Interior officials found in contempt

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 today.

"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. "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 a range of 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 poor bookkeeping has prevented landowners and their descendants from determining their account balances. The plaintiffs estimate as much as $10 billion in lost or missing funds 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, plaintiffs said. He ordered Norton and McCaleb to cover the Cobell class' 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," they said in a statement today. "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 issued this afternoon.

"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 the department throughout the case. In 1999 he held then-Secretary Bruce Babbitt, then-Assistant Secretary for Indian Affairs Kevin Grover and then-Secretary of the Treasury Department Robert Rubin in civil contempt.

The situation didn't improve.

In December, he ordered Interior to disconnect from the Internet to protect data maintained under its Trust Asset and Accounting Management System (TAAMS). Some of the department remains offline and, subsequently, under his watch.

TAAMS -- originally deployed in 2000 by Babbitt -- was designed to replace two of the department's legacy systems: the Land Records Information System, which tracks such data as land ownership, and the Integrated Records Management System. IRMS holds a wide variety of data, including information on oil and gas leases and royalties, and is used to distribute royalty payments to more than 300,000 American Indians.

Even before Interior began attempting to intertwine the old and new systems, however, the General Accounting Office predicted trouble.

"According to Interior, [these] two mainframe-based systems are not integrated, have no electronic interfaces and duplicate much of the same information," GAO officials reported to Congress in September 2000. Moreover, "the accuracy, availability and completeness of trust fund records has been a long-standing problem. Tens of thousands of records on trust fund accounts, for example, contain incorrect addresses for the account holders or lack Social Security or taxpayer identification numbers."

That "long-standing" nature 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," Rep. J.D. Hayworth (R-Ariz.), co-chairman of the Congressional Native American Caucus, said in a statement today. "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 had killed her proposal to consolidate trust fund duties into a new agency -- after the plan was panned throughout Indian country -- 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 over standards for management, according to the National Congress of American Indians.

"Trust reform is a complex undertaking," Interior and Justice officials said in their joint statement. "This administration has done more to fix a very broken trust management system than any previous administration in history.

The next phase of the trial will begin May 1.

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