Wednesday, September 10, 2008

The Animal House

Working for the Bush administration has its perks for some:

Government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies they were dealing with and received numerous gifts from them, federal investigators said Wednesday.

The alleged transgressions involve 13 Interior Department employees in Denver and Washington. Their alleged improprieties include rigging contracts, working part-time as private oil consultants, and having sexual relationships with — and accepting golf and ski trips and dinners from — oil company employees, according to three reports released Wednesday by the Interior Department's inspector general.

The investigations reveal a "culture of substance abuse and promiscuity" by a small group of individuals "wholly lacking in acceptance of or adherence to government ethical standards," wrote Inspector General Earl E. Devaney.

The reports describe a fraternity house atmosphere inside the Denver Minerals Management Service office responsible for marketing the oil and gas that energy companies barter to the government instead of making cash royalty payments for drilling on federal lands. The government received $4.3 billion in such Royalty-in-Kind payments last year. The oil is then resold to energy companies or put in the nation's emergency stockpile.

Between 2002 and 2006, nearly a third of the 55-person staff in the Denver office received gifts and gratuities from oil and gas companies, the investigators found.

Devaney said the former head of the Denver Royalty-in-Kind office, Gregory W. Smith, used illegal drugs and had sex with subordinates. The report said Smith also steered government contracts to a consulting business that was employing him part-time.

It has sex in it! It might have legs as a news story!

It does remind me of a frat house atmosphere. It's also a good approximate example of the incestuous relationship that the U.S. political system sometimes enables between the regulators and the regulated. The word "incestuous" is used to point out that often the people who work for the regulators end up working for the regulated and vice versa, sometimes even switching sides several times. This is not desirable if the objective is to keep the industry properly regulated. If the objective is to skim off the most money and sex, well, it works until you get caught.

This case is not quite the same as it's more about government marketing than regulation but the disadvantages of extreme closeness and poor oversight are pretty similar.

So how much did all this cost to us taxpayers?