Meanwhile, pressure is mounting on Indian litigants to settle. Tribal leaders say if the Cobell lawsuit drags on much longer, many elderly beneficiaries will die before seeing any money. The board of the United Southern and Eastern Tribes also claims that the DoI is offsetting some of the costs arising from the Cobell litigation by diverting funds earmarked for basic services on Indian reservations. Sen. John McCain (R–Ariz.) introduced a bill that would settle all individual accounts for $8 billion (with no ban on future suits). The legislation, supported by many tribes, was suddenly withdrawn from committee consideration in August, after Interior indicated it wanted to help craft legislation that would be acceptable to Indian litigants. But as John Dossett, general counsel for the National Congress of American Indians, points out, it's hard for Native Americans to agree to an amount if they're not sure what they're owed. "How do you know if you're getting a good deal or a bad one?" he asks.

Accountants have issued qualified opinions on audits of the Indian trust funds every year since 1996, citing, among other things, weaknesses in controls and processes. And while lax internal controls are not unheard of at federal agencies, few departments have been skewered like the BIA — and fewer serve as trustees. Even Swimmer, a former principal chief of the Cherokee Nation of Oklahoma, acknowledges that previous systems "were not appropriate for the work that needed to be done for the majority of the time of the trusts."

Nevertheless, officials at the DoI say the historical accounting is uncovering few mistakes. They claim that less than one percent of all transactions reconciled to date have been in error. Swimmer says he's not surprised by the results. "It was a manual system," he notes, "but it worked." He adds that the weak link in the old system was the agency's reliance on BIA field offices to handle lease proceeds flowing into the system. "Accountants found risk," he grants, "but not losses."

Critics contend that the department hasn't found losses because it isn't looking for them. The Office of the Special Trustee, for example, has yet to tackle most transactions dating from the agency's "paper era" — that is, before Interior moved to an electronic ledger system in 1985. The agency also appears to be stacking the deck in its favor when calculating error rates. It notes that the absence of sufficient supporting documentation for a transaction does not imply an error — and "it does not plan to include such occurrences in the calculated national error rates."

Fractured Nation
Classifying uncorroborated transactions as accurate does little to mollify critics. In addition, the OST's initial work zeroed in on the types of trust accounts that are easiest to reconcile. These large, often lump-sum payments (such as court awards) are made to native nations and later distributed to individual tribal members. "They are the simplest [transactions], the least likely to be subject to error or fraud," claims Cobell. In short, "the low-hanging fruit."

Reconciling land-based leases — for logging rights and the like — could prove even thornier. Payments into those accounts, which currently make up more than 75 percent of the individual Indian accounts, often show up sporadically and in varying amounts. And thanks to the handing down of land allotments to heirs, the accounts often have a lot of beneficiaries (a process called fractionation). Currently, beneficial ownership of the more than 320,000 individual accounts is divided among 4 million interests, with some allotments boasting a thousand beneficiaries or more. Deposits into these accounts sometimes amount to just 3 or 4 cents.

The OST had planned to perform a broader transaction-by-transaction reconciliation of individual Indian accounts, including the badly fractionated land-based accounts. But, facing time and funding constraints, the OST has scaled back the scope of the Historical Accounting Project. Under the latest scheme, the agency ended up performing statistical sampling on land-based transactions valued at under $100,000. With sampling, the OST takes a small number of transactions and applies the error rate to all accounts within specified "strata." Those accounts are then categorized as reconciled.

It's hard to assess the accuracy of the approach. The consultants performing the sampling work, a University of Chicago offshoot called NORC, declined to be interviewed for this article. Neal Hitzig, a professor of accounting at Queens College (New York), says statistical sampling is "the way to go when the target population is so large you can't audit all the transactions." Certainly, a blow-by-blow corroboration of every IIM transaction would be prohibitively expensive. Most estimates peg the cost of such a full-on reckoning at $13 billion — equal to all the money that has gone into the accounts since 1910.

But sampling has drawn heavy fire from various quarters. Some question whether the sample population is truly random or whether it has been skewed to limit the government's liability. Others say a commercial trustee would never rely on sampling to verify the accuracy of account balances. In a report given on behalf of the Cobell plaintiffs, Richard Fairchild, a former director of trust policy at the OST, claimed that statistical sampling has "no place in a fiduciary accounting." Indeed, some in Indian country think the substitution of sampling for transaction verification borders on racism. Says Harper, who heads law firm Kilpatrick Stockton's Native American rights practice: "The Interior Department is saying that Indian beneficiaries don't deserve the same kind of accounting that any fiduciary would provide to any trustee."

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