Gavin Clarkson, a senior Bureau of Indian Affairs official appointed by Interior Secretary Ryan Zinke in June, resigned Monday after the department’s inspector general issued a scathing report on the loan program he oversaw.
Clarkson, who served as deputy assistant secretary for policy and economic development, ran a program that guarantees loans for tribal businesses. When Zinke appointed Clarkson on June 11, he said in a statement that his “expertise in the areas of law, finance and economic development are a valuable asset . . . as we work together with tribes to increase economic opportunity and promote self-determination throughout Indian Country.”
But before joining the Trump administration, Clarkson served as a consultant for tribes that received loans under the program, including a controversial $22.5 million loan for the Lower Brule Sioux Tribe that helped finance the purchase of a brokerage firm that eventually went under. As a result, the Interior Department is now being sued over its refusal to guarantee the remaining $20 million balance on the loan.
Clarkson’s dealings with the tribe were the subject of a detailed report published by Human Rights Watch in 2015, as well as numerous news reports. The inspector general’s report scrutinized how the loan program was run under the Obama administration, for which Clarkson worked as a tribal economic consultant.
Arvind Ganesan, who heads Human Rights Watch’s business of human rights division and wrote the group’s 2015 report, said in an interview Tuesday that Clarkson’s departure suggests that two independent probes of the loan program had made an impact, but it also raises questions about why he was hired in the first place.
“It appears to be a real failure of due diligence. He’s being hired at a time when the BIA is being sued for millions of dollars for a deal he arranged,” Ganesan said. “It’s not as if a Google search wouldn’t have worked.”
Clarkson told Ganesan in an interview that he received “no compensation whatsoever” for his work on the loan, though New York court filings in a suit related to the deal state that Clarkson and his firm received $366,764 in fees and other payments. Asked a second time about the matter by Ganesan, Clarkson reiterated that he was not paid for his work on the tribe’s behalf.
Ganesan welcomed Clarkson’s resignation, saying, “The hope is this is a sign that there will be more transparency and accountability in the system, but it remains to be seen.”
The inspector general’s report, which was released Nov. 9, found that the BIA’s division of capital investment (DCI), which falls under its Office of Indian Energy and Economic Development (IEED), “did not have adequate controls in place and managed the [loan program] with limited oversight from IEED, creating unnecessary risk for an already risky program.”
While the probe did not specifically name Clarkson, it listed the liability incurred from the loan he worked on as one for which taxpayers could end up shouldering the burden.
“Between 2010 and 2016, DCI paid approximately $12.4 million in claims resulting from defaults, and received an additional claim for approximately $20 million, which had not been paid at the time of our review,” the report states, and notes that as of Sept. 30, 2016, the program was “potentially liable” for $606 million in loan guarantees. “Should any of the borrowers default on these loans, it is ultimately taxpayers who would carry out the burden of bailing out the lenders since their obligations are guaranteed by the U.S. government.”
The inspector general’s report noted that, on at least two occasions, the acting DCI chief approved loan-guarantee applications over the objections of the program’s credit committee without providing any written justification for the move. In one case, involving a $16 million loan guarantee for a film project, it said the chief “approved the application without formally documenting his rationale for disregarding the recommendation” of the credit panel.
Clarkson could not be reached for comment Tuesday. At the time of his appointment, which did not require Senate confirmation, he said that he would “bring new ideas and methods to Indian Affairs for tribal business and energy development. I am excited to help tribal nations and tribal entrepreneurs create the conditions under which they can build, expand and sustain their economies.”
In an email, Interior press secretary Heather Swift said of his resignation, “the department cannot comment on personnel matters.”