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Friday, April 19, 2024

Inspector General Report

Comment on the Inspector General’s Report on the Minerals Management Service.  Courtesy of Eric J. Fox, Stock Market Prognosticator.

Inspector General Report 

The Office of the Inspector General (OIG) released a couple of reports yesterday on the ethical lapses by employees in the royalty in kind program at the Minerals Management Service (MMS). This report made the front page of the Wall Street Journal, but has been ignored by many due to all the hoopla over what is going on with Lehman.

The report found that employees of the office "frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relations with oil and gas company representatives."

I have to say I am a little insulted. I have been to many oil industry events in my life and never been offered sex at any of them.

Here are some of the findings from the report:

"Between 2002 and 2006, nearly 1/3 of the entire RIK [Royalty in Kind] staff socialized with, and received a wide array of gifts and gratuities from, oil and gas companies with whom RIK was conducting official business. While the dollar amount of gifts and gratuities was not enormous, these employees accepted gifts with prodigious frequency. In particular, two RIK marketers received combined gifts and gratuities on at least 135 occasions from four major oil and gas companies with whom they were doing business."

"Several staff admitted to illegal drug use as well as illicit sexual encounters. Alcohol abuse appears to have been a problem when RIK staff socialized with industry. For example, two RIK staff accepted lodging from industry after industry events because they were too intoxicated to drive home or to their hotel. These same RIK marketers also engaged in brief sexual relationships with industry contacts. Sexual relationships with prohibited sources cannot, by definition, be arms-length."

The full reports are on this page.

More here, from the WSJ:

Federal Oil Officials Accused In Sex and Drugs Scandal

By STEPHEN POWER

Excerpt:  "WASHINGTON — Employees of the federal agency that last year collected more than $11 billion in royalties from oil and gas companies broke government rules and created a "culture of ethical failure" by allegedly accepting gifts from and having sex with industry representatives, the Interior Department’s top watchdog said Wednesday.

A report by the Interior Department’s inspector general, Earl Devaney, described a party atmosphere at the Denver office of the Minerals Management Service, a bureau of the department. Some employees of the office, which houses the department’s royalty-in-kind program, "frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relations with oil and gas company representatives,…"

The report also says that between 2002 and 2006, 19 employees in the agency’s royalty-in-kind program, roughly a third of the program’s total staff, had "socialized with and had received a wide array of gifts from oil and gas companies with whom the employees were conducting official business."

Mr. Devaney’s blistering assessment spotlights the agency as Congress and the presidential candidates weigh proposals to expand offshore drilling. "We discovered a culture of substance abuse and promiscuity," his report said.

The Minerals Management Service oversees the nation’s natural-gas, oil and other mineral resources on the outer continental shelf, and its duties include drawing up leases for drilling in offshore waters. In some years, it is the second-largest source of revenue for the U.S. Treasury, behind only the Internal Revenue Service. Through the royalty-in-kind, or RIK, program, the government receives oil instead of cash payments from energy companies in exchange for drilling rights."

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