Sex, drugs and oil company royalties: regulators were literally in bed with the oil industry

Federal officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies and received improper gifts, the Denver Post is reporting today, after predicting last month that this bombshell was about to drop.

The sex-and-oil news -- based on three inspector general reports released today -- comes just as Congress is taking up the subject of expanding offshore drilling leases. Those new leases would, of course, be handled by the same agency, the U.S. Minerals Management Agency, which is an arm of the Interior Department.

"The reports portray a dysfunctional organization that has been riddled with conflicts of interest, unprofessional behavior and a free-for-all atmosphere for much of the Bush administration’s watch," the New York Times reports.

"The alleged transgressions involve 13 Interior Department employees in Denver and Washington," the Denver Post reports. "Alleged improprieties include rigging contracts, working part-time as private oil consultants and having sexual relationships with — and accepting golf, ski trips and dinners from — oil company employees, according to three reports released today by the Interior Department's Inspector General."

"Between 2002 and 2006, nearly a third of the 55-person staff in the Denver office received gifts and gratuities from oil and gas companies, including Chevron, Shell, Hess Corp. and Denver-based Gary-Williams Energy Corp. the investigators found," reports the Associated Press.

The investigation concluded that several of the officials “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.”

To read the Inspector General's cover letter explaining the findings, click Download oig_cover_letter.pdf

--Craig Pittman