Senator Charged in Scheme to Hide Oil Firm Gifts

Original Link: http://www.nytimes.com/2008/07/30/washington/30stevens.html?ref=politics

By DAVID JOHNSTON and DAVID M. HERSZENHORN

Senator Ted Stevens of Alaska, a legendary political figure closely tied to the rough-and-tumble history of his home state, and who wields outsize influence over federal spending, was indicted on Tuesday on seven felony counts of failing to disclose gifts that he received from an oil services company.

A federal grand jury in the District of Columbia charged Mr. Stevens, who is 84 and the longest-serving Republican in the Senate, with failing to report more than $250,000 in gifts, including extensive renovations to his house in Alaska, a Land Rover and home furnishings on financial disclosure forms that he filed from 1999 to 2006.

The indictment said that Mr. Stevens “knowingly and willfully engaged in a scheme to conceal” the gifts he received from the VECO Corporation, once one of Alaska’s largest oil field contractors, and its former chief executive, William J. Allen, who last year pleaded guilty in the case. And it comes nearly a year to the day after F.B.I. agents raided the senator’s home as part of a long-running and expansive public corruption investigation in Alaska.

Mr. Stevens was informed of the indictment through a telephone call to his lawyer on Tuesday morning and was allowed to surrender instead of being arrested. He was expected to make an initial appearance in Washington before a federal judge, Emmet G. Sullivan, once a hearing is scheduled.

Mr. Stevens declared his innocence and his intention to fight the charges against him in a statement posted on his Web site. “I am innocent of these charges and intend to prove that,” he said.

But the indictment dealt a sharp blow to Mr. Stevens’s effort to win re-election in November, and raised the hopes of Democrats who have not won a Senate race in Alaska since 1974. Democrats were already relishing the chance to unseat Mr. Stevens, having recruited Mark Begich, the popular mayor of Anchorage, to challenge him. Mr. Stevens first must face six Republican challengers in the state’s Aug. 26 primary.

In his statement, Mr. Stevens also noted that he had served the nation and Alaska for more than half a century, beginning in World War II. “I have never knowingly submitted a false disclosure form required by law as a U.S. senator,” he said in the statement.

He also said that, in accordance with Senate Republican rules, he had relinquished, temporarily, his leadership positions, as senior Republican on the Commerce Committee and on the Defense Appropriations Subcommittee. He had served as chairman of the full Appropriations Committee for nearly a dozen years, and also as president pro tem of the Senate from 2003 to 2007, which put him third in line for the presidency.

Mr. Stevens, a short, square-shouldered man who shuffles through the Capitol these days in shoes with thick-cushioned soles, has long been a powerful force in the Senate, directing hundreds of millions of dollars to Alaska each year. Mr. Stevens is regarded as a nearly heroic figure in Alaska, where he is often called Uncle Ted, and played a crucial role in its achievement of statehood, which became official in 1959. Hardened by decades of legislative battles, he can be soft-spoken but also one of the most cantankerous lawmakers.

Mr. Stevens was not charged with performing improper favors for VECO, the company that gave him the unreported gifts, although the indictment said Mr. Stevens “could and did use his official position and his office on behalf of VECO.” At a news conference on Tuesday, prosecutors said they would not explain why the exchange of favors did not itself result in a charge.

The indictment said that Mr. Stevens met with the company to discuss its projects in Pakistan and Russia, its requests for “multiple federal grants and contracts to benefit VECO” and federal and state assistance in an effort to construct a natural gas pipeline from the North Slope of Alaska.

The indictment of a sitting senator, particularly one of Mr. Stevens’s seniority and stature, reverberated swiftly and ominously through the Capitol, in no small part because of the political implications.

Democrats already had high hopes that they would win more seats in November. They now control the Senate by a razor-thin 51 to 49, thanks only to two independents who vote with them.

As far-fetched as it might seem, some Democrats have started thinking aloud that they may be able to win nine more seats in November, bringing them a filibuster-proof majority of 60.

Senator Harry Reid of Nevada, the majority leader, boasted on Tuesday that Senate Democrats were mounting strong races against Republicans in 11 states.

The indictment could have implications beyond Mr. Stevens’s political future. It could set back Republican efforts to open more of Alaska to oil drilling. Mr. Stevens has been a powerful voice in favor of more drilling, including in the Arctic National Wildlife Refuge of Alaska.

The charges also handed Democrats an easy political weapon. Mr. Stevens has been a prolific fund-raiser for his party’s candidates, and Democrats immediately attacked several Republican incumbents for accepting money from him.

Mr. Stevens, in his committee positions, has helped funnel billions of federal dollars to Alaska. Since 1999, he has directed more than $3 billion in earmarks — pet projects sought by lawmakers outside the usual budget process — for Alaska, according to Citizens Against Government Waste, a Washington advocacy group.

One earmark that became a symbol of wasteful excess was the so-called Bridge to Nowhere, which was to connect the town of Ketchikan to a small, sparsely populated island, even though funds for the project were ultimately canceled.

Senator Mitch McConnell of Kentucky, the Republican leader, refused on Tuesday to answer questions about Mr. Stevens. Appearing before a huge throng of reporters at what is normally a regular weekly news conference, Mr. McConnell spoke for a scant 21 seconds.

“Let me just say that the Republican conference, like you, just learned of this news,” he said. “We’ll no doubt have more to say about it later.”

Mr. Reid said he learned of the indictment in an e-mail message from a staff member. He arrived at the lectern for his weekly news conference flashing a wide smile, the TV camera lights glinting off his teeth.

“I, of course, have served with Senator Stevens my entire Congressional career,” said Mr. Reid, who was elected to the Senate in 1986. “It’s a sad day for him, us. But you know I believe in the American system of justice. He is presumed innocent.”

Mr. Reid said that Senate Republicans would have to decide how to deal with Mr. Stevens, but suggested that they might move swiftly as they did after the news last summer that Senator Larry E. Craig, Republican of Idaho, had pleaded guilty to disorderly conduct, a misdemeanor, for allegedly soliciting an undercover police officer in an airport bathroom in Minneapolis.

Mr. Craig was stripped of his leadership positions and announced that he would resign, but then sought unsuccessfully to retract his guilty plea. He ultimately decided to remain in the Senate to complete his current term at the end of this year.

An investigation of Mr. Stevens by the Senate Ethics Committee is inevitable, but the chairwoman of the committee, Senator Babara Boxer, Democrat of California, said it would defer to the criminal authorities to complete their investigation first.

One of only a few World War II veterans left in the Senate, Mr. Stevens grew up in Indiana and California and moved to Alaska in 1950, before it was a state, according to the Almanac of American Politics.

He first ran for the Senate in 1962, losing to Ernest Gruening, a Democrat. In 1968, Mr. Stevens was appointed by Gov. Walter Hickel to fill a vacant seat in the Senate, and has been re-elected six times since then.

He is by far the most prominent figure to be charged in a four-year-old political corruption investigation in Alaska, which has resulted in seven convictions, among them three state lawmakers and the chief of staff of former Gov. Frank H. Murkowski.

The case, which began as an inquiry into VECO’s relationship with Alaska lawmakers, is still under way and several well-known figures in the state are said to remain under scrutiny, among them Representative Don Young, a Republican, and Mr. Stevens’s son, Ben, former president of the State Senate. Both have denied any wrongdoing.

The indictment was announced by Matthew Friedrich, the acting head of the Justice Department’s criminal division. He said at a news conference that politics played no role in the decision to bring the case or the timing of the charges.

The indictment was announced one day after a scathing inspector general’s report that said that senior Justice Department aides had improperly asked political questions to fill nonpolitical jobs under former Attorney General Alberto R. Gonzales.

The charges against Mr. Stevens said that, beginning in the spring and summer of 2000, Mr. Stevens and Mr. Allen discussed whether VECO could renovate Mr. Stevens’s residence in Girdwood, Alaska.

After that conversation, and over the next six years, Mr. Stevens is accused of accepting from VECO and Mr. Allen more than $250,000 in free labor, construction work like flooring, heating, plumbing and installation of electrical wiring and gutters, and a Viking gas grill.