A key witness in an Alaska political-corruption scandal claimed Monday he was the target of a blackmail plot over his efforts to renovate...

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ANCHORAGE — A key witness in an Alaska political-corruption scandal claimed Monday he was the target of a blackmail plot over his efforts to renovate U.S. Sen. Ted Stevens’ home.

During questioning in an Anchorage federal courtroom, former oil executive Bill Allen alleged that his nephew blackmailed him about the work done on Stevens’ Girdwood, Alaska, home seven years ago. The FBI has been investigating the remodel.

For decades, Allen was one of the most powerful and politically connected businessmen in Alaska and helped raise money for politicians, including U.S. Sen. Ted Stevens, the longest-sitting Republican senator in Congress.

Allen was so vexed by the blackmail plot that he threatened to kill his nephew, according to an attorney who has reviewed a secret FBI affidavit.

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But Allen testified Monday that he didn’t think he made statements about taking the life of his nephew.

“I wasn’t going to kill him,” Allen said under cross-examination in the bribery trial of Rep. Vic Kohring, a former Republican state legislator. “I wouldn’t have done that because his mother is my sister.”

The nephew is Dave Anderson, who worked on Stevens’ home in 2000, according to Bob Bundy, Allen’s lawyer.

In a recent interview, Anderson said he worked for about two decades for VECO, an oil-field-services company founded by Allen. He declined to comment on the blackmail allegations made by his uncle.

“We’re sitting on a hot skillet here,” he said. “If I could give you the full scoop, I would, but I can’t now. We have family members to think about.”

Talk of both the blackmail and a possible plan to harm or kill Anderson was contained in an FBI affidavit reviewed by Jim Wendt, an Anchorage defense attorney. Wendt represented a former Alaska state legislator who was convicted last month for accepting bribes from Allen and VECO.

“The whole issue with the blackmail indicated that Bill Allen had threatened to kill his nephew as a result of the blackmail,” Wendt said.

These allegations add another layer to one of the biggest political-corruption investigations in Alaska history. Two state legislators were convicted earlier this year of bribery. In the summer, the FBI raided Stevens’ Girdwood home.

Allen, 70, is the founder of VECO, which recently was sold to CH2M Hill for more than $400 million.

Allen has contributed heavily to Alaska politicians, including Stevens, U.S. Rep. Don Young and a slew of state lawmakers.

From at least September 2005, Allen has been a target of the FBI. Federal agents gained court approval to secretly record Allen’s phone calls. In August 2006, Allen agreed to cooperate with federal prosecutors and the FBI as they continued to investigate Alaska politicians.

In May, Allen pleaded guilty in an Anchorage federal court to bribery and conspiracy charges. He agreed to cooperate in the ongoing federal investigation, including testifying against former lawmakers he claims to have bribed in an attempt to influence a 2006 legislative vote to raise state oil taxes.

In exchange for his plea and cooperation, the government may recommend Allen receive a reduced prison sentence and has agreed not to charge his children with crimes arising from the corruption investigation.

The investigation became public last year when the FBI raided Alaska lawmakers’ offices. In July, FBI agents took the extraordinary step of searching Stevens’ home, looking for evidence about the renovation.

Last month, Allen testified in the trial of another former legislator that he and VECO provided workers and paid some of the contracting bills in the home renovation. Stevens’ home, which sits at the base of the Alyeska Resort, was initially about 1,200 square feet. The 2000 remodel roughly doubled the size to include 10 rooms and three baths.

Steven has said that he and his wife, Catherine, paid all construction bills that were forwarded to him, and that they amounted to more than $130,000.

“This is a sad portion of my life — it will take time to explain,” Stevens wrote in a note to Wev Shea, a former U.S. attorney in Alaska.

Stevens has denied any wrongdoing.

Allen on Monday was asked if the remodel was a “gift” to Stevens. He answered, “No.” In an interview Sunday, Allen’s attorney, Bundy, gave another reason why his client might have been angry at his nephew. He said Allen was upset about Anderson’s relationship with a woman whom Allen used to date.

Bundy stressed that Allen had no intention of killing Anderson.

“Bill was very upset, but he was just talking,” Bundy said.

Tony Hopfinger: thopfinger@gci.net

Tony Hopfinger is a freelance writer in Alaska. Seattle Times reporter

Hal Bernton and freelance writer Amanda Coyne contributed

to this report.

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