Friend's gifts could be Stevens' downfall

Alaska Sen. Ted Stevens repeatedly turned to an oil-industry executive for free labor on a home remodel, free construction materials and even a cut-rate deal on a new Land Rover, according to a federal indictment filed Tuesday against the longest serving Republican in the U.S. Senate.

The seven-count felony indictment accuses Stevens of benefiting from more than $250,000 in largesse from Bill Allen, a friend and former chairman of VECO, an oil-field-services company, and intentionally failing to report the gifts on Senate financial-disclosure documents.

Stevens, an Alaska senator since 1968, has been a potent ally of Washington state. He helped forge federal fishery legislation that triggered a boom in Seattle fishing fleets, championed Boeing and worked to develop an oil industry that has many ties to Puget Sound.

In Alaska, he emerged as a political giant whose seniority in Congress allowed him to steer billions of federal dollars to help build the cities, towns and villages of the nation's largest state.

With the announcement of the indictment, Stevens' congressional power immediately dimmed: In accordance with Senate rules, he temporarily stepped down from his ranking positions on the Senate Commerce and Appropriations committees.

Stevens, 84, now faces big challenges on two fronts — a tough re-election campaign that just got a lot tougher and a longer-range effort to prove his innocence and avoid ending his career in federal prison.

Stevens has said he paid all bills submitted to him, estimating that amount at more than $130,000. And he appears to be girding for battle, which could unfold in a Washington, D.C., courtroom since the indictment was filed there.

"I have proudly served this nation and Alaska for over 50 years," Stevens said in a statement released Tuesday. "It saddens me to learn that these charges have been brought against me. I have never knowingly submitted a false disclosure form required by law as a U.S. Senator."

The federal Ethics in Government Act requires senators to file financial-disclosure statements detailing their transactions during the previous calendar year, including the disclosure of gifts above a specified value.

The outlines of the case against Stevens became public last July when federal agents launched an unusual raid on his Alaska home, searching for evidence about a 2000 remodeling project by VECO and subcontractors.

But the indictment offers a more detailed look at a much longer seven-year period in which Stevens is alleged to have taken free labor and other services from VECO without disclosing the gifts.

During this period, Allen sought Stevens' help in getting VECO funding for international projects, partnerships with Russia and Pakistan, federal grants and support for a new pipeline to tap into Alaska's North Slope natural gas, the indictment says.

But prosecutors accuse Stevens of filing false statements — rather than bribery — because there is no proof of a "quid pro quo" trading the VECO services for Senate actions, said Matthew Friedrich, the Justice Department's acting criminal-division chief.

The federal investigation into political corruption in Alaska began in 2004 and has ranged far beyond Stevens, Friedrich said.

Federal subpoenas were issued to some fish processors in Seattle as investigators sought to learn more about a fishery-grant program that was championed in Congress by Stevens and also involved his son, Ben Stevens, then a state senator.

But the indictments released Tuesday don't make any reference to fishery programs.

The investigation became public in 2006 as FBI agents searched the offices of some Alaska state legislators, looking for evidence of the relationship between lawmakers and VECO.

Since then, seven people have been convicted in the public-corruption investigation, including two former state legislators who took bribes to support legislation for VECO. Allen pleaded guilty to bribery and conspiracy and pledged to cooperate with the Justice Department.

Allen will be a central witness in the Stevens case. He is a one-time oil-field worker who rode the state's oil development to riches as VECO's chairman. Before being purchased by CH2M Hill last year, the company had revenues of about $1 billion annually. Much of VECO's work involved servicing the North Slope field that pumped crude for major oil companies.

Allen was a political backer and friend of Stevens. They both had ownership shares in a racehorse.

And in 1999, the indictment says, Allen — a car collector — swapped a new Land Rover worth $44,000 to Stevens in exchange for $5,000 cash and a 1964 Ford Mustang worth less than $20,000.

Allen also visited Stevens in Girdwood, a ski-resort town southeast of Anchorage where the senator up until 2000 had a modest 1,200-square-foot home.

The indictment alleges that Allen turned his oil-field-service workers into remodelers of Stevens' home. VECO employees helped design and complete a project that jacked up the house, creating a new first floor and greatly expanding its size.

"We're really pleased with all you have done," Stevens wrote in a Sept. 24, 2000, e-mail to Allen cited in the indictment. "... hope to see you and the chalet soon. best Teds."

In 2002, 2004 and 2006, VECO workers returned to do more renovation and maintenance work on the home, the indictment alleges.

"This is very, very detailed, and is very damning," said Wev Shea, a former U.S. attorney in Alaska and longtime friend of Stevens.

If the case does go to trial, one key issue could be the value of all the labor provided by VECO. A former VECO employee, David Anderson, estimated that labor at more than $150,000.

But in an interview, Augie Paone, a contractor on the job, said the labor would have cost much less if the job had been done efficiently.

Allen's testimony also will come under scrutiny.

In the trial of a state legislator last year, Allen testified that the labor done for Stevens was not a gift. If he says something different in a new trial, his credibility could be challenged by defense attorneys.

Stevens' relationship with Washington state has been long and complicated. In his early years, he joined with Washington Sen. Warren Magnuson to help forge landmark legislation that created a 200-mile federal fishing zone off the nation's coasts.

Tony Williams, who was chief of staff to former Washington Sen. Slade Gorton, said the industry always counted on Stevens to get big issues resolved or help settle fights.

But Stevens' relationship soured with Democratic Sen. Maria Cantwell, Gorton's successor and an outspoken opponent of opening up Alaska's Arctic National Wildlife Refuge to oil drilling.

Stevens hoped to play a role in trying to defeat Cantwell in her 2006 re-election race. But in part because of the emerging VECO scandal, Stevens had little impact and the candidate he supported, Republican Mike McGavick, ended up returning $14,000 in campaign contributions from VECO employees.

Staff reporters David Postman and Ralph Thomas and Anchorage free-lance reporter Tony Hopfinger contributed to this report.

Hal Bernton: 206-464-2581 or hbernton@seattletimes.com