The investigative report was released a day after President Bush had a private lunch with Interior Secretary Dirk Kempthorne, the man in charge of the agency at the heart of the scandal.
That was behind closed doors. Wednesday's embarrassment was very public, CBS News investigative correspondent Sharyl Attkisson reports.
"The government employees who oversee offshore oil drilling are literally and figuratively in bed with big oil," said Sen. Bill Nelson, D-Fla.
The allegations of bad behavior involve about a dozen government employees in Denver and Washington - workers who sell U.S. mineral rights to oil companies, which is one of the government's biggest sources of revenue besides taxes.
They're supposed to be looking out for the taxpayers' interest.
But according to the inspector general, they rigged contracts, and engaged in illegal moonlighting, drugs, sex and gift-taking from oil company representatives.
Two reports revealed startling allegations including:
No one - from the oil companies to the workers allegedly involved - provided a response today other than to say they cooperated with the investigation, or appropriate action will be taken.
With mineral rights bringing in $8 billion in revenue a year, reporters today asked the head of government mineral management, off camera, whether taxpayers suffered a loss due to the cozy relationships. He said there's no indication they did.