My turn: Alyeska's continued culture of falsification

Company has elevated management deniability to a science

Posted: Tuesday, April 11, 2006

The revelation that a water laboratory technician at the trans-Alaska oil pipeline terminal in Valdez confessed in federal court to falsifying ship ballast water-quality data follows a dreary but well-established pattern in the pipeline company's corporate culture that subtly encourages falsification of official records.

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In a written statement to the court prior to sentencing, the lab worker admitted his crime but said he did it "to avoid conflicts" with the management of Alyeska Pipeline Service Co., which operates the pipeline. He feared retaliation from his bosses if he correctly reported the company's noncompliance with water-quality standards. The technician altered the data to make it appear that water samples taken from the ballast of oil tankers met required criteria, when in fact they did not. Alyeska spokesman Mike Heatwole said the company had no comment on the technician's statement.

Alyeska reportedly initiated the investigation into the technician's misdeeds and cooperated with authorities in prosecuting him. That's a reversal of its customary practice of surreptitiously sanctioning falsification by its employees.

Realists may assume that Alyeska management foresaw the inevitable discovery of the false reports, and in a reverse-preemptive strike blew the whistle on the technician to distract suspicion from, hence avoid prosecution of, itself.

The culture of falsification within Alyeska has been nurtured as long ago as the oil pipeline's construction era, and was most dramatically exposed during a congressional hearing in 1993. In commencing the hearing, Rep. John Dingell, D-Michigan, said, "This hearing is, as used to be said by one great player of baseball, déj vu all over again. Essentially this is a re-run." He was referring to extensive congressional hearings in 1976, triggered by a scandal over the alleged falsification of thousands of oil pipeline weld X-rays.

The 1993 hearing disclosures by whistle-blowers led to an exhaustive audit of the pipeline company's operations ordered by the U.S. Bureau of Land Management. One of the audit's many objectives was to evaluate allegations that Alyeska management discouraged its workers from reporting myriad deficiencies in the condition, maintenance and operation of the pipeline (indeed, punished them if they did).

Although orders by Alyeska management to suppress pipeline deficiencies were typically implied rather than expressly stated, there were times when overt instructions to kill deficiency reports bobbed to the surface during the 1993 hearing. For example, one of the whistle-blowers told the committee that in 1992, Alyeska manager Rod Pugh told him: "Management got that bastard (James) Schooley (for turning in too many deficiency reports), and now we are going to get that other son of a bitch, (Charles) Biddy."

Biddy had testified before the committee to numerous violations of safety, health and environmental regulations systematically ignored by Alyeska. Management "got" Biddy when he was "promoted" with a $45,000 pay cut.

These and other allegations stemmed from riveting testimony before Congress in 1993 by Biddy and six other Alyeska employees who had blown the whistle on the company for extensive violations of quality-control mandates. As a result, they lost their jobs, were demoted, had their salaries reduced, were relocated, or were blackballed within the industry. Although Alyeska ritually denied the allegations, the sweeping audit confirmed many of them and refuted the company's denials.

Among other things, the audit revealed what one federal official called "an apparent cavalier attitude by Alyeska that has resulted in what we believe to have been document destruction and falsification."

Despite assurances over the years by successive Alyeska chief executives that these retaliatory measures would cease, they have nevertheless continued. This most recent episode of falsification suggests that Alyeska management has learned through experience how to erase its fingerprints from a systemic pattern of intimidation toward employees, leaving the employees to take the heat for accommodating the company's subculture of falsification.

With the water lab technician's confession, Alyeska has elevated management's deniability to a science by initiating the technician's prosecution for activities that management secretly sanctions. It's called having your cake and eating it too.

• Joe LaRocca is a former Alaska reporter and the author of a book on the political history of the oil industry in Alaska. He now resides in Pennsylvania.



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