Widening investigation may present a hurdle for gas pipeline project

Posted: Thursday, March 06, 2008

Federal prosecutors this week broadened their Alaska corruption investigation into another branch of government, giving Gov. Sarah Palin new challenges in winning a gas line for Alaska.

Monday, Jim Clark, chief of staff for former Gov. Frank Murkowski pleaded guilty to a felony conspiracy charge in connection with illegal contributions to the Murkowski re-election campaign. Clark was Murkowski's lead pipeline negotiator.

"This bleed over into another branch of government ... is very, very unfortunate in terms of Alaska's reputation," Palin said.

Previously, about 10 percent of the 2006 Legislature had been implicated in corrupt activity, with two of them already serving time in federal prison. But the investigation has been confined to the legislative branch, as far as was publicly known.

The story has received national attention.

"When I was back in D.C. - before Jim Clark's activity had hit the papers yet - that was certainly the talk of the town where I was, when I would come into the room," Palin said.

The governor said her administration is trying to set a new standard for open, ethical government. Her natural gas pipeline effort, called the Alaska Gasline Inducement Act, calls for a public process to select the licensee for the project.

None of the North Slope oil producers applied for the license, but an outside pipeline company, TransCanada, did. Another respected pipeline company, Mid-American Energy, declined to participate, citing the fallout from the corruption investigation in Alaska.

Federal Pipeline Coordinator Drue Pearce said the good news was that what happens in Alaska doesn't get that much coverage in Washington, D.C.

"What happens in Alaska is usually way below the fold," she said, using newspaper terminology for a story that gets a less prominent position in the paper.

"Those of us who are Alaska political junkies will pay attention," she said. "The greater universe of folks probably won't."

The U.S. Congress has already approved $18 billion in loan guarantees for the pipeline, which Pearce said was the most important federal contribution needed.

If more federal guarantees, or other assistance is needed, Alaska may need the support of the U.S. Congress again.

Pearce, formerly president of the Alaska Senate, said those who follow Alaska issues closely will note changes in administrations and legislative leadership, and will have confidence in dealing with the state.

House Minority Leader Beth Kerttula, D-Juneau, said Alaskans should be confident now that they've got ethical people in charge.

"We've already started making the changes that have to be made," she said.

Palin said the previous attempt to get a natural gas pipeline built involved closed-door negotiations with the oil industry, and it now appears that a prominent member of the industry, VECO Corp., was making illegal campaign contributions through the state's lead negotiator to the governor.

Palin said that was a process built on undue influence.

"It was a different time," Palin said. "It was a different way of doing business."

Pearce said Alaska may be fortunate that it is not the only state dealing with corruption issues.

"Alaska is only one state of many where the Justice Department is acting," she said.

U.S. Sen. Lisa Murkowski, R-Alaska, and the daughter of Frank Murkowski, declined an interview request, but issued a statement saying she was "disappointed and angered" by Clark's actions.

"This breach of the public trust brings further damage to the state and our electoral process," she said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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