First in a two-part series about campaign contributions to state legislators representing Haines.

By Tom Morphet

Officials of Veco Corp., the oilfield service company whose leaders pled guilty to federal charges of bribing Alaska legislators, gave State Rep. Bill Thomas, R-Haines, $10,000 in campaign contributions since 2004, including $1,500 each from chief executive officer Bill Allen and vice-president Richard Smith.

Allen and Smith pled guilty in May to federal felony charges of bribery and conspiracy following an FBI investigation that has brought charges against three current or former Republican legislators.

According to his campaign finance reports, Thomas received $7,000 from Veco company officials for his 2004 campaign and $3,000 since then, including during his 2006 run for re-election, making Veco his single biggest source of donations from employees of a single company.

The Veco-related contribu-tions, each at the $500 maximum, included ones from Allen’s son Mark, wife Jeannette and six company officials. Under Alaska law, corporations are prohibited from making campaign contributions, but employees and family members can contribute as individuals.

In a recent interview, Thomas said Veco money didn’t sway his votes on oil industry legislation. "No, I don’t think so… It’s no different from the Teamsters or anybody else I received money from… I look at (legislation) and say, ‘Is it fair or is it not? Is it good or is it bad?’ "

State Sen. Albert Kookesh, D-Angoon, received no money from Veco officials in his election to the state Senate in 2004, his largest contributions coming from labor unions, Native corporation employees and telecom-munications firms.

Kookesh said he has never received Veco money in his 11 years in the Legislature. "They hardly ever give money to Democrats. It was never a Democratic contribution com-pany."

Thomas also said that because he didn’t vote for last year’s petroleum production tax at the percentage sought by Veco, he didn’t feel the company’s money was tainted. The company was seeking a 20 percent rate; Thomas voted for a rate of 22.5 percent, the amount approved by the Republican-dominated legislature.

The tax is on the net profits of oil companies operating in Alaska and is lessened by a 20 percent tax credit on capital investments the companies make in the state.

Democrats voting against the production tax supported a rate of 25 percent, an amount that would have brought Alaska an additional $650 million annually in oil revenues. Sen. Kookesh supported the 22.5 percent rate.

Federal prosecutors charged Veco with offering bribes to legislators for votes to lower the tax rate and Gov. Sarah Palin has called for a special session of the Legislature in the fall to reconsider the production tax in light of the federal investigation.

The Anchorage Daily News, Alaska’s largest newspaper, recently editorialized that the production tax was "born in sin" and "not working as advertised," noting that in its first year it has brought in $137 million less than projected.

In interviews, neither Thomas nor Kookesh were enthusiastic about Palin’s call for re-negotiating the production tax. "Unless the governor is willing to come in and say we want (the tax rate) higher (than 22.5 percent), it may not be worth it. I don’t know where that gets us in our relationship with the oil companies," Kookesh said.

Kookesh challenged the assertion that the tax was approved under a cloud, saying that if Veco were successful, the tax rate would have been 18 percent. "It certainly didn’t reach as far as oil companies wanted it."

Kookesh acknowledged that Alaska is receiving a smaller percentage of royalties for its oil than several foreign countries. (State Rep. Les Gara, D-Anchorage, has said that if Alaska oil taxes were equal to the world average, the state would earn an additional $1.5 billion per year.)

Considering that Alaska is a safe, stable place to operate, you’d think royalties here would be higher, Kookesh said. "I’m sure there are other considerations like that could be brought in, if the governor brought the (production tax) back."

But he said Alaska is a "small player" in terms of world oil supply. "Surely we have something they want, but if they were to walk away tomorrow, they could find the supply elsewhere."

Thomas said that before calling for the Legislature to reconsider the production tax, Gov. Palin should look at votes of individual legislators under investigation. "When they blanket question (legislators) or puts doubts on (a vote), everybody feels like they’ve done something wrong. I don’t think there was anything wrong with (the production tax vote.)"

The Alaska Public Interest Research Group, a non-profit dedicated to promoting public and consumer interests, supported a production tax at a minimum of 30 percent. Interim group director Jim Sykes said the 22.5 percent rate was still favorable to oil companies, who along with the Murkowski administration started negotiations on the tax at 20 percent, assuming the final figure would be negotiated up a bit.

"The whole idea of a net profits tax is a bad idea because there are so many ways of cooking the books on what’s an expense. They can jiggle the figures however they want," Sykes said.

U.S. Senator Lisa Murkowski, R-Alaska, has said she’d give away the money she received from Veco’s Allen and Smith. Thomas said he couldn’t do that. "I don’t have any money to give away to anybody. I spent it on the race."

Next week: Campaign contributions and the cruise industry.