Blowing the whistle to expose natural resource fraud helps to preserve the second largest source of income for our country. Oil and gas generate an enormous source of funds to the federal government, second only to taxes. Royalty payments are owed to the government for the use and exploration of natural deposits that are mined on Outer Continental Shelf, Federally leased land, and Native American leases.

OIL AND GAS FRAUD OVERVIEW

Oil and gas fraud occurs when the U.S. government or Native American tribes lease their landsto private drilling or mining companies that infringe the law by ignoring regulations or lying to increase their profits. The Federal authorities own more natural resources through public lands than any other entity. For this reason, non-governmental companies are hired for mining, drilling, or fracking operations. The absence of an efficient oversight organization often allows corrupt businessmen to take advantage of their leasing agreements to fraudulently increase their profits. All these crimes can be exposed by honest citizens and are punishable under the False Claims Act (FCA).

EXAMPLES AND TYPES OF NATURAL RESOURCE FRAUD

FALSIFYING RECORDS

Private companies must report how much gas, oil or other natural resources they extract from the land and its total value. Production records can be falsified to pay fewer royalties increasing the profit margins.

From 1998 to 2008 Unocal Incorporated, Texaco, Chevron Corporation, and their affiliates underpaid royalties to the U.S. government. Eventually, they paid $45 million to resolve all allegations.

DRILLING OR MINING KICKBACKS AND BRIBES

Mining or drilling companies often aggressively court public officials to allow them to open or expand their operations in untapped regions. These strategies may become criminal activities when they involve bribery or kickbacks.

This type of crime also happens outside of our nation’s territorial boundaries. Many developing countries such as the African ones began developing their own energy-related natural resources but lack the technology and know-how to properly extract and refine them. Bribes and kickbacks paid to foreign government officials in order to obtain licenses and approval can be still reported through the The Foreign Corrupt Practices Act (FCPA).

VIOLATING FEDERAL CONTRACT TERMS

Contractors must adhere to strict guidelines and regulations, which help ensure that their operations are safe and that the environment is protected. To cut costs, save time or illegally obtain permits, some unscrupulous individuals misrepresent their compliance record and abilities or lie about the safety protocols installed.

In March 2016, Cabot Oil & Gas Corporation settled several lawsuit filed by families who alleged their household water supplies were contaminated by drilling and fracking operations. In the last jury verdict, the company was found guilty and paid $4.2 million to settle downs the accusations.

THE FALSE CLAIMS ACT & SEC WHISTLEBLOWER PROGRAMS

Depending on the type of fraud being committed, corrupt contractors can be reported either under the False Claims Act or the SEC Whistleblower Program. Insiders and qui tam relators can hire an attorney to represent them anonymously by filing a claim and acting on their behalf and, if their case is successful, they will be rewarded with a percentage of the amount recovered by the government.

HOW TO REPORT A NATURAL RESOURCE FRAUD

In 2007, the Department of the Interior collected over $9 billion in royalties from oil and natural gas leases. Despite they already make incredible profits, massive oil companies keep thieving and deceiving each one of us with their despicable practices. Exposing these crimes is a civic duty that will help our national authorities retrieve the money required to fund many welfare programs that will benefit the entire community.
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