Friday, September 12, 2008
Energy Current: Offshore Oil Drilling Opponents Point to Bribery, Sex Scandal At Minerals Management Service to Stop Promiscuous Leasing Deals
MMS sex scandal arms anti-drilling factionFiled from Houston
9/11/2008 5:38:33 PM GMT
DENVER, COLO.: Actions by employees of the U.S. Minerals Management Service (MMS) in Denver may have given new ammunition to opponents of expanded offshore drilling.
Speaking to reporters, Democratic Senator Bill Nelson of Florida said, "We now have proof that they are both literally and figuratively in bed with big oil."
"Big oil has used sex and drugs and illegal gifts with U.S. government watchdogs that are charged with keeping a watchful eye on the oil industry's offshore leasing program in the Gulf of Mexico."
In a Web statement, Nelson said, "This all shows the oil industry holds shocking sway over the administration and key federal employees. This is why we must not allow big oil's agenda to be jammed through Congress."
Lawmakers in both the House of Representatives and the Senate have been preparing new bills which would allow more offshore drilling along America's coast. Nelson has promised to filibuster any Senate bill aimed at expanded offshore drilling.
A report released by the Department of the Interior Office of the Inspector General has revealed ethical violations by employees of the Royalty In Kind (RIK) program. The report alleges "unbridled unethical conduct" by employees, including illicit sexual relations with both RIK employees and members of the oil and gas industry, illegal drug use, and acceptance of numerous gifts and gratuities from oil and gas companies.
The Inspector General blasted the program for its "culture of ethical failure and considering itself exempt from rules that govern all Federal Government employees.
The RIK program, based in Denver, Colo., is designed to allow MMS to take possession of a percentage of oil and gas produced from a federal lease as a royalty payment. The oil and gas is then marketed and sold by MMS. According to MMS officials, in 2007 the RIK program resulted in a US$63 million gain over royalties paid in value.
Inspector General Earl Devaney's report says that many employees in RIK considered themselves "special," acting with a "private sector" approach and ignoring the Ethics in Govenment Act. Many RIK employees said their "unique" role meant that effectively performing their duties necessitated social interaction with oil and gas company representatives and becoming a part of the industry itself.
Former senior executives Jimmy Mayberry, Greg Smith and Lucy Querques Dennet were described as remaining "calculatedly ignorant" about ethical rules, manipulating the contract process to ensure two lucrative MMS contracts were awarded to a company created by Mayberry and later joined by Dial. RIK employees reported to Associate Director Dennet in Washington, rather than to the Deputy Associate Director in Denver, allowing ethical violations to be "invisible."
In 2006, key RIK employees even formed a study group to investigate creating its own ethical guidelines, allowing the program more leeway in acting like a private business rather than a federal agency.
The RIK program also had no policies, guidelines or detailed procedures on analyzing and amending bids and other internal control procedures. Since the investigation began, additional guidance is being developed.
During the course of the investigation, it was found that 19 RIK employees - one-third of its staff - had accepted gifts from prohibited sources in the oil and gas industry. The report noted that the dollar amount of the gifts was small, but the frequency of the gifts was disturbing.
Some employees were found to have used cocaine and marijuana at industry functions, and engaged in sexual relations with oil and gas company representatives. Two RIK marketers were referred to by energy industry personnel as the "MMS Chicks" for their "unprofessional behavior" at industry-sponsored social events.
Chevron, Shell, Hess and GWEC were all named as companies that had given gifts to different RIK employees. The Inspector General noted that Chevron had refused to cooperate with the investigation. At one point, Chevron was allowed to amend a bid made to the program, after an RIK employee who had received gifts from the company advocated for it.
Secretary of the Interior Dirk Kempthorne said in a statement that he was "outraged by the immoral behavior, illegal activities and appalling misconduct of the former and current MMS RIK program employees."
Kempthorne added, "During this investigation, as we awaited the Inspector General's final reports, individuals were transferred out of the RIK program. Now that we have received this report and have the information to proceed further, we will take swift action to restore the public trust.
"In the memo conveying the report, the Inspector General affirmed my frustration with the length of time it has taken to receive this investigative report. The Inspector General has acknowledged the assertive steps we took to replace the key leadership and staff in the affected components of MMS."