Shortly after they filed the case, Arnold and Little were reassigned to other duties. MMS officials said the move was made to avoid any potential "conflict of interest" in their work; the auditors considered it retaliation. Little was sent to a Bureau of Land Management office in Moore, Oklahoma, where he was put to work on a project involving abandoned wells, supervised by an employee who was considerably his junior in age and pay grade. (Arnold, who is still employed at MMS, declined through his attorney to be interviewed for this story.)

That Maxwell, Arnold and Little were publicly pursuing their claims in defiance of MMS management made for embarrassing news stories — and prompted Salazar's predecessor as Secretary of the Interior, Dirk Kempthorne, to request an investigation by the inspector general's office. But Devaney's probe into the matter seemed to be focused on whether the auditors "followed proper procedure" or used work time and privileged documents to prepare their lawsuits. Their claims that Big Oil was ripping off taxpayers for tens, possibly hundreds of millions of dollars — with help inside MMS — appeared to be a secondary consideration. Devaney's final report was masterfully inconclusive on numerous points, including the retaliation issue, citing "poor communication" and "a complex, and sometimes confusing, array of facts."

One reason for the confusion was that the interviews with the auditors had opened up fresh avenues of embarrassment well beyond the original scope of the report. Little remembers being grilled by an investigator who found it hard to believe that the RIK group was blithely signing off on costly contract amendments requested by the oil companies. At one point the investigator asked if he thought RIK employees were "in bed" with the people they were regulating.

White hat: In January 2009 Secretary of the Interior Ken Salazar declared an end to "business as usual" at MMS, flanked by ethics czar Tom Strickland (left) and DOI Inspector General Earl Devaney.
Mark Manger
White hat: In January 2009 Secretary of the Interior Ken Salazar declared an end to "business as usual" at MMS, flanked by ethics czar Tom Strickland (left) and DOI Inspector General Earl Devaney.
Reduction in force: Days after auditor Bobby Maxwell's lawsuit against Kerr-McGee was unsealed, he lost his job at MMS.
John Johnston
Reduction in force: Days after auditor Bobby Maxwell's lawsuit against Kerr-McGee was unsealed, he lost his job at MMS.

Little replied that, from what he'd heard, "being in bed together" might literally be the truth. It was said that RIK people took trips with oil executives and partied with them, he explained. That tidbit, coupled with information from other sources, eventually led to an investigation of the RIK program itself, an office of sixty people responsible for collecting close to $4 billion a year in federal revenues.

The IG's office discovered that roughly a third of the entire RIK staff had socialized with and accepted gifts from oil- and gas-company executives. Many of the favors didn't amount to much — a free dinner, Colorado Rockies tickets, that kind of thing. But at least eight of the employees had exceeded the allowable limits for gifts, and several had been showered with more golf and ski trips, luggage and silver trays than your typical game-show contestant. Two employees, Stacy Leyshon and Crystal Edler, were known among industry execs as "the MMS chicks" because of their frequent presence at social events ("Crossing Over," September 18, 2008).

Leyshon, who supervised the government's oil-marketing efforts, also operated a sex-toy business on the side. When first questioned by investigators, she denied having inappropriate personal relationships with industry executives. Later she acknowledged having intimate relations with two oil-company people, including a Shell employee, but clarified that she "did not consider a 'one-night stand' to be a personal relationship."

Like Leyshon, Edler denied that the gifts or socializing influenced how she did her job. She also admitted to two romantic relationships with oil-company people, including a Shell employee. It was the RIK group's goal to be "part of industry," she explained. "Being in the business and going out and meeting with these people and becoming friends with them has gotten me very far with them."

Sources complained that Edler had leaked information about a pipeline deal that RIK had made with one company to a competitor, which happened to be Shell; Edler denied divulging any confidential data. The penchant for fraternizing and party gifts demonstrated by the MMS chicks seemed tame compared to the boorishness ascribed to Greg Smith, the director of the RIK program; in addition to running an energy consulting business on the side, Smith was accused of awarding a performance bonus to an underling who sold him cocaine and pressuring female employees for sex. (Smith admitted using cocaine away from the office but denied the other allegations.) In the long run, though, the friendly relationships with industry execs may have cost the government much, much more.

To this day, there's been no thorough accounting of the lost royalty revenues that occurred during the RIK fiasco. MMS defenders say the matter was blown out of proportion by Bush-bashing media types and point out that the alleged misconduct involved only a few thousand dollars in gifts and a handful of employees — some of whom, like Smith and Denett, retired during the investigation, while others, including Edler, still work there. But the IG's office found that of 121 contract amendments approved by Leyshon that it reviewed, only three favored the government; the others cost the government an estimated $4.4 million. Little maintains that the change in transport costs on a single Shell contract ended up costing the taxpayers $10 million a year. And there's no way of knowing how much revenue vanished down the rabbit hole of dubious deductions while the RIK watchdogs were substituting token "compliance reviews" for real audits and turning into party animals.

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5 comments
Payton_vege
Payton_vege

Amazing write-up! This could aid plenty of people find out more about this particular issue. Are you keen to integrate video clips coupled with these? It would absolutely help out. Your conclusion was spot on and thanks to you; I probably won’t have to describe everything to my pals. I can simply direct them here!

Sally Moore
Sally Moore

The federal government is stealing from us daily -- all under the hype of public good and public safety --- Salazer is a puppet for the 'big boy's -- just why he was appointed ... birds of a feather flock together --- they are trying to harness any creative energy this nation has and funnel all the funds to a few ... where have I heard that in political science ... wake up America

BobSchmetzer
BobSchmetzer

Big money draws thieves as much as a cow patty draws flys. When people work at a position of trust and violate that trust , they should be punished.The corporate criminals should be blackballed from doing business as a punishment along with a cash penality. This will always happen and we have to be vigilent and hire enough police and investigators. When corporations support candidates that say they want less regulation, they just don't want to get caught. If a business can't survive without stealing then they just didn't make it. Shut down!

taxbreak
taxbreak

Sounds like the sex happened on Bush's watch. But you make a great point, Mark.

Oil companies should not have to pay royalties for sucking up product from public lands because, hey, that will raise prices at the pump.

Oil companies shouldn't pay taxes on their billions in profits because that will raise prices, too.

Oil company executives shouldn't be required to pay personal income taxes, either, because they'll just jack up prices.

Multinational companies like BP and Royal Dutch Shell should just be allowed to commit fraud and pollute and pillage and do whatever they want. Just so long as we can afford to fill up our tanks, it doesn't matter what it costs us in the long run.

We need more clear thinking like this.

Mark Roberts
Mark Roberts

Call it what it is, an arm of the IRS that makes the price higher at the pump. As far as the sex was Bill Clinton incharge?

 
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