Tribal Business
Contributions and Federal Mismanagement of Trust Funds
Native Americans have played a vital
role in the economic conditions of the United States. For example,
every year, Native American tribes contribute significantly to
the overall energy production of the U.S. In 1997 alone Native
Americans supplied 32 million tons of coal, 270 million mcf of
gas, 15 million barrels of oil and 5.5 million tons of construction
aggregate. In the same year tribal businesses contributed to
the lumber industry by harvesting 650 million board feet of timber.
They have reforested more than 14,000 acres and completed forest
improvements on an additional 66,625 acres of land. Native Americans
also have made an impact on the fishery programs, and release
more than 40 million young salmon and steelhead trout in the
Pacific Northwest every year.
Tribal businesses have contributed
to $10 billion in wage and salary income to the United States
and created more than 300,000 jobs. This has generated more than
$4-6 billion in federal tax revenue annually. The Native American
art and craft industry generates more than $1 billion every year.
On the state and local government levels, tribal communities
contribute $246 million in tax revenues annually, and the combined
purchases of goods from reservations total $5.5 billion on an
annual basis.
Historically there have been questions
of fairness and equity regarding the way the United States government
(the congress, various Presidential administrations, etc.) has
treated Native Americans. A current example of this is the management
of tribal funds. The Bureau of Indian Affairs (BIA) has been
the federal agency responsible for managing financial agreements
with tribes, and tribal members on reservations. Allegedly billions
have been stolen from Native Americans through the mismanagement
of trust funds and Individual Indian Moneys (IIM). This bureau
was initially instituted to protect the funds of Native Americans
in the United States, but it has, unfortunately, fallen short
of doing so.
The Bureau of Indian Affairs, an agency
under the federal Department of Interior, was established on
March 11, 1824, and is currently responsible for the management
of 55.7 million acres of land held in trust by the United States
for American Indians, Indian tribes, and Alaska Natives. The
BIA provides federal services to 1.5 million American Indians
and Alaska Natives who are members of more than 562 federally
recognized Indian tribes. The Bureau also administers 43,450,266.97
acres of tribally owned land, 10 million acres of individually
owned land, and 309,189 acres of federally owned land held in
trust status.
On June 10, 1996, the Native American
Rights Fund (NARF), together with a number of attorneys, representing
individual Native Americans, filed a class action lawsuit against
the federal government claiming that the government failed to
properly manage Indian Trust funds. This lawsuit is known as
Cobell v. Norton. There are currently 300,000 Individual Indian
Money (IIM) account holders involved in the lawsuit as well as
other Trust beneficiaries.
The lawsuit has been divided into
two phases based on the two objectives outlined on the Native
American Rights Fund (NARF) Web site. Its goals are as follows:
- To require the federal government
to create and maintain an adequate system to properly manage
and accurately account for the trust assets of individual Indians;
and
- To require the federal government
to provide a full and accurate accounting to individual Indian
Trust beneficiaries, and to restate IIM account balances accordingly.
The suit involves assets that have
been earned by Native Americans through the sale or lease of
natural resources on Indian property. The federal government
approves the lease and or sale of property. It collects the revenue
made from such transactions. Farming and grazing leases, timber
sales, and oil and gas production on Indian land and other uses
generate revenue. The funds are then to be placed in accounts
managed by the BIA. This is where the alleged mismanagement of
funds has occurred for more than 100 years.
On February 3, 1997, the U.S. District
Court for the District of Columbia certified the plaintiff case.
This makes all Indian trust beneficiaries and all 300,000 IIM
account holders eligible for automatic inclusion in the lawsuit.
Three years after the lawsuit was
filed, on June 10, 1999, the first phase of the trial began.
The trial lasted six weeks, during which Interior Secretary Babbitt
admitted that the fiduciary responsibilities of the U.S. to individual
Indian trust beneficiaries were not being executed. The Assistant
Secretary for Indian Affairs, Kevin Gover, also admitted that
the government’s Indian trust asset management system was corrupt.
On December 21, 1999, the court issued
an opinion ruling that the United States had breached it’s responsibility
to individual Indian trust beneficiaries and that the government’s
belated reform efforts are inadequate to cure the ongoing breach
of trust.
The court directed the government
to take adequate steps to reform the system. In January 2000,
the government appealed the district court ruling, asserting
that the court had overstepped its authority in requiring the
government to properly manage and account for Indian trust funds.
On February 23, 2001, a three-judge panel of the U.S. Court of
Appeals for the District of Columbia Circuit unanimously upheld
the lower court ruling. (www.narf.org)
The purpose of the lawsuit is not
to require the federal government to relinquish all control of
the trust funds but simply to have better accounting practices
and management techniques of the funds.
The depth of the mismanagement is
virtually immeasurable. The auditing company Arthur Anderson
was paid millions of dollars by the government to sort through
more than 100 years of BIA paperwork. Stunningly they were only
able to audit 20 years, from 1973 to 1992, and for this period
alone they noted that at least $2.4 billion in the tribal trust
accounts were unaccounted for, and that billions more were virtually
untraceable. (http://www.monitor.net/monitor/free/biatrustfund.html)
It was determined that it would cost
$108 to $281 million just to attempt the task of sorting through
the trust fund system, and that because the records were either
destroyed, never created or not maintained such a task would
not actually be possible. Currently, the estimated amount missing,
and perhaps stolen, from Native Americans stands at more than
$2.4 billion.
Measures are being taken to prevent
this from happening again, and to reconcile the damage that has
already been done. A bill entitled “American Indian Trust Fund
Management Reform Act Amendments” (H.R. 2981) was introduced
into the U.S. House of Representatives, on July 25, 2003, to
amend the former “American Indian Trust Fund Management Reform
Act of 1994.” (25 U.S.C. 4001). The lawsuit and bills are efforts
to correct the long record of disregard for the rights, and funds
of Native American tribal members.
Reference List
Department of the Interior
American Indians and Alaska Natives
http://www.doi.gov/oait/natives.htm
Native American Rights Fund
http://narf.org
Albion Monitor News
Billions Missing from U.S. Indian Trust Fund
http://www.monitor.net/monitor/free/biatrustfund.html
Indian Country
http://www.indiancountry.com
Indian Trust: Cobell v. Norton
http://www.indiantrust.com
GAO Audit of BIA Tribal Trust Fund
http://www.nativeweb.org/pages/lega/GAO_BIA_full.html
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