On July 10th, 2008, the Anchorage Daily News reports that current District O State Senator John Cowdery (R-South Anchorage) has been indicted by a Federal grand jury on conspiracy and bribery charges. ADN publishes a July 11th follow-up story HERE; KTUU Channel 2 coverage HERE and KTVA Channel 11 coverage HERE. The indictment revolves around the oil tax legislation pushed so hard by what was then known as Veco Corp. in 2006, when Veco executives schemed with lawmakers to win over another senator in the battle for the tax favored by North Slope oil producers. Cowdery has not been arrested. A magistrate judge has set the first court hearing for Cowdery for August 11th at 1:30 P.M.
KTUU video from July 10th at 10 P.M. embedded below:
Pete Kott and Vic Kohring also got caught up in the scheme, and are currently imprisoned. Bruce Weyhrauch also was involved, but he has not yet come to trial, awaiting an appeals court's determination on what evidence can be considered. Tom Anderson was also tried, found guilty and imprisoned, but in relation to a different scandal. Anderson was not involved with VECO. The Anchorage Daily News provides an abridged timeline of these events HERE.
Cilck HERE to view the 16-page indictment in PDF format. Specific counts as follows:
COUNT 1, CONSPIRACY TO COMMIT BRIBERY AND EXTORTION UNDER COLOR OF OFFICIAL RIGHT, Vio. 18 U.S.C. § 371: From in or about March 2006 and continuing until on or about August 10, 2006, in the District of Alaska and elsewhere, Senator John Cowdery, together with COMPANY CEO, COMPANY VP, STATE SENATOR B, and others both known and unknown to the grand jury, allegedly did knowingly and unlawfully conspire, confederate, and agree together and with each other:
(a). to corruptly give, offer, and agree to give anything of value to any person with the intent to influence or reward State Senator A, an agent of an entity, the State of Alaska, that received more than $10,000 in federal funding during the calendar year 2006, in connection with any business, transaction or series of transactions of $5,000 or more of the State of Alaska, in violation of Title 18, United States Code, Section 666(a)(2); and
(b). to obstruct, delay, and affect in any way and degree commerce and the movement of any article and commodity in commerce by extortion, that is, to unlawfully obtain or attempt to obtain under color of official right money or other property from COMPANY A, COMPANY CEO, and COMPANY VP with their consent for State Senator A not due State Senator A or his office in agreement for the performance of official acts, in violation of Title 18, United States Code, Section 1951(a).
COUNT 2, BRIBERY CONCERNING PROGRAMS RECEIVING FEDERAL FUNDS, Vio. 18 U.S.C. §§ 666(a)(2) & 2: Senator Cowdery is alleged to have corruptly given, offered, and agreed to give a thing of value to any person, with the intent to influence and reward State Senator A, an agent of the State of Alaska, in connection with a business, transaction or series of transactions of the State of Alaska involving anything of value of $5,000 or more.
If Cowdery is ultimately tried and convicted on both charges, he'll face a maximum combined penalty of 15 years in prison and a $500,000 fine, although his advancing age and precarious health make it unlikely he would be sentenced to the maximum prison time.
On its Alaska Politics blog, ADN has provided a decode of such terms as "State Senator A", confirmed by Cowdery's lawyer, Kevin Fitzgerald:
COMPANY A: Veco.
COMPANY CEO: Former Veco chief Bill Allen.
COMPANY VP: Former Veco exec Rick Smith.
STATE SENATOR A: Sen. Donny Olson, D-Nome.
STATE SENATOR B: Former Senate President Ben Stevens, R-Anchorage.
This whole issue revolves primarily around the petroleum profits tax crafted by the Alaska State Legislature in 2006. The Legislature met that summer in special session to haggle over a new way to tax oil companies that would bring in more state revenue during times of high oil prices. Veco was pushing for a relatively low tax rate as one of several options under discussion. VECO executives asked Cowdery for help in getting their version adopted. Cowdery then reached out to Senator Olson, telling him that the prospect of a natural gas pipeline and an oil tax were important to Veco. Oil companies wanted "certainty" on taxes before they'd commit to a gas line.
However, Olson, who was running for the Democratic nomination for lieutenant governor at the time, said he had a problem in that he needed to get through the primary battle for lieutenant governor against the more prominent Ethan Berkowitz. Olson apparently needed more campaign money. Eventually, after further discussion, VECO apparently agreed to donate $25,000 to Olson's campaign in exchange for his "cooperation". Cowdery is accused of facilitating the deal.
John Cowdery's reaction: Cowdery's attorney, Kevin Fitzgerald, issued a statement expressing his client's determination to fight the charges. According to the statement, "Senator Cowdery will be exonerated, and that this will be exposed for the mistake it is. We believe that in the indictment the government has seriously misinterpreted the few comments made by Senator Cowdery and has exacerbated the problem by presenting short snippets of conversation out of context".
Governor Sarah Palin's reaction: Governor Palin issued a statement calling for Cowdery's resignation. "It was disturbing to learn that another public official has been charged with violating the public trust. I urge Senator Cowdery to step down, for the good of the state," Palin said on July 10th. Since then, the conservative Voice Of The Times has panned Palin's statement, claiming that she is observing the presumption of guilt and speculating she might be getting revenge for Cowdery's skepticism about AGIA.
Senator Donny Olson's reaction: Although Olson has not been indicted, he's basically been accused in public of taking corporate campaign money in exchange for working a decision favorable to the specific beneficiary; consequently, a public response was warranted. And Olson's lawyer, Paul Stockler, delivered the response. Stockler said that Olson is cooperating with the investigation, having recently testified to a federal grand jury, and that he needed to read the indictment before he could comment further. Since I posted this earlier, Donny Olson has now issued a press release, acknowledging that he is "Senator A" and making the following statement:
“I state categorically that I have not received any money or other benefits (including aviation gas) to myself, personally or any corporation I own, or my campaign from VECO and/or its representatives during the time period of concern and subsequently,” said Olson.
“Secondly, the public record on my votes regarding the Petroleum Production Tax (PPT) is clear and without ambiguity. I rejected any attempt by VECO to influence my decisions,” said Olson. “A review of my voting record shows that I never voted in favor of a lower percentage surrounding the PPT subject matter or any other provision supported by VECO or VECO representatives.”
At 78 years of age, Cowdery is the oldest member of Alaska's Legislature. Until January 2008, he was chairman of the powerful Rules Committee, but resigned as the buzz about him continued to build. He has been in poor health, and will not be seeking re-election this year. Fighting to succeed him will be Republican State Rep. Kevin Meyer, who currently represents House District 30, and Democrat Doug Van Etten, a former Midtown representative on the Anchorage Municipal Assembly. Neither face primary opposition on August 26th; both have a clean shot until the November election. According to AlaskaReport, Van Etten has called for Cowdery's resignation.
The fact that John Cowdery's seat is up for grabs this year and that he is not running for re-election complicates the question as to whether or not he should resign. On the one hand, if he does resign, he leaves the people of Senate District O with no Senate representation; only the subordinate House representatives in HD29 and HD30 would be available to provide legislative representation. On the other hand, Cowdery's failure to resign may provide District O with flawed and impaired representation; his ability to effectively represent his constituents and get his peers to accept his proposed legislation on their behalf may be damaged.
And most Alaskans seem to share the latter opinion. In an unscientific poll conducted by KTUU Channel 2 on July 10th, a whopping 93 percent of the 2,159 respondents agreed that Cowdery should resign.
Cowdery claims his actions have been exaggerated and taken out of context. Yet that is also what Tom Anderson, Pete Kott, and Vic Kohring said; all three are now guests of the Feds at various correctional institutions. So it is difficult to believe that Cowdery could be any different.
And what about Senator Donny Olson, who represents Nome? Olson, who represents Senate District T, has no competition in his Senate race this year. Consequently, his impulse might be to circle the wagons and gut it out. But the phone transcripts cited in the indictment and reported in the media do imply a certain degree of culpability on his part. Nevertheless, the fact that he's been testifying to the grand jury could be a mitigating factor.
This situation has a way to go before it is wrapped up. And the longer it continues, the greater the likelihood that the Republicans will pay the price. Alaska's status as a "red state" is now being called into question.