An Alaska icon comes under fire

As controversy swirls around Alaska Sen. Ted Stevens's financial conduct, state politics may enter a new era.

Jet into Ted Stevens Anchorage International Airport, take a break in the Stevens Family Youth Center, or flush a toilet in a remote Native village on the tundra, and you benefit from the clout of Alaska's iconic senator. During nearly four decades in the US Congress, Senator Stevens has been so instrumental in Alaska's development that he's been lionized as "Uncle Ted," "Senator for Life," and "Alaskan of the Century."

So when federal agents converged July 30 on his house in the woodsy ski town of Girdwood, Alaska, to collect evidence against him, it was a humiliating rebuke to business as usual.

The raid on Stevens's home – apparently a search for evidence of improper freebies in a remodeling job overseen by an oil-services executive – was the latest glimpse into a vast corruption investigation. It's focusing on the ties between those who extract Alaska's rich natural resources and the politicians who control the purse strings.

The scandal touches all bases of Alaskan politics and economics: oil, fisheries, and the federal money that has always subsidized the development of this sprawling state. While misdeeds on the frontier are nothing new, the scope of the current mess is unprecedented, says one historian. "I don't think we've seen anything like this, certainly, since statehood," said Steve Haycox, a University of Alaska Anchorage history professor.

Revelations began a year ago, when federal agents swarmed legislative offices in Anchorage, Juneau, and elsewhere. Three former state lawmakers have been indicted for soliciting and taking bribes in exchange for industry-friendly votes on a controversial oil-tax overhaul. A fourth has been convicted of bribery and corruption.

The founder and chief executive of the state's largest oil-field-services firm, long a financial backer of Stevens and other Republicans, along with a fellow company executive, have admitted that they bribed lawmakers and laundered illegal campaign contributions. VECO Corporation Chief Executive Bill Allen – a business partner of Stevens who oversaw his remodel seven years ago – and a company vice president acknowledged paying state lawmakers more than $400,000 through bogus contracts, cash handouts, and illegal donations. Mr. Allen's company has benefited from tens of millions of dollars in federal contracts.

More charges are expected, with many eyes on former state Senate President Ben Stevens, son of Ted. VECO paid him $243,250 in what he and the company claimed were consulting fees, but convicted executives now describe as bribes. Suspicion also surrounds U.S. Rep. Don Young, Alaska's sole House member since 1973.

The scandals extend from the Bering Sea's fisheries to the Gulf Coast of Florida. There, a wealthy developer is suspected of being rewarded with a transportation earmark after collecting campaign donations for Mr. Young, a past chairman of the House Transportation Committee.

To former U.S. Attorney Wev Shea, a Republican critical of what he sees as the establishment's ethical lapses, the comeuppance is long overdue: "They are a group of people in Alaska that felt they were ... untouchable.... And that's over."

Others fret about damage to Alaska's reputation and economy, which depends on federal funding. During Stevens's tenure as chairman of the Senate Appropriations Committee, the money gushed. Alaska now receives, per capita, more federal money than any other state, about double the national average.

Budget hawks accuse Stevens of frittering that cash on vanity boondoggles. But many of the "Stevens dollars" go to truly needy areas, or to widely lauded programs. And Alaskans apparently appreciate that work. Sign-waving supporters and standing ovations met the senator in Anchorage when he spoke at an Aug. 7 Rotary meeting.

"I am proud of the job I've been able to do in Washington working for you and with you every day, regardless of the slings and arrows that I face," he told the crowd.

Stevens, who is in his 80s, will eventually leave the political scene. And there will still be plenty of federal spending here, economists predict. Vast stretches of federal land and natural resources will need to be managed, military bases will continue to operate, and federal obligations to the state's Native people remain. But federal assistance to economic-development programs may dry up.

Meanwhile, the political climate is changing. Voters last year dumped incumbent Gov. Frank Murkowski, who came to the statehouse after 22 years in the Senate, for outsider Sarah Palin, a former small-town mayor known as a whistle-blower who clashed with leaders of her own Republican party.

The state has long abided by the slogan, "We don't care how they do it outside" – "outside" being any place that is not Alaska. But now, it must address national perceptions. "Alaskans had better grow up and be very responsible and prove ... that we can be contributors," says Governor Palin.

Former House minority leader Ethan Berkowitz, an Anchorage Democrat, echoes that notion. "We cannot continue to walk around with our hands out," he says.

Lawmakers this year worked with Palin to pass a wide-ranging ethics-reform bill. And Palin has ordered an October special session for a do-over of the oil tax. As for VECO, it's declared itself on the road to reform. Allen and Smith have resigned. The company has launched an external audit and is being sold to a larger firm, CH2M Hill.

Still, some of Alaska's workings are unchanged. Last month, Young took to the House floor to defend education funding he termed "my money." He was the guest of honor at "Don Young's Annual Pig Roast," a pricey fundraiser that went on as planned on Aug. 8, with alterations. The event was moved to the home of former Gov. Bill Sheffield because the host from previous years, VECO's now ex-CEO Bill Allen, was unavailable. And guests walked past a phalanx of protestors.