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  1. #1

    Default 8 More Years....YEAH!!

    September 11, 2008

    Sex, Drug Use and Graft Cited in Interior Department

    By CHARLIE SAVAGE

    WASHINGTON — As Congress prepares to debate expansion of drilling in taxpayer-owned coastal waters, the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal — including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.

    In three reports delivered to Congress on Wednesday, the department’s inspector general, Earl E. Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government’s largest sources of revenue other than taxes.

    “A culture of ethical failure” pervades the agency, Mr. Devaney wrote in a cover memo.

    The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch.

    The investigations are the latest installment in a series of scathing inquiries into the program’s management and competence in recent years. While previous reports have focused on problems the agency had in collecting millions of dollars owed to the Treasury, and hinted at personal misconduct, the new reports go far beyond any previous study in revealing serious concerns with the integrity and behavior of the agency’s officials.

    In one of the new reports, investigators concluded that Ms. Denett worked with two aides to steer a lucrative consulting contract to one of the aides after he retired, violating competitive procurement rules.

    Two other reports focus on “a culture of substance abuse and promiscuity” in the service’s royalty-in-kind program. That part of the agency collects about $4 billion a year in oil and gas rather than cash royalties.

    The report says that eight officials in the royalty program accepted gifts from energy companies whose value exceeded limits set by ethics rules — including golf, ski and paintball outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.

    The investigation also concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”
    The investigation separately found that the program’s manager mixed official and personal business. In sometimes lurid detail, the report also accuses him of having intimate relations with two subordinates, one of whom regularly sold him cocaine.

    The culture of the organization “appeared to be devoid of both the ethical standards and internal controls sufficient to protect the integrity of this vital revenue-producing program,” one report said.

    A former official named in the report, Jimmy W. Mayberry, pleaded guilty to a felony conflict-of-interest charge in August and faces up to five years in prison and a $250,000 fine.
    In late 2002, when he was about to retire, Mr. Mayberry drafted a “statement of work” for a consulting contract to perform essentially identical functions to his own. He then retired, started a company, and in June 2003 won the contract with the help of Ms. Denett and Milton Dial, another friend at the agency.

    The inspector general also urged the administration to take action against several of the officials in the royalty-in-kind program who accepted gifts from the oil companies, by firing them or banning them for life from certain positions. Several have already been transferred out of the program but remain on the government payroll, the report said.

    But two of the highest-ranking officials who were subjects of the investigations will apparently escape penalty. Both retired during the investigation, rendering them safe from any administrative punishment, and the Justice Department has declined to prosecute them on the charges suggested by the inspector general.

    One of them is Ms. Denett, who oversaw the Denver-based royalty-in-kind program from Washington. The report contends that she manipulated the contracting process to steer the consulting work to Mr. Mayberry, her friend and former special assistant.

    Six other companies submitted bids for the contract, spending more than $90,000 on their proposals. The report said an Interior Department procurement lawyer described the arrangement as one in which “the fix is in throughout — this is tainted from the beginning, that is totally improper.”

    Ms. Denett did not return a message left at her home on Wednesday with her husband, Paul A. Denett, who was the top procurement official in the White House Office of Management and Budget until he resigned this month. He declined to comment.

    The other high-ranking official the Justice Department has declined to prosecute is Gregory W. Smith, the former program director of the royalty-in-kind program. Mr. Smith worked in Colorado and reported to Ms. Denett. He retired in 2007.

    The report said that Mr. Smith improperly used his position with the royalty program to get an outside consulting job helping a technical services firm seek deals with oil and gas companies with which he was also conducting official business.

    The report accused Mr. Smith of improperly accepting gifts from the oil and gas industry, of engaging in sex with two subordinates and of using cocaine that he purchased from his secretary or her boyfriend several times a year between 2002 and 2005. He sometimes asked for the drugs and received them in his office during work hours, the report said.

    The report also said that Mr. Smith lied to investigators about these and other incidents, and that he urged the two women subordinates to mislead the investigators as well.

    In discussions with investigators, the report said, Mr. Smith acknowledged buying cocaine from his secretary and having a sexual encounter with her at her home, but he denied discussing drugs at work. He also denied telling anyone to lie, saying that he only told people that “no one has a right to know what I do on my personal time.”

    The “Greg Smith was a loyal, dedicated employee of the federal government for more than 28 years, and notwithstanding the unfair and in many respects inaccurate allegations in today’s report, Greg is very proud of what he accomplished — and he should be,” Mr. Peters said. A Justice Department spokeswoman, Laura Sweeney, declined to explain why prosecutors chose not to bring charges against Ms. Denett or Mr. Smith, citing departmental policy.

    The report also detailed cozy relationships between energy companies and other officials in the royalty-in-kind program office. Some 19 officials — a third of the staff — took gifts from oil and gas executives, some with “prodigious frequency,” it said.

    On one occasion in 2002, the report said, two of the officials who marketed taxpayers’ oil got so drunk at a daytime golfing event sponsored by Shell that they could not drive to their hotels and were put up in Shell-provided lodging. Two female employees “engaged in brief sexual relationships with industry contacts,” the reports’ cover memo said, adding that “sexual relationships with prohibited sources cannot, by definition, be arms’ length.”

    On one occasion, the report said, the royalty-in-kind program allowed a Chevron representative who had won a bid to purchase some of the government’s oil to pay taxpayers a lower amount than his winning offer because he said he had made a mistake in his calculations. A report from Mr. Devaney’s office earlier this year found that the program had frequently allowed companies that purchased the oil and gas to revise their bids downward after they won contracts. It documented 118 such occasions that cost taxpayers about $4.4 million in all.

    On another occasion, the new report said, one of the officials shared information about the confidential price a pipeline company was charging the government.

    The report said that the officials told investigators that the gifts and socializing did not affect how they treated the companies in their official duties.

    They also said they did not view socializing with oil company representatives and taking gifts as inappropriate because they said they needed to be part of the marketing culture in order to market the program’s oil and gas. Several of the lower-ranking program officials have been transferred out of their old jobs, the report said. It recommended stronger supervision and a series of changes to make clearer the limits of acceptable behavior, some of which Mr. Luthi said have already been implemented.

  2. #2
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    Jun 2004
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    Default Re: 8 More Years....YEAH!!

    Probably all Liberals.
    OGR81

    I'm just a bitter, typical, white person who clings to my guns and religion.

    There are 3 kinds of people in the world: Producers, Parasites and Prostitutes who pander to both.

  3. #3
    Join Date
    May 2006
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    139

    Default Re: 8 More Years....YEAH!!

    Quote Originally Posted by OGR8ONE View Post
    Probably all Liberals.

    thank you for that well thought out response
    It really shows how much you REALLY know,nothing.
    This culture of corruption that we have had for the last eight years make me sick. and yes it is the Executive branch that is SUPPOSED to adminster our laws, but they have been too worried about making a profit.
    Jeff

    When all else fails read the instuctions

  4. #4
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    Jun 2004
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    Default Re: 8 More Years....YEAH!!

    On the internet no one knows you're funny.

  5. #5
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    Default Re: 8 More Years....YEAH!!

    Quote Originally Posted by Dancing Dan View Post
    On the internet no one knows you're funny.
    That's because Liberals have no sense of humor.
    OGR81

    I'm just a bitter, typical, white person who clings to my guns and religion.

    There are 3 kinds of people in the world: Producers, Parasites and Prostitutes who pander to both.

  6. #6
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    Sep 2007
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    Saint Paul, MN
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    253

    Default Re: 8 More Years....YEAH!!

    Quote Originally Posted by OGR8ONE View Post
    That's because Liberals have no sense of humor.
    Chris Rock (liberal) = Funny

    Drew Carrey and Dennis Miller (Conservative)= Mind numbingly not funny

  7. #7
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    Default Re: 8 More Years....YEAH!!

    Barry:

    It's not the fact that they may or may not be liberals, it's the fact that they are government employees, for someone to become a government employee tells a lot about them, risk averse, pension oriented, security oriented, etc.
    “‎A general State education is a mere contrivance for moulding people to be exactly like one another; and as the mould in which it casts them is that which pleases the dominant power in the government, whether this be a monarch, an aristocracy, or a majority of the existing generation; in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by a natural tendency to one over the body.” ― John Stuart Mill

  8. #8
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    Default Re: 8 More Years....YEAH!!

    Dick gets out the HUGE paint brush!

  9. #9
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    Default Re: 8 More Years....YEAH!!

    Quote Originally Posted by David Meiland View Post
    Dick gets out the HUGE paint brush!
    If he's using a paint brush, can a caulking gun be far behind?
    Greg

  10. #10
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    Aug 2008
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    Default Re: 8 More Years....YEAH!!

    "Sex, Drug Use and Graft Cited in Interior Department"

    In our government???? sounds like someone has to much time on their hands and needs a hobby, buy a Bong, Cross tops, some Graft sticks.....enjoy, unwind, just leave the hammer alone....and you might get elected.

    Ray D

  11. #11
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    Dec 2006
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    Default Re: 8 More Years....YEAH!!

    This is getting major press coverage here. Most people are mad because they didn't receive gifts or party invitations. They blame both Bush and the Postal Service for the snafu.
    Richie Poor

    See no evil, hear no evil, speak no evil, value engineer your unit prices.

  12. #12
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    Default Re: 8 More Years....YEAH!!

    Enrique:

    How can they blame Bush for what career civil servants do, he couldn't fire them if he wanted to.
    “‎A general State education is a mere contrivance for moulding people to be exactly like one another; and as the mould in which it casts them is that which pleases the dominant power in the government, whether this be a monarch, an aristocracy, or a majority of the existing generation; in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by a natural tendency to one over the body.” ― John Stuart Mill

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