by Silja Talvi and Brian Awehali
01.15.03

against the federal government, Indians demand an end to insult, theft and broken promises

ince 1887, the U.S. government has been entitled to lease Indian lands and utilize their natural resources for everything from logging and mining to grazing cattle to pumping oil.

Today, the government does a brisk business in leasing, as royalties from the use of the land add up to more than $1 billion annually.

According to the Interior Department's own figures, 56 million acres of Indian land are now held in "trust" by the U.S. government, which is charged with redistributing most of those royalties to the individuals and tribes whose lands are being leased. Altogether, the Department of the Interior manages over 100,000 leases for approximately 236,000 Individual Indian Money (IIM) account holders—in addition to 1,400 tribal accounts.

Individuals and tribes alike depend on these trust fund disbursements for rent, food, and the basic operation of social services in Indian Country.

The problem: Sometimes those checks arrive, and sometimes they don't. Sometimes the checks might arrive for hundreds or thousands of dollars, and sometimes those checks might only amount to pennies on the dollar. On Indian reservations, the problem has reached crisis levels; a check written out for a smaller amount than expected—or no check at all—can mean the difference between housing and homelessness.

All the while, the Interior Department's officials have made it clear that they're not sure how to fix a broken trust disbursement system, much less how much money is missing, or where the missing funds have gone. For their part, lawyers representing hundreds of thousands of Indians in the largest-ever class-action lawsuit against the government have put the cumulative total at $137.2 billion owed.

No matter what the final figure, there's no doubt that the nation's single most impoverished ethnic group could use a bit of that cash.

It's for this reason that a group representing 300,000 Indian plaintiffs have spent the last six years trying to get the Interior Department to account for all the money that they are owed. The plaintiffs, led by Elouise Cobell, an outspoken female banker and member of the Blackfoot Nation, insist that the Interior Department's officials and employees have broken the "trust" relationship between Indian people and the Federal Government, and are therefore neither fit nor equipped to continue overseeing the vast sums.

Even the federal judge overseeing this landmark case, Cobell v. Norton, has called the BIA the most "historically mismanaged federal program" in the U.S. In February 2002, U.S. District Judge Royce Lamberth had these, sharp words for the Interior Department and Secretary Gale Norton: "[T]he department has now undeniably shown that it can no longer be trusted to state accurately the status of its trust reform efforts. In short, there is no longer any doubt that the secretary of the Interior has been and continues to be an unfit trustee-delegate for the United States."

In November 2001, when Gale Norton became the second consecutive Interior Secretary to face contempt charges in a federal court for failing to provide an accounting of the Bureau of Indian Affairs (BIA) management of IIM accounts, its unlikely she or her co-defendant, former BIA director Neal McCaleb, a Chickasaw Indian, anticipated the emotional force and organizational unity of her detractors.

Both Norton and McCaleb were held in contempt in September 2002 for failing to heed the court's orders to fix trust oversight problems. (McCaleb, the nation's highest-ranking American Indian, resigned three months later, citing the "contentious and litigious environment" ahead of him.)

Norton and McCaleb were not the first government officials to be held in contempt for the handling of Indian trust monies: President Clinton's Treasury Secretary Robert Rubin had his turn at this dubious honor as well.

Government officials who let down their constituencies and mismanage millions should be held accountable. But the Indian trust debacle didn't start with Norton or Babbitt. It took a complicated and coercive relationship between the federal government and America's first peoples to make the situation what it is today.

The Great White Society

ad faith has attended every chapter in U.S.-Indian relations.

The fiduciary trust relationship between the U.S. government and Indian tribes was created well over one hundred years ago with The Dawes Act. With this act, the U.S. government ushered in a new phase of its genocidal relationship to Indians by allotting parcels of land ranging from 40 to 160 acres to the heads of Indian households, couching the move in terms of introducing a more stationary, farming lifestyle to native peoples.

Key to the successful passage of The Dawes Act in 1887 was a provision that allowed the U.S. government to purchase "surplus" portions of these allotted lands for the purposes of mining, grazing, timber and irrigation projects, and then to hold the money paid to Indians for the use of that land in trust.

In theory, monies held "in trust" would then be disbursed to individuals and tribes, subject to appropriations by Congress for the purposes of running Indian-related programs and offices. But in practice, as the ensuing century would bear out again and again, the full sum of these trust monies was never fully tallied, recorded or dispersed to the individuals and tribes for whom they were intended.

Through the process of allotment, American Indians, whose relationship to the land had been communal and often nomadic, were forced to accept a new, more individualistic concept of livelihood through "homesteading."

Promoted by self-styled humanitarians (primarily congressmen and members of the Committee on Indian Affairs), allotment was to put an end to what was seen as the objectionable, "uncivilized" nature of the Indian way of life, and to assist natives toward the process of “absorption.”

As an incentive, Indians who agreed to receive their parcels of land were granted U.S. citizenship by the Secretary of the Interior: a measured step toward cultural, political and economic assimilation.

"This is, indeed, the only hope of salvation for the aborigines of this continent. If they stand up against the progress of civilization and industry, they must be relentlessly crushed," declared the Commissioner of Indian Affairs in November, 1872.

Decade by decade, the land holdings of Indian peoples decreased dramatically. In 1891, hoping to further reduce the amount of land held by Indians, Congress passed a law making the leasing of allotted lands possible. After 1891. in the purchase of surplus lands and in the granting of leases, the U.S. government moved decisively toward guaranteeing as much land for Euro-American settlers and industrial interests as possible.

In the period between 1913 and 1920, under the leadership of Secretary of the Interior Franklin K. Lane and Commissioner of the Indian Office, Cato Sells, the transfer of lands into non-Indian hands accelerated.

"The Indian’s rich agricultural lands, his vast acres of grass land, his great forests should be so utilized as to become a powerful instrument for his civilization," Sells said in 1914. "I hold it to be an economic and social crime, in this age and under modern circumstances, to permit thousands of acres of fertile land belonging to Indians and capable of great industrial development to lie in unproductive idleness."

Sells and Lane were hardly the last to envision such a protracted policy of sticking it to the Indians while lining the pockets of industry, although articulated resistance to such policy emerged as early as 1908, when the Board of Indian Commissioners began to complain about the "wholesale slaughter" of forests on Indian reservations.

Deforestation was but one of the serious problems becoming more apparent with each passing year. As the government set about leasing surplus land to loggers, miners, farmers and, later, to oil companies, it collected monies only sporadically. Even when such monies were collected, Indians knew that they were getting only a fraction of what they were owed. Even as tribes watched their lands disappear, to be used for all manner of profit-making purposes, their own income levels diminished year by year.

The growing realization that most Indians were far worse off under allotment led, briefly, to serious-minded governmental reforms after the influential, 800-page Meriam Report of 1928 reported that Indians across the country were living in dire socioeconomic conditions. Indian Bureau officials, the report noted, were largely inefficient, careless and incompetent.

That report provided the impetus for an accelerated period of dramatic reform efforts during FDR's New Deal era, beginning with the 1933 presidential appointment of John Collier to the position of Commissioner of Indian Affairs.

Collier set about trying to reverse the allotment policy, which had brought about the diminishment of Indian lands from 138 million acres in 1887 to roughly 50 million acres in 1934. Of the remaining land still owned by Indians at that point, fully 20 million acres were too arid to be used as productive farmland. About one hundred thousand Indians, Collier complained, were "totally landless" as a result of allotment: "[T]he Indians have been robbed of initiative, their spirit has been broken, their health undermined, and their native pride ground into the dust."

Collier ushered in the Indian Reorganization Act of 1934, which prohibited further allotment, allowed for remaining surplus lands to be restored to tribal ownership where possible, promoted the centralization of power within tribes by stressing tribal constitutions, councils and bylaws, and set up a formal "trust" system through which the government was obligated to pay Indians regularly for the use of their land.

But, as Francis Paul Prucha writes in The Great Father: The United States Government and the American Indians, Collier's romanticized vision of a wholesale return to a traditional way of Indian life in a framework of U.S. government-imposed "self-governance" fell short of its intended effect.

Collier in a sense imposed upon the Indians a tribal government and a tribal economy, when traditional Indian ways often called for organization on the smaller basis of bands or villages ... The charge was made again and again, with some justification, that Collier was as paternalistic as any of his predecessors—perhaps even more so—and [that] the Indian Bureau had a tighter hold on Indian affairs and interfered more in them than ever before.

By 1948, a capricious shift in official U.S. policy toward Indians was again underway, with the findings and recommendations of the Hoover Commission that Indian assimilation must be the goal of policy toward the native population. "The basis for historic Indian culture has been swept away," stated the findings of the special task force. "Traditional tribal organization was smashed a generation ago ... Assimilation cannot be prevented. The only questions are: What kind of assimilation, and how fast?"

From the Indian standpoint, frustrations with the BIA and disappointments over a dizzying array of broken promises only continued to add up through the remaining portion of the 20th century.

One might conclude from the actions of the government in the years since the 1948 Hoover Commission Report that extinction would be their preferred method of assimilation. In fact, it would be easy to make the argument that the overall impact of systemic poverty, disease, lack of education and environmental racism on the nation's first peoples has had much the same effect as the more overtly confrontational and aggressive policies of the BIA's institutional predecessor, the War Department’s Office of Indian Affairs.

One saving grace was to have been the trust revenue Indians have received or were supposed to receive for the use of their lands.

Instead, Indian nations began to face the reality that their funds were being systematically misallocated, misplaced, and stolen.

The ongoing mismanagement of trust monies finally led to a 1992 House Committee on Government Operations report entitled, "Misplaced Trust: The Bureau of Indian Affairs Mismanagement of the Indian Trust Fund." Among other damning conclusions, the report compared the trust to "a bank that doesn't know how much money it has."

The consequent passage of the 1994 Indian Trust Reform Act (ITRA) was a well meaning, if underfunded, attempt to end the Interior Departments gross pattern of neglect and poor management in running the IIM trust. Most significantly, the ITRA established a Special Trustee for American Indians to oversee reform, a position that held some promise with the 1995 appointment of accomplished banker and the former director of Riggs Bank, Paul Homan.

Just one year later, Homan told the U.S. Senate Committee on Indian Affairs that in his 30-year career as a banker, he had never seen anything like the accounting mess at the BIA. More than $50 million had not been paid out to individual Indians because the BIA had no current addresses for them, and roughly 21,000 accounts listed the names of deceased persons. Nearly $700 million in tribal funds had been sent to the wrong recipients.

Four years after being appointed, and after exhaustive attempts to remedy the behemoth accounting nightmare of the trust accounts held by the BIA, Homan resigned in disgust. In his resignation statement, Homan claimed he had been sandbagged at every step by the Department of the Interior, and that the Office of Special Trustee had never been given the authority or independence necessary to carry out the purposes of the Indian Trust Reform Act.

"In my opinion, the Department of the Interior can no longer be trusted to keep and produce trust records," stated Homan. "I believe it is time for Congress to consider alternatives. Specifically, I recommend that Congress consider establishing an independent agency outside the Department of the Interior to manage the U.S. governments trust management responsibilities to American Indians."

Homan, obviously no radical, also hit on the first of the two key structural components of the issue of Interior Department mismanagement of monies owed to American Indians: "The lack of trust managerial competence and lack of financial trust orientation and focus throughout the BIA and the Department of the Interior have been institutionalized over many years and are now inherent in the BIA organizational culture."

The second component can be boiled down to the old axiom that one cannot serve two masters well. The Department of the Interior, which runs the BIA, is charged with the stewardship of Indian lands at the same time it is responsible for timber, minerals, water, grazing, parks and other resources found on these lands.

For the last several decades, this dual mandate has drawn fierce opposition from all over the political continuum. From a damningly critical 1961 Lyndon Johnson presidential task force report and 1969 Nixon Administration-commissioned study, to the American Indian Movement’s occupations of the BIA building in 1972 and Wounded Knee, South Dakota in 1973, all have held in common the call for fundamental changes in the BIA or the outright abolition of the Bureau.

But through the 70s, as COINTELPRO and other U.S.-sponsored covert operations murdered and imprisoned a good portion of the American Indian movement leadership, and as attention-grabbing protests began to wane as a result, the prominence of Indian issues in the broader public eye diminished.

As a result, from 1980 to 1992, little changed at the BIA. The agency continued to consume about 80% of its own budget and did little to improve its services to American Indians. In the mid-1980s, a BIA accountant in Montana disclosed his findings that the agency had deposited between $7.5 million and $11 million more in banks than had been dispersed to IIM account holders. The accountant, David Henry, was subsequently fired, and went on to author the 1995 book, Stealing from Indians.

Finally, fed up with business as usual, Elouise Cobell, a Montana banker and member of the Blackfoot nation, assisted by the Native American Rights Fund and the Intertribal Monitoring Association, spearheaded the largest class action lawsuit in history involving the U.S. government. Suing the Secretaries of the Treasury and Interior and, by extension the BIA, plaintiffs are demanding fair restitution for more than $100 billion in trust deposits, interest and accruals that remain unaccounted for.

"I can tell you," Cobell told the House Resources Committee in February 2002, "that many people depend on these payments for the bare necessities of life. These trust checks are not a luxury. Trust funds are not a handout or an entitlement program. It is very important to keep in mind that this is our money: revenue from leases for oil and gas drilling, grazing, logging and mineral extraction on Indian lands."

After literally being laughed at by Justice Department attorneys when she requested a special prosecutor to assist her trust reform efforts, Cobell and a team of lawyers and activists have proceeded in the last six years, through two administrations, to emphatically wipe the smiles from the faces of government attorneys.

he blizzard of court-mandated reports, trial phases, press releases and contempt charges in the ensuing years has left all but the most dedicated observer grasping for a comprehensive understanding of what, exactly, has transpired in the last six years of court battles.

Yet the ultimate success of trust reform efforts may depend on a broader public awareness of, and support for, Indian efforts to win a substantive measure of economic and political self-sufficiency.

On November 27, 1996, Judge Lamberth ordered the Treasury and Interior to produce trust-related documents and to provide an accounting of how much was owed to whom. Almost two years later, Lamberth concluded that his order had been completely ignored.

"They understood I ordered it," the judge said, "they just didn't want to comply."

It should not be assumed, however, that the Interior and Treasury were idle during this time. Instead, they seemed to have occupied most of their time, Enron-style, shredding rather than accounting.

From 1998 to 1999, at the same time government lawyers were telling the court they were searching for relevant accounting records, the Financial Management Service of the Treasury Department actually destroyed 162 boxes of such records. Government lawyers then waited sixteen weeks before notifying the court that these documents had been destroyed.

Whether this delay represented the spectacular disorganization of trust records—or just how corrupt and dishonest the Treasury and Interior are—can't be said with certainty. But both agencies were ordered to pay a relatively paltry sum of $600,000 in penalties for their error, and former Interior Secretary Bruce Babbitt, Treasury Secretary Robert Rubin, and Assistant Secretary for Indian Affairs Kevin Gover were all found to be in contempt of court.

On December 21, 1999, Judge Lamberth ruled that the government had breached its trust responsibilities to the Indians and ordered them to file quarterly reports detailing their trust reform efforts. Predictably, government attorneys appealed the decision, but were rebuffed by the U.S. Court of Appeals, who concluded that the "magnitude of the governments malfeasance" justified Court supervision and oversight.

Allegations were made—and later substantiated—that Babbitt and Co. had retaliated against BIA employees who had provided damaging testimony.

By March 2001, the Treasury had admitted the destruction of Indian trust documents by at least 16 Federal Reserve branches. Not long after, Special Master Alan Balaran issued a report to the court citing "compromised" documents at at least 29 of 37 Federal Reserve branches.

Increasingly disgusted by government misconduct, on April 16, 2001, Judge Lamberth appointed a Court Monitor, Joseph S. Keiffer III, to oversee trust reform and report to the judge on the Interiors progress. Keiffer's subsequent reports have only helped to complete a picture of widespread institutional mismanagement and corruption.

Here's Another Idea, Another Acronym, Another Few Million Dollars Down the Drain

or the Interior Department, the accounting and management of the IIM trust fund has been an exercise in acronyms.

From the perspective of the department, Secretaries Babbitt and Norton have legitimately tried a variety of approaches to reconcile and improve a broken system as quickly as possible .

On January 6, 2003, the Interior Department met a court-imposed "compliance plan" deadline, assuring the court that it took the responsibility of meeting the conditions of the 1994 American Indian Trust Fund Management Reform Act (ITRA) seriously.

The 16-page document (intended to demonstrate to the court what kind of progress the Interior had made in meeting its fiduciary trust obligations) announced a reorganization within the BIA and the Office of the Special Trustee for American Indians. According to the document, the Interior was also undergoing a "reengineering of Interior's trust business processes" and the implementation of a strategic plan formerly known as the Indian Trust Business Plan, and now entitled the Comprehensive Trust Management Plan (CTMP).

The CTMP, in turn, would be administered under the "leadership of the Office of Indian Trust Transition (OITT)."

After a while, the Interior's proclivity for the use of acronyms, appointed offices and grand restructuring plans begins to jumble together into a steaming, swirling bowl of alphabet soup.

In 2001, Norton had already proposed the creation of a new agency, the Bureau of Indian Trust Assets Management (BITAM), to manage IIM accounts. Tribal leaders chafed at not being consulted about her plans, but BITAM remained the Interior's buzzword will into 2002.

In the spring of 2001, Norton proclaimed the staffing of a new division, the Office of Historical Trust Accounting (OHTA), which was supposed to perform a limited accounting of owed trust monies. But in a July 2002 Report to Congress on the Historical Accounting of Individual Indian Money Accounts, the dozens of employees and contract workers hired to work in the office concluded that it would take them 10 years and $2.5 billion to actually do that job. And even then, they admitted, such research and accounting would not necessarily produce usable results.

Similar examples of expenditure without result riddle the Interior's recent history. Thirty million dollars spent on data cleanup, for instance, resulted in a computer specialist's admission, in court, that he could not certify that a single account had been cleaned up despite the fact that tens of millions had already been spent.

In their own "Compliance Action Plan" submitted to Judge Lamberth on January 6, 2003, Cobell and her peers point out that the government now has a genuine opportunity to redeem itself to Indian trust beneficiaries by taking quick and decisive action.

In doing so, plaintiffs took the opportunity to excoriate the Interior Department's tactics: "[The] defendants are forever reorganizing themselves, moving organizational boxes around on a chart, devising new acronyms, and renaming tasks and entities in deeper and deeper bureaucratic jargon in a pathetic effort to create the phony impression of, if not progress, at least movement."

Unwilling to wait for the Interior to make real progress, the plaintiffs asked Judge Lamberth to consider their own proposal: Take trust management out of the hands of the Interior altogether. Key to the proposal is the idea that the IIM trust accounts should immediately be taken over by an "unconflicted" trust administration solely devoted to fixing and administering the trust debacle.

Cobell and lead attorneys from the Native American Rights Fund have emphasized that such an administration, made up of non-governmental employees, and funded with permanent appropriations, could hire the competent staff and supervisors necessary to ensure the proper management of trust money.

As Tex Hall, president of the National Congress of American Indians told the New York Times in early January, "This isn't taxpayer money. This is our money that the government took, and they have to give it back."

Moving Forward

ecause of their statistically small numbers, the majority of congressional representatives outside of states like South Dakota, New Mexico and Arizona can safely ignore all but the most cursory issues pertaining to the modern struggles of American Indians. For U.S. politicians, the benefits of pushing for meaningful reform of federal Indian policy are negligible.

Between American politicians whose interest in Indians is tangential and inconsistent, and a majority non-Indian citizenry whose awareness of Indian realities is minimal, at best, the categorical failings of the BIA and Interior Department are simply allowed to pile up, year by year.

"Where has Congress been while this mugging has gone on for nearly six years?," asked Cobell of the House Resources Committee in 2002.

One saving grace has been increased attention from Senators John McCain (R-AZ), Tom Daschle (D-SD), and Tim Johnson (D-SD), who introduced S. 2212, the "Indian Trust Asset and Trust Fund Management and Reform Act" in April 2002.

The "discussion" bill—so entitled to encourage comment and modification, as warranted—focuses on the creation of a Deputy Secretary for Trust Management and Reform, and specific provisions for tribal participation and self-determination in the trust reform process.

"There is no more important challenge facing the tribes and their representatives in Congress than that of restoring accountability and efficiency to trust management," said Sen. Daschle when the bill was introduced.

Added Sen. Johnson, "Of all the extraordinary circumstances we find in Indian Country ... I do not think there is any more complex, more difficult and more shocking than the circumstances we have surrounding trust fund mismanagement."

But what happens from here, of course, is anybody's guess.

Will the Interior Department continue to invent an endless stream of new proposals and official acronyms to conveniently skirt their fiduciary obligations? At least in the near future, such a strategy seems likely, even predictable.

Will Cobell and her fellow plaintiffs eventually wear the government down? Anything is possible. Even now, signs are emerging that the White House itself wants to push the Interior Department to settle to prevent the additional costs of further litigation, as noted in a June 2001 letter from the Office of Management and Budget to the Interior Secretary.

But such settlement seems furthest from the Interior's agenda. J. Steven Griles, Deputy Interior Secretary, had this to say to the New York Times: "I am not settling a case with taxpayer money for billions of dollars when there is no supporting evidence that the money they say they lost ever existed."

In fact, a critical June 2002 report from the Office of the Inspector General (OIG) seemed to point toward the Department's "bunker mentality" where trust reform is concerned. "The Cobell litigation has so embroiled and angered those involved that they cannot see or think clearly in order to make a correct decision," as the OIG reported. "Every effort is thwarted by internal discord, distrust and a dysfunctional reluctance to assume ownership."

And so while a legitimate accounting of monies owed by the Interior becomes less and less likely, hundreds of thousands of Indians continue to go without what they're owed.

From the standpoint of Indian trust account holders, the trust debacle is but the latest insult in what amounts to a historical miscarriage of decency and justice toward the descendants of America's first inhabitants.

"Many of the intractable problems the tribes and federal policy makers wrestle with today stem from the wreckage caused by these misguided policies of the past," Senator John McCain noted while introducing S. 2212 last year.

"It took over 100 years to create the problems we now confront with the Indian trust funds and assets," he added. "The Indian people did not create these problems. The Federal Government did."

A different version of this piece first appeared as the cover story in the April 2002 issue of Z Magazine.

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