The federal government began its defense yesterday against a class action lawsuit alleging that it has so badly bungled management of the $2.5 billion Indian trust fund that it should hand over responsibility for managing the money to the federal court.

Kevin Gover, assistant interior secretary for Indian affairs, led off by testifying that ending Bureau of Indian Affairs authority over the trust fund would represent the "camel's nose under the tent" of killing the bureau altogether, thereby severing a century-old relationship between Native Americans and the government.

"The BIA, for all its warts, is the icon, the symbol, of what the government has done for the tribes," said Gover, head of the BIA, arguing that taking away the trust responsibility would essentially kill the agency and all the other oversight functions and assistance it offers to tribes.

Gover also testified that the bureau is on the cusp of implementing a new computer system that would help clean up a century's worth of haphazard record-keeping that has left the fund a tangled mess with records scattered across the country.

The Native American Rights Fund filed the class action suit, which accuses the BIA of mismanaging trust fund accounts for some 350,000 individual Indians and 1,500 tribes. The plaintiffs charge that mismanagement by the Interior Department, BIA and the Treasury Department has deprived the tribes and individual Indians of billions of dollars that had accumulated in trust fund accounts created to compensate them for use of their land and to pass along royalty payments generated by the sale of natural gas, oil, timber and other natural resources on the land.

Independent audits have shown that the Interior Department is unable to account from some $2.4 billion in transactions over a 20-year period. BIA officials say the money has in fact been paid out properly, but they simply don't have the records to prove it.

Gover did not contend that the current state of the trust fund is anything but a "sorry mess." But he blamed the problems on a century of poor management and congressional neglect that the Clinton administration inherited and is now prepared to correct in part by implementing the Trust Account Management System, intended to streamline record-keeping at BIA offices around the country.

The plaintiffs rested their case Wednesday after presenting just five witnesses of the 30 they had intended to call, saying they had a "slam dunk" case clearly proving a breach of trust on the part of the government.

Keith Harper, a staff attorney for the Native American Rights Fund, said nothing he heard from Gover yesterday challenged his clients' contention that responsibility for the money must be taken away from the Interior Department and a full audit conducted to determine whether the government has really paid all the money it owes.

"Ninety-five percent of what [Gover] testified to we agree with," Harper said. "The interesting thing is that in large measure it proves our case. . . . We just differ on the steps that need to be taken."