Secretary Salazar abolished the RIK program at the end of 2009, drily observing in the termination memo that his department "should be regulating, not participating in, industry activities." After an appeal to the U.S. Office of Special Counsel, Little and Arnold were eventually reinstated in their MMS auditor jobs in Oklahoma City. But it wasn't the same.

"They took us off the offshore leases — that's where the big money is — and put us in charge of doing audits for the Indian reservations," Little says. "The whole office. We went from collecting thirty to forty million dollars a year to a few hundred thousand dollars, maybe a million."

Like the former "oil marketing specialists" over at RIK, the auditors were no longer playing in the Big Game.

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.

*****

Last year, the federal government recovered a record-busting $2.8 billion in False Claims Act lawsuits initiated by whistleblowers. More than 80 percent of that total involved cases of health-care fraud, but the rest included some tidy sums drilled out of Big Oil's wallets, such as a $20.5 million settlement from BP Amoco and affiliates and a $16.35 million settlement from Kerr-McGee and Anadarko. Both cases involved claims that the companies deliberately underpaid royalties on natural gas produced on federal and Indian lands.

Yet at the same time that Justice Department attorneys were trumpeting their successes under the False Claims Act, they were actively opposing the lawsuit launched by Little and Arnold against Shell. And they avoided direct involvement in Maxwell's case against Kerr-McGee until it was time to put in an appearance in order to collect the government's share of the settlement.

Even after Maxwell won a $7.5 million jury verdict against Kerr-McGee in a federal courtroom in Denver in 2007, MMS continued to declare on its website that the company didn't owe the government the money. The verdict was thrown out a few weeks later by U.S. District Judge Philip Figa on jurisdictional issues but was reinstated in 2008 by the 10th Circuit Court of Appeals. Maxwell attorney Sean Connelly says the DOJ attorneys "supported the jury verdict" and were helpful "silent partners" behind the scenes. It took another three years to finalize the $26 million settlement and attain government approval of the 30 percent share that Maxwell will receive.

"I never worked so hard in my life to give the government $16 million," says Richard LaFond, another one of Maxwell's attorneys. "This case is A Civil Action with a happy ending. But the road has been incredible."

"I still can't believe it's over," says Maxwell. "After nine years and so many ups and downs, I'm still kind of numb."

For Little and Arnold, it's far from over. Their lawsuit against Shell was moved from Oklahoma to Texas at the company's request — where, for almost five years, it sat as inert as an expiring lizard in the Houston courtroom of Lynn Hughes, an industry-friendly federal judge whose financial-disclosure reports list stock in Chevron and mineral royalties on properties he owns. (Hughes was reportedly BP's choice to oversee the slew of lawsuits filed against the company after the 2010 Gulf oil spill.) Last April, Hughes dismissed the case, claiming that the auditors had "attempted to manufacture a claim by violating rules and issuing arbitrary orders."

The auditors' attorneys — a team that includes some of the same Denver lawyers who represented Maxwell, including LaFond, Connelly, and Michael Porter — have appealed Hughes's ruling. They are also seeking to get the case reassigned to a different judge, arguing that the decision was so one-sided and dismissive that "an objective observer reasonably would question the district court's impartiality." Their appeal is being contested not only by Shell, but also by the Department of Justice, which contends that it's a conflict of interest for federal auditors to bring False Claim Act cases on their own.

Attorney Porter says that there's substantial case law that federal employees can bring such suits — including, of course, the Maxwell case. Amendments made to the law 25 years ago were designed to encourage whistleblowers like Little and Arnold, he points out: "If the government isn't doing its job, who else is going to bring these kinds of suits?"

Little says he was told by Justice attorneys that his case was a good one to pursue, but that the government couldn't support it because it didn't want to "open the floodgates" to similar cases from rogue federal workers. He and Maxwell both believe that officials at Interior have also attempted to discourage government participation in the actions.

"Arnold and Little are good people, two of the best I ever worked with," Maxwell says. "The issues they developed are valid. But Interior will go to the extreme not to get involved — because if they do, they look like idiots. We blew the whistle, and they ignored it."

   Last fall, Tom Strickland, Salazar's ethics czar, left Interior for a job with the law firm that was defending BP in the oil-spill debacle. Over at the restructured Office of Natural Resource Revenue, director Greg Gould is focused on the future, not his predecessors' blunders. He's implemented new data-mining programs that pore over royalty reports and have already caught millions of dollars in reporting errors. "That's eight million dollars we would have caught in our audit process, but we would have caught it two or three years later than we're doing now," he says.

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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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