Knowles defends taking money from BP Amoco

Posted: Friday, February 11, 2000

JUNEAU -- Faced with a hailstorm of criticism, the Knowles administration on Thursday defended its decision to let BP Amoco pay for the state's legal battle on behalf of the company's proposed takeover of Atlantic Richfield Co.

The company already has reimbursed the state $1.5 million for the investigation that led to a settlement, known as a charter, with BP Amoco. The charter also allows the state to seek more money from the company to challenge the Federal Trade Commission's decision to block the merger.

That has prompted sharp criticism from some lawmakers and others opposed to the merger.

''What does it mean to be in lockstep with any big corporation?'' asked Rep. Beth Kerttula, D-Juneau, a vocal critic of the merger and the administration's agreement. ''What does that do for our ability to remain independent?''

While critics have been unable to cite laws or ethics rules that forbid the practice, many simply find the arrangement a little sleazy.

''It's the appearance of impropriety that smells,'' said Sen. Sean Parnell, R-Anchorage, who plans to grill the Department of Law on the subject.

On Thursday, the criticism spread to the editorial page of the Anchorage Daily News, which denounced Gov. Tony Knowles' decision as ''inept, immature and indefensible.''

''Asking a private company to pay a state's legal bills in a political battle is unheard of and absurd,'' the paper wrote.

But Attorney General Bruce Botelho defends the arrangement as partly ordinary and partly unique.

When states negotiate with companies going through mergers, they routinely seek legal costs as part of a final settlement, Botelho said.

''When we undertake these kinds of investigations it should be the companies and not the public who have to bear the cost,'' Botelho said.

He cited the recent Carrs-Safeway merger as an example. That state got attorney fees in that agreement, Botelho said, along with money to monitor the deal to make sure the state's interests were protected.

The $1.5 million BP Amoco paid the state as part of the charter settlement was no different than any other settlement, Botelho said.

It's what happened afterward that makes the case unique. After the FTC sued to block the merger, Knowles ordered the state's attorneys to intervene to defend the charter agreement. That puts the state in the unusual position of defending a large multinational corporation in an antitrust situation -- with the corporation footing the bill.

Botelho said he understands how some might find that arrangement questionable, but maintains the state has not sacrificed its interests.

''What we have here is our effort to defend the terms of the settlement embodied in the charter,'' Botelho said. ''Our interests are not necessarily totally aligned with those of BP.''

Botelho also defended the way the money was handled, trying to rebut lawmakers who believe the arrangement may be usurping their power over the state's money.

''That money doesn't go into some Department of Law checking account,'' Botelho said. ''It goes directly into the general fund. It can only be spent by appropriation.''

Botelho said the Department of Law spent the money out of a special $750,000 appropriation for the merger investigation and its normal budget for oil and gas litigation.

Botelho wouldn't disclose how much of BP Amoco's money the state expects to spend fighting the FTC, saying it might give away legal strategy.

''How we've specifically allocated what goes toward the case is something that we hold pretty close to the vest,'' Botelho said.

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