news.yahoo.com/s/ap/20080910/ap_on_go_ot/interior_oil_trysts
AP Gov't officials investigated for sex, gifts By DINA CAPPIELLO, Associated Press Writer Wed Sep 10, 6:26 PM ET WASHINGTON - Government officials handling billions of dollars in oil royalties partied, had sex with and accepted golf and ski outings from employees of energy companies they were dealing with, federal investigators said Wednesday.
WnmfDxJJQB2wPIE/Y=YAHOO/EXP=1221120940/L=kc6N_k WTVvr83xETQI4Vvwc4RTfow0jIt4sADNPv/B=zWa4Btj8els-/J=1221113740612407/A =5406486/R=0/* The alleged transgressions involve 13 former and current Interior Department employees in Denver and Washington. Their alleged improprieties include rigging contracts, working part-time as private oil consultants, and having sexual relationships with -- and accepting golf and ski trips and dinners from -- oil company employees, according to three reports released Wednesday by the Interior Department's inspector general. "Sexual relationships with prohibited sources cannot, by definition, be arms-length," Devaney said. The reports describe a fraternity house atmosphere inside the Denver Minerals Management Service office responsible for marketing oil and natural gas that energy companies barter to the government in lieu of cash royalty payments for drilling on federal lands. The oil and gas is then resold to energy companies or put in the nation's emergency stockpile. "During the course of our investigation, we learned that some RIK employees frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives," the report said. Two government employees who had to spend the night after a daytime industry function because they were too intoxicated to drive home were commonly referred to by energy traders as the "MMS Chicks." Two oil marketers received gifts and gratuities on at least 135 occasions. One admitted having a one-night-stand with a Shell employee. That same individual allegedly passed out business cards for her sex toy business at work, bragging that her income from that business exceeded her salary at the Interior Department. Devaney said the investigations took so long because Chevron refused to cooperate. An Interior Department official said Chevron would not allow investigators to interview its employees. Don Campbell, a Chevron spokesman, said Wednesday that the company "produced all of the documents that the government requested months ago." A Shell spokeswoman said it would be premature for the company to comment on the report until it had time to review it. The reports also said former head of the Denver royalty-in-kind office, Gregory W Smith, used cocaine and had sex with subordinates. The report said Smith also steered government contracts to a consulting business that paid him $30,000 for his work from April 2002 through June 2003. Smith's attorney, Steve Peters, called the claims "sheer fantasy." "Greg Smith was a loyal, dedicated employee of the federal government for more than 28 years," Peters said Wednesday. "His efforts in running the royalty-in-kind program resulted in one of the most profitable government programs in American history." MMS Director Randall Luthi, in an interview, said the agency was taking the report "extremely seriously" and would review the allegations and weigh taking appropriate action in coming months. The inspector general is recommending that current employees implicated be fired and be barred for life from working within the royalty program. It is no wonder that the office was doing such a lousy job of overseeing the RIK program; clearly the employees had 'other' priorities in that office." One of the employees named in the investigation, Jimmy Mayberry, already has pleaded guilty in US District Court in Washington to violations of conflict-of-interest laws. The Justice Department declined to prosecute Smith and former Associate Director of the Minerals Revenue Management program Lucy Querques Denett, who the report says manipulated contracts to ensure they were awarded to former Interior employees. The findings are the latest sign of trouble at the Minerals Management Service, which already has been accused of mismanaging the collection of fees from oil companies and writing faulty contracts for drilling on government land and offshore. The charges also come as Congress and both presidential candidates are debating whether to open up more federal offshore waters to oil and natural gas drilling. "This all shows the oil industry holds shocking sway over the administration and even key federal employees," said Sen. "This is why we must not allow Big Oil's agenda to be jammed through Congress." "Looking into and fixing these problems would have meant highlighting the enormous revenues that domestic oil and natural gas production contributes to our treasury. This just didn't fit into their anti-drilling campaign," he said. While most government royalties for drilling on federal lands are paid in cash, the government in recent years has been receiving a greater share of its oil and gas royalties in the actual product. More of that oil is also being sold on the open market, versus being deposited in the Strategic Petroleum Reserve, the nation's emergency oil stockpile. Congress earlier this year passed a law halting deposits of oil to the reserve to help alleviate high gasoline prices. The investigation was prompted by a 2006 phone call from an employee in the Denver office who reported ethical lapses.
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The US Interior Department building is shown reflected in a pond in Washington, September 10, 2008. The US Interior Department employees who oversaw oil drilling on federal lands had sex and used illegal drugs with workers at the energy companies they regulated, an internal government report said on Wednesday.
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