State Department Inspector General Probing Keystone XL Contractor’s Conflicts of Interest
May 29, 2013 10 Comments
In yet another investigation into the Obama Administration’s activities, the State Department Inspector General is probing the conflicts of interest surrounding the contractor that performed the Keystone XL review,.
The American public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, Environmental Resources Management (ERM), a fossil fuel contractor, hid its ties from the State Department so they could green light the project on behalf of its oil company clients.
Hiring an oil company contractor to review an oil pipeline that its clients have a financial interest in should be illegal – and it is. The Federal Government has strict laws to avoid conflicts of interest and prevent the hiring of contractors who cannot provide unbiased services.
Unredacted documents from the contractor’s proposal (revealed by Mother Jones) show that the company had worked for TransCanada, ExxonMobil and other fossil fuel companies that have a stake in the Canadian Tar Sands.
But, ERM misled the State Department at least twice in its proposal (see C&BP’s original post on ERM’s conflicts of interest)– which may have led to its selection by the State Department to review the Keystone XL pipeline.
First, ERM answered “No” to the question “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.” Regardless of the addendum, the oil company contractor misled the State Department by checking “No” to the specific question above. Despite the fact that unredacted documents show that ERM worked for TransCanada and other fossil fuel companies with a stake in Keystone XL pipeline in the three years prior to its proposal.
Second, ERM claimed it was not an energy interest. The State Department question defines an energy interest in part as any company or person engaged in research related to energy development. Yet, ERM has worked for all of the top five oil companies and dozens of other fossil fuel companies. In other words, ERM is clearly an energy interest.
How can we trust ERM to perform an honest review of the Keystone XL pipeline, if it can’t answer a yes/no question honestly?
These misleading statements should have been flagged by the State Department and the contractor should not have been able to perform the review because of these seeming conflicts of interest.
Because of the issues above, Checks & Balances Project (C&BP) and 11 environmental, faith-based and public interest organizations sent a letter [.PDF] on April 8, 2013, calling on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate two things: first, whether ERM hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and second, how State Department officials failed to flag inconsistencies in ERM’s proposal.
A few weeks later, C&BP received a voicemail from a Special Agent at the State Department’s Office of Inspector General (OIG):
Hello Mr. Elsner, my name is Special Agent Pedro Colon from the State Department’s Office of Inspector General. I’m calling to inform you that we have received your request and are reviewing the matter. If you have any questions please contact me at 703-284-2688.
On May 7, 2013, I called Special Agent Colon but he was unable to speak at the time. I followed up the next day and spoke with the Special Agent via phone regarding the request for an investigation. I asked a few basic questions about the status of the complaint and asked specifically if C&BP would be informed should the complaint be fully investigated by the Office of Inspector General (OIG). Special Agent Colon informed me that he could not speak to any of the questions and referred us to other staff in the OIG.
On May 9, 2013, I received an email from the OIG General Counsel saying, “that the complaint was being processed per the OIG hotline procedures and is under review.” (See the entire email correspondence here [.PDF])
I then asked the OIG General Counsel the same question he asked Mr. Colon:
If the hotline is moved out of the review process and onto the next step (an investigation?), will I be notified?
The OIG replied via email saying that the OIG Office of Investigations will not comment if it is engaged in an investigation.
The correspondence between C&BP and the OIG indicates that there is a probe into the Keystone XL review conflicts of interest.
The public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, ERM, an oil company contractor, misled the State Department, in what appears to be an attempt to green light the project on behalf of oil industry clients.
The American Public needs a full investigation into the conflicts of interest and misleading statements of the Keystone XL review contractor, Environmental Resources Management.
Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact.