Alaska's 'earmarks' king Stevens, now indicted

Girdwood, Alaska - It is, according to federal prosecutors, the scene of the crime. But as potential illegal payout, it appears a paltry trade for what could be the ruin of Alaska Sen. Ted Stevens's long legacy of public service.

The modest chalet-style house on a dirt road south of Anchorage has peeling brown paint, a front lawn in need of mowing, and a pair of handmade campaign signs. The house, the official Alaska residence of Senator Stevens, was expanded and remodeled through unreported gifts from VECO Corp., a company that was once a giant in both the Alaska oil fields and the halls of political power, according to a federal indictment issued in Washington Tuesday.

The charges against Stevens are part of a federal probe of political corruption in Alaska that so far has sent three former state lawmakers to prison. The investigation is forcing Alaskans, who receive more federal funds in earmarks per person than residents of any other state, to take a harder look at their heavy reliance on US tax dollars and to ask whether the mutual back-scratching that has long characterized business and politics here needs to be reconsidered.

With Stevens's indictment, some see an end of that era. Others predict it may also end the career of an Alaskan icon who has dominated the political scene since territorial days.

"The phrase that comes to mind is 'sic transit gloria.' It is the end of an era," says Jerry McBeath, a University of Alaska Fairbanks political scientist.

The indictment, the first issued against a sitting senator since 1993, charges Stevens with seven felony counts involving a failure to report gifts, worth more than $250,000, bestowed from 1999 to 2006 by VECO and its chief executive – mostly in the form of materials and labor used to double the size of his Girdwood home. While Stevens is not charged specifically with taking bribes, the indictment alleges that he helped steer lucrative federal contracts to VECO and took other actions that benefited the company.

Though the most powerful figure entangled so far, the senator is not likely to be the last. His son, former state Senate President Ben Stevens, has been fingered in court testimony by VECO executives as the recipient of $243,000 in VECO bribes that they said were disguised as payments for "consulting" work.

The elder Stevens, the longest-serving Senate Republican in history, proclaimed his innocence in a terse statement Tuesday. "I have proudly served this nation and Alaska for over 50 years. My public service began when I served in World War II. 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," said the statement, released by his Senate office.

He also said that in line with Senate GOP rules, he would temporarily give up leadership positions. Stevens is a senior Republican on the Commerce Committee and Appropriations Committee.

His campaign issued a statement as well, insisting that his bid for a seventh term, in which he was already lagging in the polls against popular Anchorage Mayor Mark Begich, "is continuing to move full steam ahead."

After being appointed to office in 1968 and coasting to victory in every Senate election since, an indicted Stevens is now the decided underdog against Mayor Begich, a Democrat, and may not even survive the Aug. 26 GOP primary, says Ivan Moore, a pollster and political consultant who generally works for Democrats.

"Is Ted Stevens going to win in November? No. Is Ted Stevens going to win the Republican primary? He could, but I think it's unlikely," says Mr. Moore.

In fact, within minutes of the indictment, the Congressional Quarterly changed its rating of this race from Leans Republican to Leans Democratic.

"Even before the indictment, this race was already very competitive," says Jennifer Duffy, who tracks Senate races for the Cook Political Report in Washington. "What some people don't appreciate is that Senator Stevens has a primary race, and now it might be tougher to see him come out of it."

For Alaska, it would be a seismic shift.

Stevens has long been lionized as a pillar of the economy here. The state is reliant on North Slope oil and the money it generates, and it has been at least equally reliant on generous amounts of federal spending, otherwise known as "Stevens dollars," that is distributed throughout Alaska. "Stevens dollars" are particularly appreciated in the rural bush, where some Native villages still lack running water and rely on plastic-bag-lined "honey buckets" for toilets.

The nickname "Uncle Ted" is bestowed more in awe than in affection, according to Mr. McBeath.

"Stevens is not a likable person because of the nature of his personality. But I've rarely seen a public official as respected as he is because of his effectiveness," he says.

Alaskans have shown their appreciation over the years. At about the time the Justice Department says VECO's unreported gifts began, Stevens was honored as "Alaskan of the Century" by a civic group and by the state Legislature, and the airport in Anchorage was named after him.

In the Lower 48, Stevens has been much lampooned for his angry outbursts on the Senate floor, his promotion of big-ticket budget earmarks that appear preposterous outside of Alaska, and his oft-quoted speech about how the Internet is a "series of tubes."

True to the old Alaska saying "We don't care how they do it Outside," with "Outside" referring to every place that is not Alaska, Stevens shows little concern about being unpopular in the Lower 48. He even seems to relish his cantankerous image, donning an "Incredible Hulk" tie for major political clashes on the Senate floor.

If Stevens does not care what people say "Outside," however, several younger Alaska leaders do.

"Unfortunately, it's been that perception by mostly the Outside media that ... has been, 'What are you guys doing up there to clean up any corruption or perceived corruption?' " Gov. Sarah Palin said at a news conference in Juneau Tuesday. "We recognize that we have, perhaps, that reputation at this point." Governor Palin, a Republican who won her office on an anticorruption platform, touts several reform measures that she and lawmakers have put into place. She has also instructed budget writers to scale back the state's requests for federal dollars.

The governor drew ire from Stevens and US Rep. Don Young (R) for canceling state work on an expensive project that they had championed but was ridiculed as a "bridge to nowhere."

Other younger leaders also say Alaska needs to reassess its reliance on federal money and move on to a new era. Between Alaska's current oil wealth and the growing federal budget deficit and overall hardships in the Lower 48, it's the wrong time for the state to make big demands on the federal treasury, they say.

If oil prices average $120 a barrel for the current fiscal year, Alaska could reap a $9 billion surplus, notes state Sen. Hollis French (D). "Right now, we're sort of floating on a sea of oil," he says.

The move-on message was echoed Tuesday by Begich, who held a previously scheduled news conference intended to promote a new city program to convert to energy-efficient lighting. At the event, held on the sidewalk just below Stevens's office in the city's federal building, Begich found himself fending off reporters' questions about the man he hopes to replace in Washington.

"It's basically a sad day for Alaska, but we're going to keep focusing on the future of this great state," said the mayor, who was only 6 when Stevens was first sent to the Senate. "We're resilient. We're Alaskans. And we'll move forward."

• Staff writer Gail Russell Chaddock contributed to this report from Washington.