Ken Salazar Will Find That DOI Scandals Are More Than Just Sex Parties

From TPMMuckraker:

Ken Salazar, the new Interior Secretary, said at a White House briefing this afternoon that he would undertake a top-to-bottom review of ethical misconduct at his agency, reports the Associated Press.

Salazar cited several of the department's lowest moments during the Bush years, and said that probes closed by the Bush administration could be reopened.

As we've noted at TPMmuckraker, Interior employees were found to have partied and had sex with employes from oil and gas companies they were supposed to be regulating. And Deputy Interior Secretary Steven Griles pleaded guilty to corruption in connection with the Jack Abramoff case.

That's all well and good, or rather bad and nasty, but the biggest scandals at DOI have gotten the least attention.

As Jerome wrote in December 2007:

However, for the past six years, government whistleblowers have alleged that a lack of oversight, deficient procedures, and cozy industry ties between MMS officials and oil and gas companies have created a system that allows the companies to underpay the federal government for scarce resources extracted from public lands.

On September 19th, DOI Inspector General Earl Devaney echoed these concerns in his report "Minerals Management Service (MMS): False Claims Allegations." The report describes a process systemically plagued by ethical lapses, process failures, mismanagement and conflicts of interest. The IG report highlights the need for vigorous oversight of the oil and gas industry with an eye towards real accountability.

Taxpayers for Common Sense and Project on Government Oversight assert the MMS's closeness with its clients taints its mission to pursue uncollected royalties for the Treasury. This has been especially true, they say, in the six years since the Bush administration instituted a new process called "compliance review." Beth Daley, an investigator for Project on Government Oversight, said there has been a fundamental change with auditors being told not to audit oil companies that hold federal leases: "It was never a great culture, but it has taken a turn for the worse." Before, the agency relied more on auditing to determine whether proper royalties were being levied and paid.

As a result of these alleged abuses, whistleblowers have brought forth legal actions claiming oil and gas companies systematically undervalue the amount and value of resources removed from public and Native American lands, with one case (Burlington Resources) recently settling for more than $97 million. Evidence in these cases suggests oil companies prefer to risk federal penalties rather than pay the actual amounts owed since the prospect of real penalties (particularly under this Administration) stands so remote.

I'm looking forward to a thorough accounting of all the crap that went on at the DOI/MMS during the Bush era. I imagine the cost to the tax payers will come into the billions. Let's hope the fines to the oil companies are comparable.

There's more...

"Cult of Corruption" at Bush Agency to Audit Oil Companies

We've been covering the staggeringly corrupt Minerals Management Service of the Bush Dept. of the Interior all year and the hits just keep on coming.

The latest is another whistleblower coming forward and talking to CNN. Seems the dude won the DOI's highest award in 2003 for saving the government (that's you and me, taxpayers) $500 million in royalties that the oil companies tried to underpay.

The next year his position was eliminated. Meanwhile the more oil company friendly staff at MMA partied on for the next five years.

Maxwell said the report doesn't surprise him. The agency, he said, is corrupt "top to bottom." Video Watch a failure to "protect America's interests"»

"It sounds like they forgot they work for the government," he said. "It's disgusting. ... There's no excuse for that. Those people should not be working in those positions at all.


Just before he lost his job, he said, one of his superiors in Washington ordered him not to investigate why Shell Oil had raised its oil transportation costs. Maxwell said it jumped from 90 cents to $3 a barrel without adequate explanation. The government paid Shell to transport oil from offshore platforms.

When asked why a government worker would tell an auditor not to investigate, he said: "I believe it started from the top down," he said.

Shell Oil told CNN it "pays the same rate any shipper does" and that it has "never engaged in fraudulent transactions or entered into sham contracts as Mr. Maxwell alleges."

Maxwell, a registered independent, said the shift in attitude at the agency began about seven or eight years ago, about the time the Bush administration came into power. He said he was discouraged from aggressively auditing oil companies.

"Laws and regulations were not applied, also not enforced," he said.

There's more...

Congressional Committees Piling on Corrupt Government Agency

Fresh off the damning reports by the DOI Inspector General, now Congress is going to do some oversightin':

Tomorrow the House Natural Resources Committee, led by Chairman Nick J. Rahall (D-WV), will hold a full Committee oversight hearing on "Recent Interior Department Inspector General Investigations on Federal Oil and Gas Royalty Collections."

The hearing will be web cast at 10am tomorrow for those who are hoping to see an oil exec breakdown under pressure.

And its not just the DOI's Inspector General who's been putting out damning reports on the Minerals Management Services. The General Accounting Office has also issued a report. Not surprisingly, it's damning too:

A GAO audit published Friday found neither the MMS nor the Bureau of Land Management, which administers onshore-drilling leases, is meeting targets for inspecting leases and metering equipment used to measure oil and gas production, "raising uncertainty about the accuracy of oil and gas measurement."

In 2007, the GAO said, MMS officials completed about half of the required 2,700 inspections of the meters in the Gulf of Mexico that measure production to determine royalty payments. MMS policy calls for annual inspection of all oil- and gas-royalty meters.


"You've got a culture there that doesn't worry about the American people getting their fair share of assets," Rep. Darrell Issa (R., Calif.) said in an interview.

Yeah, that's the same Darrell Issa who brought us Governor Ahnold, but even a broken clock is right twice a day.

But wait, Natural Resources isn't the only committee that wants a piece of this scandal:

The chairman of the U.S. House Select Committee on Energy Independence and Global Warming has launched an investigation into an Interior department scandal involving employees in Lakewood.

Edward Markey, D-Mass., said Monday he has sent letters to the heads of the four companies identified in investigation into allegations of misconduct at Interior's Minerals Management Service office in Lakewood.


Markey sent letters to Marvin Odum, president of Shell Oil; David O'Reilly, chairman and CEO of Chevron; and Ronald Williams, president and CEO of Denver-based Gary-Williams Energy Corp. He wants detailed records of lobbying expenses by the companies and answers to the following questions:

  • Did any senior executives at the companies know their employees were providing gifts to Interior employees?
  • Did any senior executives at the companies direct any employee to seek out "inappropriately close relationships" with Interior employees or officials?
  • Did the oil companies put aside funds to buy gifts for Interior employees, or any other Bush administration employees or officials?

I'm just looking forward to someone connecting the dots and pointing out that unless something dramatically changes, the oil companies won't be paying royalties for all the offshore oil they're about to start pumping. And the kicker is, they'll be selling it to the highest bidder, there's no guarantee that that oil will be sold to American consumers.

There's more...

Corrupt Bush DOJ Protected Oil Companies From Prosecutors Too

In case you were afraid that the corrupt Bush/Alberto Gonzales Department of Justice only held back prosecutors who were investigating charges of Republican political corruption, rest easy. They were pulling out all the stops to protect oil companies too.

Senior Justice Department officials blocked the U.S. attorney in Colorado from supporting a whistleblower's suit last year, jeopardizing the government's prospects for recovering as much as $40 million from a major oil company for its alleged underpayment of royalties.

U.S. Attorney Troy Eid said Washington overruled his request to enter the case against the Kerr-McGee Corp. A lawyer for the whistleblower said he was told that decision was made "at the highest levels" of the Justice Department, then run by former Attorney General Alberto Gonzales.

"I recommended strongly that we intervene," Eid said. "My view did not prevail."

Moreover, McClatchy found that the Justice Department has participated in only a handful of the 80 whistleblower cases brought against the oil industry since 1995.

When you consider that the $40 million is only from one case out of potentially dozens, we're talking about real money.

Several oil companies including Shell ($56 million)and Conoco Phillips ($97.5 million) have had to settle suits with the government for systematically underpaying royalties for petroleum pumped off federal lands. When you consider that those companies were negotiating with a complicit Bush Department of Justice its easy to imagine the total amount of money stolen from taxpayers winding up in the billions.

Drill, baby, drill, indeed.

More on those settlements in the full entry.

There's more...

Laying Pipe

Jerome and I have been blogging about ongoing corruption at the Dept. of Interior's Minerals Management Service for almost a year now.

Its been pretty hard to get many people to focus on this scandal of "a lack of oversight, deficient procedures, and cozy industry ties between MMS officials and oil and gas companies have created a system that allows the companies to systematically underpay the federal government" -- despite multiple ongoing congressional investigations and evidence that oil companies have underpaid more than $750 million in royalties.

But something tells me this story is about to get a lot more coverage:

Government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies they were dealing with and received numerous gifts from them, federal investigators said Wednesday.

The alleged transgressions involve 13 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.


Between 2002 and 2006, nearly a third of the 55-person staff in the Denver office received gifts and gratuities from oil and gas companies, the investigators found.

There's more...


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