Who would have thought the Minerals Management Service was this exciting?

INTERIOR: Sex, drugs, booze and industry cash in MMS ethics scandal (09/10/2008)

Noelle Straub, E&ENews PM reporterInterior Department employees accepted gifts from oil and gas companies, participated in “a culture of substance abuse and promiscuity” and considered themselves exempt from federal ethics rules, new reports by the department’s inspector general say.

The reports — the result of three different investigations against more than a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually — found a “relatively small group of individuals” wholly lacking in government ethical standards and management that provided passive or purposeful ignorance, Inspector General Earl Devaney wrote in a memo to Interior Secretary Dirk Kempthorne.

The investigation discovered that nearly a third of the entire staff of MMS’s royalty-in-kind (RIK) program socialized with and received a wide array of gifts and gratuities from oil and gas companies with which the agency was conducting official business. The RIK program allows companies to pay royalties in the form of oil and gas rather than cash.

The dollar amount of the gifts was not enormous, but the gifts were accepted with “prodigious frequency.” Two RIK marketers received gifts and gratuities on at least 135 occasions from four major oil and gas companies with which they were doing business.

“When confronted by our investigators, none of the employees involved displayed remorse,” the memo says.

The investigation also found drug and sex abuse both inside the program and “in consort with industry.” One supervisor, Greg Smith, engaged in illegal drug use and had sexual relations with subordinates. Several staff members admitted to illegal drug use as well as illicit sexual encounters, and some had sexual relationships with industry contacts.

“Alcohol abuse appears to have been a problem when RIK staff socialized with industry,” it said.

One of the employees, Jimmy Mayberry, has already pleaded guilty to a criminal charge. The cases against two others, Greg Smith and Lucy Querques Dennett, were referred to the Justice Department’s public integrity section, but that office declined to prosecute them.

Three senior executives, Mayberry, Dennett and Milton Dial, were good friends who remained “calculatedly ignorant” of the rules governing post-employment restrictions, conflicts of interest and federal acquisition regulations, to ensure that two lucrative MMS contracts would be awarded to the company created by Mayberry and later joined by Dial.