Find Post Investigations On:
Facebook Scribd Twitter
Friendfeed RSS Google Reader
» About This Blog | Meet the Investigative Team | Subscribe
Ongoing Investigation

Top Secret America

The Post explores the top secret world the government created in response to the attacks of Sept. 11.

Ongoing Investigation

The Hidden Life of Guns

How guns move through American society, from store counter to crime scene.

Have a Tip?

Talk to Us

If you have solid tips, news or documents on potential ethical violations or abuses of power, we want to know. Send us your suggestions.
• E-mail Us


Post Investigations
In-depth investigative news
and multimedia from The Washington Post.
• Special Reports
• The Blog

Reporters' Notebook
An insider's guide to investigative news: reporters offer insights on their stories.

The Daily Read
A daily look at investigative news of note across the Web.

Top Picks
A weekly review of the best
in-depth and investigative reports from across the nation.

Hot Documents
Court filings, letters, audits and other documents of interest.

D.C. Region
Post coverage of investigative news in Maryland, Virginia and the District.

Washington Watchdogs
A periodic look into official government investigations.

Help! What Is RSS?
Find out how to follow Post Investigations in your favorite RSS reader.

Hot Comments

Unfortunately I believe that we are limited in what we can focus on. I think that if we proceed with the partisan sideshow of prosecuting Bush admin. officials, healthcare will get lost in the brouhaha.
— Posted by denamom, Obama's Quandary...

Recent Posts
Bob Woodward

The Washington Post's permanent investigative unit was set up in 1982 under Bob Woodward.

See what you missed, find what you're looking for.
Blog Archive »
Investigations Archive »

Have a Tip?
Send us information on ethics violations or abuses of power.
E-Mail Us »

Notable investigative projects from other news outlets.
On the Web »
Top Picks »

Interior: Losses 'Probable' at Oil Office

POSTED: 01:15 PM ET, 09/18/2008 by Derek Kravitz

In congressional testimony today, Interior Department officials acknowledged that it is "probable" they would have uncovered financial losses with further investigation of a drug, sex and conflict-of-interest scandal involving employees at a Denver-based oil royalty office. However, the officials said the beleaguered royalty-in-kind program had turned a corner and needed to be continued.

Earl E. Devaney, Interior's inspector general, said the environment in the royalty office is now "decidedly different." The office, based outside of Denver in Lakewood, Colo., collects billions of dollars in oil and natural gas from companies given contracts to extract fossil fuels offshore or on federal or Indian lands.

Devaney said an enhanced ethics program, with a policy prohibiting gifts from industry representatives, would help Interior's Minerals Management Service (MMS), which runs the royalty office.

Three reports released last week found that government officials attended parties with oil and gas marketers, accepted gifts including ski trips, sports tickets and golf outings, and steered contracts to favored clients. Since 2006, the royalty program has been subjected to multiple investigations for alleged mismanagement and conflicts of interest.

"It is important to note that we believe the single most serious problem portrayed in these reports is a pervasive culture of exclusivity, exempt from the rules that govern all other employees of the federal government," Devaney said. "Simply stated, the MMS employees named in these latest reports had a callous disregard for the rules by which the rest of us are required to play."

Devaney also said he was disappointed that two retired government employees - former oil royalty office chief Gregory W. Smith and former Washington administrator Lucy Querques Denett - were not prosecuted by the Justice Department in connection with the two-year investigation.

Investigators found that Smith, 56, who was among a group of more than a dozen employees who took gifts from oil and gas marketers, was involved in illicit sexual relationships with subordinates; purchased cocaine at his office; and arranged side consulting deals that personally netted him more than $30,000 over an 18-month stretch.

The inspector general's reports alleged that Denett, 55, improperly arranged a million-dollar deal for two retired employees, who pleaded guilty to federal conflict-of-interest charges.

"I would have liked to see a more aggressive approach," Devaney said of the Justice Department's decision not to charge Smith and Denett. He said Justice officials "were aware" of his desire to have the pair prosecuted.

That decision caused a sizable rift between Interior and Justice Department officials, prompting Interior to pull resources off of an ongoing investigation by Justice's Public Integrity Section into the illegal activities of former lobbyist Jack Abramoff, who is now serving a nearly six-year sentence on corruption charges in Cumberland, Md., according to sources familiar with the investigation.

Devaney said investigators were also hampered by contract files that were in "terrible shape" and a group of Chevron employees who refused to be interviewed.

"We were unable to show that any personal relationship to any of the oil and gas companies resulted in money being lost," he said. "If we had, we might be sitting here talking about more criminal prosecutions.

Calling the conduct "inexcusable" and "tragic," Interior Department Secretary Dirk Kempthorne said he was assured that the "behavior described in these reports no longer exists in these programs" and pledged to promote "a culture of conscience."

"I am outraged that the public's trust, an important and necessary part of public service, has been abused," Kempthorne said.

Kempthorne said the ethics office at the royalty program would be expanded, with the hiring of an attorney/adviser to provide "invaluable ethics support and program oversight" and that royalty office managers would now report to a Denver-based supervisor instead of a government official in Washington.

Kempthorne has previously called for the implementation of a random drug-testing program at the agency as well.

At one point, Kempthorne proposed briefing energy firms on the government's ethics rules, a plan that prompted a sharp rebuke by Rep. George Miller (D-Calif.).

"I find it kind of disturbing that these businesses can conduct business as if nothing happened," Miller said. "Apparently, there's no lesson learned inside these corporations."

By Derek Kravitz |  September 18, 2008; 1:15 PM ET Post Investigations
Previous: Experts Predict Election Day Mess | Next: Engineer in Deadly LA Train Crash Was Texting


Please email us to report offensive comments.

A premiere bee-hive of jive the united states government and the media is.

Posted by: carlos | September 18, 2008 2:39 PM

This is what Republicans do.

and they have NO intention of fixing things if they get reelected.

Why do we allow this to keep happening?

Posted by: veep | September 18, 2008 4:13 PM

Kempthorne thinks an ethics class is needed so that employees understand that taking gifts and getting screwed--literally--by those they regulate is wrong?

Who did they hire? Ten year old kids? Anyone older knows better. And of course Kempthorne knows that as well. But when sweeping under the rug, everything goes.

Laughable as it is, I just can't laugh any more at what this administration offers as an excuse.

Posted by: infuse | September 18, 2008 4:49 PM

There is a very simple reason why the current Justice Dept doesn't prosecute criminal activities in various administrative departments. If they did, the truth would come out, under oath, in court. That must be avoided at all costs. The World of Karl Rove proceeds apace.

Posted by: Eric | September 18, 2008 6:05 PM

Hmmm. Now let me see here. The Inspector General refers to employees who had a "callous disregard for the rules by which the rest of us are required to play." Now where have I heard that before?

Posted by: Fred | September 18, 2008 6:09 PM

New ethics rules? Government employees are prohibited from accepting gifts having a value of $25 (at least they were when I served). And Interior was upset about the unvestigation? Of course it was. Corruption in the Bush administration isn't news. Was Dirk awake or was he just too busy trying to undo years of environmental protection?

Posted by: Steve Johnson | September 18, 2008 6:13 PM

Every dime these crooks let slid by because of sweetheart deals is a dime out of the american taxpayer pocket. It is fraud, pure and simple. Chevron should have all its contracts cancelled for refusing to cooperate and participating in the fraud. And, now Interior will not cooperate with Justice on the Abramoff scandal because Justice is asking someone's wrist be slap. If there weren't so many scandals to choose from in the Bush administration this would be front and center.

Posted by: merrylees | September 18, 2008 6:16 PM


Gregory W. Smith - ARREST HIM.
Lucy Querques Denett - ARREST HER
Chevron employees who refused to be interviewed - ARREST THEM.

Theseare all white collar criminals who took advantage of taxpayers for personal gain!


Posted by: JBE | September 18, 2008 6:23 PM

McCain will reform the government, and the coyotes will stop the chicken thieves.

Posted by: majorteddy | September 18, 2008 9:14 PM

Atten: Derek Kravitz. Re: Your column
on the Oil Office.
These people should be investigated, tried,
and if found guilty, prosecuted to the full extent of the law. Officials of the government who are avoiding their official duty, should also be prosecuted. What else can be said??

Posted by: kenneth b. smith | September 18, 2008 9:15 PM

Republican/Bush Administration scandal
# 2,345678,900,000 and the lemming Republikkkan public is still thinking about (s)electing McSame and his "lipstick on a pig plans" & his headline grabbing surprise sidekick Palin the former beauty queen/super small town mayor/ super short time Gov from very unpopulated Alaska to save the day?

Reform/Re-invent the American Federal Government? I hope not lie G "Dumbya" B the dunce of Crawford, TX has over the last 8 very painful to watch/ live through years......

Nothing to see here...move on now....

You get what you deserve, and if you think more of the McSame is good, you deserve the very worst he has to offer....Suffer BIG Idiots!

Posted by: G. Lucier | September 19, 2008 11:48 AM

Post a Comment

We encourage users to analyze, comment on and even challenge's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.

characters remaining


© 2010 The Washington Post Company