This earlier post reported on the lawsuit by former Interior Department auditor-turned-whistleblower Bobby Maxwell against Kerr-McGee Corporation, a subsidiary of The Woodlands-based Anadarko Petroleum, for allegedly cheating the government out of millions of dollars in oil royalties on production that the company generated from leases on government-owned property. Kerr-McGee contended that no fraud was involved and that it simply computed royalties differently under the leases than Maxwell contended was correct.
Earlier this week, this NY Times article reports that the jury in Maxwellís case decided that Kerr-McGee had underpaid the government $7.5 million. Accordingly, under the False Claims Act, the law under which Maxwell is bringing his whistleblower lawsuit, Kerr-McGee could be forced to pay more than $30 million — double or triple the jury verdict, as well as penalties of up to $11,000 for each of over 1,000 false statements that the company is accused of making in its royalty reports to the government. Maxwell is entitled to as much as 30 percent of that amount.
The bottom line — skimping on payment of oil and gas royalties is risky business.