NEWS > 17 February 2007

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Boston Globe - Boston,MA,USA
17 February 2007

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Interior ethics lapses rarely

WASHINGTON -- Officials at the US Interior Department received free golf outings, dinners, hunting trips, and box seats at sporting events from companies they monitored, but were rarely punished for the ethics violations, other than being ordered to attend two-hour ethics courses, the department's inspector general told a House panel yesterday.

Testifying before the House Natural Resources Committee, Earl E. Devaney said the ethical lapses were part of a department-wide culture "replete with a lack of accountability."

Devaney, who for seven years has been the independent overseer of a department that manages oil leases, national parks, and Native American affairs, has been in charge of numerous investigations inside the Interior Department, including one probe that has drawn intense scrutiny: What was behind the omission of royalty payments to the government in oil and gas contracts from 1998 to 1999.

He said the loss of the payments, which kick in when oil and gas prices reached certain levels, could cost taxpayers "tens of billions of dollars" over the lifetime of the contracts. Six criminal investigations were now under way by the Justice Department relating to unethical behavior in the department, Devaney said.

Asked why the Interior Department has had so many ethical and management problems, Devaney suggested it was simply greed.

"Outside of the money at the Treasury Department, everything else [of value] that someone would want is at Interior -- oil, gas, mines, land, and water," he said. "It's been my experience that when a lot of money is at stake, bad people will show up eventually."

Still, he told the committee that "99.9 percent" of department employees were dedicated and ethical and that Dirk A. Kempthorne , the current department secretary, has in the past year tried to tackle a multitude of serious problems.

"In fairness to him, I have discerned a dramatic shift in attitude since his arrival," Devaney said.

Shane Wolfe , a department spokesman, said he was "heartened" by Devaney's statements noting the change at the department. "There is, of course, room for improvement in any organization," Wolfe added, "and we welcome the work of the inspector general in highlighting the areas that may need improvement."

Congress and Devaney's office have been investigating the broader issue of whether the Interior Department has been properly collecting money from its oil and gas contracts with energy companies. The New York Times first reported the omission of royalty payments during the late 1990s; Devaney said yesterday that he believed Kempthorne first learned of the omissions because of the Times story.

Devaney, 59, said the department's problems were deep and wide, including ineffective law enforcement , notably in Native American detention facilities; inadequate protection of some national parks' resources; a failure to follow funding and procurement laws; and an unethically cozy relationship among senior officials and companies seeking government contracts.

He also said that the Minerals Management Service rarely audited its major contracts and that the organization never reviewed the smaller ones even though they totaled millions of dollars.

"Throughout the department, the appearance of preferential treatment in awarding contracts and procurements has come to our attention far too frequently, and the failure of department officials to remain at arm ' s length from prohibited sources is pervasive," said Devaney, a Boston native who was a police officer in Dennis, Mass., in the late 1960s.

He said senior officials caught in ethical lapses were treated more leniently than junior employees. From 2003 to 2006, he said, his investigators identified 71 employees whose actions triggered ethics probes. The vast majority of those penalized were low- to mid-ranking employees.

Of the 21 senior officials whose ethical behavior was reviewed, more than half were not disciplined, Devaney said. The remainder received a reprimand that often involved a two-hour course on ethics, a transfer, or the option to resign, he said.

Representative Edward J. Markey , a Massachusetts Democrat and a member of the committee, said the findings shows "an upside-down system that punishes junior employees while rewarding or giving a pass to senior officials who have been responsible for horrendous errors in judgment, potentially criminal activities, and the loss of billions in taxpayer revenues."

Robin M. Nazzaro , director of the Government Accountability Office's Natural Resources and Environmental department , told the House panel that the royalty mismanagement could cost taxpayers as much as $10 billion for 576 active leases granted during 1998 and 1999 under the Clinton administration. Another $60 billion in royalties could be at risk because of a lawsuit filed by an oil company challenging the government's right to charge it royalties, she said.

Nazzaro also identified a separate set of problems in addition to Devaney's investigations, including the Interior Department's poor strategy in dealing with the growing number of wildfires, its inadequate land appraisals that have led to the "loss of millions" of dollars, and its failure to collect fees from tourist operations in at least three national parks.

But the committee seemed most interested in the loss of billions of dollars in oil and gas royalty contracts in the late 1990s that inadvertently allowed companies to avoid payments. Devaney characterized it as a mistake; he said he found no criminal intent.

Representative Steve Pearce , a Republican from New Mexico, countered that it must have been a "deliberate omission" and called Devaney's report a "great disservice." Devaney said he stood by the accuracy of his report.

Six companies have agreed to pay royalties on the leases for production . But 50 other companies have refused to sign any agreement, contending that the US government is legally bound to the contract.

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Article sourced from

Boston Globe - Boston,MA,USA17 February 2007

Interior ethics lapses rarely

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Boston Globe - Boston,MA,USA
17 February 2007