ARIZONA REPUBLIC EDITORIAL 1/16/2002 Feds are flunking on Indian trust funds Let financial pros unravel the mess Jan. 16, 2002 What a muddled mess of a morass. For more than a century, the Interior Department has bungled royalty payments to Native Americans. Billions of dollars are unaccounted for. There's only one thing worse: the government's effort to fix the problem. The Interior Department, under both Presidents Clinton and Bush, has shown such breathtaking ineptitude that the only answer is to take the job away and let the courts sort it out. The money is income from grazing, mining, logging and oil drilling on Indian land. As the system was set up in 1887, the federal government collects the payments and then distributes them to individual tribal members who have rights to the land. But the accounts make Enron look like a model of good bookkeeping. Records were lost and destroyed, money was stolen and diverted. The issue is complicated by the land changing hands and being split up as a result of inheritances. Estimates of the number of people who should have been receiving regular payments range from 300,000 to 500,000. Three years ago, in the wake of a class-action lawsuit, a judge ordered the department to straighten out the accounts. Instead, the Interior Department mismanaged the cleanup and misled the judge. A new $40 million computer system is riddled with problems and such a security risk that Interior had to shut down virtually its entire computer network. There's plenty of blame for the Clinton and Bush administrations to share. District Judge Royce C. Lamberth held then-Interior Secretary Bruce Babbitt and other officials in contempt in 1999 for delays and misrepresentations. Now Lamberth is trying Interior Secretary Gale Norton and her assistant secretary for Indian affairs on contempt charges. Norton's solution is to create a new agency, the Bureau of Indian Trust Assets, to handle the accounts. The details haven't been worked out, but it would be funded with $300 million from the Bureau of Indian Affairs. Tribes in Arizona and around the country fiercely oppose the plan. They complain that they had no input and worry that it will undermine the BIA. To her credit, Norton has held a string of meetings to hear their concerns. She insists, however, that she must stick with the proposal after presenting it to the court as a step toward reform. Norton's response should be simpler: Toss in the towel. The tribes' opposition is a factor against Norton's proposal. But the real reason to oppose it is that creating a new agency, without the details worked out, is a recipe for repeating all the mistakes made before. And they are colossal. Since Congress called for the trust fund problems to be fixed in 1994, the Interior Department has poured well over $600 million into the job with no resolution in sight. As a plaintiff in the trust fund lawsuit, Elouise Cobell, put it: "The Interior Department is the problem. They're not a bank. They don't know how to manage trust assets. All they'll do is transfer some of the same old people into this new bureau." She wants the judge to put the trust fund into receivership. And at this point, that seems to be the only way of ensuring that the accounts go into the hands of financial professionals. But the sharpest accounting minds can't re-create decades of missing records. So in the end, the remedy will undoubtedly include a negotiated financial settlement, with Congress appropriating a chunk of money to pay for the historical shortfall. Once the accounts are settled, tribes should be offered two options: to manage their own accounts or to help set up a new agency handle the job. That new agency should be run as a financial-services institution, outside the Interior Department. _______________________________________________________________________ To subscribe TO the Indian Trust mailing list, please paste the following link into your browser: http://www.indiantrust.com/