US oil agency accused of ethics violations

By Sheila McNulty in Houston. Published: September 11 2008 01:03 | Last updated: September 11 2008 01:03 The US interior department agency that collects oil and gas royalties was accused on Wednesday of ethics violations, ranging from accepting gifts from energy companies and manipulating contracts to cocaine use and sexual misconduct. The accusations were levelled at the Minerals Management Service by Earl E. Devaney, the department’s inspector-general.

Mr. Devaney spent more than two years and $5m reviewing more than 470,000 documents and interviewing 233 witnesses to reach the allegations he delivered both to Dirk Kempthorne, the interior secretary, and to Congress. The claims against more than a dozen MMS officials come at an awkward time for the oil and gas industry and the interior department. Congress is set to debate an expansion of their relationship by opening up restricted areas to offshore drilling. That would lead to more interaction between the energy companies and the MMS, which Mr Devaney charged has been marked by “a culture of ethical failure”. Both current and former MMS staff have been caught up in the scandal, which accuses officials of taking gratuities from energy companies that ranged from golf outings to tickets for concerts and football games. The investigation also claimed several officials ­“frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives”. The MMS said it was grateful for the investigative report, which it requested after an employee raised allegations of ethical lapses in 2006. It planned to take appropriate action. One former employee, Jimmy Mayberry, has pleaded guilty to conflict of interest, with improper contractual activity. He faces up to five years imprisonment and a $250,000 fine. The cases against former employees Greg Smith and Lucy Querques Dennet were referred to the department of justice, which declined to prosecute. Mr Devaney said some officials still employed by the MMS “await your [the interior secretary’s] discretion in imposing corrective administrative action”. “Others have escaped potential administrative action by departing from federal service, with the usual celebratory send-offs that allegedly highlighted the impeccable service these individuals had given to the federal government,” Mr Devaney said in the report. “Our reports belie this notion.” Between 2002 and 2006, almost one-third of the ­Royalty-in-Kind staff of the MMS socialised with and received a wide array of gifts and gratuities from oil and gas companies with whom they were doing official business, it is alleged.