"The federal office in charge of collecting billions of dollars per year in oil and natural gas royalties is in the midst of a massive reorganization after a highly-publicized sex-and-gift scandal this summer, officials said today.

A two-year investigation by Department of Interior's inspector general, Earl E. Devaney, into the oil-royalties program surfaced last month, finding a "culture of substance abuse and promiscuity" where officials in Colorado attended parties with oil and gas marketers, accepted gifts including ski trips, sports tickets and golf outings and steered contracts to favored clients. Two retired employees-turned-consultants pleaded guilty to federal conflict-of-interest charges and await sentencing.

Since then, several of the employees identified in the reports have been placed on administrative leave or transferred out of the Minerals Management Service's royalty-in-kind program, while officials contemplate a "full range" of options, including firing, said Gregory J. Gould, the newly-promoted associate director of the government's Minerals Revenue Management agency.

A week after the reports were made public, at a Sept. 19 town-hall meeting among oil agency employees in Denver, officials pledged they would take a "hard look" at the royalty-in-kind program and promised its first management overhaul since 2000. Employees appeared "upset and concerned" about media reports regarding the agency and asked that the "proper controls" be instituted, Gould said.

Last week, Gould wrote to staffers, saying the royalty-in-kind program would now be overseen by the department's asset management program, incorporating the 10-year-old royalties program into other operations so it's not "just hanging out to the side.""

Get the Story:
Scandal-Plagued Oil Agency Revamping Itself (The Washington Post 10/20)
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OIG Reports:
Gregory W. Smith | MMS Oil Marketing Group - Lakewood | Federal Business Solutions Contracts

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