making local government more ethical

A Good Example of a Bad Government Organizational Culture

There's a lot of talk about organizational culture and the effect it can have on individuals' unethical conduct, but it's rare to find reported instances of poor organizational cultures that aren't extreme, such as Chicago. Even Enron had an excellent ethics program, and its misconduct appears to have been limited to high-level management.

The U.S. Department of the Interior seems to be an excellent example of a terrible organizational culture, at least according to its Inspector General, Earl E. Devaney. Devaney told the House Government Reform subcommittee (as reported in a 9/14/06 New York Times article) about the department's culture of denial and "defending the indefensible."

"Simply stated," he said, "short of a crime, anything goes at the highest levels of the Department." Besides appearances of impropriety, favoritism, and bias, there was serious bungling of oil and gas leases, which was covered up for six years before it was unearthed by the New York Times.

One deputy secretary, a former oil industry lobbyist facing possible indictment for allegedly lying about his dealings with Jack Abramoff, favored former clients and steered contracts to them. The department's office of ethics dismissed 23 of 25 charges against him, and the department secretary, Gale Norton (a former Attorney General of Colorado, currently employed by Shell Oil), chose not to act on the other two charges. Other officials left the department while under investigation by the Inspector General. The department disregarded his investigations, and even gave a bonus to an official who tried to fool investigators by forging and backdating documents lost by the agency's auditors.

Usually, it is difficult to put a dollar amount on ethical misconduct, but the debacle concerning the oil and gas leases (which occurred under the Clinton administration, and was only covered up under the Bush administration) could cost as much as $10 billion over the next five years, depending on what Congress does (this problem is a high, bipartisan priority of the new Congress).

Devaney refers in his 145-page report to a "culture of managerial irresponsibility and lack of accountability." It appears that the interests of the agency's management were its first priority, followed by the interests of associates and former clients. For an agency that holds America's natural resources in trust, this nonexistence of a feeling of fiduciary duty is especially damaging.

Even auditors were pulled into Interior's ethical black hole. In September, four Interior Department auditors sued under the False Claims Act, alleging, in part, that their bosses ordered them to halt attempts to recover oil royalties, and that dozens of oil companies concocted schemes to hide from the government the true amount of royalties they owed. The Justice Department is also investigating allegations that four people in the Minerals Management Service, which oversees the royalty arrangement, had consulting arrangements with companies seeking contracts to resell government oil. There is a second Justice Department investigation, too.

Clearly, Interior managers believed they could get away with it. They had the auditors on their side, and they were able to ignore and undermine the Inspector General's investigations. If not for his and the auditors' (rather late) whistleblowing, and the Times' reporting, they probably would have gotten away with it, and ended up with nice jobs in the oil industry (many of them did, anyway).

According to an article in today's (1/16/07) New York Times, the director of the Minerals Management Service will not speak to reporters, nor will she appear before the Senate Energy Committee. She has denied knowing anything about the requirements left out of leasing agreements, although her deputy was talking about them two years ago. Needless to say, according to the Times article, she formerly co-managed an oil exploration service, and started an oil industry news service.

In fact, it appears that management is just one mass of conflicts of interest. Having managers who do not want an organization to be effective in the role assigned to it is certainly not the basis for a good organizational culture.

This is rarely the case with a local government, but to the extent that government is supposed to act in the public interest, and the public interest is not consistent with their personal interests or with the interests of an administration's principal contributors and associates, the essential situation can be similar.

By the way, Devaney's background is very different from that of Interior's management. The Massachusetts police officer moved on to handling white-collar crime for the Secret Service, then to director of criminal enforcement at the Environmental Protection Agency, before being named Inspector General at Interior.

This is one picture of an unethical organizational culture. What we can't see is the pain that was felt by employees who knew what was happening or even went along, afraid to say anything. It is a horrible, humiliating thing to feel helpless and scared, to weigh one's ethics against one's natural inclination to protect one's career.

No one appears to have apologized. The denials continue as the revolving door turns.

"As the Door Turns": a great name for a government ethics soap opera, if television's channels ever proliferate enough to have one focused on ethics.

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