U.S. Says Royalty Workers Had Sex With Oil Contacts (Tina Seeley)

Sept. 10 (Bloomberg) -- Employees in the same U.S. agency whose errors cost the government billions of dollars in oil royalties had sex with their industry contacts and took illegal drugs such as cocaine, an inspector general investigation found. 

Workers in an Interior Department program through which the government is paid with oil rather than money for rights to drill on federal lands also accepted gifts from oil companies, the department's inspector general said in a report submitted today to members of Congress. The program is known as royalty in kind, or RIK, and its former director took illegal drugs and had sexual relations with subordinates, according to the report.

{xtypo_quote_right} The activities at the RIK office are so outlandish that this whole (inspector general) report reads like a script from a television miniseries, and one that cannot air during family viewing time," West Virginia Democrat Nick Rahall, chairman of the House Natural Resources Committee, said in a statement. {/xtypo_quote_right} 

``We discovered that between 2002 and 2006, nearly one- third of the entire RIK staff socialized with, and received a wide array of gifts and gratuities from, oil and gas companies with whom RIK was conducting official business,'' Interior Department Inspector General Earl Devaney said in a letter accompanying the report. Two staffers ``engaged in brief sexual relationships with industry contacts,'' he said.

The Minerals Management Service, part of the Interior Department, collected $11.4 billion in the government's 2007 fiscal year from companies that used federal and Indian lands to produce oil, natural gas or minerals. The agency came under increased scrutiny after revelations in 2006 that it failed to include price triggers in offshore leases that could cost the government $10 billion in lost revenue.

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