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Cronyism, Cocaine, Oil…and now Congressional Oversight

That was quick.

Yesterday the Interior Dept. inspector general unveiled three lurid reports of sexual misconduct, drug dealing and partying with oil executives at Interior’s Mineral Management Services.

Today the House oversight committee said there will be a hearing next Wednesday to scrutinize MMS and their oil and natural gas drilling program.

The investigation seems to merit congressional follow-up. Particularly since the Justice Dept. has said, without explanation, that it won’t prosecute two officials that may have committed multiple felonies– Lucy Q. Denett, the former associate director of MMS; and Gregory W. Smith, the former director of the oil and gas program.

So what is the brewing scandal about? It seems to be a blanket indictment of the MMS royalty-in-kind program, in which natural gas and oil companies lease federal land and then give the government usually 1/6 of what gas and oil they extract.

MMS has 50 employees and, according to the IG report, 19 took gifts from oil and gas executives with “prodigious frequency.” Employees went to parties with oil and gas executives that featured cocaine and marijuana. Two female employees had sexual relationships with industry contacts.

But where the federal investigation really gets interesting are specific allegations against the former top officials Denett and Smith. Denett reportedly went out of her way to arrange MMS consulting contracts for two former colleagues. One, Jimmy W. Mayberry, has pled guilty to a felony conflict-of-interest charge related to his MMS consulting work.

An entire IG report, meanwhile, is devoted to Smith, the former royalty-in-kind director. Smith used his position to get an outside consulting job while he was stiill working at Interior; took gifts from oil and gas officials; had sex with two subordinates, and purchased cocaine several times from his secretary and her boyfriend.

Reaction to the scandal has so far focused largely on how it might effect Congress’s offshore drilling debate. After all, MMS is in charge of the Florida coast, Arctic National Wildlife Refuge and other resource-rich, federally owned land.

But these are no ordinary accusations of government mismanagement. Congressional investigators will surely focus on the broader issue of oil drilling. Will they also find out why Denett, Smith and several of their former colleagues aren’t being prosecuted?

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