Oil magnate sowed political clout

From Juneau to Washington, ex-VECO head wove a thick web of influence

Posted: Monday, August 06, 2007

ANCHORAGE - The former head of the oil field services company VECO Corp. was once a model of political clout.

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From the halls of Congress to the sequestered capital city of Juneau, Bill Allen spent more than two decades throwing lavish fundraisers for favored candidates, sending them generous campaign contributions and lobbying hard for the oil and gas industry.

But Allen's seemingly unshakable influence ended abruptly this year when the founder and then-chairman of VECO pleaded guilty to bribing state legislators.

Now, the fallen business magnate appears to be the link between at least three unfolding investigations of Alaska politicians by the Department of Justice, the FBI and the Internal Revenue Service.

Two influential members of Alaska's congressional delegation, Sen. Ted Stevens and Rep. Don Young, both Republicans, are under investigation for their relationships with VECO. Meanwhile, three former Republican state legislators have been indicted since December for accepting bribes from Allen and other high-ranking VECO officers.

Stevens' son, Ben, is also under investigation for ties to VECO and has not been charged. Ben Stevens is former president of the state senate.

The multimillion dollar company is the largest oil field services firm on Alaska's lucrative North Slope, home to the nation's most productive oil field. And until the federal probes surfaced last year, VECO was one of the state's most prolific campaign donors.

Allen made no secret of his preference for Republicans and pro-development Democrats. He routinely urged employees to vote for candidates who would push for oil and gas exploration.

In a company newsletter before the 2004 presidential election, Allen wrote that Democrats were tied to "extreme environmental groups" that wanted to "shut down Alaska and preserve it as a national park."

More than 70 percent of VECO's business worldwide comes from fossil fuel production and the company has logged more than $1 billion in sales. Its assets on the North Slope total more than $200 million and include an equipment fleet, maintenance facilities, a hotel, warehouses, fabrication facilities and a concrete plant.

"Needless to say," Allen wrote in the newsletter, "the best outcome for VECO and our employees would be for Republicans to control the White House, the U.S. Capitol and the Alaska State Legislature."

He and other VECO officials were known for their campaign fundraisers at the swank Petroleum Club in Anchorage. And they have given hundreds of thousands of dollars in campaign donations to Stevens, Young and a host of state lawmakers.

"They were a very important source of money to some of the more pro-oil company candidates," said Rep. Les Gara, D-Anchorage. "Without VECO's involvement in state politics, we'll have a much more level playing field."

Rick Smith, former company vice president, also has pleaded guilty to bribery charges. Court documents say Smith and Allen would meet politicians in Juneau's Baranof Hotel to discuss the exchange of bribes for votes on key oil and gas legislation.

Vic Kohring, Bruce Weyhrauch and Pete Kott are charged with taking bribes or extorting favors in exchange for votes on the state's oil tax last year. All have pleaded not guilty and are awaiting trial this fall.

VECO executives, led by Allen, lobbied on behalf of oil producers on the North Slope, the largest of which are BP PLC, Exxon Mobil Corp. and ConocoPhillips. Oil is the cornerstone of Alaska's economy. It funds about 80 percent of the state's annual budget.

"We discovered that there really wasn't anybody - not even the oil companies - defending themselves on the political front," VECO President Pete Leathard told the Anchorage Daily News in 2005. "So we took on the task."

Allen chafed at limits on his political sway and had two high-profile run-ins with the Alaska Public Offices Commission, which oversees the finances of state lawmakers.

In 1983, VECO began deducting money from the paychecks of participating employees and funneling it to candidates chosen by management.

The commission fined VECO $28,000 for failing to file campaign disclosure reports about its activities, according to court documents.

In 2003 Allen tried unsuccessfully to have his name removed from the commission's lobbyist list and argued that he should be exempt from caps on political fundraising and campaign giving.

"You have this very disturbing process where the biggest donors in Alaska politics had a financial interest in the biggest issue in Alaska politics and used their influence to damage the state incredibly," Gara said. "Their tentacles ran deep."

The value of VECO's federal contracts jumped after the elder Stevens, the longest-serving Republican in Senate history, became chairman of the Appropriations Committee in 1997.

Allen and Stevens are longtime friends and share ownership in a racehorse. Allen oversaw the renovation of Stevens' home in Girdwood in 2000. Federal investigators are looking into the extent of Allen's involvement.

At times, VECO's campaign contributions have crossed state and party lines, but still appeared to benefit the 83-year-old senator.

The company donated to the campaigns of Sen. Daniel Inouye, D-Hawaii, who is a close friend and ally of Stevens, and Washington's Republican Senate hopeful Mike McGavick, who ran against Stevens' Democratic nemesis, Maria Cantwell.

Allen expounded on his political views as publisher of Voice of the Times, a conservative editorial column embedded in the editorial page of the Anchorage Daily News. The unusual deal was intended to maintain diverse viewpoints after Allen's rival paper, The Anchorage Times, folded in 1992. The Daily News did not renew the Times' contract after it expired in May.

Allen stepped down after his guilty plea in May and was replaced by interim chief executive Dan Armel. Allen has kept a low profile since then and is cooperating with the investigation. Calls to Allen's home and to his lawyer, Robert Bundy, were not returned.

"He's completely separated from the company," said VECO attorney, Amy Menard. "He has no relationship to the company, no management involvement and no role in its operation." VECO is cooperating with the federal investigations, Menard said.

The Allen family still owns a majority of the company and Allen's daughter, Tammy Kerrigan, is chairwoman.

International engineering firm CH2MHill is in negotiations to acquire VECO. The deal with the Denver-based company could be finalized this month, said CH2MHill spokesman John Corsi.

VECO is playing a major role in repairing corroded pipes after crude oil leaks last year led BP to temporarily halve production at Prudhoe Bay, the nation's largest oil field. It was the lead contractor on the multibillion dollar cleanup of the 1989 Exxon Valdez oil spill.

VECO started in 1968 as a local firm specializing in work on offshore oil and gas platforms in Cook Inlet, south of Anchorage.

By the time crude began flowing from the North Slope in 1977, VECO had shifted its focus to engineering, management and construction services for large oil companies working in the Arctic.

The move proved lucrative and the company posted huge growth in the mid-1970s with revenues increasing from $8.9 million in 1976 to $56.1 million in 1981.

VECO suffered a bankruptcy setback in 1982, but bounced back after filing for Chapter 11 reorganization. The company gained an edge on competitors with its mostly nonunion workforce and won most of the large construction jobs on the North Slope in the mid-1980s.

Today, VECO is worth $463 million and employs more than 5,000 people worldwide, half of them in Alaska. Its subsidiaries operate in Russia, Canada, United Arab Emirates, Barbados, India and the western U.S.



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