On Sept. 4, Earl Devaney, inspector general for the Department of Interior, submitted three related reports (PDFs here, here, and here) to Secretary Dirk Kempthorne detailing investigations of "more than a dozen current and former Minerals Management Service employees." Devaney's cover memorandum (see below and the following three pages) noted that "alcohol abuse seems to have been a problem" when Denver-based federal employees tasked with collecting royalties on oil pumped from federal land "socialized with industry." The memo describes a "culture of substance abuse and promiscuity" in which the "royalty in kind" staff—the government collects its royalties not in cash but in an allotment of oil or gas—accepted gifts with "prodigious frequency" from the companies they oversaw. The RIK staff reported to Washington-based Associate Director Lucy Q. Denett (misspelled "Dennet" in the report), whom Devaney criticized for "ethical failure" and for allowing a "pervasive culture of exclusivity." According to the report, Denett, who retired earlier this year, herself "manipulated the contracting process" to award "lucrative MMS contracts" to her former assistant.
Secretary Kempthorne said he was "outraged by the immoral behavior, illegal activities, and appalling misconduct" of his employees.
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