Sex Scandal At Federal Agency Is Not New

News that workers in the Denver office of the Minerals and Management Service were caught up with alcohol, sex and drugs is a throwback to a scandal from 1990. At that time, workers in the MMS' Denver and Dallas offices partied with prostitutes.

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Yesterday, we reported on a scandal in the Interior Department. The details are juicy, but as you'll hear today, not unprecedented. In yesterday's report, the department's inspector general said he found a culture of substance abuse and promiscuity in the Denver office of the agency that collects billions in government royalties from oil companies. Among the findings, some bureaucrats had sex with oil company employees. Political leaders expressed shock and outrage.

But as NPR's Jeff Brady reports, this agency has been the subject of salacious headlines before.

JEFF BRADY: When news broke that the Minerals Management Service office in Denver was caught up in a scandal involving alcohol, drugs and sex, Dallas Morning News reporter Steve McGonigle was sitting at his desk.

Mr. STEVE MCGONIGLE (Reporter, Dallas Morning News): I had a total flashback.

BRADY: The story sounded a lot like one he'd reported in 1990 that involved both the Denver and the Dallas offices of the MMS. Employees were caught partying with prostitutes. And the men dubbed themselves the royalty rangers. They documented their excursions with photos and collected them in a notebook. But McGonigle says there was no evidence they were colluding with folks in the oil industry.

Mr. McGONIGLE: It struck me more as guys who had jobs that weren't the most exciting kind of jobs who were blowing off steam in inappropriate ways out of the office.

BARDY: This time, though, the Department of Interior's inspector general found evidence that a few MMS supervisors rigged contracts to benefit themselves and friends, and nearly a third of the people in the Denver office accepted gifts from those in the oil industry - mostly things like dinners, golf outings and sometimes hotel rooms when they were too drunk to drive home.

Secretary of the Interior Dirk Kempthorne said in a written statement that he's outraged by the immoral behavior, illegal activities and appalling misconduct. Colorado attorney Michael Porter says this should not have been a surprise to the secretary.

Mr. MICHAEL PORTER (Lawyer): And it's either simple stupidity or calculated corruption that somewhere between those two variants they're not doing their job.

BRADY: Porter and other lawyers have argued cases showing the MMS is not a very good watchdog.

Mr. PORTER: They are more interested in pleasing the oil industry than fulfilling their fiduciary duty to the American people to police the oil industry.

BRADY: Porter represents a former MMS auditor Bobby Maxwell who's suing an energy company under a law that allows private parties to go after companies that shortchange the government on royalties. Maxwell retired from the MMS. He says he was forced out when he raised questions about practices at the agency. He thinks the MMS can't be fixed.

Mr. BOBBY MAXWELL (Former MMS Auditor): I would almost, at this point, just like to see them to give that function to a new organization, maybe the Internal Revenue Service. It's like it's so corrupt and it's so ingrained in it I would almost just like to see them start all over (unintelligible).

BRADY: Other critics of the MMS say it's not necessary to go that far. This scandal is primarily associated with one program called the royalty-in-kind or RIK program. That allows energy companies to pay their royalties in gas or oil rather than money.

Mandy Smithberger is with the Project on Government Oversight.

Ms. MANDY SMITHBERGER (Project on Government Oversight): There needs to be a thorough evaluation on the RIK program. I still don't think that it has been definitively proven that this is the best deal for the taxpayers.

BRADY: A report last March from the Government Accountability Office says the RIK program relies on self reporting by the industry, and there aren't enough controls to keep companies honest.

Next week, Congress is expected to hold hearings on the inspector general's report as lawmakers continue to debate the expansion of offshore drilling. MMS critics hope this time, the scandal leads to big changes within the agency.

Jeff Brady, NPR News, Denver.

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