By Manu Raju - 09/06/07 07:56 PM EDT
Critics say those earmarked federal dollars could be the first example of how Stevens rewarded Penney for a land deal in Utah that reportedly earned the senator more than $125,000. Penney’s group, for its part, rewarded Stevens with several expensive gifts at the time it was receiving the earmarked dollars.
Penney, who earlier this year testified before a grand jury as part of a federal investigation into political corruption in Alaska, did not return telephone calls, and his Alaska-based attorney, Bruce Gagnon, declined to comment.
An ongoing federal corruption probe has implicated Stevens, whose house was raided by the FBI and IRS in July. There is no evidence that the earmarks to Penney’s group are part of that investigation, though one source said he was aware that the FBI had been contacted about the matter.
It remains unclear whether the earmarks violate any laws prohibiting official business in exchange for financial transactions, but at the very least, it creates an “appearance” problem, critics say.
“That certainly shows an appearance of Stevens using his official position to financially benefit a group run by an individual who had cut him in on an investment which was paying spectacular returns,” said Ken Boehm, chairman of the National Legal and Policy Center, a watchdog group.
Penney told the Anchorage Daily News in 2004 that he invited Stevens in on the Utah land deal in “appreciation for all he’s done for Alaska and the country.” Stevens invested $15,000 initially in 1998, but sold his share of the property for $150,000 in 2004, according to press reports and his financial disclosure records.
That occurred around the same time that Stevens, as a senior member on the powerful Appropriations Committee, helped the Kenai River Sportfishing Association through the federal treasury. The group, which was founded by Penney, who now sits on the board of directors, secured more than $4.5 million between fiscal 2004 and 2006 to conduct and oversee research efforts on salmon populations in the Kenai River and a major tributary.
The spending laws do not specifically say the money was targeted for the group, but the funds were given to it after Stevens’s office instructed the Alaska Department of Fish and Game to do so, according to officials there.
Penney’s group works to promote tour-guided salmon fishing for sport, an economic engine that creates jobs and drives up tourism and property value in the Cook Inlet area of Alaska. Penney himself has seen the price of his properties along the Kenai rise, including a 1.3-acre parcel of land that he sold to Lisa Murkowski, the state’s junior Republican senator, for $179,400. Murkowski this year backed away from the deal after it was revealed she bought the land significantly under the assessed value of $214,900, and denies any wrongdoing despite an ethics complaint by the National Legal and Policy Center that is pending against her.
Penney has long fought for sport fishermen to get increased access to the Kenai, much to the chagrin of commercial fishing industry groups, which are fierce competitors with sport fishermen over salmon allocations. Officials from the commercial fishing industry say that the group shut them out of determining how to spend the earmarked dollars, alleging the sporting group is using the funding to lay the groundwork to help them at the commercial sector’s expense.
“This is probably the largest research grant that has come to the Kenai River and it basically has been laundered by the state agency,” said Ken Tarbox, who works on behalf of commercial fisherman and private anglers in the Cook Inlet. “It was a terrible public process and Stevens should be ashamed of his behavior.”
Ricky Gease, executive director of the sportfishing group, denies those accusations, saying commercial groups are “trying to impede the advancement of information to manage these fisheries better.”
Gease also downplayed Penney’s influence within the group, pointing to the fact that he is just one of 13 people who sit on the board of directors. He said his group worked with leading scientists to determine where best to spend the earmarked dollars to ensure money heads to researchers to review ways to preserve salmon populations. Gease argued that none of the money has been used for administrative and management costs and instead has been targeted for projects aimed at restoring, preserving and protecting salmon populations.
“Senator Stevens wanted to make sure the money was given to reputable groups, and that’s what we did,” Gease said.
Penney, a well-known real estate developer and political donor in the Cook -Inlet area, has longstanding ties to Stevens and other politicians in the state. Between 2001 and 2003, Stevens stayed free of charge at a Bristol Bay resort known as the Golden Horn Lodge, which was co-owned by Penney. But Stevens paid those bills after it was disclosed that he stayed for free at the expensive resort.
Stevens and Penney, along with the former head of the Veco energy company, Bill Allen, also co-owned a racing horse before Allen pleaded guilty earlier this year to bribing state lawmakers.
Penney has personally contributed more than $78,000 over the last decade, mostly to Republican politicians, including over $3,000 to Stevens and his political action committee, according to Federal Election Commission records.
Stevens has long been a strong booster of the Kenai River Sportfishing Association, helping it become a major player in Alaska over highly contentious fish-allocation issues, which dominate local politics. Stevens holds a popular fundraiser known as the Kenai River Classic every summer, raising about $1 million annually for the group as members of Congress and corporate officials descend on the river to fish for salmon.
According to his most recent financial disclosures, the group has rewarded Stevens with several gifts over the years, including the years it received earmarked dollars: a $1,400 rifle in 2003; a pistol worth $1,800 in 2004; an $800 revolver in 2005; and an $850 Marlin Guide gun in 2002.
Watchdog groups have long questioned Stevens’s relationship with Penney. Keith Ashdown, vice president of the watchdog group Taxpayers for Common Sense, said the earmarks could be the “the first example that shows what Stevens gave back to Penney in exchange for lucrative business dealings.”
Current and former Alaska agency officials deny that allegation, saying the money was used for a nonprofit group with substantial expertise on one of the most crucial sectors of the fishing industry in Alaska.
McKie Campbell, who ran the Alaska Department of Fish and Game from April 2005 to January, said the earmarked money was used for habitat protection and the development of salmon. “To that end, those benefit all groups,” he said.
Susan Aspelund, special assistant to the commissioner at the Alaska Department of Fish and Game, argues the funding has
come under scrutiny because of the intense battles between the commercial and sportfishing sectors over salmon allocations in the river.
She said Penney’s connection with Stevens shouldn’t conflict with what is enormously important federal funding aimed at helping with fish habitat.
“My take is that Alaska is so small that nobody would receive anything if simply having relationships with people was a factor — especially in the fish world,” Aspelund said.