Transcript: Alaska: The Senator and the Oil Man -- NOW on PBS, August 1, 2008
HINOJOSA: The political scandal rocking Alaska has done something that was inconceivable just a couple years ago—it has unhinged the state's old boy network and opened the door for reformers.
Into the breach..... an unexpected figure. Sarah Palin, Alaska's governor.
PALIN: Good morning central Huskies:
HINOJOSA: The former beauty queen, small town mayor and mother of five is a conservative Republican who ran for office in 2006 and won, promising to clean up corruption—in her own party.
Before the elections, Palin was considered a long shot. But her plain spoken style and willingness to be tough on the oil industry has made her wildly popular here. With the VECO case constantly in the headlines Palin has already forced sweeping ethics reforms on the legislature in Juneau.
DOUGHERTY: She has a real instinct for politics and she comes in at a time when almost the entire rest of the political culture is discredited. And—you know, she doesn't speak to the chairman of the Republican Party. Because she turned him in for ethics violations when they both served on—the state commission that regulates the oil industry.
HINOJOSA: Last October, Palin proved she means business. She called law makers back to Juneau for a special session. She demanded they vote for the tax increase on big oil that they failed to pass while Bill Allen was handing out bribes in suite 604.
We caught up with Palin as the session was getting underway.
Her proposal— increase the oil profits tax rate about two and a half percent. It doesn't sound like much but with oil selling at more than 120 dollars a barrel it could add up to almost two billion dollars that oil companies will have to pay this year alone.
GOVERNOR PALIN: This is a big darn deal for Alaska. That non-renewable resource, of course, is so valuable it's being sold first at a premium by Exxon, BP, Conoco Phillips. And of course they're fighting us every step of the way when we say, "Well we wanna make sure, especially as it's being sold for a premium, that we're receiving appropriate value."
HINOJOSA: Palin may be talking tough to the industry, but like most Alaskans, she's a believer in big oil. The industry accounts for more than 85 percent of the state's tax revenues. Thanks to oil, Alaskans pay no income or sales tax. And mostly because of the royalties the oil companies pay to the state, each and every resident gets a yearly check from a special fund.
In a State like Alaska, can you in fact—really take on the power of the oil companies?
GOVERNOR PALIN: The oil companies don't own the resources. They
have leases and the right to develop our resources for us. And we share
a value, we're partners there, because they do the producing for us.
But we own the resources.
HINOJOSA: Palin gave legislators 30 days to debate her tax proposal.
During committee hearings,—
Palin's opponents—argued that higher taxes may ultimately force big oil
to cut back on investments in Alaska, especially as some of the oil
fields here are beginning to get tapped out.
Democrats like Representative Les Gara from Anchorage, aren't buying the industry's argument. .
GARA: Their bluff, every, single day, is that if you tax and get your fair share for the people of the state of Alaska, we'll just leave the state. As oil companies will go somewhere else. We know that's a bluff.
HINOJOSA: If they are bluffing, the VECO scandal has, for the first time in decades, given lawmakers like Gara the political capital to call them on it. Bill Allen and his men may be gone Gara says, but the oil industry is still wields a lot of power in these halls.
And Gara says, big oil still has questions to answer about the VECO scandal He pointed to this phone call— taped by the FBI—between Bill Allen and the president of Alaska ConocoPhillips, Jim Bowles.
ALLEN: We want to just see if we can't stop this thing, don't we?
HINOJOSA: The two oil executives are talking about stopping the tax bill.
BOWLES: If there's any way we can get this thing stopped, that's the best possible outcome.
ALLEN: Okay I got work- and it's just between me and you, but I got Pete Kott and uh, Jim, I mean Ben, Ben doing it, and hopefully we—they're gonna to try.
HINOJOSA: At the time of this recording Pete Kott was a representative in the Alaskan house and Ben Stevens was the President of the senate.
ALLEN: Maybe-maybe they can't get it done but they think that—they told me that they thought they could.
BOWLES: Okay, well that's good news. Bill I tell ya what, I think if we can this killed this time we can come back and package up something that works better for the governor and for ourselves.
GARA: That makes you ask the question—what did the folks at Conoco know? What did the folks at Bill Allen tell them about this little scheme they had to defraud the Alaska public
HINOJOSA: Gara and fellow democrat senator Hollis French recently wrote this letter to all three of the state's big oil companies, demanding that they come clean about their relations with VECO.
FRENCH: It's a question. And it's a fair question. And it—and—and as I'd said before, it's a question in the minds of—of tens of thousands of Alaskans.
HINOJOSA: All three oil companies have denied knowing about VECO's illegal activities. Conoco Phillips wrote back to the lawmakers saying "there is no indication that ...Conoco Phillips was involved in, or had any knowledge of the illegal acts...."
But ultimately Bill Allen may have cost the oil industry—billions. Last October Governor Palin got what she wanted. The Special Session ended with legislators voting to increase the tax rate on big oil.
Back in the newsroom, the Anchorage Daily News reporters consider the fall out.
Can you ever have a situation where Alaska politics—can be independent from the oil industry and the money and power that they wield here?
DOUGHERTY: I would say history suggests not. Because I don't think that there has been a time in—Alaska in the last 25 years, 30 years, in which the state was not—really being pushed around by the oil industry.
HINOJOSA: VECO has disappeared, bought up by a multinational conglomerate.
But with Senator Stevens' indictment it is clear that the scandal is not going away. And In this election nobody is happier about that than the democrats. Mark Begich is mayor of Anchorage, but he wants Ted Steven's seat in the US Senate.
In a state that hasn't sent a democrat to Washington in more than 30 years...polls now show he's got a chance.
BRANCACCIO: How much influence do oil industry players have over U.S. policy? Check out our exclusive expose of how big oil and gas companies "work" Capitol Hill against the interest of alternative and renewable energies. It's all on our website.