Risk Management

The End of the Trail?

The massive government project to account for billions owed to Indian landholders will never be completed, a federal judge opines.
Stephen TaubJanuary 31, 2008

A federal judge harsh criticized the Interior Department for delays in its accounting for billions of dollars owed to Indian landholders, saying the massive project is pointless.

“Indeed, it is now clear that completion of the required accounting is an impossible task,” said U.S. District Judge James Robertson said in a 165-page decision, adding that he plans to schedule a hearing in the next month to discuss a way to solve the problem, the Associated Press reported.

A lawsuit filed in 1996 by Elouise Cobell, a former treasurer of the Blackfeet Nation, accuses the government of mismanaging more than $100 billion in oil, gas, timber, and other royalties held in trust from Indian lands dating back to 1887, the wire service noted. Other tribes, as well as individuals, have sued separately.

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Robertson said a remedy must be found for the department’s unrepaired, and irreparable, breach of its fiduciary duty over the last century, and that “the time has come to bring this suit to a close,” according to the AP report.

The government offered in March 2007 to pay $7 billion over 10 years to settle all claims, both individual and tribal. Plaintiffs rejected the offer, estimating that the government’s liability could exceed $100 billion. “The offer was seen by all tribes as an insult,” Michael Marchand, chairman of the business council of the Confederated Tribes of the Colville (Washington) Reservation, told CFO magazine in mid-2007. “It was a clear signal that the Administration has no interest in settling anything.”

Interior Department officials, though, have said they believe the actual amount owed will turn out to be much less than the $7 billion offer.

The DoI earlier this year forecasted that a massive project to analyze tens of millions of pages of financial records and determine the appropriate payments to Indian landholders would wind up in 2011 at a total cost of $274 million. So far Interior has spend $127 million in the five years since the project began, according to the AP.

In 1989, at the prodding of the U.S. Congress, the government hired Arthur Andersen to perform a full historical accounting of both individual Indian and tribal trust-fund accounts. Five years and $21 million later, the firm reported that, due to missing records and the lack of an audit trail in the Bureau of Indian Affairs (BIA) systems, it could reconcile only tribal accounts — and even then, only those opened after 1972.

In 1994, Congress passed the American Indian Trust Fund Management Reform Act, mandating a tallying of the tribal and individual accounts. But it took a federal court order six years later to jump-start the project.

“Ultimately the question is going to be for the administration and the Justice Department. Are they willing to settle for all of these years of mismanagement?” said Sen. Byron Dorgan, D-N.D., chairman of the Senate Indian Affairs Committee, according to the AP report.