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.

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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