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Final move by Babbitt upsets trust case plaintiffs

WASHINGTON - Actions by the federal government in the ongoing lawsuit over billions of dollars of tribal trust funds are again drawing attention.

In his final days in office, former Interior Secretary Bruce Babbitt called for "statistical sampling" of individual Indian trust accounts to solve problems over lost records. Indian plaintiffs in Cobell vs. Babbitt say the sampling violates a judge's order and will waste as much as $70 million.

"This is another desperate effort to distract the courts and Congress from their utter inability to complete a full and accurate accounting, as required by law," said Elouise Cobell, lead plaintiff. "I certainly hope the Bush administration can get control of the Justice Department, obey the law and the federal judge's orders and start to restore some integrity to this disgrace."

Cobell says the sampling plan is destined to fail because most of the critical trust documents have been lost or destroyed by the federal government for more than a century, and the database maintained by Interior is unreliable.

Interior admitted many of the records relating to these funds have been lost over the last 100 years. Although the BIA is not sure if the money is actually missing, no documents can be found to show the origin of most of these accounts or where they were paid. Many records are scattered throughout a number of BIA offices around the country.

Interior claimed it could not comply with a court order to produce documents from the Albuquerque, N.M., office because they were covered in mouse droppings and in a state of disarray.

As a result, Federal District Judge Royce Lamberth found Babbitt, former Secretary of Treasury Robert Rubin and former Assistant Secretary for Indian Affairs Kevin Gover in contempt of court for failing to comply in a full and timely manner with a discovery order in the case. To date, approximately $625,000 in sanctions have been leveled against the federal government for violations during the court's consideration of this case.

In Judge Lamberth's 1999 decision, which also held the government in breach of its trust duties to American Indians, he noted that Congress specifically ordered that the Interior secretary "shall account for the daily and annual balance of all funds held in trust by the United States for the benefit of ... an individual Indian."

Since the judge's orders call for a full accounting of funds, Justice appealed, saying that because of lost records such an accounting is impossible. That appeal is pending.

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In spite of Judge Lamberth's decisions, Interior scheduled a series of 80 meetings throughout Indian country last year, seeking opinions from trust beneficiaries about the acceptability of statistical sampling rather than an individual accounting to determine the accuracy of current trust accounts.

In early January, Justice filed papers notifying the U.S. Court of Appeals of Babbitt's order on sampling, together with memos from Special Trustee Thomas Slonaker and Gover.

In his memo, Gover acknowledges the "overwhelming majority" of Indian beneficiaries attending the meetings wanted "a transaction-by-transaction reconciliation" of their accounts, not statistical sampling.

As part of Babbitt's recent call for sampling, Justice attempts to narrow the time frame for any court-ordered accounting to no earlier than 1952, despite Judge Lamberth's order to account for all funds since 1887.

Plaintiffs claim that for more than a quarter century, the BIA failed to invest in the modernization of its account systems. In addition, the BIA investment activity in general has left many questions with regard to the potential for funds, were they properly invested, they say, adding that hundreds of millions of dollars in potential interest has been lost because money was left as cash for long periods of time.

Plaintiffs say basic operating principles were neglected by the BIA's Office of Trust Fund Management while tribal resources flowed from the reservations. Without an accounts receivable system and with so many leases "missing," the BIA is unable to tell the trust account holders whether all of the income due on asset leases has been collected. Mineral Management Service operations on tribal lands also continued with no system to guarantee the legal amount due a tribe or individual on those resources was in fact paid.

In 1994 Congress passed the Indian Trust Fund Management Reform Act in an attempt to begin to rectify these long-standing problems. Among other things, it created the Office of the Special Trustee for American Indians and the Advisory Board on Trust Fund Management Reform. It was expected that the Special Trustee would create an accountable system by implementing the reforms necessary for the proper discharge of the secretary's trust responsibilities to Indian nations and people.

However, since that office was created there have been numerous obstacles in resolving the myriad levels of mismanagement. The first special trustee, Paul Homan, resigned in protest of what he claimed were attempts to obstruct his efforts to reconcile trust accounts.

A memo accompanying Babbitt's order on sampling, signed by Slonaker, estimates the cost of the sampling project at $17 million to $70 million. Attorneys for the plaintiffs say Slonaker told them in settlement negotiations last year that he believes a statistical sampling would be a significant waste of time and money and that the government is incapable of furnishing an accurate and complete accounting of the trust accounts, as ordered by Judge Lamberth.