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Correction to This Article
Previous editions of this article in print and on the Web incorrectly identified state Rep. Jay Ramras (R) as Ray Ramras. This version has been corrected.
'I'll Sell My Soul to the Devil'
Corruption Scandals Involve Alaska's Biggest Political Names

By Karl Vick
Washington Post Staff Writer
Monday, November 12, 2007

ANCHORAGE -- When the FBI came looking for corruption in Alaska politics, it found an excellent perch in Suite 604 of the Baranof Hotel in Juneau, the state capital. There, a profane septuagenarian named Bill Allen did business throughout a 2006 special session called to set taxes on the oil industry. With hundred-dollar bills in his front pocket for ease of access when lawmakers turned up with their hands out, the oil-services company executive turned in a bravura performance before the pinhole camera that federal agents installed opposite his favorite chair.

"Let me count first here," Allen said, shushing a former statehouse speaker as he counted out a bribe in video footage entered as evidence in the lawmaker's September trial, one of several crowding the docket of the federal court here.

On another tape, Pete Kott, the former Republican speaker of the Alaska House of Representatives, crowed as he described beating back a tax bill opposed by oil companies. "I had to cheat, steal, beg, borrow and lie," Kott said. "Exxon's happy. BP's happy. I'll sell my soul to the devil."

"Well, that will stay in this room," one lobbyist said as a midnight session wound down.

It did not, of course. Since breaking into public view a year ago when federal agents raided lawmakers' offices and homes -- finding $32,200 neatly stacked in a closet of Kott's condo -- the federal probe has produced four indictments, three convictions, three guilty pleas and a rapt audience keen to see how high into Alaska's political hierarchy the rot reaches.

Officially, the scandal has remained confined to Juneau, where Alaska lawmakers had grown so accustomed to operating under the presumption of impropriety that several of them embroidered ball caps with the letters CBC, for "Corrupt Bastards Club." (An Anchorage coffeehouse now offers Corrupt Bastards Brew.) But with signs that the investigation is brushing against Alaska's lone congressman, Don Young (R), and its longtime and venerated senator Ted Stevens (R), residents of the Last Frontier are experiencing a rare spasm of soul-searching.

"These disclosures have come as a real shock, because of revelations of what was going on, and because Alaskans have always felt that they are special," said Vic Fisher, 83, one of four surviving members of the convention that only a half-century ago wrote Alaska's state constitution. "And that this thing is ruining our national reputation."

Young, who has represented the nation's largest state in the U.S. House for 34 years, has not been named in the proceedings -- yet he reports spending $450,000 on legal fees over the past six months. Veco, the oil-field services company that Allen owned, was Young's largest campaign contributor.

Stevens, an iconic figure who has dominated Alaska politics for decades, has said little publicly since agents swarmed over his mountainside home, the renovation of which was overseen by Allen.

But Ben Stevens, the senator's son and a former Alaska Senate president, has been at the center of the scandal from the start. When Allen pleaded guilty to bribery and conspiracy charges, he stated that almost a quarter of a million dollars in consulting fees paid to the younger Stevens was in fact bribery.

"About the only ones that I can trust is you and ol' Ben Stevens," the oil executive told Kott on one tape.

The younger Stevens maintains his innocence, most recently in a call to an Anchorage radio talk show that noted he had received fees from fishing companies that benefited from federal grants his father engineered.

"I'm under investigation by the Department of Justice, the FBI, the IRS, the National Marine Fisheries Service," Ben Stevens told KFQD-AM. "This is a feeding frenzy. Anybody who says anything, this is an environment where any accusation is . . . is automatic guilt."

The probe has delivered low humor as well as bad behavior. In one exchange the FBI captured by wiretap, Allen handed a sexual potency pill and a sleeping pill to Kott -- who later phoned, confused and upset, after mixing them up.

"Sometimes you try to come up with an exaggeration to make a point," said Les Gara, an Anchorage Democrat. "It's hard to do that here."

Not all the indictments rose from oil money. Former representative Tom Anderson last month was sentenced to five years for taking money from a consultant for a company hoping to build a prison in Alaska; the consultant was working undercover for the FBI. The Republican lawmaker's only previous brush with the law came when his girlfriend, a fellow legislator, summoned police as they fought over bowling scores.

But Alaskans appreciate, on a personal level, the role of petroleum in their state. When vast deposits were discovered on the North Slope, the government negotiated a share of royalties that now accounts for 85 percent of the state budget. The windfall not only lets Alaska do away with personal income tax but also offers annual payments to every one of its 670,000 residents. This year's check: $1,654.

Dependence on such a mammoth scale naturally affected the dynamic in Juneau, where the Petroleum Club became the preferred site for political fundraisers.

"You get this frontier image of individualism, stereotypical bluster, self-reliance, and it plays right into corrupt politics," said historian Steve Haycox, author of several books on Alaska. " 'We don't need advice from anybody else. We don't give a damn about traditional institutions of American culture. We're just going to do it our way.' "

The bluster roared in Suite 604, where Allen and his chief lobbyist plotted strategy and dispensed cash.

"You got any hundreds?" Allen asks an associate before passing a wad to then-Rep. Vic Kohring, convicted early this month of bribery and extortion.

"I appreciate that, Bill. Thank you so much," Kohring says warmly. "What can I do at this point to help you guys? Anything? Just keep lobbying my colleagues for the governor's plan?"

The footage unspools like a Thomas Nast cartoon come to life, the grainy images punctuated by Allen's bray, the pop and squeak of a cork leaving a wine bottle and the sycophantic chortles of lawmakers vying for Veco's favor.

Veco Vice President Rick Smith, who also pleaded guilty, tried on one tape to coax Allen toward discretion. But Allen waved him off, referring to pressure from "clients."

Smith relents: "You have to get dirty and you have to produce; I understand that."

Alaskans' disappointment with all this has taken several forms.

Few profess shock.

"It was common knowledge that everything was corrupt," said Ray Metcalfe, a former Republican legislator known as "Disco Ray" while in office, but known in later years for his vain efforts to persuade state officials to investigate Ben Stevens. "It was common knowledge, but nobody wanted to talk about it."

The brazenness evident on the tapes has taken many aback, however.

"There's a whole kind of culture of unreality," said Michael Carey, former editorial page editor of the Anchorage Daily News, whose Web site, http://www.adn.com, posted much of the evidence. "I always thought there were people on the take, but in the way of campaign contributions -- traditionally legitimate ways to game the system."

Indeed, the fallout has some officials wondering what "normal" means in Alaska politics. Last month, a Fairbanks Republican accused a mining company of bribing private citizens by flying them to Anchorage and giving them spending money.

"I don't know if this is immoral behavior, illegal behavior, unethical behavior or just raw capitalism," said Rep. Jay Ramras. In the end, upon encountering one of the men he had accused, "we hugged it out, like they say on the HBO show 'Entourage.' "

Veco's bribes went to public officials, totaling $400,000, Allen testified. But some residents expressed dismay at the puny size of individual transactions. Kohring was convicted of taking around $2,000.

"The fact of the matter is, we all want to bribe a politician," said Mr. Whitekeys, an Anchorage entertainer whose long-running political cabaret is called the Whale Fat Follies. "We all thought it'd take a Mercedes or a Porsche. Nobody knew you could buy a politician for the cost of a used riding lawn mower."

Alaskans also express a regret bordering on shame that the misdeeds were uncovered by the feds. The state is deeply ambivalent about Washington. Thanks in large part to Ted Stevens's seniority, Alaska receives more federal money per capita than any other state, a situation that tends to undermine the image of flinty self-reliance.

It also encourages cronyism. Bob Kaufman, a Web tourism entrepreneur who moved to Anchorage as a venture capitalist, said that every one of a half-dozen businesses he researched for acquisition depended on a government subsidy for profitability.

"Most of the companies up here, I look at them and say, 'I'm not as valuable as an owner up here, because I don't have any buddies in politics,' " Kaufman said.

Still, the tapes produced sentiments that overwhelm even resentment toward Washington. "I spoke at a meeting of Alaska Conservation Voters recently, mentioned the FBI -- and people applauded!" said Vic Fisher.

The outrage helped Democrats push through ethics legislation last session, and in November catapulted a reformer into the governor's chair. Republican Sarah Palin was already running on clean government when the first indictments landed, right between the primary and general election.

In office, Palin has kept up the drumbeat, last month summoning lawmakers back for a new special session on the very oil-tax issue that brought the FBI to Juneau. In an interview, Palin said she wanted to "clear the legislature's name" by "allowing legislators the opportunity to revote.

"Those who are left," she added.

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