Billions Missing From U.S. Indian Trust Fund

[Guest guest]

Billions Missing From U.S. Indian Trust Fund

by Joel Dyer

 

John Echohawk, director of Native American Rights Fund

The U.S. has lost not millions, but billions of dollars belonging to

native Americans In his testimony before Congress, John Echohawk,

director of Native American Rights Fund, called it "yet another

serious and continuing breach in a long history of dishonorable

treatment of Indian tribes and individual Indians by the United

States government."

Arizona Senator John McCain, the chairman of the Senate Committee on

Indian Affairs, bluntly called it "theft from Indian people."

 

These men were describing the single largest and longest-lasting

financial scandal in history involving the federal government of the

United States.

 

With no other recourse left at their disposal, NARF, along with

other attorneys, filed a class action lawsuit in federal district

court on June 10 on behalf of more than 300,000 American Indians.

The suit charges Secretary of the Interior Bruce Babbitt, Assistant

Interior Secretary of the Interior for Indian Affairs Ada Deer and

Secretary of the Treasury Robert Rubin with illegal conduct in

regard to the management of Indian money held in trust accounts and

managed by the Bureau of Indian Affairs.

 

If the lawsuit's claims are correct, and there's an overwhelming

body of evidence that suggests they are, then the federal government

has lost, misappropriated or, in some cases, stolen billions of

dollars from some of its poorest citizens.

 

 

"The BIA has spent more than 100 years mismanaging, diverting and

losing money that belongs to Indians." The trust accounts in

question -- which hold approximately $450 million at any given time -

- aren't filled with government handouts. They contain money that

belongs to individual Indians who have earned it from a variety of

sources such as oil and gas production, grazing leases, coal

production and timber sales on their allotted lands.

Revenues from such sources are held in more than 387,000 Individual

Indian Money (IIM) accounts managed -- or according to

detractors, "mismanaged" -- by the Bureau of Indian Affairs

(BIA). "The BIA has spent more than 100 years mismanaging, diverting

and losing money that belongs to Indians," Echohawk says. "They have

no idea how much has been collected from the companies that use our

land and are unable to provide even a basic, regular statement to

Indian account holders."

 

Echohawk is quick to point out that the lawsuit was the very last

resort. Native Americans have long been hopeful that a governmental

remedy to the BIA'############### could be found. Finally in 1994,

after years of pressure by both Indians and legislators, Congress

enacted the Indian Trust Fund Management Reform Act and appointed

Paul Homan as the special trustee charged with straightening out the

century-old mess.

 

Once again there was hope. But the legislative solution proved to be

just another in a long line of toothless piles of paper generated by

government bureaucrats. Although Homan was ready and willing to

repair the system, Congress failed to provide funds to make the

changes a reality. With no other path before them, the Indians took

their fight to the courts.

 

 

In many instances it provides the only life-line for Indian families

who often make up the most impoverished sector of our society

Echohawk's claim that the BIA is completely out of touch with the

amount of revenues it collects or should be collecting has been

confirmed by countless congressional oversight hearings covering

decades.

As an example, during one such hearing -- a 1987 Appropriations

Subcommittee hearing on uncollected royalties -- then director of

the Minerals Management Service William Bettenberg told the

committee he was aware that hundreds of millions of dollars that

belonged to Indians was going uncollected from oil royalties each

year. This is in spite of the fact that MMS, a branch of the

Department of the Interior, had been made aware of the annual lost

revenue six years earlier. Bettenberg's revelation is typical of BIA

behavior.

 

Adding still more credence to Echohawk's claims of government

incompetence pertaining to the IIM accounts is the recent example

provided by the long overdue audit of the tribal trust funds. These

tribal funds, which are also managed by the BIA, are a collection of

approximately 2,000 tribal accounts owned by some 200 tribes. These

accounts hold about $2.3 billion at any given time and are primarily

used to finance essential tribal government services.

 

Several years ago, after a decade of extensive pressure from the

House Committee on Government Operations, the BIA agreed to contract

with Arthur Anderson & Co. to audit and reconcile both the tribal

accounts and a random sampling of some 17,000 IIM accounts. The

sampling of the IIM accounts was to be a precursor to a complete

reconciliation of all IIM trust accounts -- the first in history.

 

What happened next is truly astounding. After years of work and

millions of dollars in fees, Arthur Anderson was only able to

reconcile the 2,000 tribal accounts -- not the 17,000 IIMs -- and

only then for the relatively short period of some 20 years from 1973

to 1992.

 

For this 20-year period alone, the auditor noted that at least $2.4

billion in the tribal trust accounts was unaccounted for and

billions of dollars more were virtually untraceable because of the

questionable nature of the government's records.

 

As for the IIMs, Arthur Anderson told the feds that its trust fund

system for individuals was so screwed up that it wouldn't even try

to reconcile the accounts and estimated that it would cost $108

million to $281 million just to attempt the monumental task. The

accounting firm claimed that the government had destroyed, never

created or otherwise did not maintain the records necessary to

conduct a reconciliation. Even if the full IIM audit were performed,

the firm said the costly information would be of little or no value

when it came to providing IIM account holders with any real

assurance that their balances are correct.

 

While the missing billions from the tribal accounts aren't part of

the NARF lawsuit, the reconciliation process for these accounts does

illustrate how badly the BIA's accounting system, or lack thereof,

actually works. In June of this year, Special Trustee Homan told the

Senate Committee on Indian Affairs that the IIM account system

was "as bad or worse" than the tribal accounts. For now, NARF

lawyers are concentrating on the mismanagement of money in the IIM

accounts because in many instances it provides the only life-line

for Indian families who often make up the most impoverished sector

of our society. Echohawk told Congress that most of the IIM account

holders are so poor that they need their money just for basic

subsistence.

 

 

BIA's fiscally irresponsible behavior may prove more sinister than

mere incompetence So how did the BIA's financial house get into

such disarray and why has it been allowed to stay that way? The

truth is it has never been in order, and the reasons behind the

seemingly never-ending tolerance of the BIA's fiscally irresponsible

behavior may prove more sinister than mere incompetence. Critics of

the bureau point out that the United States has a long history of

trying to separate Native Americans from their lands and way of

life.

You can choose almost any year since the BIA's predecessor, the

Indian Department, was created in 1824 and find governments reports

describing poor management, no accounting system, missing money, no

attempt to fulfill the fiduciary duty to the Indians as promised and

required by law.

 

Congress has verbally demanded accountability and drastic change in

the BIA's behavior for more than 100 years. Yet as of 1996 little if

anything has actually changed. A 1992 report titled "Misplaced

Trust: The Bureau of Indian Affairs' Mismanagement of the Indian

Trust Fund" was prepared by the Committee on Government Operations.

The 66-page report contained a scathing review of the BIA and

hundreds of examples of the bureau's blundering over the years.

 

Among other things, the report surmised that "one hundred sixty

three years later, Schoolcraft's assessment of the BIA's financial

management still rings true. BIA's administration of the Indian

trust fund continues to make the accounts look as though they had

been handled with a pitchfork.

 

"Undoubtedly there is a screw loose in the public machinery at the

Bureau. Indeed, while mismanagement of the Indian trust fund has

been reported for more than a century, there is no evidence that

either the Bureau or the Department of the Interior has undertaken

any sustained or comprehensive effort to resolve glaring

deficiencies."

 

Unfortunately, most of what was contained in the Misplaced Trust

report was old news. Essentially the exact same findings were

embodied in the GAO's 1928, 1952 and 1955 audits of the Indian trust

fund. In fact, just since 1982, more than 30 audits have been

performed on the BIA's records. Every single one of the 30 reports

generated have noted serious accounting and financial management

problems and weak internal controls throughout the BIA.

 

In a tone not often heard these days in Washington, Senator McCain

cut to the chase during a June 11, 1996 oversight hearing when he

stated that "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."

 

 

Taxpayers who will have to cough up the money lost by the BIA

McCain makes a good point. But in typical politician style he

forgets to tell us that when he says it's "the federal government"

that will be forced to pay for the mishandling of the Indian trusts,

what he's really saying is it will be taxpayers who will have to

cough up the money lost by the BIA.

Every day that the BIA procrastinates on fulfilling its trust

responsibilities, the price tag to repair the damage goes up. The

1992 Misplaced Trust report clarifies the vulnerability of

taxpayers.

 

The report states that "Continuing mismanagement and incompetence in

the supervision and control of Indian trust funds present a clear

danger to the American taxpayer, who must bear the financial burden

of compensating trust fund account holders for BIA's breach of

fiduciary duties."

 

Other sections of the report contain testimony that reads like the

vision from a crystal ball. Speakers from six and 10 years ago offer

warning after warning about the potential for costly litigation at

the taxpayer's expense. The NARF lawsuit stands as harsh evidence

that the warnings fell on deaf ears at the bureau.

 

Guarding our pocketbooks gives everyone a reason to get involved

with the struggle to correct the injustices being perpetrated by the

BIA. But at some point we must confront the reality that there is

something more at work here than bureaucratic ineptitude.

 

 

"If this happened in Social Security, I tell you there would be a

war" When obvious and admitted abuses of a small minority of people

by a government are allowed to continue unchecked for over a

century -- with little or no outcry from the citizenry -- it most

likely means that the majority of the citizens condone the

government's behavior.

What other explanation can there be for the BIA's belligerent lack

of concern for its fiscal responsibilities to Native Americans? It

isn't that the task of properly handling the revenue is just too

daunting. Other departments of the government deal with larger and

more complicated accounting systems with comparable ease everyday.

 

A similar observation was made by then-Representative from Texas

Albert G. Bustamante during oversight hearings in 1990.

 

"We have 300,000 accounts. We have about 350 tribes in the United

States. It is really sad that these people have been misrepresented

by the BIA ... They have no real representation in Congress.

 

"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."

 

NARF's Echohawk speculates that the reason for the government's

seemingly eternal incompetence is darker than accidental

mismanagement. "I think it comes down to race. Our people have

historically suffered abuse after abuse. We have continuous problems

with unemployment, health care and education. It just goes on and

on. We don't have any political power to change it, so the

government just continues to ignore us."

 

 

 

 

 

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