The Teapot Dome scandal was a bribery incident that took place in the United States in 1922–23, during the administration of President Warren G. Harding. Secretary of the Interior Albert B. Fall leased Navy petroleum reserves at Teapot Dome and two other locations to private oil companies at low rates without competitive bidding. In 1922 and 1923, the leases became the subject of a sensational investigation by Senator Thomas J. Walsh. Fall was later convicted of accepting bribes from the oil companies.
Before the Watergate scandal, Teapot Dome was regarded as the "greatest and most sensational scandal in the history of American politics". The scandal also was a key factor in posthumously further destroying the public reputation of the Harding administration, which was already unpopular due to its poor handling of the Great Railroad Strike of 1922 and the President's veto of the Bonus Bill in 1922.
Democrat Thomas J. Walsh of Montana, the senior minority member, led a lengthy inquiry. For two years, Walsh pushed forward while Fall stepped backward, covering his tracks as he went. No evidence of wrongdoing was initially uncovered as the leases were legal enough, but records kept disappearing mysteriously. Fall had made the leases appear legitimate, but his acceptance of the money was his undoing. By 1924, the remaining unanswered question was how Fall had become so rich so quickly.
Money from the bribes had gone to Fall's cattle ranch and investments in his business. Finally, as the investigation was winding down with Fall apparently innocent, Walsh uncovered a piece of evidence Fall had forgotten to cover up: Doheny's $100,000 loan to Fall.
This discovery broke the scandal open. Civil and criminal suits related to the scandal continued throughout the 1920s. In 1927 the Supreme Court ruled that the oil leases had been corruptly (fraudulently) obtained. The Court invalidated the Elk Hills lease in February 1927 and the Teapot Dome lease in October. Both reserves were returned to the Navy.
Albert Fall was found guilty of bribery in 1929; he was fined $100,000 and sentenced to one year in prison, making him the first Presidential cabinet member to go to prison for his actions in office. Harry Sinclair, who refused to cooperate with the government investigators, was charged with contempt, fined $100,000, and received a short sentence for jury tampering. Edward Doheny was acquitted of bribery in 1930.
Another significant outcome was the Supreme Court's ruling in McGrain v. Daugherty (1927) which, for the first time, explicitly established that Congress had the power to compel testimony.