Parties, Sex & Drugs Made Fed’l Office Much Like a Frat House, Probe Finds

A federal government office charged with overseeing the collection of some $4 billion in royalty payments by oil companies to the U.S. government allegedly operated more like an out-of-control fraternity than a regulatory agency.

Sex, booze, drugs and parties among federal employees and representatives of the oil companies they were overseeing contributed to a ''culture of substance abuse and promiscuity'' at the Denver office of the U.S. Interior Department's Minerals Management Service, a $5.3 million investigation found. Meanwhile, there is concern that some 13 current and former employees in Denver and Washington, D.C., may also have been improperly influenced by gifts including sports tickets, golf outings and ski trips, according to the Associated Press and Washington Post.

However, it is not clear that all of the the alleged misconduct violated the law, although representatives of the inspector general's office of the Interior Department reportedly say it violated ethical standards.

"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, including Chevron Corp., Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp., the investigators found," the news agency writes.

"Two oil marketers received gifts and gratuities on at least 135 occasions. One admitted having a one-night-stand with a Shell employee. That same individual allegedly passed out business cards for her sex toy business ... at work, bragging that her income from that business exceeded her salary at the Interior Department."

A lawyer for a former director criticized by the Interior Department's inspector general's office says the accusations "sound very much embellished and fabricated," the Post notes.

Members of Congress expressed concern about the apparent lack of oversight, indicating that it would be on their minds as they consider whether to approve additional offshore drilling for oil and natural gas.

"The royalty-in-kind program, which started as a small pilot project a decade ago, has been touted as a way to simplify the way oil and gas companies pay for the right to drill on federal land and offshore. Instead of calculating the profit from a well, they can simply give the government one-sixth to one-eighth of whatever they take from the ground," the Post explains.