"the Interior Department agency that collects oil and gas royalties has been caught up in a wide-ranging ethics scandal - including allegations of financial self-dealing, accepting gifts from energy companies, cocaine use and sexual misconduct.
In three reports delivered to Congress on Wednesday, the department's inspector general, Earl Devaney, found wrongdoing by a dozen current and former employees of the Minerals Management Service, which collects about $10 billion in royalties annually and is one of the government's largest sources of revenue other than taxes."
That is from: Sex, drug use and graft alleged in U.S. Interior Department
(see below for the link about their ethics award)
The article also says:
"The report alleges that eight officials in the royalty program accepted gifts from energy companies whose value exceeded limits set by ethics rules. These included golf and ski outings; meals and drinks; and tickets to a Toby Keith concert, a Houston Texans football game and a Colorado Rockies baseball game.
The investigation also concluded that several of the officials "frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.""
Here is another article on this: Federal oil lease employees had sex with industry reps
In my 1301 class, we just read a chapter called "Sex, Booze and Drugs" (from the book The Economics of Public Issues), so this is a timely story!
But this story points out two important economic concepts. One is The capture theory of regulation. The idea is that although the government agencies are supposed to make sure companies follow the rules to benefit society, those companies can influence or control the regulators. They do this by lobbying (and giving perks like in these artilces). Also, the industry has the interest and incentive to influence these agencies while the rest of us are too busy to keep tabs on it. And sometimes the regulators are former industry employees.
The other concept it illustrates is The law of unintended consequences. We may have well-meaning laws that should benefit society but people react to those laws and change their behavior sometimes in unexpected and undesirable ways. We see this here in these articles. Another example would be rent controls. If you legally keep down the price of rent, landlords have less incentive to keep their buildings or construct new apartments. So the rental market (and renters) suffer even though that was not the intended result.
Days Before Scandal, Interior Got Ethics Award