WASHINGTON — Two employees of the Interior Department have been fired and eight others disciplined in a scandal over the acceptance of meals, junkets, gifts and, in some cases, illicit sex and drugs from the oil companies that they regulated, a knowledgeable person said Friday.
Randall Luthi, the director of the department's Minerals Management Service, announced Friday that he'd meted out discipline ranging from a letter of reprimand to dismissal, but gave no details. All those disciplined worked in the controversial Royalties-in-Kind program, in which the government forgoes royalties on federal leases and instead takes a percentage of the pumped oil and gas for resale.
The actions came in response to a scathing September report in which Department Inspector General Earl Devaney described ``a culture of substance abuse and promiscuity'' in the RIK program and said 19 of its employees had taken gifts from oil and gas industry sources.
The employees' cozy ties with industry have raised alarm because of the potential impact on the federal treasury of any favors or leniency they might have shown their industry hosts. The MMS recently announced that it had collected a record $23.4 billion in royalties amid soaring oil and gas prices in the fiscal year ending Sept. 30, including more than $3 billion for states and Indian tribes, far exceeding the previous record of $12.6 billion, set in 2006.
The person with close knowledge of the disciplinary actions, who declined to be identified because of the sensitivity of the matter, said that two female marketing specialists in the Royalties-in-Kind program had been terminated and a third employee had been demoted to a lower pay grade. Luthi's statement indicated that at least one RIK employee was transferred to a job outside the unit.
The first person and a second, who also insisted on anonymity because the disciplinary action was a personnel matter, identified the fired women as Stacy Leyshon and Cristel Edler, who cleaned out their desks when they were put on administrative leave weeks ago, pending resolution of the administrative action. From 2002 to 2006, the two accepted outings, meals and gifts valued at more than $5,500 from three oil companies, these people said.
Leyshon, who held a supervisory post, got $10,450 in cash from the MMS during the same period for meritorious service, although her name showed up 45 times on Chevron's expense reports and she got 29 gifts from Shell Oil and Gary-Williams Energy Corp., the inspector general reported.
The report described one instance in which a Chevron trader, Jeff Brough, made an error in the government's favor when he failed to include a transportation cost on a bid for MMS oil properties. The investigators quoted witnesses as saying that Leyshon and Edler amended the contract to assist Brough in avoiding a potentially career-ending mistake.
The report said that Leyshon initially indicated that she always made sure that any gratuities were below the allowable $20 threshold, though she went on an overnight golf outing that included meals, a golf bag or luggage and a ticket to a professional golf tournament or baseball game. She later admitted to investigators that she probably exceeded the limit, investigators said.
Leyshon also repeatedly said that she'd donated all gifts to charity, but couldn't produce any receipts, the report said.
It said that e-mails showed that Edler, who allegedly accepted gratuities on at least 61 occasions, had divulged confidential pipeline-transportation rates provided to the government by Poseidon Oil to a competitive rival, Shell Oil.
Leyshon and Edler, who live in Colorado, where the MMS program is based, couldn't be reached for comment.
The disciplinary action came after Devaney complained to Congress that the Justice Department had declined to prosecute two former MMS officials that his investigators found had created a lucrative contract that would benefit them after they retired.
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