U.S. Mismanagement of Indian Trust
Funds
NEVER a man to mince his words, General William Sherman
summed it up in 1865. "Indian
reservations", he said, "are a parcel of land set aside for Indians,
surrounded by thieves." Most of today's Indians would
agree. For decades, they have complained that their overseers
from the Bureau of Indian Affairs ( BIA ) have not had their
interests truly at heart. In particular, they are upset by the
government's mismanagement of the Individual Indian Money (
IIM ) trust accounting system.
Under this arrangement, the United States acts as a trustee
on behalf of around 500,000 Indian landowners. The policy
dates from various "allotments acts", chief among them the Dawes
Act of 1887, under which the federal government broke
up tribal lands within the reservations into 80-or 160-acre tracts.
These tracts are leased out for a fee to oil, gas or timber
companies by the government. Fees for the leases are paid to the
Treasury Department and then, at least in theory, back
through the BIA to the individual Indians. About $350m-500m is
estimated to pass through the IIM accounts each year, but
the accounting has long baffled Indians and outside auditors alike.
Tribespeople claim that the collection, investment and
distribution of IIM money is a shambles, and that as much as $10
billion may be owing to the Indians (although, as one lawyer puts
it, the numbers are "all over the map"). For example, the
Interior Department keeps no record of income earned by short-term
leases (up to five years) where there has been no
transaction for 18 months; there are more than 200,000 such leases.
About 50,000 active trusts cannot be accounted for.
Indians often have no idea what company is working on their land,
how much it is taking from it, or how much the land has
earned. The government protests that it sends the cheques out,
but that Indians can be difficult to find. Bear in mind that
these are some of the most wretched people in the United States.
In 1996 five tribal members sued, saying they wanted a formal
accounting of their trusts. The mess turned out to be worse
than anyone had imagined. Paul Homan, once a boss of Riggs Bank
and a former head of trust operations for the
comptroller of the currency, testified that the record-keeping
system for the IIM accounts was "the worst that I have seen in
my entire life". When pressed, the Bureau of Indian Affairs, the
Interior Department (which oversees the BIA ) and the
Treasury Department, which is the custodian of all BIA trusts
and writes the cheques, could not verify the accuracy of any
single account.
When Royce Lamberth, a judge of the United States district
court in Washington, ordered the government to produce the
relevant documents, the government was unable to do so. Last week,
Bruce Babbitt had the distinction of becoming the
first serving secretary of the interior to be held in contempt
of court. The treasury secretary, Robert Rubin, was also held in
contempt. Abandoning neutral judicial language, Judge Lamberth
said the ruling was necessary "in light of the defendants'
flagrant disregard for the orders of this court and the
defendants' corresponding lack of candour in concealing their
wrongdoing." The court, he went on, is deeply disappointed that
any litigant would fail to obey orders for production of
documents, and then conceal and cover up that disobedience with
outright false statements that the court then relied
upon...This two-week contempt trial has certainly proved that
the courts trust in the Justice Department was misplaced.
The federal government here did not just stub its toe. It abused
the rights of the plaintiffs to obtain these trust documents,
and it engaged in a shocking pattern of deception of the court.
I have never seen more egregious misconduct by the federal
government.
The Justice Department's behaviour may have shocked the
judge&emdash;who once worked there&emdash;but it is familiar to a whole
generation of westerners, who, when protesting against a government
regulation, have been met by a phalanx of
departmental lawyers with unlimited funds. Messy accounting is
also a habit at the BIA . Congress created the Office of the
Special Trustee ( OST ) in 1994 to straighten matters out, and
the OST is now undergoing a major overhaul, supposedly as a
result of the facts underlying the current contempt proceeding.
This may not be enough. "Justice has not been done," said
Judge Lamberth. "Moreover, justice delayed is justice denied.
The court cannot tolerate more empty promises to these Indian
plaintiffs. The time has come for action, and the court will
make full use of its powers to ensure that this case gets back
on track."
Source: The Economist, 13 March 1999.