Salazar reopens criminal investigation of MMS scandal

Interior Secretary Ken Salazar has asked the Justice Department to reopen criminal investigations of employees involved in a recent sex, drugs and financial favor scandal at the Minerals Management Service.

In a visit today to the Colorado office where the misconduct happened, Salazar also promised to update departmental ethics policies and overhaul MMS's royalty collection system.

"The president has made it clear that the type of ethical transgressions, blatant conflicts of interest, wastes and abuses that we have seen over the past eight years will no longer be tolerated," Salazar said in remarks prepared for delivery. "The Department of the Interior will raise the bar for ethics, and we will set the standard for reform."

Salazar said the American public associates Interior with convicted lobbyist Jack Abramoff and that ethical lapses and criminal behavior "have extended to the highest levels" of the department, noting that former Deputy Secretary J. Steven Griles went to prison. He added that the problems in the Lakewood, Colo., office, including "blatant and criminal conflicts of interest and self-dealing, set one of the worst examples of corruption and abuse in government."

Interior Inspector General Earl Devaney found that 19 employees there, nearly one-third of the entire staff of the MMS royalty-in-kind (RIK) program, partied with and received a wide array of financial favors from oil and gas companies with which the agency was conducting official business. The RIK program allows companies to pay royalties in the form of oil and gas rather than cash.


Lawmakers last year had questioned why the Justice Department under the Bush administration had not pursued criminal charges against more employees involved in the scandal.

Two employees have pleaded guilty to a criminal charge; Devaney referred the cases against two others to the Justice Department's public integrity section, but that office declined to prosecute them. Devaney last year said he was disappointed with that decision and made his position clear to the agency.

"I have asked the Department of Justice and, if appropriate, the Colorado United States Attorney's office, to review whether the criminal determinations made earlier were correct," Salazar said. "Given the seriousness of the findings ... I want to make sure that those who blatantly flaunted the law receive the appropriate sanction."

Today Salazar also said he tasked his chief of staff, Tom Strickland, a former U.S. attorney for Colorado, to review personnel actions taken against employees to "determine whether the sanctions were appropriate, or if additional sanctions are needed."

In November, Interior took disciplinary actions against the involved employees, ranging from a letter of warning and reprimand to permanent reassignment from the RIK program, suspension without pay, demotion to a lower pay grade and termination from federal service.

Several employees retired while the two-year investigation was in progress, thereby escaping any administrative punishment. They received "the usual celebratory send-offs," which were undeserved, Devaney said last year.

Salazar also had a strict new code of conduct published today for all MMS employees and promised a thorough review of Interior's ethics policies and guidelines.

Former Interior Secretary Dirk Kempthorne had already put some reforms in place. They included strengthened internal controls, enhanced documentation requirements, improved record-keeping and strengthened ethics training for all employees. A new RIK program director was named, and the organizational structure was modified so the head of the Denver-based RIK program now reports directly to the deputy associate director there, rather than to Washington, as had previously been the case.

Overhaul of royalty system

Salazar also directed Strickland to review recommendations in separate reports from the inspector general, the Government Accountability Office and a panel co-chaired by former Sens. Bob Kerrey (D-Neb.) and Jake Garn (R-Utah) that assessed the department's mineral revenue management system.

GAO has criticized the system in a series of reports, saying the department remains unable to ensure that oil and gas producers are paying full royalties due to data management problems and failure to consistently verify industry-reported data.

"We will assess the progress and effectiveness of the implementation of the recommendations," Salazar said. "We want to ensure that the actions taken to date are comprehensive. If they are not, we will take additional steps."

Salazar said "all ideas for reform" are on the table in overhauling the MMS, noting that the Lakewood office alone collected $23 billion last year.

"The problems that occurred here in Lakewood were the product of a few individuals and a set of special interests who capitalized on an outdated and flawed royalty collection system," he said. "So in addition to reviewing the cases of those individuals, we will examine a fundamental restructuring of MMS's royalty program so that taxpayers get their fair share from the development of natural resources, like oil and natural gas, on our public lands."

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