big oil

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Oil execs plead guilty in political kickback scandal

Story Highlights
• Cash, jobs, favors exchanged for support on pipeline, oil tax bills
• Pleas come days after indictments of lawmakers on bribery, extortion charges
• Feds: Indictments are product of probe, raids last year at six lawmakers' offices
• Oil execs could face 10 years in prison, stiff fine; legislators maintain innocence

ANCHORAGE, Alaska (AP) -- The founder of a multinational oil services company and one of his top executives have admitted to illegally paying more than $400,000 to Alaska lawmakers in a widening political corruption scandal.

Bill J. Allen, chief executive of Anchorage-based VECO Corp., and Rick Smith, a vice president, pleaded guilty Monday to bribing state legislators with cash and the promise of jobs and favors for their backing on bills supported by the company.

Allen, 70, and Smith, 62, appeared separately in U.S. District Court to plead guilty to extortion, bribery and conspiracy to impede the Internal Revenue Service.

The pleas came days after the indictment of one current and two former Republican members of the Alaska House of Representatives on federal bribery and extortion charges related to last year's negotiations for a new oil and gas tax and a proposed natural gas pipeline that would have benefited VECO.

House Democrats on Monday asked Gov. Sarah Palin and House Speaker John Harris, R-Valdez, to consider a fall special session to review how the petroleum profits tax was approved.

The three indicted lawmakers -- Rep. Vic Kohring of Wasilla and former Reps. Pete Kott of Eagle River and Bruce Weyhrauch of Juneau -- have pleaded not guilty to accepting payoffs from VECO.

The FBI has said the arrests Friday stemmed from an investigation that led federal agents last summer to raid the offices of at least six lawmakers, including Kohring, Kott and Weyhrauch. Among those raided was the office of then-Senate President Ben Stevens, the son of U.S. Sen. Ted Stevens, R-Alaska.

Ben Stevens did not seek re-election last year.

No charges have been filed against the younger Stevens, who has reported collecting more than $240,000 in consulting fees from VECO since 2000.

He could not be reached Monday but his Seattle-based attorney said the former state senator is blameless.

"Ben Stevens denies he's engaged in any criminal conduct and maintains he is innocent of any wrongdoing," John Wolfe said.

Allen's attorney did not return calls for comment Monday. Smith's attorney, John Murtagh, declined comment.

Allen also pleaded guilty to issuing company bonuses to VECO executives to repay them for campaign contributions they made to politicians, then claiming those bonuses as legitimate company expenses.

"It's an unfortunate day," said Amy Menard, an attorney for VECO. "No company wants to find itself where VECO is at. It's a difficult set of circumstances for any company to contend with."

Sentencing was not immediately scheduled. The sentence recommended for both is about 10 years in prison and a fine up to $150,000, according to the plea agreement dated Wednesday and unsealed Monday.

Kott, a former House speaker, is accused of accepting $8,993 in payments, $2,750 in polling expenses and the promise of a contract as a lobbyist for VECO in exchange for his support of the proposed pipeline and a tax proposal favored by VECO, according to court documents. A version of the tax passed, but the contract for the pipeline was never approved.

Kohring is accused of demanding and accepting up to $2,600 in cash and a $3,000 job for a relative from VECO executives in exchange for his support. The indictment also alleges Kohring sought but did not receive a $17,000 loan for credit card debt.

On Monday, Kohring was stripped of his job as chairman of the House Oil & Gas Committee, though he remained a member of the panel.

"I firmly believe in the judicial system and that a jury of my peers will find me not guilty of these charges at which time the leadership of the House has agreed to return me to my chair," Kohring said in a statement.

Weyhrauch, a 54-year-old lawyer, is charged with helping advance the oil service company's causes for the promise of legal work.

VECO's executives are major contributors to Republican political campaigns. The corporation, founded by Allen in 1968, also operates in Asia, the Middle East, the Caribbean and elsewhere in the U.S. It has about 4,000 employees.