IRS tempest: Teapot Dome and Beyond

Like thunder rolling across the plains, the latest political scandal started as a low rumble a year ago and exploded with sound and fury two weeks ago. The congressional hearings have begun with the jawing and snapping from partisans out for blood.

            What can either side expect (hope) to find in the Internal Revenue Service’s practice of focusing on conservative political groups, notably the Tea Party, who sought nonprofit, thus tax-exempt, status as so-called social-welfare organizations?

            More precisely, what can they uncover that the investigation conducted by the Treasury Inspector General for Tax Administration didn’t find? A missed memo that has the president ordering the practice? A liberal grand conspiracy to destroy America?

            Perhaps, but the hearings and investigations also could lead to the less nefarious, nothing more than bureaucratic incompetence; even, dare say a tempest in a teapot?

            This political scandal, as with many, has scale and headlines – “IRS targeted conservative groups” – that compel partisans and pundits to over-react with one hearing after another, one investigation after another, and one expose after another.

            Often, there is no there there, as the White House has said about the endless Benghazi terrorist attack hearings, but congressional investigations can sometimes uncover wrongdoing, even when they look like partisan point-scoring in the lurch-for-power game.

            The precedent was set for this nearly a century ago during the presidency of Republican Warren G. Harding, who had one of the more scandal-ridden administrations in American history. The scandal du jour then was known as Teapot Dome.

The leasing of U.S. naval oil reserves at Teapot Dome in Wyoming and Elk Hills in California to two private oil companies seemed suspicious to Montana Democratic Sen. Thomas Walsh because Secretary of the Interior Albert Fall had not sought competitive bids.

In 1921, Harding ordered control of Teapot Dome and Elk Hills transferred from the Navy Department to the Interior Department. The navy, after Secretary Fall’s persuasive insistence, transferred control in 1922.

That same year, Fall leased the oil production rights at Teapot Dome to Mammoth Oil, a subsidiary of Sinclair Oil, and Elk Hills to Pan American Petroleum. That neither lease was competitively bid was legal under the Mineral Leasing Act of 1920.

 Nonetheless, a Wyoming oil producer complained to his senator that Sinclair got the rights through a secret deal. Republican Sen. Robert LaFollette of Wisconsin lead an investigation, during which he initially believed Fall innocent, until his Senate office was ransacked. Then he, too, became as suspicious as Walsh.

For two years, Walsh conducted a fruitless inquiry into Teapot Dome, uncovering nothing illegal, even though records kept disappearing mysteriously. Just as things were about to wrap up, the Montana senator uncovered evidence that revealed Fall had gotten kickbacks from the oil companies – a $100,000 loan to start.

That broke open the scandal. Civil and criminal lawsuits ensued; the U.S. Supreme Court ruled the contracts were obtained through fraudulent and corrupt means, and the oil reserves were returned to the navy.

Fall was found to have received more than half a million dollars in kickbacks. He was fined $100,000 and sentenced to one year behind bars, the first time in history that a presidential cabinet member was sent to prison for his actions while in office, according to historical accounts.

Since then, scandal and investigation have become part of the political diet in Washington because, as the Teapot Dome scandal showed, no matter how thorough an investigation, there could still be something damning that was missed or not yet found.

Expect the congressional investigations into the IRS’s targeting practice, and the Benghazi scandal, and whatever other scandals come our way, to continue for a long time because there could be that bit of yet unfound evidence.

 Incidentally, the Teapot Dome scandal had no political effect in the following elections of helping Democrats win or Republicans lose.