MMS employees in Louisiana admit accepting gifts from oil and gas companies

Several employees of the Minerals Management Service's Lake Charles, La., district office admitted to accepting gifts, such as trips to sporting events, from oil and gas companies the agency regulates, according to an Interior Department inspector general report.

In the course of the IG's investigation, two employees also admitted to using illegal drugs. And investigators found e-mails on employee computers that they said, "contained inappropriate humor and pornography."

E-mails that investigators obtained showed that from 2005 to 2007, offshore companies invited MMS employees to various events, including skeet-shooting contests, hunting and fishing trips, and golf tournaments. Photos that investigators uncovered showed two MMS inspectors had traveled to the 2005 Peach Bowl football game in Atlanta with a manager at Production Management Inc., a company that operated in the Gulf of Mexico.

Asked about the photos, MMS Lake Charles District Manager Larry Williamson told investigators, "Obviously, we're all oil industry. We're all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns. Some of these people, they've been friends with all their life."

In a memo accompanying the report, acting Interior IG Mary L. Kendall wrote: "Of greatest concern to me is the environment in which these inspectors operate, particularly the ease with which they move between industry and government." Investigators, she said, "discovered that the individuals involved in the fraternizing and gift exchange -- both government and industry -- have often known one another since childhood."

In the course of the investigation, an MMS clerical employee revealed she had used cocaine and methamphetamine with an agency inspector. And the IG probe uncovered "numerous instances of pornography and other inappropriate material on the e-mail accounts of 13 employees, six of whom have resigned."

A confidential source told investigators that MMS inspectors allowed oil and gas company personnel to fill out their own inspection forms in pencil. Then the inspectors would trace over the pencil markings in pen before submitting the forms. The report said investigators found some reports with "pencil and ink variations," but "could not discern if any fraudulent alterations were present on these forms."

The IG's office presented the findings in the report to the U.S. Attorney's Office for the Western District of Louisiana, but the office declined to prosecute any of the employees. The MMS director still could impose administrative penalties on them.

"This deeply disturbing report is further evidence of the cozy relationship between some elements of MMS and the oil and gas industry, said Interior Secretary Ken Salazar in a statement. "That is why during the first 10 days of becoming secretary of the Interior I directed a strong ethics reform agenda to clean house of these ethical lapses at MMS. I appreciate and fully support the inspector general's strong work to root out the bad apples in MMS and we will follow through on her recommendations, including taking any and all appropriate personnel actions including termination, discipline and referrals of any wrongdoing for criminal prosecution."

Salazar said he had asked Kendall to expand her investigation to determine if improprieties occurred after he implemented new ethics rules last year.

In 2008, the Interior Department inspector general issued three reports documenting widespread misconduct , including contract rigging, improper sexual relationships, and criminal drug use between 2002 and 2006 in the MMS office in Denver responsible for collecting in-kind oil and gas royalties.