BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES

OF THE UNITED STATES CONGRESS

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

2226 Rayburn House Office Building Washington, D.C.

November 4 & 5, 1991

Chairman Miller, Members of the Committee, Good Afternoon.

Thank you for giving me the opportunity to testify on the Alyeska investigation conducted into my business activities and my private life.

My name is Charles Hamel, of Alexandria, Virginia. May I introduce my wife, Kathleen Morgan Hamel and my son Chuck, Jr., Prince William Sound commercial salmon fisherman of Cordova, Alaska. Accompanying me this afternoon is my friend and counsel, Billie Pirner Garde.

I grew up in Watertown, Connecticut, attending Assumption Prep School and a year at Assumption College in Worcester, Massachusetts. My sophomore year was at the Universite de Montpellier in France, after which I was drafted into the United States Army in Europe during the Korean War. I served in Military Intelligence on loan to the French Army in Koblenz, Germany. Upon my honorable discharge, I remained in Europe as Administrative Officer, Off-Shore Procurement Program, United States Embassy, in Brussels, Belgium, in support of the U.S. forces in Korea. In 1954 I returned home to continue my studies in foreign trade here at Georgetown University School of Foreign Service. Senator Hubert Humphrey helped me gain an elevator operator job in the Capitol. Thereafter I was a student staff member in the offices of Senator Ralph Yarborough and Majority Leader Lyndon B. Johnson.

In 1958 I became the Administrative Assistant to the late Senator Thomas J. Dodd of Connecticut. Following years in foreign trade, I again returned to the Capitol for two years as Executive Assistant to my former prep school roommate, Senator Mike Gravel of Alaska. Among my duties, as his assistant, I worked relentlessly to convince Alaska residents, commercial fishermen, Natives and the public that the oil industry would be good for Alaska and would surely build an environmentally sound pipeline and port terminal. Prior to construction, I traveled the 800 mile right-of-way from Prudhoe Bay to Valdez.

In the foreign trade business, I worked mainly as a management consultant, and commodities, ship and cargo broker/agent. In this capacity, I had the opportunity to represent foreign countries and arrange purchases of grain and other commodities on their behalf. Once I negotiated the purchase, I would arrange the ocean transportation of those commodities to other parts of the world. I also brokered the sale of oil and arranged long term crude tanker contracts. Eventually, I became an independent oil and shipping broker. In addition I acquired partial ownership in oil leases in Alaska and the lower U.S. I worked very hard and was fortunate enough to be very successful for a period of years.

In 1980, all my hard work and success began to fall apart when my clients discovered that they were not getting the crude that they were paying for, but were instead receiving oil that was significantly diluted with water. I could not cover the losses and by 1982 I had lost my clients, my source of income, and my credibility in the eyes of the business community I represented. From that point forward I began to lose everything I had worked for over the years.

At first, Exxon executives led me to believe the dilution problem was caused by malfeasance at the Panama Canal trans-shipment point. My investigations in Panama proved otherwise. I brought my discoveries to the attention of Exxon and other oil company executives who I had come to know personally over the years. However, soon I realized that the water in the oil was no mistake and it was, by no means, limited to me or my clients. In fact, I was provided Exxon documents that proved that Exxon, Arco and British Petroleum were quite aware of the water problem.

I had sincerely believed that the Alaska oil executives and Owners of the Alyeska Pipeline would take prompt corrective action. Nothing was done. Instead they denied the truth, and apparently hoped that I would forget about my business, the damage to my credibility and reputation, and my lost income. I could not do that then, or now. I built my business not only on hard work but on the honesty of my word. When the Alyeska owners cheated my clients, they were, in effect, making me out as a dishonest businessman before my own clients.

In 1985, I decided to expose the dishonesty of the oil industry in regards to the water in the oil issue, and attempted to insure that there was some accountability of the industry in connection with their business practices. By this time I had also come to the conclusion that the oil industry was turning Alaska into an environmental disaster. Employees I talked to in Valdez, friends I knew in the industry, people I had worked with for years were all discussing the dismal performance of Alyeska in regards to their commitment to environmental and worker safety.

I realized that I was not the only victim of the dishonesty of the oil industry in Alaska - we were all victims, and no one was doing anything about it. We were living in a conspiracy of silence waiting for an environmental disaster to occur and, as you know, it did. I decided that I had to do something to prove to the public that the oil industry had violated their legal and moral obligations to Alaska. The more I heard, the angrier I got about what was going on. Alyeska was polluting the water by introducing toxic sludge, including cancer-causing benzene, into the pristine waters of Port Valdez and Prince William Sound. Alyeska was poisoning the Valdez fjord's air by venting extremely hazardous hydrocarbon vapors directly into the atmosphere. There was no regulatory oversight, and thus no regulatory violations. It was as if the environmental regulations of the United States did not even apply north of the Canadian border -- no regulators, no oversight, no enforcement -- nothing. In fact, the oil industry wasn't putting out anything but poison and lies.

In order to pursue the excessive water in the oil matter, I filed an administrative complaint with the Alaska Public Utilities Commission ("APUC"). At the hearing, former Alyeska employee, Erlene Blake, at great risk, testified that, as senior laboratory technician responsible for testing the amount of water in the oil, she continually discovered excessive water in the oil, but had been directed by her supervisors to falsify the log entries to show only acceptable levels in the samples. During this same period, she was required to falsify laboratory analysis with regard to water quality. The reports to the United States Environmental Protection Agency ("EPA") were false. Because she was so troubled by those instructions, as suggested by an assistant lab tech, she secretly maintained log books of duplicate entries, recording the true lab analysis beside the falsified data -- a red book for the water in oil and a yellow log book for the EPA violations.

Alyeska adamantly denied her allegations and discredited her testimony by claiming she couldn't produce the notebooks with the double entries of oil and water. In fact, Ms. Blake could not produce the logs because an Alyeska supervisor broke open her personal locker and stole them. She couldn't prove her allegations, and neither could I. But we knew it was true. So did Alyeska.

Not long after the hearing I was contacted by an Alyeska employee - Bob Scott. Two Alyeska supervisors boasted to Mr. Scott and several fellow technicians that the log books had been removed from her locker, had not been destroyed and were not produced as required by the APUC subpoena. He was ashamed of Alyeska management's illegal actions. He knew that Alyeska had cheated me, had deceived the APUC, and had discredited one of their own honest employees. He also knew that Alyeska was violating numerous environmental and worker safety regulations.

Bob Scott was among the first of many employees that provided me information about violations of environmental regulations by Alyeska. As I learned of these abuses, I in turn, provided the information to the appropriate government agencies responsible for investigating these matters, including EPA, the General Accounting Office and the Alaska Department of Environmental Conservation. In the beginning it was very difficult to get any government action on the employee's allegations. I then turned the information over to the press and, sometimes, to members of Congress. There was a profound skepticism everywhere that the oil industry would knowingly pollute the environment and harm their own employees in Alaska. The Alyeska public relations campaign was working. Few newspapers would print the facts. Few regulators would even listen.

Alyeska tried hard to discredit me by attacking my motives, my sources of information, my credibility, and attempting to portray me as a vengeful - if not slightly insane - opponent of the oil industry. But their "kill the messenger approach" backfired. It seemed that the harder Alyeska tried to discredit me publicly, the more their employees came to me with information privately. In fact, frequently the public denial of facts, known to be true to Alyeska employees, led those employees to my doorstep.

By the end of 1985, I had provided substantial documentary evidence to the EPA about environmental wrongdoing by Alyeska. Rather than deal honestly with these facts, Alyeska sued the EPA to force disclosure of the documents. The United States District Court, and the U.S. Court of Appeals, I am grateful to say, denied Alyeska access to the documents because to do so could have identified my sources, who feared retaliation.

In 1985 the oil industry attempted to find out what it would take to make me go away. As requested, I calculated my actual business losses at $12 million dollars. I also insisted that actions be taken to clean up the environmental issues I had raised, including an audit of the Valdez terminal, a pollution monitoring program funded by Alyeska and run by an independent group not accountable to the oil industry, and a medical monitoring fund for the Alyeska technicians who had been needlessly exposed to toxic vapors. The industry obviously was not prepared to meet those demands to get rid of me.

I continued to receive information from employees -- horror stories of poison and pollution which I conveyed to the media, Congress and government agencies. Alyeska had to be dragged kicking and screaming through each corrective action. However, it was apparent to fishing community leaders like Dr. Riki Ott and Rick Steiner of Cordova, my loyal supporters throughout the years, that a major disaster was imminent. Early in 1989 the severity of the problems demanded Congressional intervention and your Committee's Majority staff agreed. But within weeks the Exxon Valdez oil spill occurred, and everything in Alaska changed forever. The allegations I had been pointing out to the EPA for years to no avail were suddenly "high priority," and even the public began to doubt the public relations departments of the oil industry.

The day after the spill, leaders of the fishing community and fish processors telephoned for my help. I immediately flew to Valdez to do what I could. In addition to helping the fishermen, I assisted this Committee with housing and support services during their on site investigation, and also provided a network of information to members of the media who were attempting to provide accurate coverage. As with most disasters, even the oil spill brought out the best of people in Alaska trying to help. I made numerous new friends, and put old friends together with new ones. The evidence continued to mount.

The more information I was provided, the more disgusted I became. The more disgusted I became, the harder it was to ignore the information that employees provided me. What I perceived as the "Sovereign State" of Alyeska, continued to operate as a company without accountability, beyond regulation, absent a corporate conscience. I desperately wanted to go on with my life, to leave behind me the disillusionment that I felt, to do what other men at my age are doing -- walking on the beach with their wife, enjoying the hard earned fruits of their labor. Instead, the fruits of my labor were stolen from me, and the peace and contentment I tried to achieve were replaced by worrying and concern for those people who turned to me for help. Personally, these were terrible, dark nights for Kathy and me. And it went on for years.

One day in April, 1990, a Dr. Wayne Jenkins came to me. He described his company, Ecolit Group, as a well funded group of attorneys who wanted to help me. They would provide me the tools to protect those workers who had turned to me for help, Ecolit could help protect their jobs, and supply me support staff and assistance to manage what had become a full time, financially costly, job of protecting whistleblowers and coordinating government investigations. I thought it was too good to be true.

As I wrote in a note to my Anchorage attorney and faithful supporter, Julian Mason, Ecolit was "the stuff that dreams are made of." This Ecolit Group showed up in answer to a dilemma that seemed to have no end for me. I was tired, almost broke, and broken in spirit. I wanted to be able to turn the reins of these responsibilities over to someone else. My wife had been caring for her invalid parents in Washington State without my help. It seemed as if we had spent a decade fighting to keep what we had, losing our assets, and becoming the only hope for many Alaskans who turned to us for help, for no one else was there for them to turn to.

The Ecolit Group seemed such a perfect answer. Dr. Jenkins was anxious to learn all about my Congressional contacts, my informants, interested media, and my plans. He expressed moral outrage at the environmental wrongs being committed by the oil industry, and was anxious to provide legal support to stop the polluting, the dumping and other wrongs that I revealed to him. Now that I have had the opportunity to review the transcripts and tapes of my meetings with Wayne Black, I am embarrassed at many of the things that I said trying to get him interested in helping to do the right things without compromising my sources.

Obviously I did compromise many of them. Inadvertently, of course, but nonetheless, I let them down and I will always have to deal with that. I also let this Committee down. In my zeal to find an answer to the problems I was facing - no resources and increasing obligations to more and more people - I exaggerated my influence with this Committee and I exposed information that I had been entrusted with by Committee staffers. In my business activities I knew that if it sounds too good to be true, it probably isn't true. In this instance, I failed to recognize the warnings that should have tipped me off to Ecolit's true purpose.

Yet, I could never have known nor little imagined the extent of the betrayal of my trust. The details of the Wackenhut surveillance are now well known. Alyeska authorized the stealing of our trash, monitoring and taping our telephone calls, concealing video cameras in hotel rooms, stealing our mail, and illegally obtaining our personal and financial information. Alyeska successfully launched an internal "witch hunt" to target everyone who had communications with me. By illicitly obtaining AT&T telephone records they identified the people who we called nationwide and people who called us, and - worst of all - violated my confidences with people who trusted me. Bob Scott was fired, lost his home, lost his retirement. Others have lost their jobs, become suspected of being sources of information and now live in fear of being monitored by their employer. All that I tried to do to help stop Alyeska's wrongdoing was being turned upside down by them.

I am repeatedly asked how all this makes me feel. When I first learned of the surveillance activities I was afraid for my family and friends. Next I became angry, furious that Alyeska would stoop to dishonesty, deception and theft out of paranoia that the truth would somehow find its way to the public. It is the classic psychological projection when Alyeska justifies their elaborate sting operation by claiming that I had "stolen" documents. I never picked through Alyeska's trash, broke into its offices, taped their phone calls. I never posed as one of their own. I never attempted to destroy their careers, or worse, invade their families' privacy. I have always done exactly as I said I was going to do -- insist on responsible environmental management of the oil industry in Alaska. Today I am simply saddened and disgusted; but, in a strange way, grateful and relieved that this entire incident has come to light because it demonstrates better than I could ever do that Alyeska, and its owners, cannot be trusted.

The last ten years of my life have been spent trying to warn the public that Alyeska and Exxon cannot be trusted with our natural resources, they cannot be trusted as business partners, and they cannot be trusted about their alleged claim that we desperately need more oil. It is now up to the Congress to sort out the truth from all the lies.

In 1988, ARCO, Exxon and British Petroleum failed to tell this Committee about the existence of the Pt. McIntyre billion barrel oil field directly under the West Dock, virtually within sight of the Alyeska Pipeline, while they were testifying that Prudhoe Bay was running dry. In fact, both ARCO and Exxon knew that they had discovered the Pt. McIntyre field years earlier. In 1989, my General Partner, Exxon, told me that our Pt. McIntyre leases were dry. I sold my interest in the leases for what Exxon told me was a fair price. Several weeks after selling Exxon my interests, the major discovery was announced. Once again, they lied to you, they lied to the Congress, they lied to the public, and they defrauded us all.

The public relations departments of the oil industry, their lawyers and lobbyists desperately want this Committee and the public to believe that I attempted to humiliate the oil industry in retaliation for the economic losses I suffered. Alyeska and the oil industry have tried desperately for years to convince themselves and the public that I am an extortionist - a businessman motivated to expose environmental wrongs for personal profit. The truth is that the oil companies were and continue to be motivated to ignore environmental wrongs to increase corporate assets. Do not misunderstand me, I believe that responsible oil development is necessary to our national interest. However, Alyeska and its oil company owners believe that in order for someone to be "for" the oil business, one must also be "against" environmental protections that might stand in the way of corporate profits. I refuse to believe that fallacy, and I certainly refuse to conduct myself and my activities in a manner that these members of the oil industry find acceptable.

I refuse to believe that the only way to advocate for a clean environment and regulatory compliance is to take a vow of poverty and join a not-for-profit environmental organization. I also refuse to believe that I must choose between pursuing the economic damage that I have been caused by Exxon and the other Alyeska owners and insisting that they clean up their environmental act.

Most importantly, I refuse to believe that any citizen of this country has to tolerate the invasion of privacy that I have been subjected to simply because I have exercised my Constitutional rights and responsibilities as a citizen to petition Congress, and to assist the news media in the presentation of facts and evidence that certain members of the oil industry have chosen to ignore. I may not ever be able to walk on the beach with my wife in peace or to recoup the money that I have been cheated out of, but both my wife and I will know that we have done everything within our power to keep the beaches clean for our children and grandchildren.