Report: Rampant Corruption At Interior Department’s Minerals Management Program

A report by the US Department of the Interior’s inspector general Earl Devaney alleges that a culture of sex, drugs and corruption exists at the Denver-area office of the Department’s Minerals Management Program (MMS), which is responsible for collecting royalties from oil and gas producers. The office is home to the MMS’ Royalty-In-Kind (RIK) program. The RIK program allows royalties to be paid in oil and gas rather than money.

The report (.pdf) states that between 2002 and 2006, 19 RIK employees, about one-third of the 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.” Four companies were allegedly involved: Chevron, a Shell subsidiary, Gary-Williams Energy and Hess Corporation. The report describes “an organizational culture lacking acceptance of government ethical standards, inappropriate personal behaviors, and a program without the necessary internal controls in place to prevent future unethical or unlawful behavior,” including allegations that some employees “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relations with oil and gas company representatives.” Devaney released a separate report on former MMS director Gregory Smith, alleging improper conduct, and made public a memo to Interior Secretary Dirk Kempthorne which said his office had referred cases against two other former high-ranking MMS officials to the DOJ, which has declined to prosecute (WSJ, WaPo).