Alaska editorial: Oil companies could've done more to prevent VECO bribery scandal

Posted: Thursday, October 18, 2007

Veco's executives sought the favor of Alaska's major oil producers. Veco had a track record of campaign law violations. It was well known Veco had hired legislators on some "consulting" contracts that raised eyebrows even before the FBI raids of 2006.

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Long before those raids and the recent indictments and convictions, VECO chairman Bill Allen and vice president Rick Smith had reputations that didn't jibe with the images of good corporate citizenship cultivated by Conoco Phillips and BP. (The other major Alaska producer, Exxon, doesn't seem to care much about its image here.)

But the companies were happy to have Mr. Allen and VECO work the Legislature on their behalf. They professed surprise and shock when it turned out Mr. Allen's methods included bribery.

Just how wise were the majors to his methods? And did anyone from the majors ever take Mr. Allen and friends aside and tell them to stay on the straight and narrow?

They likely would be better off if they had. Without VECO's corruption scandal, they wouldn't be looking at a special session to revisit Alaska's oil production tax.

That corruption taints the majors, even though no one from their ranks has been accused of any wrongdoing.

Bill Allen was a powerful part of the industry's overall lobbying effort. As Conoco Phillips Alaska president Jim Bowles told the Daily News, executives and lobbyists of the oil patch routinely talked and consulted with one another in Juneau, Mr. Allen among them. If they were willing to benefit from his lobbying work, the majors had an obligation to know how he went about his business, because his business was their business.

BP spokesman Daren Beaudo has said BP condemns "in the strongest possible terms" any illegal activity. Mr. Bowles spoke of his company's commitment to "open, honest and ethical behavior."

Fine words - but they are just words. Look instead at the companies' behavior. And their behavior was "don't ask, don't tell." As long as Bill Allen delivers, we don't need to know the details.

They could have taken a different approach, if not on the basis of virtue then out of enlightened self-interest:

"Bill, keep workin' it hard, but keep it above board. We already hold the high cards; we're the most powerful economic and political force in Alaska. You can play hardball, but there's no need to cross any legal lines. You make a good living serving the oil industry. Don't jeopardize it by being stupid. Are we clear?"

That's not just the wisdom of hindsight. Alaska's major oil companies knew who they were dealing with when Mr. Allen went to bat for them in the Legislature. They had the power to set and enforce the rules on their side of the game. They could have sent a clear and unmistakable message to stay on the legal side of the line - and they didn't.

And now they are paying the price for that ethical failure. This month, the Legislature will revisit the oil production tax born amid VECO's bribery. The taint of that scandal makes it that much harder for the oil industry to ward off an increase in taxes.

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