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US Inspector General Report: Falsified Oil Rig Inspections and Other Improprieties

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US Inspector General Report - Falsified Oil Rig Inspections and Other Improprieties - by Stephen Lendman

On May 24, Mary L. Kendall, Acting Interior Department Inspector General's memo to her boss, Secretary Ken Salazar, discussed an "Investigative Report," titled "Island Operating Company, et al," addressing allegations that Lake Charles, Louisiana District Office Minerals Management Service (MMS) employees (in charge of inspections and oversight) "accepted gifts from oil and gas production companies."

Occurring prior to 2007, it provides evidence that "a much-needed (MMS ethics) change is required." Ordinarily, public release would have followed a formal MMS response, 90 days after getting it. But today's events forced Kendall "to release it now," saying her greatest concern is the "environment in which these inspectors operate - particularly the ease with which they move between industry and government."

She found evidence that MMS and industry personnel fraternized and exchanged gifts, and have known each other since childhood. MMS staff used illegal drugs, viewed pornography on their government computers, and sent emails with racist comments, citing one manager saying:

"Obviously, we're all oil industry. We're all from the same part of the country. Almost all of our inspectors have worked for oil companies out on these same platforms. They grew up in the same towns." They've been friends all their lives. "They've hunted together. They fish together. They skeet shoot together....They do this all the time."

John E. Dupuy, Assistant Inspector General for Investigations, prepared the report for S. Elizabeth Birnbaum, MMS's Director.

It says industry gifts included hunting and fishing trips, lunches, and other favors from the Island Operating Company (IOC), working on Gulf oil and gas rigs. In addition, one inspector was in the process of "negotiating and later accepting employment with that company."

The investigation followed an anonymous October 28, 2008 letter, addressed to the New Orleans US Attorney's office, citing improprieties and recommending an investigation. Dupuy found "a number of MMS employees....admitted to attending sporting events prior to 2007 in which which oil and gas production companies sponsored teams, as well as receiving lunches" and other gifts.

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His investigation showed a pervasive gift-acceptance culture in the Lake Charles, LA District Office, suggesting similar improprieties elsewhere.


MMS leased Gulf drilling sites to about 130 oil and gas companies, including BP, Exxon Mobil, Shell, Chevron, and many others. About 4,000 rigs are located throughout four Louisiana districts - Lake Charles, Lafayette, New Orleans, and Houma - as well as one in Lake Jackson, TX.

The Outer Continental Shelf Act requires that MMS inspect these platforms to assure they comply with federal regulations with regard to safety and environmental considerations, issuing "incidents of non-compliance" for known deficiencies. From 2004 - 2009, IOC's experience was instructive. It was fined a mere $572,500, pocket change too little to matter.

The current investigation followed an earlier one into former New Orleans regional supervisor Don Howard's activities - fired in January 2007 for accepting drilling contractor gifts, failing to report them, then making false statements for cover.

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His impropriety "appears to have been a generally accepted practice by MMS inspectors and supervisors in the Gulf of Mexico region."

Gifts included sports tickets, skeet-shooting contests, hunting and fishing trips, golf tournaments, crawfish boils, Christmas parties, among others, at times including travel and other expenses. If they exceed $335 dollars from any one source during the reporting period, they're required to be disclosed, and the identity of the source.

According to one former Lake Charles inspector, "everyone has gotten some sort of gift before at some point," showing a practice way out of hand, suggesting the possibility that maybe cash and other favors were given.

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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