Thursday, October 11, 2007

NEVER: last accounting by Feds on US Indian money

When the US government took control of Indians’ property rights in 1887, they were assured they would receive all the income from their land. They never did, and now they’re fighting for it.

According to accounts from whistle-blowers, money belonging to individual Indians was pilfered, skimmed, redirected, or thrown in with general government funds by the Department of the Interior or its representatives. Yet, the Interior Department has not accounted for or repaid losses of trust resources, proceeds, or royalties. After struggling for decades to receive a hearing, American Indian families went to federal court in 1996 to plead their case.


1887 – Passage of the General Allotment Act (the Dawes Act) which divided a great deal of tribal lands, especially in the Midwest, into parcels of 40, 80, or 160 acres which were conveyed in trust to individual Indians. The federal government retained management of all natural resources on those lands, and encouraged the Indians to take up farming. The rest of the lands were made available in 1889 for homesteading by settlers coming from the East. Prior to the Allotment Act, tribal land holdings totaled 138 million acres. By 1934, the American Indians had lost almost 90 million of those lands to non-Indian owners. Today, even with more money, tribes have been able to buy back only 8 percent of land they lost in 1887.

1915 – The Report of the Joint Commission of the Congress of the United States described the "great wealth in the form of Indian funds" [derived from lands held in trust] as "an inducement to fraud, corruption, and institutional incompetence almost beyond the possibility of comprehension."

1934 – The Indian Reorganization Act was passed. It stopped all further allotments of portions of tribal reservations to individual owners. It also made perpetual the special trust arrangements which had been created for the lands deeded or allotted to individual Indian owners.

1955 – A U.S. General Accounting Office report stated, "The deficiencies [in trust management] include disbursements of individual Indian moneys without adequate support, deficiencies in accounting for cash and bonds and in computation and distribution of interests income and other weaknesses in internal procedures."

1986 – David Henry, an accountant with BIA, became a prime whistle-blower on the fraud and mismanagement which he witnessed was taking place within the Bureau of Indian Affairs regarding funds held by BIA for tribes and individual Indian owners/allottees.

1990 – During oversight hearings, then-Rep. Albert Bustamante (TX) reportedly stated, "I have a tribe that I represent in my district, but throughout the years, most of these people have been abused by many, and you in the BIA ought to be the ones that really look after them. If this happened in Social Security, I tell you there would be a war. If we can manage Social Security, we ought to be able to manage this."

1991 – Secretary of the Interior's Annual Statement and Report to Congress stated, "The Bureau’s management of Individual Indian Monies (IIM) [accounts] and Tribal trust funds is inadequate to properly maintain and administer the $2 billion dollar fund for which it has responsibility. The BIA’s management of tribal and Individual Indian Trust Funds lacks effective management/internal controls, reliable systems and management information. Tribal and individual accounts lack credibility and have never been reconciled in the entire history of the trust fund."

1992 – The House Committee on Government Operations published its report entitled "Misplaced Trust: The Bureau of Indian Affairs' Mismanagement of the Indian Trust Fund." It contained serious accusations of malfeasance, and called for significant changes in the Department of Interior’s handling of IIM and tribal trust funds.

1994 – The Indian Trust Fund Management Reform Act of 1994 was enacted which made significant changes in the Department of Interior organization and its administration of the trust funds. Its passage came despite the vigorous opposition of the Department of Interior. Under the act, a Special Trustee was appointed to serve directly under the Secretary of Interior, and separate from the Bureau of Indian Affairs, in an effort to remedy the problems in both tribal accounts and IIM accounts.

June, 1996 – The Native American Rights Fund and attorney Dennis Gingold filed Cobell v. Babbitt in U.S. District Court on behalf of five named individual Indian account holders as a class action to compel an accounting and adjustment of accounts. It also sought to establish better policies for appropriate future management of the Indian trust funds.

June, 1996 – The BIA created a new officer, The Special Trustee, who testified to Senate Committee on Indian Affairs that the IIM account system was "as bad or worse" than the system used for tribal accounts. During the hearing, Sen. McCain (AZ) stated, "Trustees receive and disburse funds all the time for other Americans, and if they blow it they pay. In this case it's the Native Americans who are rightfully owed the money and the federal government who will be forced to compensate for their loss."

November, 1996 – The first of several judicial orders was entered in Cobell v. Babbitt requiring that the government produce and give to the plaintiffs’ attorneys all records of accounts relating to the five individual plaintiffs.

February, 1997 – The case was certified as a class action lawsuit by Judge Royce Lamberth, meaning all orders entered for the benefit of the five named plaintiffs (such as the order to produce records of account) would also relate to all members of the class. It was estimated at that time that 300,000 individual Indians and their descendants were members of that class, but that estimate has since been increased to about 500,000.

November 1998 – Judge Lamberth issued an important ruling, over strenuous objections of lawyers for Department of Interior, that in managing IIM accounts the federal government would be held to the same account management standards as any other trustee such as a bank, rather than to the less strict statutory governmental standards. One major consequence of this ruling is that the burden of proof (that there had been appropriate management of funds and proper payments from the accounts to the beneficiaries) became the responsibility of the Department of Interior, rather than that of the plaintiffs.

February, 1999 – Interior Secretary Bruce Babbitt, Assistant Secretary Kevin Gover, and Treasury Secretary Robert Rubin were all found to be in contempt for failure to produce records as required by court orders.

May, 1999 – The government acknowledged in writing that while the case was pending, the Department of Treasury had destroyed 162 boxes of relevant documents.

June, 1999 – A seven-week trial was held. During his testimony, Secretary Babbitt admitted that the fiduciary responsibilities of the U.S. were "not being fulfilled."

Spring and summer, 1999 – Settlement discussions between the parties with the help of mediators were undertaken but were unsuccessful.

December, 1999 – Judge Lamberth held that the United States had breached its fiduciary duties and had "unreasonably delayed" trust reform efforts; and he ordered continued judicial oversight for at least five years. The government appealed this order.

November, 2000 – The Department of Treasury admitted destruction of substantial numbers of additional records which were under its control.

Early 2001 – The case became renamed Cobell v. Norton, to reflect the change of identity of the new Secretary of Interior.

February 2001– The U.S. Court of Appeals for the D.C. Circuit affirmed the major findings of Judge Lamberth. "Not only does the 1994 Act plainly reaffirm the government’s preexisting duty to provide an accounting to IIM trust beneficiaries, but it is plain that such an obligation inheres in the trust relationship itself." At another point in the decision the court stated, "...the magnitude of the government’s malfeasance and potential prejudice to the plaintiff's class" justified great latitude in the judge’s continuing oversight.

June 2001 – The Senate Government Affairs Committee issued a report in which it described the handling of these funds as one of the 10 worst examples of federal government mismanagement, second only to the Big Dig in Boston.

October 2001 – Government lawyers revealed to the district court that Assistant Secretary of the Interior for Indian Affairs Neal McCaleb had erased his electronic communications relating to Indian trust funds for a period of 10 months, despite court orders and internal policy to the contrary. Those communications reportedly included figures on the amounts of money going in and out of Indian trust fund accounts.

November 2001 – Judge Lamberth ordered Interior Secretary Gale Norton and Assistant Secretary Neal McCaleb to stand trial for being in contempt of court. McCaleb resigned shortly thereafter, and as a consequence he did not have to stand trial. The hearing took place several months later, and Norton was found by the judge to be in contempt.

This pattern of battles in court between the parties has continued ever since then. The Department of Interior has appealed on three separate occasions to the D.C. Circuit Court of Appeals. In every instance the appeals court has affirmed the important findings and legal rulings of the district court, but has also criticized the judge's orders as calling for inappropriately detailed court supervision of Interior's procedures. Also, the plaintiffs have on at least two occasions asked that access via the Internet to Department of Interior files be terminated because of concerns that hackers could access and alter existing records. At one point, all of Interior's computer access was ended by the judge, and at other points certain portions of Interior's operations were taken off-line in accordance with orders from the judge. Later, the judge required the government to notify any American Indian landowner before selling property from the trust it manages. (info from Friends Committee on National Legislation)

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