BP - The Devastating Impact of Ethical Lapses

Conclusions from a number of investigations into the Minerals Management Service practices reveal ethical lapses, including the acceptance of gifts, being under the influence of illegal substances while on the job and accounting inaccuracies.

Posted by Joe Gerard in Code of Conduct, Ethics, Ethics & Compliance, Human Resources on June 2nd, 2010

11 people were killed, hundreds of animals have died and the future consequences of the BP oil spill in the Gulf of Mexico are largely unknown. Until this point, we have yet to touch on the topic of this devastating event. Conclusions from a number of investigations into the Minerals Management Service practices reveal ethical lapses, including the acceptance of gifts, being under the influence of illegal substances while on the job and accounting inaccuracies. One of the largest concerns the investigation has raised is the relationship between the government and the energy industry.

The question on my mind is, why now? Why not earlier?  If the explosion in the Gulf never occurred, would MMS and the energy industry be under the same pressure to get their acts together and undergo an ethics overhaul? People have been aware of the wrongdoings and unethical nature at MMS for years, but it has taken until now for changes to be implemented and enforced.

Minerals Management Service

On May 27th, President Obama announced the resignation of Elizabeth Birnbaum, the head of Minerals Management Service (MMS) due to increasing criticism of the inadequate oversight of offshore drilling. However, other reports claim Birnbaum was fired. The corrupt culture and continuous ethical lapses at MMS have been revealed, with many of these events occurring prior to 2008. Previous inspections and reports have drawn the same conclusions as the report announced this week. However, it has taken a disastrous spill to draw attention to the need for a change in ethics and safety at MMS.

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In the Reuters article “Interior Requests Offshore Agency Ethics Probe,” they report the findings of the MMS investigation:

“U.S. Interior Secretary Ken Salazar ordered an investigation into whether the rig involved in the massive oil spill in the Gulf of Mexico was properly monitored by the MMS. The investigation follows a report citing workers from the MMS accepted gifts, viewed pornography and possibly allowed oil workers to fill out their own inspection reports. The report found it was commonplace before 2007 for MMS employees at a Lake Charles, La. office to receive gifts including sporting event tickets and hunting trips from energy companies. ‘This deeply disturbing report is further evidence of the cozy relationship between some elements of MMS and the oil and gas industry,’ Salazar said in a statement. Salazar said he has asked the agency’s acting inspector general, Mary Kendall, to look into whether MMS employees adequately inspected and enforced standards on the Deepwater Horizon rig. He also asked the inspector to determine if the improper behavior outlined in the report has continued since he took office at the department.”

In 2009, Salazar was named Secretary to the Interior and worked to establish new ethics rules throughout the department. MMS is also being scrutinized for safety related issues, as many question the company’s safety requirements and practices. Safety concerns are also raised, as MMS is responsible for leasing rigs to oil companies. BP has a very lengthy list of oil spills and safety issues tied to their name, paying some of the largest fines ever administered.

What’s Next?

The relationship between federal regulators and energy companies provides several examples of conflicts of interest. In the Chron article “Minerals Management Service Regulators Took Energy Firms’ Gifts,” they report the discovery of at least one inspector at MMS “negotiating employment with an energy company while simultaneously inspecting its platforms in the Gulf of Mexico.”

An article in the Miami Herald, “Drilling for Answers to the Gulf Disaster,” states:

“In 2008, the Interior Department’s inspector general found ‘an organizational culture lacking acceptance of government ethical standards.’ Ethical lapses resulted in a sexual scandal, in MMS employees accepting gifts from Big Oil and failing to collect millions of dollars in royalties. The Obama administration has announced an overhaul, separating MMS into three branches to deal with safety and environmental regulation, lease management and royalty collection. The commission may find more needs to be done, like a thorough housecleaning of staff.”

In the Oil & Gas Journal article “House Hearing, Senate Bill Focus on MMS Ethics Reforms,” they discuss the possibility of instating a “two-year rule”:

“Kendall said most of her office’s recommendations in the latest report involved stronger ethics requirements and ensuring that the reforms which Salazar ordered actually happened. ‘An inspector who comes from Shell, for example, should not be allowed to inspect a Shell platform or well for 2 years.’ MMS suggested a two-year waiting period in its response to the IG office’s latest report, she added.”

It will be interesting to see which plans will be implemented at MMS in response to increasing public pressures, as well as the implications for oil companies. Tighter enforcement of ethical codes will need to be implemented, as will increased safety measures for both employees and drilling sites in order to avoid future catastrophes.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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