Alaska Dispatch

In 2001, Sarah Palin drove from her Wasilla home, through the downtown streets of Anchorage, to a large home near the bluffs of muddy Cook Inlet. The home belonged to Bill Allen, one of the most influential businessmen and Republican donors in Alaska history. Allen ran the state's largest oil-contracting firm, the ominously named VECO Corp., which contracted with some of the biggest oil producers in the world.

Palin was wrapping up her last term as mayor of Wasilla. She had higher political aspirations. She wanted the second-most powerful job in Alaska: lieutenant governor. In those days, there was virtually only one road to the state capital, and it passed through Allen. A foul-mouthed oilman, a high-school drop out, the son of fruit pickers, Allen was one of those "good ol' boys" who Palin touted taking on in Alaska when she gave her vice-presidential speech last night at the National Republican Convention.

Allen, then in his mid-60s, shaped Alaska politics through campaign contributions and sometimes flat-out bribes. He and his VECO executives, employees and family members gave hundreds of thousands of dollars to both Republicans and Democrats, lawmakers Allen believed would support the oil industry. He was so steeped in politics that he co-chaired the Alaska finance committee during the Bush-Cheney 2000 campaign.

A year later, a young hometown mayor was on his doorstep.

Palin sat with Allen in his den and sipped wine, according to a former VECO employee who says he personally fetched the bottle of wine for the two. The worker asked that his name not be printed because of the sensitivity of the matter. It's unclear why Palin was hanging with Allen; the governor's spokesman, Bill McAllister, refused to ask her. "This is a silly story and I'm not going to take any more time with this. Goodbye," said McAllister, hanging up on a reporter.

Whatever the case, after Palin and Allen met, VECO contributed $5,000 to Palin's campaign for lieutenant governor. The contributions came at $500 a pop over a two-day period in late December from Allen, his executives and a couple of their spouses, representing 10 percent of all money Palin raised in her 2002 campaign.

Today, Palin is Sen. John McCain's presidential running mate on the Republican ticket. She's cast herself as a reformer, the woman mayor-turned governor who cleaned up Alaska's politics. She now vows to change Washington.

But her meeting with Allen and the subsequent contributions she received from his company's employees raise a question: What kind of Republican did Palin set out to be when she made her first run for state office six years ago?

Allen, her one-time supporter, is now a convicted felon caught at the center of the largest federal corruption investigation in state history. He and another VECO executive pleaded guilty last year to bribing state lawmakers, making phony campaign contributions, and other corrupt acts. Later this month, Allen is expected to testify in federal court against U.S. Sen. Ted Stevens. The senator is charged with accepting more than $250,000 in gifts and failing to report them on his Senate disclosure statements. Most of the alleged gifts came from Allen and VECO, which remodeled Stevens's Girdwood home in 2000.

That Palin collected campaign contributions from Allen and his oil company in late 2001 was not necessarily unusual. The oilman's questionable dealings with politicians were an open secret in Alaska. Still, not every lawmaker came to Allen's trough, and most knew of his reputation, said Stephen Haycox, a history professor at the University of Alaska Anchorage, and frequent political commentator in the Anchorage Daily News.

Palin "should have known better, just as Ted Stevens should have known better than hanging out with Bill Allen," Haycox said. "Bill Allen's reputation goes back a long way, and everybody took money from him."

After losing the 2002 race for lieutenant governor, Palin supported Alaska's new Republican governor, Frank Murkowski. A former U.S. senator, one of Murkowski's first acts was filling his Senate seat with his own daughter, Lisa Murkowski. Gov. Murkowski recognized Palin as a rising start in the state Republican Party and he appointed her in 2003 to the Alaska Oil and Gas Conservation Commission, which helps regulate the state's oil fields, the largest in the country.

This is where Palin eventually made her split. While on the commission, Palin blew the whistle on another member, state Republican Chairman Randy Ruedrich, who was accused of doing party business on state time. It was a risky move, one that could have propelled her to Alaska's newest gadfly or a political career based on standing up to those "good ol' boys" of the Republican Party.

What set Palin's course to governor, and now vice president, had as much to do with her charisma and personal story as it did with timing and the failures of Murkowski. Unbeknownst to Palin, the FBI had launched a sweeping investigation into Allen and political corruption in 2004, the same year she ratted out Ruedrich. Meantime, Alaskans were growing tired of the Murkowski administration, particularly its policy to negotiate oil taxes with industry behind closed doors.

By 2006, the year Palin made her successful run for governor, her story as an ethics reformer was already well-known among Alaskans, thanks to extensive media coverage. Murkowski was suffering from some of the lowest approval ratings of any governor ever in Alaska. Palin beat him soundly in the Republican primary. "Sarah Palin is governor because Frank Murkowski was such a god-awful governor," said Larry Persily, who until June worked in the governor's Washington, D.C., office. "He created her."

After the primary, Palin faced former Gov. Tony Knowles, a Democrat, and Andrew Halcro, who was running as an independent. She got some luck almost immediately when the field narrowed. The FBI raided offices belonging to VECO and a half-dozen state lawmakers, and Alaskans suddenly became aware that the Feds were investigating corruption. Palin took advantage of the scandal and played herself up as somebody who had taken on her own party.

Although media during the 2006 race pointed out that the candidates had all received contributions from Allen and VECO employees in previous years, Palin was successful at setting herself apart. She attacked Knowles, her main opponent, for his relationship with Allen. Knowles had served two terms as governor between 1994 and 2004, and Allen had served on Knowles's transition team after he was first elected.

"We've been told that they literally flew off together to visit oil companies after he was elected," Palin told the Anchorage Daily News on Oct. 1, 2006, a month before she won the general election. "This isn't being negative. These are just facts that illustrate the relationship."

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