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<H1>Whistleblower: Oil watchdog agency 'cult of corruption'</H1>
<UL>
<LI class=cnnhiliteheader>Story Highlights</LI>
<LI>Whistleblower said oil regulators in bed with oil industry: "It's
disgusting"<BR></LI>
<LI>Department of Interior said it can't comment on Bobby Maxwell's
specific claims<BR></LI>
<LI>Maxwell was auditor for 20-plus years, said he lost job due to
scrutiny of oil giants<BR></LI>
<LI>Recent report found the agency Maxwell worked for took improper
gifts from oil reps<BR></LI></UL>
<DIV id=cnnSCByLine>From Dan Simon and David Fitzpatrick<BR>CNN<BR></DIV>
<P><B>HONOLULU, Hawaii (CNN) </B>-- Bobby Maxwell kept a close eye on the
oil industry for more than 20 years as a government auditor. But he said
the federal agency he worked for is now a "cult of corruption" -- a claim
backed up by a recent government report.</P>
<P>"I believe the management we were under was showing favoritism to the
oil industry," Maxwell told CNN.</P>
<P>Maxwell is referring to a tiny agency within the Department of the
Interior called the Minerals Management Service, which manages the
nation's natural gas, oil and other mineral resources on federal
lands.</P>
<P>A report, conducted by the Interior Department's inspector general and
released earlier this month, found that employees at the agency received
improper gifts from energy industry officials and engaged with them in
illegal drug use and inappropriate sexual relations. It looked at
activities at the agency from 2003 through 2006.</P>
<P>Maxwell said the report doesn't surprise him. The agency, he said, is
corrupt "top to bottom." <SPAN class=cnnembeddedmoslnk><IMG height=14
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width=16 border=0><A
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href="http://cnn.site.printthis.clickability.com/pt/cpt?action=cpt&title=Whistleblower%3A+Oil+watchdog+agency+%27cult+of+corruption%27+-+CNN.com&expire=-1&urlID=31689745&fb=Y&url=http%3A%2F%2Fwww.cnn.com%2F2008%2FUS%2F10%2F14%2Foil.whistleblower%2Findex.html&partnerID=211911#cnnSTCVideo">Watch
a failure to "protect America's interests" »</A></SPAN></P>
<P>"It sounds like they forgot they work for the government," he said.
"It's disgusting. ... There's no excuse for that. Those people should not
be working in those positions at all.</P>
<P>"They crossed a lot of lines that should never have been crossed," he
said. "They lost all objectivity."</P>
<P>Maxwell was in charge of keeping track of the millions in royalty
payments owed taxpayers by oil and gas companies who explored and found
oil on U.S. government lands.</P>
<P>He estimates he and his team were responsible for saving the government
close to $500 million in royalties, either underpaid or somehow skipped by
oil and gas companies, over the years.</P>
<P>He received the Interior Department's highest award in 2003 for his
work. But not long afterward, his job was killed.</P>
<P>He believes it was retribution for his cracking down on Big Oil and
blowing the whistle on what he believes was a "cult of corruption" within
the agency. The Interior Department denies that, saying his job was
reorganized as part of routine restructuring.</P>
<P>Just before he lost his job, he said, one of his superiors in
Washington ordered him not to investigate why Shell Oil had raised its oil
transportation costs. Maxwell said it jumped from 90 cents to $3 a barrel
without adequate explanation. The government paid Shell to transport oil
from offshore platforms.</P>
<P>When asked why a government worker would tell an auditor not to
investigate, he said: "I believe it started from the top down," he
said.</P>
<P>Shell Oil told CNN it "pays the same rate any shipper does" and that it
has "never engaged in fraudulent transactions or entered into sham
contracts as Mr. Maxwell alleges."</P>
<P><STRONG><FONT color=#ff0000 size=4>Maxwell, a registered independent,
said the shift in attitude at the agency began about seven or eight years
ago, about the time the Bush administration came into power. He said he
was discouraged from aggressively auditing oil
companies.</FONT></STRONG></P>
<P>"Laws and regulations were not applied, also not enforced," he
said.</P>
<P>The inspector general's 27-page summary says that nearly a third of the
roughly 60 people in Maxwell's former office received gifts and gratuities
from oil industry executives.</P>
<P>Two received improper, if not illegal, gifts at least 135 times, the
report says. It goes on to describe a wild atmosphere in which some staff
members admitted using cocaine and marijuana.</P>
<P>In addition, two female workers at the Minerals Management Service were
known as the "MMS chicks" and both told investigators they had sex with
oil industry officials they were supposed to be auditing.</P>
<P>One e-mail from a pipeline company representative invited government
workers to a tailgating party: "Have you and the girls meet at my place at
6 a.m. for bubble baths and final prep ... Just kidding."</P>
<P>Inspector General Earl Devaney said in a letter to Interior Secretary
Dirk Kempthorne accompanying the report that it details "a textbook
example of improperly receiving gifts from prohibited sources."</P>
<P>Maxwell is now retired from the government and teaches at the
University of Hawaii. He said it was just a matter of time until the
agency's behavior was exposed. He feels vindicated now in the wake of the
inspector general's report, but is still disgusted by what he was
happening at the Minerals Management Service.</P>
<P>"Their job is to protect United States taxpayers' interest. It's like
they completely forgot that, like they just became part of the oil
companies," he said.</P>
<P>The Interior Department said it could not comment on Maxwell's specific
allegations or removal, saying his former supervisor no longer works for
the Interior Department either.</P>
<P>Kempthorne said he was "outraged" by the disclosures in the inspector
general's report and that the actions "of a few has cast a shadow on the
entire agency."</P>
<P>But the department said there is no evidence taxpayers lost money as a
result of unethical behavior between government workers and the oil and
gas industry.</P>
<P>Maxwell doubts that.</P>
<P>The former auditor said he'd love to put all the government royalty
records under his magnifying glass.</P>
<P>"I think the government should be transparent. We are for the people,
by the people. This is the government. We're here to serve," he said.</P>
<P>Maxwell has filed a whistleblower lawsuit against the Kerr-McGee Corp.,
an energy company involved in oil and gas exploration. In it, he claims
the company defrauded taxpayers out of millions in oil royalty
payments.</P>
<P class=cnninline>The company denies the accusation. If Maxwell wins, the
government would recieve about $40 million in additonal revenue and
Maxwell would be entitled to about a third of that.</P>
<P class=cnntopics><B>All About</B><A
href="http://topics.cnn.com/topics/U_S_Department_of_the_Interior"
target=_blank>U.S. Department of the Interior</A> • <A
href="http://topics.cnn.com/topics/Oil_Production_and_Refining"
target=_blank>Oil Production and Refining</A> • <A
href="http://topics.cnn.com/topics/Energy_Policy" target=_blank>Energy
Policy</A></P></TD></TR></TBODY></TABLE></DIV><!--Article End--><!--Bibliography Goes Here-->
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<TD class=font-cn><SPAN class=fonttitle>Find this article at:</SPAN>
<BR>http://www.cnn.com/2008/US/10/14/oil.whistleblower/index.html
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