A federal judge yesterday ordered the Clinton administration to overhaul an antiquated trust fund kept for Native Americans, saying that a century of mismanagement, shoddy record-keeping and neglect have left 300,000 Indians with no idea how much they are owed and demonstrate "fiscal and governmental irresponsibility in its purest form."
Declaring that "it would be difficult to find a more historically mismanaged federal program," U.S. District Judge Royce C. Lamberth said he found it inexcusable that the Interior and Treasury departments cannot accurately account for the $500 million in royalties for use of Indian lands that has been channeled into the trust funds each year.
"It is entirely possible that tens of thousands of trust beneficiaries should be receiving different amounts of money--their own money--than they do today," Lamberth wrote. "Perhaps not. But no one can say, which is the crux of the problem."
The judge's ruling came in a class action lawsuit filed three years ago by the Native American Rights Fund and clears the way for a trial next year to assess how much money the Indians are owed.
The trust accounts cover at least 300,000 Indians of an overall national population of about 2.2 million, according to the Native American Rights Fund. They come from more than 100 tribes throughout the country, though primarily west of the Mississippi River.
"I think we're looking at a minimum of $10 billion," said Eloise Cobell, a member of the Blackfeet tribe and the lead plaintiff.
"This is wonderful, wonderful news," Cobell said of the decision against the government. "You need to have a shining light to know there can be an end to such a horrible wrong done to Native American people. I think we have a breakthrough finally."
Cobell and others alleged that the federal government has lost track of billions of dollars in trust funds because of mismanagement that dates back at least 100 years.
The government set up the trust accounts, known as the Individual Indian Money Trusts, to compensate Indians for use of their land. Royalties from the sale of petroleum, timber and other natural resources are supposed to be channeled into the accounts, which are passed down through generations. Many account-holders are impoverished and rely on the income to pay for food and other everyday needs, Cobell said.
During a six-week trial last summer, government officials conceded that the records are a shambles and that they are unable to provide an accounting. But they insisted they are committed to computerizing the system and making other changes. Federal officials said it could cost billions to reconstruct records for account-holders and raised the possibility of a settlement. But talks to resolve the case recently collapsed.
"The court knows of no other program in American government in which federal officials are allowed to write checks--some of which are known to be written in erroneous amounts--from unreconciled accounts, some of which are known to have incorrect balances," Lamberth wrote, saying many records are missing or destroyed.
Despite his harsh language, officials from the Interior, Treasury and Justice departments issued a joint statement yesterday saying they were pleased that Lamberth kept the trust fund system under the government's management. They vowed to move forward with changes and said they "welcome the continued oversight from the court."
Although Lamberth characterized his decision as a "stunning victory" for the Native Americans, he did not take the drastic action that they had recommended. The Indians wanted control of the trust fund system wrested from the government and placed under a special master or receiver who would report directly to the court.
Lamberth said he would give officials "one last opportunity" to deliver on their promises of reform.
The judge said he would retain jurisdiction over the case for at least five years and demanded that officials provide quarterly reports updating the court and the Native American Rights Fund of their progress in making improvements. If changes are not forthcoming, he warned that some officials could be found in contempt of court.
He already cited Interior Secretary Bruce Babbitt, Assistant Interior Secretary Kevin Gover and then-Treasury Secretary Robert E. Rubin in contempt in February for failing to produce records despite numerous court orders.
Lamberth's 126-page opinion traced the history of the trust fund to the late 1800s, when the United States desperately wanted rights to Indian lands. He said evidence was overwhelming that the government failed to meet its fiduciary responsibilities.
"The United States' mismanagement of the IIM trust is far more inexcusable than garden-variety trust mismanagement of a typical donative trust," he wrote. "For the beneficiaries of this trust did not voluntarily choose to have their lands taken from them; they did not willingly relinquish pervasive control of their money to the United States. The United States imposed this trust on the Indian people."
Yesterday, Gover said Lamberth and others "had every reason to be outraged" about past failures to make changes. Gover said a new computer system will make a difference and Congress recently allocated $55 million for improvements.
"The court has given us a mandate. Congress has given us the money. We're out of excuses," said Gover, who oversees the Bureau of Indian Affairs.
He said he understood the need for court supervision to ensure the system is repaired: "After all this time, there's no reason anyone should just take our word for it."