Archive for December 30th, 2006

HAPPY NEW YEAR 2007!!!!!!

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U.S. Official Overseeing Oil Program Faces Inquiry

WASHINGTON, Dec. 29 — The Justice Department is investigating whether the director of a multibillion-dollar oil-trading program at the Interior Department has been paid as a consultant for oil companies hoping for contracts.

The director of the program and three subordinates, all based in Denver, have been transferred to different jobs and have been ordered to cease all contacts with the oil industry until the investigation is completed some time next spring, according to officials involved.

The officials, who spoke on condition of anonymity because the investigation had not been announced publicly, said investigators were worried that senior government officials had been steering huge oil-trading contracts to favored companies.

Any such favoritism would probably reduce the money that the federal government receives on nearly $4 billion worth of oil and gas, because it would reduce competition among companies that compete to sell the fuel on behalf of the government.

If the allegations prove correct, they would constitute a major new blot on the Interior Department’s much-criticized effort to properly collect royalties on vast amounts of oil and gas produced on land or in coastal waters.

The Interior Department’s Minerals Management Service, which oversees royalty collections, is now the target of multiple investigations by Congress and the Interior Department’s inspector general.

Those investigations are focused on allegations that the agency ordered its own auditors to abandon claims of cheating by large oil companies; that the agency’s arcane rules for calculating sales value and royalties make it easier for companies to understate their obligations; and that the agency’s basic sources of data are riddled with inaccuracies and are unreliable.

Interior officials have promoted “royalties in kind” as a much simpler and more efficient way for the government to get its proper share, because it eliminates much of the arcane accounting and reduces the opportunities for sleight-of-hand bookkeeping.

About a quarter of all oil and gas produced in the United States comes from federal property, and the Interior Department collected about $10 billion in royalties last year on about $60 billion in oil and gas.

At issue is the “royalty in kind” program, a fast-growing program under which companies pay their royalties in the form oil or gas rather than in the traditional form of cash.

For the 12 months ending last April, the government collected about $3.7 billion in oil and gas. Until recently, most of the oil simply went to the government’s Strategic Petroleum Reserve. But the strategic reserve was essentially filled this year, so the Interior Department hires private companies to resell the fuel on the open market.

To ensure that it gets the best price, the Interior Department takes bids for contracts in which companies typically offer to pay a specific premium over the daily spot-market prices quoted on the Nymex commodity exchange. The companies offering the biggest premium over the spot market get the contracts.
People familiar with the investigation said it had begun several months ago, but had picked up speed in the last few weeks.

The most prominent figure in the inquiry is Gregory W. Smith, who was director of the royalty-in-kind program at the Minerals Management Service in Denver. Mr. Smith oversaw the entire program, which now covers 75 percent of royalties for all oil and 30 percent of royalties for all natural gas produced in the Gulf of Mexico.

One person familiar with the investigation said it originally had focused on potentially improper social ties between some of Mr. Smith’s subordinates and executives at companies vying for contracts. The subordinates include two women, including one who is said to be in charge of oil marketing, and a second man.

All four people were transferred out of the royalty-in-kind office several weeks ago. Mr. Smith was reassigned as a “special assistant” to Lucy Querques Dennett, associate director of the Mineral Management Service in Washington. He was given strict orders to avoid any contact with industry executives, according to one official.

One official said investigators were now looking at possible consulting arrangements between the Denver officials and oil companies. The official said the most recent information had, if anything, hardened the suspicions of investigators, and said the potential ramifications could turn out to be far-reaching.

Mr. Smith did not return calls to his office in Denver. Spokesmen for the Interior Department in Washington as well as in the inspector general’s office, which began the investigation before referring the matter to the Justice Department, refused to comment on the matter.


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Democrats vow to restore political integrity

WASHINGTON (AP) — A California Democrat newly elected to Congress promised Saturday that his party will restore integrity and civility to the House when it assumes control in January.

“In this election, the American people clearly called for change,” Rep.-elect Jerry McNerney said in the Democrats’ weekly radio address. “As our first responsibility in fulfilling the mandate of this critical election, House Democrats will restore integrity and civility in Washington in order to earn the public trust.”

The effort to build that trust will include bans on gifts from lobbyists, lobbyist-funded travel and use of corporate jets, McNerney said.

The incoming congressman also promised “a new direction in Iraq” and said Democrats would resist any plan to deploy more U.S. troops there. “The Iraqis need to understand that the responsibility for the future of that country is theirs,” he said.

McNerney also said Democrats would work to reduce U.S. dependence on foreign oil “while creating jobs, prosperity and a healthy environment with a new energy technology, including renewable energy and biofuels.”

Before running for office, McNerney worked as a wind-energy engineer and consultant. In November, he defeated incumbent Republican Richard Pombo, whose efforts to rewrite the endangered species law and open public lands to energy drilling were frequently criticized by environmentalists when he chaired the House Resources Committee.


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Saddam Hussein put to death

Refusing to have his face covered and uttering curses upon his perceived foes, condemned Iraqi ex-dictator Saddam Hussein was executed by hanging early Saturday morning in a Baghdad square outside the Green Zone.

The Associated Press reports that Hussein’s half-brother, Ibrahim Barzan al-Tikriti, and the former Revolutionary Court chief justice, Awad Hamed al-Bandar, were also to be hanged, though the exact times for each was unclear.

The deposed strongman’s execution, just before 6 AM Baghdad time, came as the Muslim feast of Eid ul-Adha began.

CNN reported “celebratory gunfire” in the Iraqi capital and showed footage of Iraqis in Dearborn, Michigan cheering the demise of the 69-year-old Hussein, who was put to death for the 1982 massacre of 182 Iraqi Shi’ites. There was also a report that Iraqis at Hussein’s execution site “were dancing around his body.”

Small protests were held by supporters of the former Iraq leader in his hometown of Tikrit, according to Deutsche Presse Agentur.

The White House released a written statement by President Bush in which he said that the death of Hussein “comes at the end of a difficult year for the Iraqi people and for our troops.” He acknowledged that “bringing Saddam Hussein to justice will not end the violence in Iraq, but it is an important milestone on Iraq’s course to becoming a democracy…”

Reuters reported that the President, vacationing in Crawford, Texas, was asleep at the time of Hussein’s execution and was not awakened. He had been informed by his staff earlier in the evening that “the execution would take place in a few hours.”

Buildup to dictator’s demise

Earlier, the Associated Press reported that U.S. authorities were “maintaining physical custody of Saddam to prevent him from being humiliated before his execution,” and will “try to prevent the mutilation of his corpse.”

Iraq’s national security adviser told CNN’s Anderson Cooper that Hussein’s body would be prepared according to traditional Muslim rituals, and, despite an expressed desire by his daughter to have him laid to rest in Yemen, could “absolutely” be buried in Iraq if his family requests it, saying “we can agree on the whereabouts.”

McClatchy Newspapers said that Hussein was in a “state of shock” and had “come apart” after realizing “he couldn’t escape this,” according to an Iraqi parliament member present at Friday meetings concerning Hussein’s execution. Later, United Press International quoted an Iraqi official who witnessed the execution as saying the deposed dictator was “quiet and obedient” as the noose was placed around his neck. “We were astonished,” the official said. “It was strange. He just gave up.”

Rumors had flown into the night about the timing of Hussein’s hanging, with news agencies reporting conflicting details.

Late Friday evening, the Associated Press reported that the Iraqi government had prepared all necessary documents for the hanging to commence, “including a ‘red card’ – an execution order introduced during Saddam’s dictatorship.”

Iraqis gathered in throngs during the early morning leadup to the execution, reports said. Reuters reported that some in the Kurd region of Iraq awaited Hussein’s death with “grim satisfaction.”

Some U.S. embassies around the world warned American travelers of potential “problems” they might encounter due to Hussein’s hanging. The Pentagon stated that U.S. troops were prepared to deal with any increase in violence that could follow the execution.


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