Interior management slammed

Judge finds officials 'unfit' to manage trust

Finding them "unfit trustee-delegates," a federal judge held Interior Department Secretary Gale Norton and Assistant Secretary for Indian Affairs Neal McCaleb in civil contempt last week.

"The agency has indisputably proven to the court, Congress and the individual Indian beneficiaries that it is either unwilling or unable to administer competently" the Individual Indian Money (IIM) trust, U.S. District Judge Royce Lamberth wrote in a 267-page opinion Sept. 17. "Worse yet, the department has now undeniably shown that it can no longer be trusted to state accurately the status of its trust reform efforts."

Norton and McCaleb committed four counts of fraud and one of litigation misconduct for various actions that include making false and misleading statements about computer security for IIM data, Lamberth concluded.

Interior has leased American Indian-owned properties and processed revenue earned from farming and drilling for more than 100 years. A group of beneficiaries, led by Elouise Cobell, filed a class-action lawsuit in 1996, claiming that poor bookkeeping has prevented landowners and their descendants from determining their account balances. The plaintiffs estimate that as much as $10 billion is lost or missing and have asked the court to place the trust in receivership out of the department's control.

Although he didn't appoint a receiver, Lamberth paved the way for that action by finding it constitutionally permissible, according to the plaintiffs. For now, he ordered Norton and McCaleb to cover the Cobell group's legal fees and to submit a plan for fixing the trust system in January.

"Clearly, they ought not to be trusted in either administrating the IIM trust competently or reporting accurately," the plaintiffs said in a statement. "The court has set the foundation for proper resolution."

Meanwhile, officials at the Interior and Justice departments maintain that Interior "has worked very hard over the past 18 months to improve the trust management system and will continue to do so," according to a joint statement.

"Justice does not believe that the facts of this case or the applicable law justify a finding of contempt," said Robert McCallum Jr., assistant attorney general of the department's civil division. "We disagree with the court's decision and are evaluating it to consider all of the options for appeal."

Lamberth has expressed frustration with Interior throughout the case. In 1999, he held Interior Secretary Bruce Babbitt, Assistant Secretary for Indian Affairs Kevin Grover and Treasury Department Secretary Robert Rubin in civil contempt.

The situation didn't improve.

In December 2001, he ordered Interior to disconnect from the Internet to protect data maintained under its Trust Asset and Accounting Management System. Some of the department remains off-line and, consequently, under his watch.

The long-standing nature of the problems prompted some politicians to come to Norton's defense.

"On days like this, it's important to note that the mishandling of Indian trust funds dates back two centuries; Secretary Norton has been in office less than two years," said Rep. J.D. Hayworth (R-Ariz.), co-chairman of the Congressional Native American Caucus. "She deserves commendation, not contempt, for the commitment and energy she has brought to bear on this problem and for the real results she has achieved."

In recent months, Norton killed her proposal to consolidate trust fund duties into a new agency — after the plan was roundly rejected by Indian communities — and instead began working to hash out a new solution with a joint Interior/tribal task force. Those discussions, however, disintegrated as both parties came to an impasse concerning standards for management, according to the National Congress of American Indians.

The next phase of the trial will begin May 1.

***

Found in contempt

U.S. District Judge Royce Lamberth found Interior Department Secretary Gale Norton and Assistant Secretary for Indian Affairs Neal McCaleb in contempt for, among other things, "failing to disclose the true status" of the Trust Asset and Accounting Management System (TAAMS) between September 1999 and Dec. 21, 1999. TAAMS was designed to replace two of Interior's legacy systems that hold data used to distribute royalty payments to more than 300,000 American Indians.

Lamberth also found that Norton and McCaleb filed "false and misleading quarterly status reports starting in March 2000 regarding TAAMS and [Bureau of Indian Affairs] data cleanup" and made "false and misleading representations starting in March 2000 regarding computer security" of Individual Indian Money trust data. Interior, Lamberth said, is required by law to properly secure and maintain IIM trust funds.

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