Posted by D. Cupples | Even Jed Clampet didn't give away oil. When oil companies drill on government lands, they're supposed to pay royalties, but for years they've underpaid. It might be different if oil companies lowered gas prices out of respect for us taxpayers who allow them to drill on our lands, but they haven't.
Interior Department Inspector General Earl Devaney recently reported on an investigation of the Bureau of Minerals Management Services (MMS), an agency that has failed to collect oil royalties. In May, after this scandal's seeds sprouted, MMS director Johnnie Burton resigned.
Friday's NY Times reported that Devaney attributed MMS's failures largely to "lazy management, ethical lapses and a culture of secrecy that hid mistakes" and found that officials seemed more concerned with protecting the oil industry than the taxpayers. Some officials reportedly "blocked" auditors' efforts to recover unpaid royalties.
This is not a new issue: by 2001 fifteen oil companies had paid a combined $438 million to settle Justice Department lawsuits over underpaid royalties. There's more.
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Devaney said he has launched "an investigation into the Interior Department's payments of more than $100 million to Accenture, a consulting firm, for a flawed information management system" (NY Times). Accenture, which used to be known as Andersen Consulting, was a subsidiary of Arthur Andersen -- the accounting firm that sort of went out of business after being indicted for its involvement in the Enron scandal.
Some of the current underpaid-royalties scandal stems from loopholes in oil leases in the late 1990s. The loopholes were discovered in 2000 and largely ignored for the last 7 years.
Though not directly related, recent news reports have uncovered evidence that other Executive Branch agencies have questionably handled their duty to protect us taxpayers (see the posts linked below).
* State Department Staff Threatened for Cooperating with Congress
* Justice Dept. Official Turned Blind Eye to Fraud?
* Time for Pentagon to Get Serious About Contractor Fraud
* Billions over Baghdad: Poor Accounting Allowed Waste & Fraud
* Defense Dept. Rewarding Bad Contractor Performance?
* How the Defense Dept. Flushes Dollars Down Latrine
* Gov. Contractors: Driving up War's Costs?
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