WASHINGTON — Nearly seven years after a government auditor charged that an oil company had cheated the government out of millions of dollars in royalties, a federal judge has ordered the company to pay nearly $23 million in penalties – including $5.7 million to the auditor who uncovered the problem.
The company, Kerr-McGee Oil and Gas, was ordered to pay treble damages, or triple the $7.5 million that a jury said in 2007 the company was liable for, because of the false royalty claims it submitted to the federal government.
The judge in the case, Marcia S. Krieger, a federal judge in Colorado, found that the auditor who first reported the royalty fraud, Bobby Maxwell, was entitled to 25 percent of the judgment, or about $5.7 million, under the federal whistle-blower program for uncovering fraud and abuse.
Maxwell, 57, was an auditor for the federal Minerals Management Service when he said he discovered that Kerr-McGee was vastly underpaying royalties on the 57 oil leases it held with the government.
A jury found that Kerr-McGee was selling its oil to the Texon Corp. for below-market prices from 1999 to 2002 as part of an arrangement with Texon to provide marketing services and other incentives.
But Maxwell’s bosses at the minerals service were not persuaded by his claims, and he was let go by the agency after bringing the accusations – a move that he charged was a clear case of retaliation. He is now retired in Tennessee.
A lawyer for Kerr-McGee, which is now owned by Woodlands-based Anadarko Petroleum, declined to comment on the judgment, which was signed Thursday. Officials at the minerals service, which has been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement, had no comment.
Kerr-McGee could still appeal the ruling, and Maxwell said that even if he collected his portion of the award, “the majority of it is going to the attorneys, not to me.”More »