How to entertain like an oil company.

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Sept. 12 2008 12:35 PM

How To Entertain Like an Oil Company

Interior Department investigation into government-oil industry ties.

The investigations into the Department of Interior's cozy relationship with the oil and gas industry have spotlighted the freewheeling lifestyle of those who worked in the booming energy sector of the early 2000s.

In three reports that reached the press on Wednesday, department Inspector General Earl E. Devaney detailed all kinds of civil service malfeasance, including inappropriate consulting arrangements, drug use and sex between superior and subordinate, and flings and other forms of close contact with oil industry representatives.

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The officials worked for the Department of Interior's Royalty-in-Kind program, in which the federal government receives oil and gas (rather than cash payments) in exchange for oil and gas leases on government land; the product is then put into the Strategic Petroleum Reserve, or resold on the market. Big Oil apparently saved at least $4.4 million through the RIK program, thanks to a multiyear practice of offering gifts, free meals, and junkets to government employees, luring staff into what one official called the "oil and gas industry marketing culture."

We pick out the juicy bits from the inspector general's report here:

Sex

"One e-mail from Shell Pipeline Company representative to [a RIK program employee], regarding attending 'tailgating festivities' at a Houston Texans game, stated, 'You're invited … have you and the girls meet at my place at 6 a.m. for bubble baths and final prep. Just kidding ... ' " (Page 9).

"[The e-mail] was laden was sexual innuendo such as, 'We've always provided the patrons with beer on demand, but the ever-depleting supplies have dwindled beer storage to dangerously low volumes on occasion. ... Although it's a given that the horsemen will indeed 'bring the meat to the table' " (Page 9).

"[A RIK employee] also admitted to having a 'one-night stand' with a Shell employee. She said she did not subsequently recuse herself from work involving Shell because she only had a 'one-night stand' with its employee and did not think this would affect RIK business" (Page 14).

 "Relationship-Building"

"We determined Chevron, Shell, Gary Williams Energy Corporation, and Hess Corporation provided gifts to RIK (Royalty-in-Kind) employees. Each of the four companies maintained a business relationship with RIK and is therefore considered a 'prohibited source' " (Page 5 of "Investigation Report of MMS [Minerals Management Service] Oil Marketing Group—Lakewood").

"[Former Shell Trading Company trader Alan] Raymond said he viewed RIK as 'just another oil exploration company,' and, therefore, providing RIK employees with gifts and entertainment was 'relationship building.' He claimed that his superiors at Shell Trading Company had approved of providing gifts and entertainment to RIK employees" (Page 15).

"Industry expense reports and other documentation indicate that [a RIK program employee] accepted gifts valued at approximately $2,887 from Chevron, Shell, and GWEC on at least 74 occasions between 2002 and 2006" (Page 10).

Field Trips

"One RIK employee opined that because RIK regularly paid a major producer to transport oil, it was perfectly appropriate for him to attend a 'treasure hunt' in the desert with all expenses paid by the producer" (Page 9).

"[A Shell manager] remembered that [a RIK program employee] stayed overnight in the Shell-owned lodge, 'Dutchman Haus,' because she had too much to drink" (Page 15).

"Chevron representatives' expense reports … entries include meals and drinks, an appreciation dinner, and a paintball outing" (Page 10).

Karim Bardeesy is the editorial assistant for The Big Money.