Gov. Palin put donors and friends in key posts

Piller is a Times staff writer.

Alaska Gov. Sarah Palin, plucked from relative obscurity in part for her reform credentials, has been eager to tout them in her vice presidential campaign.

“I took on the old politics as usual in Juneau when I stood up to the special interests and the lobbyists and the big oil companies and the good old boys,” Palin told the Republican National Convention in her acceptance speech. She said that as a new governor she “shook things up, and in short order we put the government of our state back on the side of the people.”

By midway through her first term, she had signed an ethics reform bill, increased oil profit taxes and tweaked Big Oil again by awarding a gas pipeline contract to a Canadian company.


In some other respects, a Los Angeles Times examination of state records shows, her approach to government was business as usual. Take, for example, the tradition of patronage. Some of Palin’s most controversial appointments involved donors, records show.

Among The Times’ findings:

More than 100 appointments to state posts -- nearly 1 in 4 -- went to campaign contributors or their relatives, sometimes without apparent regard to qualifications.

Palin filled 16 state offices with appointees from families that donated $2,000 to $5,600 and were among her top political patrons.

Several of Palin’s leading campaign donors received state-subsidized industrial development loans of up to $3.6 million for business ventures of questionable public value.

Palin picked a donor to replace the public safety commissioner she fired. But the new top cop had to resign days later under an ethics cloud. And Palin drew a formal ethics complaint still pending against her and several aides for allegedly helping another donor and fundraiser land a state job.

Most new governors install friends and supporters in state jobs. But Alaska historians say some of Palin’s appointees were less qualified than those of her Republican and Democratic predecessors.


University of Alaska historian Steve Haycox said Palin has been a reformer. But he said she has a penchant for placing supporters, many of them ill-prepared, in high posts. He called it “cronyism” far beyond what previous governors have done and a contradiction of her high-minded philosophy.

Terrence Cole, an Alaska political historian, said Palin had in some cases shown “a disrespect for experience.”

Administration officials disputed such criticism. They said campaign contributions were not a factor in state appointments. Frank Bailey, the state’s director of boards and commissions, in speaking for Palin, who was not available to answer inquiries from The Times, said, “We are always seeking the best-qualified folks.”

In a little-noted sequel to Palin’s controversial dismissal of her public safety commissioner, the governor replaced Walt Monegan with former small-town Police Chief Charles Kopp of Kenai. The appointment unraveled almost immediately in what Cole called a vetting catastrophe.

A previous sexual harassment complaint came to light and Kopp had to resign two weeks after taking over. Alaska paid him $10,000 in severance.

After another of Palin’s campaign donors and fundraisers landed a civil service job with the state department of transportation, GOP activist Andree McLeod filed an ethics complaint against the governor and several aides, alleging that improper pressure was used to help Tom Lamal.

Lamal, a public school teacher in Fairbanks until he retired in 2006, was hired as a right-of-way agent despite reports of internal conflicts over whether he was qualified under state law.

E-mail messages between Palin aides, obtained by McLeod under the state public records act, indicate that the hiring was pushed “through the roadblocks” by a deputy to one of Palin’s appointees. And Palin aide Bailey sent Lamal a congratulatory note saying, in part, “Well now your foot’s back in the door and maybe we can tap you for other things.”

Lamal declined to be interviewed for this article.

Palin spokesman William McAllister declined to comment because of an ongoing state personnel board inquiry.

Palin told the Anchorage Daily News in August that her office merely worked to fix a “glitch” that prevented Lamal’s hiring because of outdated job requirements, and that no favors were given.

In other state appointments, records show that all five Palin selections for the powerful Natural Gas Development Authority, which oversees a proposed gas pipeline project, were donors. They included Kathryn Lamal, wife of Tom Lamal.

She appointed Kristan Cole, a school friend and a campaign donor, to the Board of Agriculture and Conservation, a farm regulatory position that by state law must go to people with strong business experience. Cole is a real estate agent.

All three appointees to the Board of Public Accountancy, which oversees the accounting industry, gave to her campaign for governor, as did all three appointees to the Local Boundary Commission, which regulates contentious land annexations by local governments.

Palin reappointed donor Steve Frank to the Alaska Permanent Fund Corp., which manages Alaska’s $29-billion oil revenue nest egg. Frank, a former Republican legislator, is married to another leading donor, Linda Anderson, a lobbyist for power and tourism companies, among others.

The Permanent Fund position earns a $400-a-day honorarium. Most other board and commission appointees receive per diem and travel expenses. Regardless of compensation, experts said, such appointments are coveted for their power and prestige, or as a political stepping stone.

Palin spokesman McAllister said that most Cabinet-level officials she appointed were not donors. In every state, he added, people who “apply to serve in a voluntary role are typically supporters of the governor.”

Records show that Palin donors obtained state-subsidized business loans from the Alaska Industrial Development and Export Authority, or AIDEA, whose mission is to encourage “economic growth and diversification of the state, including expansion of small businesses.”

In one case, Jae G. Lee, a former Los Angeles businessman who is the proprietor of Party Time, a rundown grocery store and bottle shop in Anchorage, sought a $2.7-million state loan to buy an aging strip mall in midtown Anchorage. It was on the market because of a glut of similar malls in the area, all of them losing customers to big-box stores.

Lee and his wife, who had contributed $3,000 worth of office space to Palin’s 2006 campaign, won the low-interest, state-backed mortgage although it was unclear how the old mall would add jobs. Lee said he did nothing to improve his acquisition, but with the cheap loan his profits have been robust.

Lee said he did not seek Palin’s help to obtain the loan.

Two other state-backed loans with favorable terms and questionable development benefits went to Palin contributor and local dentist Scott Laudon and his partners. The investors got $1.2 million to refinance debt on Northern Lights Village -- a gritty collection of shops including massage and tattoo parlors, a secondhand-clothing store and a video arcade. Its neighbors along a 1 1/2 -mile stretch of Northern Lights Boulevard in midtown Anchorage include a dozen strip malls.

Laudon and other partners also received $3.6 million to buy two automated car washes in Anchorage. The benefit to Alaska, according to the approval documents, was the retention of five jobs -- which would have remained without the subsidy. Laudon declined to comment.

The Times requested documentation on the Lee and Laudon loans, including interest rates, from AIDEA on Sept. 25, but the agency has not released the materials and has declined to discuss details.

The agency “probably looked at it this way: ‘This is a good loan that will be paid back,’ ” said Bob Poe, former AIDEA chief. “That helps them produce income to make other loans, much like a bank.” As economic development, however, both loans sound questionable, he said.

Three Palin appointees to the AIDEA board also gave to her campaign for governor. This year the board picked Palin donor Ted Leonard as chief executive of the $1.2-billion agency. His principal credential was having been financial manager of tiny Wasilla, Alaska. Palin appointed him to the city post when she was mayor.

Agency spokesman Karsten Rodvik said that Palin was not directly involved in the selection and that Leonard was the top applicant because of his long and diverse experience in finance and economic development. He also said that AIDEA managers were “not aware” of any influence by Palin or her aides on any loans.

Some of Palin’s other appointments have been controversial.

Franci Havemeister, one of several of Palin’s childhood friends tapped for leadership jobs, heads the state agriculture division. A former real estate agent, she was ridiculed in Alaska after it was reported that she had cited among her qualifications for the job a childhood love of cows.

And Palin’s choice for attorney general, Talis Colberg, stirred considerable puzzlement: He was virtually unknown beyond her circle near Wasilla. Colberg, who had a solo law practice and little management experience, now oversees 500 professionals.

Colberg was criticized by both Republican and Democratic legislators for his handling of the recent investigation of Palin’s actions in a controversy involving her ex-brother-in-law -- a state trooper -- and Monegan. A Superior Court judge overruled Colberg’s move to quash investigative subpoenas in the case.



Times staff writer Doug Smith and researchers Janet Lundblad and Maloy Moore contributed to this report.