ANCHORAGE - Former state Rep. Pete Kott was a willing puppet dancing to strings pulled by officials for an oil field services company that stood to be enriched if a natural gas pipeline was built, a federal prosecutor said Monday at the opening of Kott's corruption trial.
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During deliberations of the Alaska Legislature over a new oil tax, Kott violated voters' trust and instead did the bidding of the chairman of VECO Corp., said Nicholas A. Marsh, a trial attorney in the Public Integrity Section of the U.S. Department of Justice.
"Mr. Kott has been charged with selling out," Marsh told jurors.
Kott, Marsh said, would acknowledge in secretly recorded conversations that he had to "cheat, steal, beg, borrow and lie" on behalf of VECO chairman Bill Allen, who has pleaded guilty to bribing lawmakers.
"We will prove to you," Marsh said, "that Pete Kott did every one of those."
Kott's attorney, James Wendt, told jurors that the seven-term legislator, a Republican who represented the Anchorage suburb of Eagle River, did nothing more than work hard to accomplish something that 80 percent or more of Alaskans wanted done - providing incentives for petroleum producers to build a natural gas pipeline tapping Alaska's vast North Slope reserves.
"This is a case about w-o-r-k - work," Wendt said.
Wendt acknowledged that Kott exhibited poor judgment in once instance: He let Allen reimburse him for a $1,000 campaign contribution check Kott donated to the re-election campaign of former Gov. Frank Murkowski.
But Wendt denied Kott acted in VECO's interest for the promise of a job, for a $2,750 poll done for Kott's re-election campaign, or for a $7,993 check paid through a phony invoice generated by Kott's flooring business. That check was an advance for a job Kott did not get to carry out in 2006 because of the disruption caused by federal raids on VECO and the offices of a half-dozen legislators, Wendt said.
Kott is one of three former Alaska Republican lawmakers facing corruption charges connected to VECO. He originally was scheduled to be tried with former Juneau Rep. Bruce Weyhrauch. The cases were separated last week by U.S. District Court Judge John Sedwick while prosecutors appeal Sedwick's decision to reject the contention that legislators have a duty to disclose dealings with a future employer while they consider laws that affect them.
The third indicted lawmaker is Vic Kohring, who represented Wasilla. His trial is scheduled for October.
Marsh on Monday told jurors that much of the trial would focus on the Legislature's deliberations on a revised Alaska tax on crude oil, the petroleum profits tax, or PPT. Petroleum companies wanted revised oil taxes settled before they would consider participating in a natural gas pipeline project.
The proposed new tax system for oil contained two crucial elements: the rate at which crude oil would be taxed and the rate at which oil producers would be reimbursed for reinvesting their profits in Alaska.
The bill as eventually introduced by Murkowski would have taxed 20 percent of the Alaska profits of oil companies working in the state. That tax would be offset by a 20 percent credit on companies' capital expenses and other exploration incentives - a so-called 20-20 version of the bill.
Marsh said secretly recorded conversations from phones and meetings in a room rented by VECO in Juneau's Baranof Hotel would show Kott doing VECO's bidding to keep the tax rate at 20 percent rather than a higher number advocated by some of Kott's colleagues.
As an oil field services company that performed much of the work in oil fields under contract to producers, Marsh said, VECO had a huge financial incentive to see legislation passed that favored producers. Kott, a member of the Republican majority and former House speaker, was in position to manipulate fellow lawmakers of behalf of VECO.
"He was their go-to guy," Marsh said.
Recorded conversations will show Kott seeking a job with VECO, Marsh said, including repeated references to serving as the warden at a VECO prison project in Barbados. VECO officials did not take that to mean he wanted that job, Marsh said, but as Kott's reminder that he expected to be taken care of with employment.
Marsh ticked off dates of recorded conversations between Kott and Allen or VECO's vice president of government affairs, Rick Smith, that he said would persuade jurors of Kott's guilt. In one, Kott acknowledged that he would favor a higher crude oil tax rate if not for Allen.
"I would be for 30 percent tax if it wasn't for this guy here," Marsh quoted Kott as saying.
Wendt asked jurors to show consideration to Kott for conversations he thought were private.
"Take a camera to anyone's life and the results are not pretty," he said.
The government's case will show no evidence of bribing, he said, only a legislator and two businessmen who shared a common goal with most Alaskans - a natural gas pipeline.
"It's not illegal to share a goal with a lobbyist or a non-legislator," Wendt said.
Kott's reference to a job in Barbados stemmed from chatter at a party, he said. Kott didn't even know anything about Barbados, Wendt told jurors, other than it being a warm-weather locale where he joked there might be topless sunbathing.
"It became a running joke," Wendt said. "It's a joke. That's all it ever was."
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