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United States Department of the Interior
OFFICE OF INSPECTOR GENERAL
Washington, DC 20240
To: Secretary Salazar
From: Mary L. Kendall
Acting Inspector General
With this memorandum, I am forwarding our investigative report entitled "Island Operating Company, et. al" which addresses a number of allegations that Minerals Management Service (MMS) employees at the Lake Charles District Office had accepted gifts from oil-and gas production companies.
At the outset, I want to note that all of the conduct chronicled in this report occurred prior to 2007, and pre-dating your tenure as Secretary and your January 2009 Ethics Guide. While this conduct is dated, it is more evidence that there was, indeed, a much-needed change to the ethical culture of MMS.
E-mails for MMS inspectors from the Lake Charles office revealed that in 2005, 2006, and 2007, various offshore companies invited MMS personnel to events such as skeet-shooting contests, hunting and fishing trips, golf tournaments, crawfish boils, and Christmas parties. Some e-mails confirmed that MMS inspectors attended these events.
In an e-mail dated January 3, 2006, to other MMS employees, the former MMS inspector at the Lake Charles office stated, “The 40 to 3 ass whipping LSU put on Miami was a lot more impressive in person. My daughter and I had a blast”. The next day, the inspector sent another e-mail attaching pictures, including the plane on which he, and an oil and gas production company official, and others flew to Atlanta for the 2005 Peach Bowl game.
In addition to providing information about the Peach Bowl trip, the confidential source claimed that an MMS inspector had used drugs, including crystal methamphetamine. The source claimed to have heard that this inspector might have used these drugs offshore on the platforms.
We reviewed the e-mail accounts of MMS employees at the Lake Charles and New Orleans offices from 2005 to 2009. We found numerous instances of pornography and other inappropriate material on the e-mail accounts of 13 employees, six of whom have resigned. We specifically discovered 314 instances where the seven remaining employees received or forwarded pornographic images and links to Internet websites containing pornographic videos to other federal employees and individuals outside of the office using their government e-mail accounts.
Another confidential source told investigators that some MMS inspectors had allowed oil and gas production company personnel located on the platform to fill out inspection forms. The forms would then be completed or signed by the inspector and turned in for review. According to the source, operating company personnel completed the inspection forms using pencils, and MMS inspectors would write on top of the pencil in ink and turn in the completed form.
We reviewed a total of 556 files to look for any alteration of pencil and ink markings, notations, or signatures. We found a small number with pencil and ink variations; however, we could not discern if any fraudulent alterations were present on these forms. According to a lead MMS inspector, MMS inspectors often used pencil to complete inspection forms. He said that anyone from MMS involved in the platform inspections could author the inspection form, and inspectors routinely signed each other’s names on the forms.
During our review of MMS employee e-mails, we found several referencing employment discussions between a former MMS inspector and the IOC.
In a June 12, 2008 e-mail, an IOC employee, told a former MMS inspector the IOC would like to hire him in the compliance department. In an e-mail dated June 16, 2008, the inspector discussed his excitement about coming back to work for the business with another IOC employee. The inspector said, “I’m excited about coming back to work with IOC. Do you think [an IOC official] would go with $65,000 a year? And all the trimmings you told me about.” The IOC employee replied on June 17, 2008, “Yes I think [he] will. When you hire on you will talk to him”. On June 19, 2008, the IOC employee urged the inspector to come to the IOC and meet with “[an IOC official]” regarding potential employment.
Agent’s Note: The inspector resigned from MMS on August 8, 2008, to work for the IOC.
This investigation was initiated in 2006 based on allegations made by Chris Oynes, Regional Director, Gulf of Mexico Region (GOMR), Minerals Management Service (MMS), U.S. Department of the Interior (DOI), New Orleans. Oynes alleged that Donald C. Howard, Regional Supervisor, GOMR, had attended one or more hunting trips with officials of offshore oil and gas companies.
The investigation disclosed that between August 2004 and July 2006, Howard accepted an offshore fishing trip, two hunting trips involving transportation on a company airplane, meals, and other gifts from Rowan Drilling Company, Inc. (Rowan), an offshore drilling contractor affected by MMS regulations and decisions. These gifts were valued at approximately $6,678.
Howard failed to report at least one of these gifts as required on a Confidential Financial Disclosure Report (Form OGE-450) he submitted to MMS in October 2005. Subsequent to receiving these gifts, and at the apparent request of Rowan, Howard improperly issued a letter directing Rowan to salvage the Rowan Halifax, a Rowan-operated, offshore drilling rig that sank in the GOMR during Hurricane Rita in September 2005. At the time, this letter appeared to be integral to Rowan’s efforts to collect $90 million in insurance proceeds related to the sinking of the Rowan Halifax and other Rowan drilling rigs.