U.S. oil agency scandal unfolds

* Two employees engaged in "brief sexual relationships" with customers but didn't recuse themselves from handling work involving those companies and officials. One employee said she didn't disclose the contact or consider it improper because "she did not consider a 'one-night stand' to be a personal relationship" and didn't think it would affect government business. Devaney noted: "Sexual relationships with prohibited sources cannot, by definition, be arms-length." One program official allegedly had sex with two subordinates and bought cocaine, sometimes at his office.

* During a 2004 industry gathering, an employee became too intoxicated to drive to her accommodations and instead stayed at a Shell-provided hotel room. A Shell employee later reassured her in an e-mail, "Nobody will say anything about you being here for the night. As far as I'm concerned, you were in a hotel." The employee responded, "you are sooo wonderful. You know how much I totally adore you."

* In some cases officials had "inappropriate" outside employment with entities doing business with the Royalty in Kind group, the reports said. A former program director received more than $30,000 from an industry consulting firm in return for marketing the company to various oil and gas companies doing business with the government agency. A former Minerals Management Service associate director helped direct lucrative consulting contracts to a firm run by two members of the agency who had retired less than a year earlier.

* Royalty in Kind employees routinely allowed energy companies to revise their bids for oil or natural gas after the sale had been awarded to the company. Out of 121 amendments reviewed, only three favored the government. The amendments favoring industry were worth about $4.4 million.

Minerals Management Service spokesman Drew Malcomb said that the agency hadn't yet reviewed the reports but that it would "take action clearly and quickly" if there was evidence of misconduct. Rep. Henry A. Waxman (D-Beverly Hills), chairman of the House Committee on Oversight and Government Reform, said he would hold a hearing on the matter next week.

Devaney said that one former employee pleaded guilty to an unspecified criminal charge but that the Justice Department declined to prosecute cases against two high-ranking former employees implicated in the scandal.

On Wednesday, Justice Department spokeswoman Laura Sweeney said the department had received referrals related to the reports, but she could not comment further.