Ben Stevens of Anchorage, John Cowdery of Anchorage, as well as state Reps. Vic Kohring of Wasilla, Pete Kott of Eagle River and Bruce Weyhrauch of Juneau.

A copy of one of the search warrants, obtained by AP, links the investigation to the new production tax law signed last month by Murkowski and the natural gas pipeline draft contract Murkowski and the state's three largest oil companies negotiated.

Among the items to be seized, according to the warrant, “from the period of October 2005 to the present, any and all documents concerning, reflecting or relating to proposed legislation in the state of Alaska involving either the creation of a natural gas pipeline or the petroleum production tax.”

Warrants

VECO and its chairman, Bill Allen, were staunch supporters of the governor's production tax plan, a version of which the Legislature passed in August after twice rejecting it earlier this year. Lawmakers have also twice failed to pass legislation related to the governor's pipeline fiscal contract with BP PLC, ConocoPhillips and Exxon Mobil Corp.

VECO's executives are top contributors to Alaska politicians, mostly Republican. Allen flew to Juneau at the end of the regular session to lobby lawmakers and watch the vote on the new production tax.

The warrant calls for seizure of documents “concerning, reflecting or relating to any payment” to lawmakers by VECO executives Allen and Richard Smith. Agents also looked for documents about contracts, agreements or employment of legislators provided by VECO, Allen, Smith and company president Peter Leathard.

In the warrant served on state Sen. Donald Olson, D-Nome, agents were also authorized to seize any documents related to fuel payments, landing strip fees, storage fees and similar aircraft costs. Olson owns a flying service.

Besides VECO and its executives, agents were authorized to seize any documents related to The Petroleum Club, Republican pollster David Dittman or his company, Dittman Research and Communication Corp., pollster Marc Hellenthal or his company, Hellenthal and Associates, Roger Chan, VECO's chief financial officer, and Olson Air Service, according to the warrant.

A receipt of items seized from Olson's office by the FBI and obtained by The Associated Press lists five things: Olson's 2006 year planner, Murkowski's gas pipeline proposal released in May, a manila folder labeled “APOC,” the Alaska Public Offices Commission, Olson's interim travel file and a binder related to the Alaska Stranded Gas Fiscal contract. FBI spokesman Eric Gonzalez said a total of 20 search warrants were being executed across Alaska, but would not say where.

Those caps

Specific items named in the search for seizure: “Any physical garments (including hats) bearing any of the following logos or phrases: 'CBC,' 'Corrupt Bastards Club,' 'Corrupt Bastards Caucus,' 'VECO.'”

House Speaker John Harris, R-Valdez, said he saw Smith and Kott handing out hats in June during the first special session when lawmakers voted down the petroleum tax bill. But he did not see anything with the “Corrupt Bastards Club” on it.

“They were handing out hats down at the Baranoff (Hotel) at the bar down there. All they had was 'VECO' on them,” Harris said.

Repeat performance

The latest FBI raids in Alaska are not the first time lawmakers have been scrutinized for political influences. Political bribery has led to a legislator going to prison in the past. Sen. George Hohman, D-Bethel, who spent a year in prison on two felony counts of bribery, was convicted on Christmas Eve 1981 for attempting to bribe Rep. Russ Meekins, D-Anchorage, for a vote to buy two Canadian firefighting aircraft.

"A Juneau jury pronounced Hohman guilty of agreeing to accept a bribe and then offering part of that $30,000 to Meekins in exchange for his vote to buy two CL-215 'water bombers' from Canadair Services Ltd.," reported the Juneau Empire on Dec. 28, 1981.

A jury of nine women and three men took only six hours to deliberate on the case that many legal experts felt would go in favour of Hohman. Meekins and Hohman were co-chair of the "powerful free conference committee" that sifted through some 200 requests for more than $500 million of funding when the bribe was made. Meekins alerted authorities that the bribe took place.

Former Gov. Bill Sheffield, also a Democrat, and his administration were under investigation for its role in steering a state office lease in the mid-1980s. The Aug. 15, 1985, edition of the Juneau Empire said the Senate Rules Committee and the full 20-member Senate considered to try Sheffield in the House of Representatives for "his role in the way a 10-year, $9.1 million lease for state office space (that) was awarded to a firm represented by a Sheffield friend and campaign contributor."

Former Watergate attorneys from both sides of the event that led to the impeachment of President Nixon heard testimony and argued the Sheffield case for 10 days prior to the rules panel, declaring that there was not enough evidence that the first-term governor had committed an impeachable offence.

Campaign Funding

From media reports, the most prolific and consistent "investor" in Alaska politics is the oil industry. The employees of VECO Corp. stand out as the largest contributing block.

Between 1998 and 2004, reports show that VECO employees and their family members contributed no less than $914,929 to Alaska political campaigns.

The following totals represent the amount of donations received from only the top seven VECO executives:

• Senate Rules Committee Chair John Cowdery: $24,550.
• Rep. Pete Kott, former speaker of the House: $21,300.
• House Rules Committee Chair Norman Rokeberg: $18,000.
• House Oil and Gas Committee Chair Vic Kohring: $14,708.
• Gov. Murkowski: $6,500 (not including donations to his U.S. Senate races).
• House Finance Committee Co-Chair Kevin Meyer: $12,300.
• House Finance Committee Co-Chair Mike Chenault: $12,000.
• House Judiciary Committee Chair Lesil McGuire: $12,000.
• Senate Labor and Commerce Committee Chair Con Bunde: $11,500.
• Senate Finance Committee Co-Chair Lyda Green: 9,000.
• Rep. Mike Hawker: $8,050.
• House Labor and commerce Chair Tom Anderson: $8,000.

These totals do not include Senate President Ben Stevens' "consulting" contract with VECO; Rep. Meyer's salary and benefits from Conoco Phillips; or the salary, retirement and stock options to the Rep. Hawker household from Conoco Phillips.

Rep. Hawker was apprised of confidential gas line contract negotiation information while under contract to ASCG Inc., a subsidiary of NANA Development Corp., which has contracts for oil field services with VECO and BP.

Shocked

“I was real surprised, of course, along with everyone else,” said Sarah Palin, the Republican candidate for governor.

“Alaskans are shocked, and I'm shocked about this investigation,” said Tony Knowles, the Democratic candidate for governor.

The major party candidates for governor are just two of the political figures in the state still absorbing the news of an apparent influence-peddling investigation by the FBI focusing on VECO.

Palin launched her gubernatorial campaign on the issue of ethics in government, having blown the whistle on Republican Party chairman Ruedrich for doing party business on state time while he was serving with her on the Alaska Oil and Gas Conservation Commission.

Meanwhile, Knowles describes himself personally and his time in Juneau from 1994 through 2002 as “squeaky clean.” They both seem to feel the latest turn of events highlights their good government themes.

Rep. Eric Croft (D-Anchorage) says he saw this coming two years ago during a legislative committee meeting concerning VECO's pitch for a sole-source contract award for a private prison.

“I said at the time, in 2004, on the Whittier proposal, someone's going to jail over this 'cause I could see how corrupt the process was,” said Croft.

Croft says the FBI probe probably kills a planned special session this month. “The special session was on life support anyway,” Croft said.

A troubled state

FBI agents in Alaska have raided the offices of at least six Alaska lawmakers Thursday in a search for any ties between the legislators and oil field services company, VECO Corp., an Anchorage-based oil field services and construction company

The “Corrupt Bastards Club”, the reference first sprouted in a barroom joke, according to state Rep. Mike Chenault, R-Nikiski. It happened earlier this year, after a opinion column highlighting Veco contributions to 11 lawmakers and Gov. Murkowski appeared in the Daily News and other newspapers.

“I can’t remember (who), somebody came up and said, ‘well, you corrupt bastards,’ more as a joke. That’s where that came from. There is no group,” he said. “Somebody thought it humorous enough to have CBC put on some hats.”

While the FBI are guarded about the raids a copy of the search warrant released by Sen. Donny Olson, D-Nome, one of those whose office was searched, the FBI is looking for:

• “Any and all documents concerning, reflecting, or relating to any payment by Bill J. Allen, Richard Smith, and/or Veco to, or for the benefit of, any political candidate, political campaign, or political action committee.”
• •Any documents concerning “any contracts, agreements, or employment” that involves Allen, Smith, or Veco president Peter Leathard.
• •Any documents relating to ethics standards and regulations for legislators “including any materials relating to limits on outside employment, limits on acceptance of things of value, and reporting requirements.”

In addition to information about Allen, Smith and Leathard, the warrant served on Sen. Olson seeks documents concerning Veco chief financial officer Roger Chan, Olson’s Nome-based air taxi company, and the Petroleum Club, an Anchorage private club.

The FBI also searched the offices of two powerful leaders from Anchorage: Senate President Ben Stevens and Senate Rules Committee Chairman John Cowdery, who told reporters he didn’t think he was under investigation.

Agents searched offices of Rep. Pete Kott, a former House Speaker from Eagle River who chairs the Legislative Council; Rep. Vic Kohring of Wasilla, who chairs the House Committee on Oil and Gas, and Rep. Bruce Weyhrauch of Juneau, who chairs the House Ways and Means Committee. All of the six legislators are Republicans except for Olson.

Stevens, the son of Alaska’s powerful U.S. senator, Ted Stevens, has said in required disclosure forms that he was paid $243,000 over the last five years as a consultant to Veco. Neither he nor the company has explained what he did for the money.

The place was crawling with FBI

The FBI has brought in agents from around the country for the investigation. The Internal Revenue Service and other federal agencies also are involved in an investigation which quickly stretched to past legislators, including former Sen. Robin Taylor. R-Wrangell.

Taylor is now a deputy commissioner in the state Department of Transportation.”

Agents with the FBI and IRS also met with the president and two other executives of Cook Inlet Region Inc. Friday afternoon.

Barbara Donatelli, CIRI’s senior vice president for administration and government relations, said the interview “was related to some of the investigation that is currently underway,” but that the agents told CIRI president Margie Brown that the regional Native corporation is not a target of the probe.

Agents also executed a search warrant and spent about three hours Friday afternoon copying computer hard drives at the office of Dittman Research and Communications Corp., said Terry Dittman, the firm’s research director and wife of Dave Dittman, who was duck hunting with his sons and didn’t know about all the commotion.

Department of Justice spokeswoman Jaclyn Lesch said Friday the searches began Thursday and are continuing Friday. FBI spokesman Eric Gonzalez said a total of 20 search warrants were being executed across Alaska, but would not say where.

"Those actions took place yesterday in cities in Alaska as part of an ongoing law enforcement matter. The (Justice Department) and FBI won't be able to comment any further," Lesch said.

Sins of the father

A 2003 article counted at least nine separate cases in which Sen. Ted Stevens (R-AK) has done favors for companies or organizations which paid his son Ben over $1.5 million in salary and "consulting fees." And there have been more since then. (The article, from the Los Angeles Times, was unearthed by the Washington, D.C.-based Sunlight Foundation.)

In late 2003, the U.S. senator finagled a $29 million earmark for "The Alaska Fisheries Marketing Board." Guess who got to chair the group -- which for two years did not disclose its activities? That's right: Ben Stevens. (A spokesman for the father said he merely "recommended" his son for the post.)

And last December, it was revealed that Stevens senior inserted a provision into a bill worth $10 million to a fishing venture for which his son Ben secretly held an investment option. The provision was estimated to be worth $1.5 million to Ben. (In the end, Ben didn't collect that profit, however; the venture soured for unrelated reasons.)

There's no evidence Ted Stevens is of interest to the investigation announced yesterday -- although he does have an office in the same town where one of the FBI warrants was executed. Keep in mind, however, investigators are required to follow up on any evidence of wrongdoing they come across. And judging by the news pictures, the FBI has been wheeling a lot of documents out of those offices. If they've already got reason to believe that evidence as outrageous as "Corrupt Bastards Club" hats exist, who knows what kind of stuff they might stumble across.