Palin hired former lobbyist for pipeline company to oversee multibillion-dollar deal with same company

By Timothy J. Burger and Tony Hopfinger

Sept. 11 (Bloomberg) -- John McCain's choice of Sarah Palin as his running mate sent a signal that he would end business as usual and cronyism in government. Her record shows the Alaska governor engaged in some of the same practices she and McCain now condemn.

Palin's office approved a state job for a friend and campaign aide with whom she shared a land investment, financial records and interviews over the past two weeks show. She hired a former lobbyist for a pipeline company to help oversee a multibillion-dollar deal with that same company.

She named a police chief accused of harassment to head the state police. And she sent campaign e-mails on her city hall account while serving as mayor of Wasilla -- conduct for which she later turned in an oil commissioner on ethics charges.

These incidents raise ``some serious questions about her judgment and serious questions about her standards of ethics in public service,'' said James Thurber, director of American University's Center for Congressional and Presidential Studies in Washington. Suggesting a real estate investment partner for a job ``may be acceptable in Alaska; it would not be acceptable in Washington, D.C., a place whose norms she wants to change.''

Palin defeated an incumbent governor, a fellow Republican, in 2006 charging that her party's old guard had committed ethical lapses and become too cozy with special interests, including oil companies. A central theme in this year's presidential campaign has been that Palin's record demonstrates the change a McCain administration would bring to Washington.

Recent statements by the governor may erode that claim. In her acceptance speech last week, she suggested that she opposed the infamous ``Bridge to Nowhere,'' a $223 million earmark for a bridge to an island where only 53 people lived.

For It, Against It

When Palin, 44, campaigned for governor, however, she said she was in favor of the bridge. In 2007, she canceled the project in the face of national outrage. The state never returned the money allocated by the federal government, with some of the funds going toward other state and local projects.

And as mayor of Wasilla, a job she held for six years until 2002, Palin hired lobbyists to get federal funding for local projects. Wasilla secured $27 million in earmarks for the town of about 9,000 that included a rail project and a youth center.

Shortly after she was elected governor, Palin's office signed off on hiring Deborah Richter -- who attended college for a year then worked in bookkeeping and finance jobs -- as director of a division that distributes dividends to Alaskans from the state's oil-wealth savings account.

Richter, who said she's known Palin for 13 years, was Palin's gubernatorial campaign treasurer and ran her inaugural committee.

Sharing an Investment

The Richters and Palins also shared an investment: 30 acres of rural property near a lake in Petersville, Alaska, worth $47,300, according to Matanuska-Susitna Borough data.

``It sounds like a patronage deal for someone who ran your campaign; that's pretty normal,'' said Bill Buzenberg, executive director of the Center for Public Integrity in Washington. ``What's not normal is that they have business dealings together.''

No evidence has emerged to suggest that laws were broken in the appointment, and Richter said she ``didn't go in there with any promises from the governor or the chief of staff or anybody. I turned in my resume'' to the governor's transition team ``and I didn't know if anyone was going to call me.''

``She was qualified,'' said Pat Galvin, commissioner of the Department of Revenue and Richter's boss. Galvin said he also interviewed other people for the job and that Richter has done well. He said Palin's office approved his selection of Richter.

Not Palin's Decision

Palin's gubernatorial spokesman, William McAllister, said the decision to hire Richter was Galvin's. ``I have no knowledge of land ownership or college degrees,'' he said.

Deborah Richter gave up her share of the property last September in a divorce settlement that followed an affair with Palin's legislative director, John Bitney. Bitney and Richter both acknowledged the affair in interviews. Bitney said Palin fired him over it; Richter is still on the job. They are now married.

Last month, Palin signed a law granting TransCanada Corp., Canada's largest pipeline company, an exclusive state license and up to $500 million in subsidies to proceed with work on a $27 billion pipeline, which would carry natural gas from Alaska to other U.S. markets.

Once a Lobbyist

Marty Rutherford, the chief coordinator behind Palin's pipeline effort, once worked as an Alaska lobbyist for a TransCanada pipeline subsidiary, according to state records. Rutherford, deputy commissioner at the Alaska Department of Natural Resources, earned $40,200 as a lobbyist for 10 months in 2003 working for Foothills, the subsidiary.

Rutherford said in an interview that she only did consulting work for the company, including reviewing natural gas legislation. She said the work had no bearing on her future job as coordinator of Palin's pipeline team.

``I intended to leave state government when I went to Jade North, but as time went on I realized my heart was in government,'' she said, referring to the firm she briefly worked for.

Palin told the Anchorage Daily News last December that Rutherford's work with Foothills wasn't a conflict because it had been five years earlier.

Trooper Investigation

The governor already has triggered an investigation by the Alaska legislature into whether she fired the state commissioner of public safety, Walt Monegan, for not removing a state trooper involved in a contentious divorce from Palin's sister.

Palin has denied exerting any pressure on Monegan and said she dismissed him because she wanted to take the department in a new direction.

Since McCain picked Palin, seven Palin aides have declined to be interviewed on the matter by an investigator hired by the Alaska legislature, according to the House and Senate Judiciary committees.

Earlier this year, Palin found herself apologizing for her handling of Monegan's replacement. About six weeks before she learned McCain wanted her to be his vice president, she named Kenai, Alaska, police chief Charles Kopp to replace Monegan.

On July 25, two weeks after being appointed, Kopp resigned amid scrutiny over a 2005 sexual-harassment complaint against him while he was chief in Kenai. The complaint resulted in a letter of reprimand from the city, which Palin told reporters she never knew about and had believed that the allegations were unsubstantiated, according to the Anchorage Daily News.

Not a Harasser

In a July press conference, Kopp denied any harassment. ``I've always done every job I've ever done with honor and integrity,'' he said. ``There is one thing I am not. I am not a sex harasser.'' Attempts to reach him were unsuccessful.

Asked about these episodes in Palin's career, McCain campaign spokesman Tucker Bounds lauded her reform efforts. Bounds said Palin has allowed the public to scrutinize state financial information, ``cut wasteful spending by a quarter of a billion dollars just last year and ushered in landmark ethics legislation.''

The moment that crystallized her image as a reformer came when she turned in state Republican chairman Randy Ruedrich after discovering he was using his state e-mail account to conduct party business.

Palin and Ruedrich were serving together as commissioners on the Alaska Oil and Gas Conservation Commission, a state regulatory agency, at the time. Ruedrich resigned from the commission in November 2003, and was later fined $12,000, according to a 2004 article in the Anchorage Daily News.

In 2006, Palin found herself asking forgiveness for a similar offense from her past, according to a July 28, 2006, article in the Anchorage Daily News. She had sent campaign e- mails from her Wasilla mayor's office in 2002, when she made an unsuccessful run for lieutenant governor.

``For any mistakes like that (were) made, I apologize,'' Palin said of the e-mail controversy in July 2006, according to the Anchorage Daily News.