Interior Department disciplines Denver workers in sex, drugs and oil scandal

The Department of Interior has disciplined eight government employees for their role in a wide-ranging scandal that involved illegal drugs, sex with oil company employees and financial shenanigans at a federal agency in Denver charged with collecting energy royalties for taxpayers, The Associated Press reported Friday morning.

The disciplinary action against employees who at one time worked for the federal Minerals Management Service (MMS) ranged from reprimand to demotion to termination, but the Interior Department wouldn’t say how many were fired, citing personnel rules protecting privacy.

The royalties scandal brewed for over a year but the lurid aspects broke in September when a set of scathing reports found a “culture of substance abuse and promiscuity” at the office, headquartered at the Federal Center in Lakewood. In the reports (viewable as pdfs here, here, here and here, thanks to ProPublica), MMS employees were charged with violating the public trust by accepting lavish gifts from oil companies, having sex with industry contacts and doing drugs at office and oil company parties. Other officials steered business to their own companies and set up consultant firms to win contracts they drew up themselves.

Several of those implicated have already resigned and one has pleaded guilty to felony conflict-of-interest charges. Last week, a former top employee was sentenced to two years probation for devising a scheme to win a $1.4 million consulting contract with MMS after his retirement.

The agency is charged with collecting billions of dollars in oil and gas royalties from companies drilling on public lands, and oversees one of the federal government’s largest in-kind revenue sources, accepting oil and gas in lieu of cash royalty payments.

On Thursday, the agency reported a record $23.4 billion in payments from oil and gas companies, including a record $178.4 million paid to Colorado for its share of royalties from drilling on public lands. Colorado ranks third in the nation in royalty revenue, behind Wyoming’s $1.2 billion and New Mexico’s $614.8 million.

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Ernest Luning

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