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  U.S. and Indians Argue Over State of Trust Funds

By Bill Miller
Washington Post Staff Writer
Friday, June 11, 1999; Page A35

The Clinton administration yesterday sought to convince a skeptical federal judge that it was making strides toward reforming an antiquated trust fund system maintained on behalf of 500,000 Native Americans. But lawyers for the Indians countered that history shows that government promises won't bring results.

U.S. District Judge Royce C. Lamberth began hearing testimony yesterday in a class action lawsuit that contends the federal government has made such a shambles of the trust fund program that the only solution is court control.

The lawsuit, filed by the Native American Rights Fund, alleges that decades of mismanagement have deprived Indians of billions of dollars.

At issue is the government's stewardship of the Individual Indian Money Trust Fund, established to hold and disburse income generated for Native American beneficiaries. The trust funds were created more than 100 years ago as a way to compensate Indians for use of their land. The government was supposed to manage and pass along royalties from the sale of petroleum, natural gas, timber and other natural resources. There are roughly 350,000 such trust accounts, with more than $350 million going into the trusts each year.

Lawyers for the Indians maintain that the trusts have been grossly mishandled and neglected by the Bureau of Indian Affairs, an arm of the Interior Department, as well as by the Treasury Department. Interior collects money for the trusts and manages the accounts; Treasury is supposed to prudently invest it.

Both sides agree that the record-keeping long has been a mess, with documents scattered at sites across the country. The system is in such disarray that the government cannot accurately provide account balances to the holders, leading the Native Americans to question what has happened to their money. The government says money hasn't vanished, just that the records are the problem.

"We're not here to rehash the problems of the past," declared government lawyer Tom C. Clark II in his opening remarks in court. "But we're not here to duck them either. We're here to tell you how we're going to solve them."

Clark insisted that court intervention is not necessary because a 13-point reform plan developed by Interior Secretary Bruce Babbitt is moving forward in "high gear," including the installation of a computer system to begin straightening out records. He said Babbitt had been hampered in the past by a lack of funding from Congress.

But Thaddeus Holt, a lawyer for the Indians, said similar initiatives were trumpeted in the past but collapsed because of a lack of commitment. "Sadly, it's an example of one more breach of faith with the original inhabitants of this land," he said.

Lamberth repeatedly has expressed disdain for the way the Clinton administration has handled the case. Earlier this year, he held Babbitt, Gover and Treasury Secretary Robert E. Rubin in contempt of court for failing to ensure that records were turned over to lawyers representing the Indians.

The judge was so critical of the government attorneys working the case that a new set of lawyers has taken control. Clark, the lead attorney, has been on board for just 11 weeks.

The Indians' first witness was former representative William F. Clinger Jr. (R-Pa.), former chairman of the House Government Reform and Oversight Committee. He helped draft a report in 1992 about mismanagement of the trust fund. Both the Bush and Clinton administrations failed to deliver on promises, said Clinger, now a fellow at Johns Hopkins University.

"We were pretty much appalled by what we saw," Clinger testified.

His testimony was echoed by Paul M. Homan, a special trustee appointed by President Clinton in 1995 to straighten out the trusts. Homan, who resigned in January after a dispute with Babbitt, testified that he never got enough money to do his job properly.

The trust funds, he said, "seemed to always come in last on anybody's list of priorities."


© 1999 The Washington Post Company

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