Legal News

Report: ?A Culture of Substance Abuse, Promiscuity? at Oil & Gas Agency

By Dan Slater

The DOJ’s inspector general’s office, run by Glenn Fine, has had one heckuva busy summer, throwing much of its resources at investigations into the legacy of political meddling at the Department. But the Interior Department’s inspector general, Earl Devaney (pictured), has been busy too. The big news today, via the WSJ: Employees of the federal agency that last year collected more than $11 billion in royalties from oil and gas companies broke government rules and created a “culture of ethical failure” by allegedly accepting gifts from and having sex with industry representatives.

A report by Devaney describes a party atmosphere at the Denver office of the Minerals Management Service, a bureau of the Interior Department. Some employees of the office, which houses the department’s royalty-in-kind program, “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relations with oil and gas company representatives,” the report says, adding that “sexual relationships with prohibited sources cannot, by definition, be arms-length.”

The report also says that between 2002 and 2006, 19 employees in the agency’s royalty-in-kind program, roughly a third of the program’s total staff, had “socialized with and had received a wide array of gifts from oil and gas companies with whom the employees were conducting official business.” Devaney’s report said: “We discovered a culture of substance abuse and promiscuity.”

We know what you’re thinking: What’s the Minerals Management Service? As the WSJ notes, it oversees the nation’s natural-gas, oil and other mineral resources on the outer continental shelf. Its duties include drawing up leases for drilling in offshore waters. Through the royalty-in-kind, or RIK, program, the government receives oil instead of cash payments from energy companies in exchange for drilling rights.

The IG’s report named four companies — Chevron, a U.S. unit of Royal Dutch Shell, Gary-Williams Energy Corp. and Hess Corp. — as gift givers. In a written statement Wednesday, the Shell unit said it cooperated fully with the investigation, but that it would be premature to comment on the report “until we have an opportunity to review the content.” A spokesman for Hess said the company had cooperated with the inspector general’s inquiry, and that the company’s own investigation “indicated no wrongdoing” by employees. Officials at Gary-Williams Energy couldn’t be reached Wednesday for comment.

In July, a former aide to the agency’s associate director of minerals revenue management pleaded guilty in U.S. District Court to violating conflict-of-interest laws. The employee, Jimmy W. Mayberry, 65 years old, acknowledged helping create a consulting position that he later took after retiring from government.

Full post as published by Law Blog - WSJ.com on September 11, 2008 (boomark / email).