Interior Dept. Misled Court On Reforms, Report Says 


By Bill Miller and Ellen Nakashima
Washington Post Staff Writers
Friday, August 10, 2001; Page A23 


Senior managers and lawyers at the Interior Department misled a federal 
judge about the progress of Indian trust reform by failing to reveal 
that a highly touted new record-keeping system wasn't working, a 
court-appointed monitor reported yesterday. 

"The range of possible criticism of the senior managers and attorneys 
for their failure to provide this Court with a correct picture . . . 
covers the full legal spectrum from nonfeasance, misfeasance, to 
malfeasance," wrote Joseph S. Kieffer III, who spent the past few months 
assessing the reform efforts.

Kieffer's 130-page report could provide a framework for 
contempt-of-court proceedings against Interior officials and attorneys. 

Attorneys representing Native American trust account-holders have urged 
U.S. District Judge Royce C. Lamberth to take such action, charging in 
court papers that the government has "utterly failed" in its 
responsibilities.

Lamberth appointed Kieffer in April to monitor the Interior Department's 
efforts to modernize methods for keeping track of trust accounts for 
more than 300,000 Native Americans. The accounts were set up more than 
100 years ago to compensate Native Americans for use of their land. 
Royalties from the sale of petroleum, timber and other natural resources 
are channeled into the accounts, generating about $500 million each year.

The judge has been dealing with the controversy since 1996, when the 
Native American Rights Fund filed a lawsuit accusing the government of 
making a shambles of the trust funds through decades of poor 
record-keeping, mismanagement and neglect. He convened a trial two years 
ago in which government officials, including former Interior secretary 
Bruce Babbitt, said they were on track to overhaul the system by March 
2001.

A centerpiece of the reform effort was a new computer network known as 
the Trust Asset and Accounting Management System, which was supposed to 
automatically keep track of titles, trust accounts and income generated 
from roughly 170,000 tracts of land. During court testimony in July 1999, 
Babbitt likened trust reform to a ship and said he would bring it into 
harbor by the end of the Clinton administration. 

Despite those promises, Kieffer reported yesterday, many question 
whether the computer system will ever work.

Due to numerous glitches, officials now say the system won't be fully 
operational until 2004, five years behind schedule. The General 
Accounting Office has recommended the Interior Department consider 
scrapping the system entirely, after "tens of millions of dollars" were 
invested, Kieffer said. 

"Secretary of the Interior Babbitt and his direct subordinates not only 
did not bring the TAAMS' 'ship into the harbor,' they placed it in a 
turbulent sea, without compass, direction or course, in danger of 
impending shipwreck," Kieffer wrote.

He said problems emerged soon after Babbitt's testimony, leading to a 
September 1999 meeting convened by Babbitt's chief of staff, Anne 
Shields. Managers initially said they needed to tell Lamberth of the 
troubles, and even prepared draft reports for him, but in the end they 
and Interior's attorneys did not alert him, Kieffer said. 

Kieffer said Interior's managers and attorneys "presented testimony and 
evidence to this Court that was over-optimistic at best and false at 
worst."

In December 1999, Lamberth ordered the government to repair the trust 
fund system but decided against turning matters over to an outsider.

At the time, the judge said he was giving the government "one last 
opportunity to carry through on their promises," warning he would act 
if officials were "less than truthful" to him.

Most of Kieffer's criticism is directed at activities during the Clinton 
administration. Babbitt, Shields and Kevin Gover, the former assistant 
secretary for Indian affairs, have since left the government. But some 
managers and lawyers remain on the job, and Kieffer said Interior 
Secretary Gale A. Norton should watch over them closely.

The system's difficulties came to light in March, when Dom Nessi, chief 
information officer for the Bureau of Indian Affairs, wrote a memo saying 
the effort to repair the system was "slowly but surely imploding." That 
led to Kieffer's appointment.

"What is most striking to us is you see an unbroken chain of misdeeds 
and lack of candor from the time of trial to the present," said Keith 
Harper, an attorney for the Native American account-holders. 

Babbitt, who joined the law firm of Latham & Watkins this year, was 
traveling yesterday and unavailable for comment, his secretary said.

Shields said she did not want to comment on the report because she had 
not read it, but added, "We believed TAAMS was functioning." 

Norton and Neal A. McCaleb, Interior assistant secretary of Indian 
affairs and head of the Bureau of Indian Affairs, were traveling and 
unavailable to discuss the report, officials said. McCaleb, Norton and 
Tom Slonaker, a special trustee at Interior in charge of trust reform, 
are scheduled to meet in Albuquerque today to learn more about how the 
system is operating in the field office, an agency official said.

Interior officials are reviewing Kieffer's findings, according to an 
agency statement. Interior officials said they have "created the 
first-ever office of historical trust accounting and we remain committed 
to improving trust reform for the good of Indian country." 

Staff researcher Madonna Lebling contributed to this report.