Uncooking the Books
The Fed’s Trust Fund Mess

By Elouise Cobell (Blackfeet)

When we filed our class-action lawsuit over the federal government’s mismanagement of the Indian Trust 12 years ago, I was confident that the case would be resolved fairly and expeditiously. After all, the government had admitted repeatedly that it had made a shambles of the Trust. Boy, was I naive to the ways of Washington. I did not anticipate the ability of political appointees and the usual handful of federal bureaucrats to avoid accountability for this massive wrong to Native Americans.

This is not, of course, the first time that Washington has failed Native people. Believing Indians were incapable of managing their own monies, Congress created Individual Indian Money Trust Accounts in 1887. The idea was part of a scheme to break up tribal lands and allot small parcels to individual Indians. Indian agents were supposed to manage the lands for the Indians, leasing their resources to non-Natives who would unlock their rich stores of oil, gas and minerals. What monies the agents could collect for the lands were supposed to be placed in these government-managed trust accounts.

Numerous reports to Congress have confirmed that the trust program was a failure from the outset. Agents failed to record many leases. Payments often were not made. Monies disappeared. Records, if they were ever made, largely have been lost. The result: It’s impossible to document how many dollars that should have gone to Indians never made it into or out of the U.S. Treasury. Both the government and our lawyers have said that approximately $13 billion flowed through the Trust. We say billions of dollars from Indian lands managed by the government never reached the people who owned those lands.
What our lawsuit seeks is simply an accounting of what happened to our money. That’s a fundamental right the appeals courts have agreed we must be given.

A 10-day trial in October on how the accounting should be conducted reinforced my amazement at the Interior Department’s continuing efforts to prolong our case. The gap between the Indian plaintiffs and the government has never been wider. Replacing the government’s earlier admissions of mismanagement are new, absurd claims that the Trust has been well managed. Indians suffered few losses, Interior officials are now saying. No more than a few million dollars was misplaced since the Trust was created, they claim.

The government’s self-serving plan for dealing with the accounting is yet another scandal. What they have proposed is far from the accounting that the Congress demanded years ago. It is, frankly, what the government calls a “litigation support accounting,” a project whose principal purpose is to limit the liability of the government to Individual Indian Trust beneficiaries, not to discharge their fiduciary duty to account for all funds.

There are an estimated 500,000 current Indian Trust beneficiaries who are covered by our lawsuit. No one knows how many deceased beneficiaries are in the certified class. But not a single beneficiary will receive an accounting of his or her funds, the way the government is planning it. Not a single beneficiary will receive assurances from an independent certified accounting firm that his or her trust balances are fairly stated. Not a single account and all its transactions will be reconciled. No procedures employed by the government in its “reconciliation” will meet Generally Accepted Audit Standards or satisfy the Generally Accepted Accounting Principles.

Shockingly, the government plan grotesquely downplays the importance of records. “The absence of supporting documentation does not imply an error,” the plan asserts. That means government workers will be allowed to “reconstruct missing transaction records” as they deem appropriate. If some beneficiaries were paid something on any given date, the government will assume that all others who should have been paid also got paid. That is the government’s so-called accounting.

Many of the government’s current conclusions are based on the 6,600 “creatively reconciled” transactions—out of hundreds of millions of posted transactions that they refuse to examine. The government has no idea how many posted credits and collections have been purged from its systems; and it has no idea how much Trust revenue has been collected but was never posted to individual Trust accounts.

Their approach is unconscionable and a continuing breach of trust; they’ve cooked the books and aim to keep it that way. As I realized early in our legal fight, nothing comes quickly to Indian Country. What I do know is that we are right and that the government is terribly wrong. Too many of our people are suffering from the disgraceful behavior of our trustee: the United States government.

With Congress unwilling to deal with our case, the district court remains our hope. We continue to have confidence in the integrity of the district court and with great hope await its decision. The trail of tears runs straight through the U.S. Courthouse on Third Street and Constitution
Avenue in Washington, D.C. It is time for the tears to end.

Elouise Cobell (Blackfeet) is a great-granddaughter of Mountain Chief. She is the lead plaintiff in the class-action lawsuit Cobell v. Kempthorne, which has successfully challenged the federal government’s acknowledged mismanagement of the Indian Trust. A resident of Montana, she is the executive director of the Native American Community Development Corporation (P.O. Box 3029, Browning, MT 59417), a nonprofit affiliate of the Native American Bank. She runs a working ranch with her husband and is active in local agricultural and environmental issues.She has won many prominent awards for her work.