Suit Stands to Repay Billions to Indians

America’s history with Native Americans is full of broken promises, government deceit and wrongs not righted.

But the upcoming decision in a lawsuit here appears likely to go to historic lengths to reimburse Native Americans for billions of dollars in lost income and force the government to repair a long-standing paternalistic financial relationship.

A federal judge, expressing anger at what he has heard in the case, is expected to issue a plan early next month to overhaul the government’s troubled Native American trust fund system.

The government’s abject failure to responsibly handle billions of dollars in trust funds belonging to about 300,000 Native Americans has been clearly laid out in the just-concluded case. But the problem is so old--going back about 170 years--that it is not clear exactly who is to blame, testimony has shown.

And the fundamental offense--the government’s gross mismanagement of $350 million a year it claims it has pumped into the Native American accounts from sales of natural resources on their land--has been compounded by the administration’s behavior in the six-week nonjury trial.

The case, if only the latest in a long line of U.S.-Indian disputes, has become the largest class-action lawsuit in history against the federal government.

While much of the courtroom testimony was technical and attracted little public attention, the presiding judge, Royce C. Lamberth of the District of Columbia District Court, became so exercised at times that he could scarcely restrain his rage.

“The federal government here did not just stub its toe,” Lamberth declared at one point. “It abused the rights of the [Native Americans] to obtain these trust documents, and it engaged in a shocking pattern of deception of the court.”

In a pretrial “discovery” phase, Lamberth cited Interior Secretary Bruce Babbitt and then-Treasury Secretary Robert E. Rubin for contempt of court, saying that they showed “flagrant disregard” for his orders to furnish key records to lawyers representing a class of Native Americans.

The government eventually furnished some documents, but Lamberth recently fined the administration $625,000 to compensate Native American lawyers for delays.

Government attorneys had argued that production of documents was impossible because tens of thousands of account records were missing and others were stored haphazardly in more than 100 locations across the country. Some records in a New Mexico warehouse were inaccessible because they were contaminated with a deadly virus resulting from rat infestation, they contended.

Interior Department Records in Disarray

Testimony showed that the bulk of the materials in dispute were in the possession of the Interior Department, with Treasury acting as banker. The records were in such disarray that the government could not track billions of dollars it claims it has channeled into individual Native American accounts.

The trust funds were established during the Andrew Jackson administration, part of a government effort to compensate individual Native Americans for use of their land while weakening tribal control of valuable assets. The government is supposed to manage the accounts and pass along royalties from the sale of petroleum, timber and other natural resources. In all, the government said, it deposited about $350 million a year into the accounts, but officials have been unable to give an accounting of exactly where all the money has gone.

Kevin Gover, a Pawnee who runs the Interior Department’s Bureau of Indian Affairs, and others at the department acknowledged that the problems are real--and deeply rooted. They conceded that there never has been an adequate accounting of these funds.

Native American plaintiffs, who filed their lawsuit in 1996, contend that the court should grant them millions of dollars in damages, order a full accounting by the government and ensure a complete overhaul of the system.

Lamberth, based on his remarks from the bench, seems ready to grant many, if not all, of their demands.

Congress was made aware of the problem in 1994 and passed legislation to require massive reforms in the trust system. But the intended major revisions never took root, largely because of bureaucratic bickering.

The legislation required President Clinton to name a special trustee to work on behalf of Native Americans, and he chose a respected Washington banker, Paul M. Homan. A trust specialist and former president of Riggs National Bank in the nation’s capital, Homan had been recommended by Babbitt. But Homan soon had a public falling-out with the Interior secretary and resigned earlier this year.

Homan testified in court that Babbitt never gave him sufficient finances or staff to make any real progress. And, he said, Babbitt blocked his plan to create an outside agency to manage the troubled trust system.

As Babbitt and Homan dueled ineffectively in the mid-1990s, Indian leaders grew more frustrated over the inadequate steps by Congress and the Interior Department to clean up the mess. Tired of waiting for reform, the Native American Rights Fund in Boulder, Colo., rounded up five plaintiffs to take the matter to federal court three years ago.

Soon the lawsuit was certified as a class-action complaint on behalf of the 300,000 Native American beneficiaries. The suit covers individual trust accounts affecting Native Americans in every state west of the Mississippi River. Most who are affected in California are members of the Hoopa and Klamath tribes in the northern part of the state.

Those affected are the descendants of Native Americans whose lands were broken up by the federal government into 80-acre or 160-acre parcels. The tracts were given to Native Americans to manage and were intended for activities such as logging and farming.

Over time however, as the lands were turned over to succeeding generations and the number of beneficiaries grew, the Bureau of Indian Affairs failed to properly track the income generated and who was supposed to receive it.

If the class-action suit is successful, hundreds of tribes with so-called tribal accounts--as opposed to individual accounts, the subject of this lawsuit--are prepared to follow up with a similar class-action suit. These tribes include “dozens all throughout Southern California,” according to Indian lawyer Keith Harper.

Elouise Cobell, a member of the Blackfeet tribe who was among the original plaintiffs, believes that Judge Lamberth is trying to assure that justice is done.

“The Department of Interior is supposed to be keeping records for us all,” she said in an interview. “What would happen if you went to a bank and people wouldn’t tell you how much money you had?”

Reconciling Cobell’s account and many others will not be easy. Her funds have been pooled for investment purposes by the BIA and Treasury Department with those of thousands of other Native Americans in an outmoded banking system reminiscent of the 1800s.

Because ownership of Indian lands has been splintered through inheritances, many accounts may be worth only a few cents. But no one seems able to say for sure.

Babbitt portrayed himself as an ardent supporter of Indian interests, insisting to Lamberth that he is firmly committed to overhauling the problem-ridden system and that trust reforms are in the works.

“I have been immersed in Indian affairs all of my life,” Babbitt testified last month, recalling his work 30 years ago as a legal advisor to the Navajo nation. He said that trust reform will be well underway by the time Clinton leaves office in January 2001, without any intervention by the federal court.

A new computer system and other improvements worth $150 million will get Indian accounts back on track within the next few years, he declared.

Asked why he had blocked Homan’s plan to create an outside agency to handle the trust system, Babbitt said that native Americans have always placed great importance on dealing with the BIA itself and are against any idea that would dilute the bureau’s role.

Skepticism About Babbitt’s Promises

But Elliott H. Levitas, an attorney for Native American plaintiffs and a former Democratic congressman from Georgia, told Babbitt that some of these statements sounded like “gobbledygook.” He said he was skeptical about Babbitt’s promises.

Lamberth, a Ronald Reagan appointee who has clashed with administration officials before, also expressed doubts that the Interior Department is up to the job at hand. He said that Babbitt had shown so much “inattention to detail” that his much-vaunted reorganization plan may only compound the records problem.

The judge said that he may soon appoint a special master to oversee reform efforts and report to the court but that he wants to work out a carefully detailed plan before handing down a ruling.