Cowdery indicted on corruption charges

Lisa Demer

Nearly two years after the FBI raided his office, state Sen. John Cowdery was indicted on conspiracy and bribery charges.

The Anchorage Republican is accused of scheming with Veco Corp. executives to buy the vote of another senator in the battle for an oil tax favored by North Slope oil producers.

According to the 16-page indictment, Cowdery and others conspired in 2006 to give another senator $25,000, characterized as campaign contributions. The indictment was handed up by a grand jury Wednesday and filed in U.S. District Court on Thursday.

Cowdery was not arrested. He's been summoned to appear in U.S. District Court in Anchorage on Aug. 11.

Cowdery will fight the charges, said his attorney, Kevin Fitzgerald of Anchorage.

"Senator Cowdery will be exonerated, and this will be exposed for the mistake it is," Fitzgerald said in a written statement.

"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," Fitzgerald said.

Gov. Sarah Palin called for Cowdery to resign.

"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.

At 78, Cowdery is the oldest member of the Alaska Legislature. Until January, he was chairman of the powerful Rules Committee. He has been in poor health. He isn't running for re-election this year.

The indictment identifies the senator whom Cowdery was trying to influence only as "State Senator A." Fitzgerald said that person is Donny Olson, D-Nome, who in 2006 was running for lieutenant governor and looking for campaign funds.

The document describes a series of phone calls as well as a June 25, 2006, breakfast meeting. Olson, Cowdery and Veco chief executive Bill Allen met at the old Sunshine Grill in Anchorage, Olson's lawyer, Paul Stockler of Anchorage, said Thursday.

Olson didn't want to talk about the case against Cowdery in detail on Thursday but said he is cooperating in the investigation.

"If there is corruption out there, those people need to be held responsible," Olson said.

Olson has been cooperating with the FBI and federal prosecutors for about a year, Stockler said. He testified to a federal grand jury in June and has been interviewed maybe a half dozen times about the events covered in the indictment, and confirmed a transcript of the June breakfast, Stockler said.

Olson has no assurance that he won't be prosecuted, but Stockler said it appears highly unlikely that he will be.

"I don't believe Donny Olson did anything wrong," Stockler said. Olson never received the $25,000.

A SERIES OF PHONE CALLS

Cowdery and Olson are among six state legislators whose offices were searched by the FBI on Aug. 31, 2006, the event that broke into the open a bribery scandal that has shaken Alaska's political establishment.

Allen and Veco vice president Rick Smith pleaded guilty to bribing legislators to push through the oil tax supported by North Slope producers, and admitted in court papers that Cowdery was part of the conspiracy.

Two former legislators, Pete Kott of Eagle River and Vic Kohring of Wasilla, are serving federal prison sentences after being convicted on corruption charges related to the push for the tax. A third former legislator, Bruce Weyhrauch of Juneau, is awaiting trial.

The new indictment covers a series of phone calls that began in March 2006 and also the June 2006 breakfast. The FBI had wiretaps on Allen's and Smith's phones. They are not named in the Cowdery charging document, but Fitzgerald confirmed that they are the unnamed executives cited.

During 2006, legislators haggled over a new way to tax oil companies that would bring in more state revenue during times of high oil prices. Veco was pushing a 20 percent tax rate proposed by the Murkowski administration to help promote construction of a natural gas pipeline from the North Slope. Others wanted a higher rate.

According to the new indictment, in a March 30, 2006, telephone call, Cowdery told Smith they needed the support of legislators on the Senate Finance Committee, including Olson. He and his wife were "pretty good friends" with Olson. They could get together socially and talk about where Olson stood, Cowdery told Smith.

Later, on June 20, 2006, Smith twice told Allen in a phone call that the only leverage Veco had to change votes on the tax was by making campaign contributions and hosting fund-raisers.

Then, the charges say, on June 22, 2006, Smith told Cowdery "gotta have some votes here." Smith said company executives would help Olson if he would "step up to the plate," according to the indictment.

Cowdery said he had told Olson, "Maybe we can buy some gasoline," the indictment says. "You know, he's got planes," Cowdery told Smith. A doctor and pilot, Olson owns Olson Air Service Inc.

"Yeah. Yeah," Smith answered.

"That'd be pretty easy and clean," Cowdery said.

Smith said the company didn't "have a problem gettin' some checks to (State Senator A) ... if he can come through on this PPT ... and the gas line," according to the indictment. The tax was called the Petroleum Profits Tax.

Cowdery said he'd tell Olson, the charges say.

"Okay. I mean this is -- you know, I mean this is, ah, come to Jesus time," Smith said.

In another phone call, according to the charges, Cowdery told Allen that he had let Olson know he could probably get Olson some campaign money, but Olson would have to vote for the tax and the gas line. Cowdery said that Olson answered that he had no problem with that, the charges say.

THE BREAKFAST MEETING

On June 25, 2006, Cowdery, Allen and Olson met over breakfast at the Sunshine Grill, which used to be the restaurant next to the Moose's Tooth. They didn't know that a couple of FBI agents were in the next booth with a video camera. Stockler described that scene, based on evidence shown to him and Olson.

Over breakfast, Cowdery told Olson that he needed to go along with Cowdery and two other legislators. One was identified in the charges only as State Senator B. Fitzgerald said that was then-Senate President Ben Stevens. The other wasn't identified at all.

Olson said he needed to get through the primary battle for lieutenant governor, the charges say.

Allen asked him how much money he needed.

"I don't know," Olson answered, according to the indictment. "I've got $100,000 of my own ... but I may fall short, and that's why I haven't had a fund-raiser because I've got all this other stuff I'm trying to organize."

"Well, I think the way (company CEO) could do that is by check. Probably the best way for everybody," Cowdery said, according to the indictment.

"There are a couple of issues I can certainly help you out on. But I gotta be real careful on some of the other ones," Olson said.

"So you need ... some money here pretty quick?" Allen asked Olson. Olson nodded that he did.

Olson then asked Allen, "How much are you good for?"

"What?" Allen answered.

"How much are you good for?"

"Oh, we can probably go 25," Allen answered.

"That's a good start," Olson answered, according to the charges.

Later in the meeting, the indictment says that Cowdery told Olson that "I think we can make this work if you vote the way me and (State Senator B) were to vote when we get down (to Juneau)."

Olson said if they had 11 votes in the Senate and 21 in the House, "I'll be there with you," according to the charging document.

Later that day, Ben Stevens told Allen on the phone that if Olson got money for his campaign, "We might be able to keep him ... as a player," according to the charges. Two days later, Stevens talked to both Cowdery and Olson multiple times, the charges say. Stevens has denied that he did anything wrong.

Olson lost in the August primary to Democrat Ethan Berkowitz.

No Veco fund-raiser ever occurred; the money wasn't pursued after the meeting, Fitzgerald said.

"Our understanding was that while Senator Cowdery was present at this breakfast meeting on June 25, 2006, more than two years ago, he made more comments about the ham being served than he did about the discussion between Allen and Olson," Fitzgerald said in his statement.

LEGISLATORS REACT

Thursday morning in Juneau, legislators were anxiously trying to get information on the criminal charges against one of their colleagues. Cowdery wasn't there, although he attended the legislative session on Wednesday. His office was locked and dark.

Copies of the indictment were made, and lawmakers were seen walking with them in hand.

The Senate leadership appeared shaken initially, but later Senate President Lyda Green talked about the scandal involving a member of her coalition.

Green said Cowdery shouldn't step down. She called him a friend and noted his years in the Legislature, his frail health, his recent absences, the few months he has left to serve. He is part of her leadership team.

"We have a man who has served many years, at the end of his career. I would just hope people would step back and be very thoughtful about that," Green said.

It's been rare for a sitting state legislator to be charged with corruption in Alaska. Kohring was the third and Cowdery is the fourth.

If convicted, Cowdery faces a penalty of up to 10 years in prison on the bribery count and a maximum of five years for conspiracy.

Daily News reporters Wesley Loy and Terry Carr contributed to this story. Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.

Charges against Cowdery

COUNT 1: Conspiracy to commit bribery and extortion. Prosecutors allege Cowdery conspired with executives of oil services company Veco Corp. to bribe state Sen. Donny Olson of Nome to keep oil taxes from going too high.

COUNT 2: Bribery. Prosecutors allege Cowdery offered to bribe Olson in exchange for his vote on the oil tax legislation.

PDF: Statement from Sen. Cowdery's lawyers
PDF: Statement from Gov. Palin
Political corruption overview
By LISA DEMER
ldemer@adn.com
Contact Lisa Demer at LDemer@adn.com or on