Indian Trust Fund Mismanaged, Audit Charges

An audit has uncovered widespread Interior Department mismanagement of an Indian trust fund, including the unexplained disappearance of $17 million and other losses because of sloppy record-keeping, officials said Friday.

The losses were brought to light by an inspector general’s investigation into the Bureau of Indian Affairs’ management of the trust fund totaling more than $1.7 billion.

The fund, which represents money belonging to 200 Indian tribes and 290,000 individuals, is managed for investment purposes by the bureau. Most of the money comes from court-ordered monetary awards to the Indians or revenue from oil, gas or mineral leases.

The inspector general’s report concluded that the financial and investment records of the trust fund were in such disarray that their accuracy no longer can be relied upon. It called the fund’s management and control problems pervasive.

The investigators said they found no evidence indicating how $17 million shown on the fund’s main ledger had been disposed of. Although there is no direct evidence that the money had been stolen, the report said it did not rule out the possibility.

The audit identified another $19.5 million in actual or potential losses because of poor investment decisions or mismanagement of invested funds. In many cases, sloppy record-keeping and inattention cost the fund millions of dollars, the report said.

The Bureau of Indian Affairs acknowledged severe shortcomings in the record-keeping of the trust fund. It said that much of the problem stemmed from not having a modern automated system. The agency said it is preparing to shift the accounting responsibilities for the fund to a private contractor.