Embattled Sen. Stephen D. Alves broke his silence yesterday, denying that he killed tax-incentive legislation last June as payback for not receiving pension-fund business from the Town of Johnston.

Two Johnston legislators and a lobbyist have told The Journal that Alves opposed the measure, giving a $330,000 tax break to a Pennsylvania trucking company, A. Duie Pyle, for constructing a $9-million distribution center in town and creating 120 new jobs. Furthermore, the lobbyist and a lawyer for Johnston told The Providence Sunday Journal that Alves, a stockbroker, was angry at not getting a crack at the town’s pension-fund business.

The FBI is investigating the matter, as part of a larger State House corruption probe of Alves and other politicians, dubbed Operation Dollar Bill. Alves, who did not comment for the Sunday story, has silently endured two days of public criticism, including Governor Carcieri calling for him to relinquish his chairmanship of the Senate Finance Committee until the investigation is resolved.

Yesterday, Alves fought back. He said that he wasn’t opposed to the tax break for Duie Pyle, but that advocates for the company failed to lobby him in a timely fashion. Calling the allegations “ridiculous and baseless,” the West Warwick Democrat said that he will “absolutely not” step aside.

In an interview with The Journal at his State House office, Alves denied that he ever discussed the matter with Duie Pyle’s lobbyist, Jeffrey Britt, or told Britt that he was angry with Johnston Mayor Joseph M. Polisena for not steering him $29 million in town pension-fund investments. Alves said that he didn’t know that the town had transferred the money to two other brokers at his firm, UBS Financial Services, until he read the story in Sunday’s Journal.

Besides, Alves said, he was negotiating his departure from UBS, which he left a few weeks ago, to launch his own firm, Dorrance Street Financial. His departure, he says, was motivated by his desire to be on his own, not because of the FBI probe.

Alves cited legislation that he championed on behalf of Johnston during the same time, including a supplemental tax bill that was vital to the town’s health and the leadership of Polisena, the first-year mayor.

“That was the most important thing [for Johnston],” said Alves. “If I was trying to screw them over an alleged deal, that would be the bill to do it on.”

Alves, who was accompanied by a lawyer, Christopher E. Friel, said that he is aware of the federal investigation swirling about him, but professed confidence that nothing will come of it. The FBI has asked questions about Alves’ investment business, or attempts to secure business, with several communities, including Cranston, Lincoln and Woonsocket. They also have questioned officials in West Warwick, where UBS also did business and Alves chaired the town pension board, and union representatives regarding a $100,000 finder’s fee that he split with another senator, Daniel DaPonte, in connection with an electrical workers union pension fund.

And Alves said that executives at UBS also have been questioned. (A UBS spokeswoman in New York has declined to comment, except to say that the company is cooperating with the investigation.)

“They’re asking questions of everyone,” said Alves, adding that no federal authorities have approached him.

Budget deliberations

Britt and Rep. Stephen R. Ucci, D-Johnston, both told The Journal that House Majority Leader Gordon Fox told them that Alves opposed the Duie Pyle bill. Fox said that he couldn’t recall those conversations, in the session’s hectic final days, but that they could have happened.

Alves confirmed telling Sen. Christopher B. Maselli, D-Johnston, that he couldn’t support Duie Pyle, but only after the House had passed a budget omitting it, because it would throw off the budget.

“I never had an objection to Duie Pyle,” said Alves. “It was just never high on our priority list to spend $330,000 on it when we were cutting children off of RIte Care. It was a tough budget year. There were lots of winners and losers, lots of people who were disappointed.

“If it was so important to them, why didn’t anybody come to see me about Duie Pyle or request a hearing? Nobody did.”

Nobody lobbied him for another tax incentive that did pass, for a medical parts company. But Alves said that one passed because the state has made it a priority to cultivate the biotechnology industry.

As Senate Finance chairman, Alves helps shape the budget that the House Finance Committee passes, sitting with his House counterpart, Rep. Steven M. Costantino, D-Providence, to hash out what’s in and what’s out. Those meetings are so secretive, said Rep. Jan. P. Malik, D-Warren, that he’s not even allowed to attend — and he’s a vice chairman of House Finance.

“That’s where they barter — ‘I’m looking for this, you’re looking for that,’ ” said Malik. “I can’t even get into those meetings. They’re afraid that if word leaks out, then members will find out that they’re not going to get a project they want. By the time it comes out as a document, then it’s too late to start moaning and groaning.”

Alves said yesterday that he can’t recall if Duie Pyle came up in his back and forth with Costantino.

Costantino has not responded to numerous attempts by The Journal seeking comment on his recollection, prior to Sunday’s story and since.

Encounter with lobbyist

Alves issued a statement yesterday in which he said that he didn’t recall ever speaking to Britt, the Duie Pyle lobbyist, about the matter. In the interview, however, he said that he did have a conversation with Britt, but a brief one, at a bar in Providence, the week before the House passed the budget and sent it to the Senate.

The encounter took place, said Alves, at a bar called Motor. He said that he wasn’t aware at the time that Britt was a lobbyist, but that Britt raised the issue, saying, “Hey Steve, if I can resurrect the Duie Pyle thing, I can get hired as their lobbyist.”

Alves said that he told Britt he’d consider it “if you can get it out of the House, but we’re not going to amend the budget [in the Senate] … The show is over.”

During the same conversation, Britt says, Alves voiced his displeasure at Polisena over not getting a shot at the town pension business, saying that Polisena “screwed me.” Britt said that Alves expressed anger with Cranston regarding pension funds; the city had recently removed Alves’ name from its pension fund business with UBS and stopped paying him a commission.

Yesterday, Alves called Britt a liar. Alves said that he had a good working relationship with Polisena, who was a senator before becoming Johnston mayor, and that he worked on Johnston’s behalf to pass crucial local tax legislation this year.

“If I wanted to go after the Johnston pension business, I had a good enough relationship with Joe that I could have called him up,” said Alves.

Besides, Alves said, he was in the process of negotiating his departure from UBS, and didn’t know that two other UBS brokers had become the brokers of record for the pension money, which wouldn’t bear fruit in the way of potential commissions until long after Alves was gone from UBS.

Alves said he did earn a small commission on the Cranston pension fund as the “introducing broker.” But he didn’t use any political connections, he said. He earned his commission by spotting the city’s ad seeking an investment consultant in The Providence Journal and notifying a UBS subsidiary in Hartford that handled pension funds.

Alves said that he discovered he had been taken off the Cranston account in June when he noticed a dip in his monthly income statement at UBS, and his manager told him that Cranston had removed him.

Asked how Britt would have known about the Cranston situation if Alves hadn’t mentioned it to him, Alves answered: “I’m sure I told someone. I could have told [Britt].

“On any given night,” he added, smiling, “I might be mad at anybody.”