- The Washington Times - Saturday, November 22, 2008

The Interior Department disciplined several employees in a conflict-of-interest scandal in which workers partied and in some cases had sex and used drugs with oil industry representatives who do business with the government.

The reprimands announced Friday include permanent reassignment, suspension without pay, demotion to a lower pay grade and termination.

The Interior Department would not confirm how many employees were fired, citing privacy. The Associated Press reported that more than a half-dozen employees have been disciplined.

The disciplinary actions came in response to an inspector general’s report released in September that described a “culture of substance abuse and promiscuity” at the department’s Minerals Management Service’s (MMS) royalty-collection office in Denver.

The investigation showed that between 2002 and 2006, a total of 19 oil marketers — almost a third of the Denver office — received gifts and gratuities from oil and gas companies including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp. The perks included golf and ski trips, snowboarding lessons and concert tickets.

In some extreme cases, workers had sex and used drugs with oil company representatives, the report said.

In one example, two royalty program staffers accepted lodging from industry representatives during a social event because they were too drunk to drive back to their hotel, and then had “brief sexual relationships” with them.

The employees involved in the scandal were responsible for helping collect billions of dollars annually in royalties from oil companies that hold leases with the federal government.

The disciplinary action announced Friday culminated a two-year investigation by the inspector general at cost of $5.3 million.

“These actions complete a long and thorough investigation into the Royalty-in-Kind program,” said MMS Director Randall Luthi. “While the behavior of some MMS employees prior to 2007 was clearly inappropriate and warranted strong administrative action, the vast majority of our employees take great pride in the service they perform for our nation.”

The Interior Department said Friday that reforms to the royalty program included “strengthened internal controls, enhanced documentation requirements, improved record-keeping and strengthened ethics training for all employees.”

A new royalty collection program director also has been named.

Interior’s action were met with a tepid response on Capitol Hill.

House Natural Resources Committee Chairman Nick J. Rahall II, West Virginia Democrat, said that while he appreciated disciplinary action, he worries the program “remains vulnerable to manipulation and malfeasance.”

Bill Wicker, spokesman for Sen. Jeff Bingaman, New Mexico Democrat and Energy and Natural Resources Committee chairman, complained that the Interior Department’s reforms of its royalty collection program were too vague, making it impossible to know whether the department has done enough to guard against a future scandal.

“You can’t tell whether those actions are really adequate for the many problems MMS has,” Mr. Wicker said. “We’re going to seek more information from the Interior Department.”

Interior Secretary Dirk Kempthorne had vowed to take swift action to squelch what he called an “ethics storm.”

Mr. Kempthorne, in an appearance before lawmakers in September said he was considering a random drug-testing program and banning all employees in the division from receiving gifts and gratuities.

This article is based in part on wire service reports.

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