Indian money: Where is it?

  • Interior Secretary Bruce Babbitt

  • Blackfoot banker Elouise Cobell


A federal judge raked Interior Secretary Bruce Babbitt over the coals last month, when he held Babbitt in contempt of court in a lawsuit over unaccounted-for Indian money. Babbitt's department "engaged in a shocking pattern of deception of the court," said Federal District Court Judge Royce Lamberth. "I have never seen more egregious misconduct by the federal government."

At issue is lease money the department collects from grazing, oil and gas, and timber operations on Indian reservations. Thanks to the 1887 Dawes Act, the department is in charge of distributing lease money to the tribes and individuals who own the land. But a massive class-action lawsuit, led by Browning, Mont., banker Elouise Cobell and the Boulder Colo.-based Native American Rights Fund, claims the department has lost track of tens of billions of dollars (HCN, 8/3/98).

"They've mismanaged trust assets from the beginning of time," said Cobell. "And by keeping information away from people, they've been able to control them."

In November, Lamberth ordered Interior to find the documentation for the accounts of five individual Indians and their ancestors. The department promised the papers, but never delivered.

On Feb. 22, the judge held Babbitt, his Assistant Secretary Kevin Gover and Treasury Secretary Robert Rubin in contempt. He called on a "special master," similar to an independent counsel, to keep tabs on Interior for the remainder of the suit. The government must also cover Cobell's legal and accounting fees.

The Interior Department was quick to point out that Babbitt inherited the accounting problems. But the judge's message was clear: Babbitt will not be able to pawn this problem off on the next Interior secretary. If he tries, he could face criminal contempt charges.

"We're hoping to exchange Babbitt's vertical pin stripes with broad horizontal stripes," said Dennis Gingold, lead counsel in the lawsuit. "He's playing fast and loose with the law."

Is Babbitt a whipping boy?

Interior spokeswoman Stephanie Hanna says Babbitt is taking the heat for a problem that started over a century ago. "There have been 46 secretaries of the Interior who have basically turned a blind eye to the problem. There's been 106 years of Congress that's failed to fix it," she said. "Babbitt is the only secretary of the Interior who hasn't put it off."

To Babbitt's credit, there has been progress. Last year, his department finished a five-year, $21 million effort to reconcile trust funds belonging to tribes. It admitted that it had lost track of about $2 billion and offered to negotiate settlement payments with the tribes.

Last summer, Interior put a bill before Congress aimed at ending the fractionation of Indian land. Under inheritance codes set up by the Dawes Act, when a landowner dies, the Bureau of Indian Affairs keeps the land physically intact, but divides it on paper by giving each heir an interest in it. With each passing generation, Indians own smaller and smaller fractions of their land, and it becomes harder and more expensive for the bureau to keep track of the many owners.

Interior's bill would have set up a fund to buy interest in land and consolidate ownership. Congress never even gave it hearings.

Finally, Interior has put together the first comprehensive plan to correct the problems with the Individual Indian Money accounts owned by Cobell and 300,000 others. In January, soon after Judge Lamberth ordered Babbitt to answer to contempt charges, the department asked Congress for $100 million this year to throw into the effort, a $60 million increase over last year. Officials hope to have the trust management program on track by 2000.

"I have made this my highest priority," Babbitt told the Senate Committee on Indian Affairs in early March. "I do not want to pass on to my successors what I inherited."

Interior has dragged its heels

Critics say that if Elouise Cobell's lawsuit hadn't forced him to act, Babbitt would have gladly handed this one off. "We've seen what Babbitt does with his highest priorities. He's gone to bat for environmental causes, but he's never even spoken publicly on this issue," said Native American Rights Fund attorney Keith Harper. "Babbitt wants to look like he's doing reform, but he doesn't want to pay the price."

At the Senate hearings in March, Osage Chief Charles Tillman painted a picture of the Secretary stalling reform and breaking promises: During his 1993 confirmation hearing, he promised a reform plan within 60 days. The plan didn't materialize. In 1993, Babbitt promised Congress he would comment on the pending Indian Trust Management Reform Act. Congress sat on the bill for a year in anticipation of Babbitt's comments, but they never came. Then, when Congress went ahead without him, Babbitt did everything in his power to undermine the act, said Tillman, who sits on the board of the Intertribal Monitoring Association on Indian Trust Funds.

Then in January, Babbitt reorganized the office of the Special Trustee, a position created by the 1994 Reform Act to oversee the cleanup of the trust records. Two days later, Special Trustee Paul Homan resigned, saying Babbitt had gutted his authority.

"Department officials surrounded Homan, pounded him, and were eventually able to drive him out of office," said Tillman. "With Mr. Homan's resignation, there is not a single person in the chain of command on trust reform who has a single day of experience running trust systems."

Without Homan, lead counsel Dennis Gingold worries the effort to reform the trust accounts will backslide. The only solution would be for Judge Lamberth to step in and oversee the entire effort, says Gingold: "The Department of Interior should not be managing trust funds anymore."

Now, lawmakers are lining up to oppose Babbitt's reform plans. On March 5, Colorado Republican Sen. Ben Nighthorse Campbell amended an Interior appropriations bill to prohibit Babbitt from spending money on the reorganization that sparked Homan to resign.

* Greg Hanscom, HCN assistant editor

You can contact ...

* Keith Harper, Native American Rights Fund, 202/785-4166;

* Stephanie Hanna, Interior Department, 202/501-4633.

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