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Osage Nation, U.S. at odds over trust fund damages
Monday, November 27, 2006

The Osage Nation of Oklahoma is headed back to court after efforts to settle a trust mismanagement case with the Bush administration failed.

The tribe sued the federal government in 2000, alleging the mishandling of billions of dollars in oil revenues. A series of court rulings upheld the Interior Department's duty to account for the funds.

Most recently, Judge Emily C. Hewitt of the U.S. Court of Federal Claims said the government breached four specific fiduciary duties. She ordered the parties to come up with a figure to resolve this aspect of the case.

After months of negotiations between tribal leaders, federal officials and attorneys, the talks broke down. Both sides dispute how much is owed for four oil leases covering a five-month period.

"While the parties were able to agree on certain elements of the damages calculation, they ultimately disagreed on key elements of the calculation," the tribe said in a statement.

The tribe claims the U.S. owes at least $3.3 million for mismanaging the tribe's assets. The figure covers the four breaches of trust -- under-collection of oil royalties, uncollected late fees, waiting too long to deposit oil royalty checks into interest-bearing accounts and failing to properly invest deposited funds -- plus interest.

The government, on the other hand, says it owes no more than $191,697, significantly lower than the tribe's proposed amount. Depending on how interest is calculated, the figure rises to $1.2 million.

Hewitt will now try to decide whose argument carries greater weight as she determines a damage amount. But even then, the case is far from over -- the tribe has claims going back to the late 1800s and early 1900s that have to be resolved.

"These damage calculations only apply to the four specified Osage oil leases during five months within the time period January 1976 to July 1989," the tribe noted. "They do not include mismanagement for the entire claim period dating back to the late treaty era or the total mismanagement for all funds the government should have collected or collected but improperly invested."

The Osages are among more than two dozen tribes with trust cases in the courts. These challenges are separate from the Cobell lawsuit over money held in trust for individual Indians, a case that is worth billions as well.

Bush administration officials have repeatedly claimed that tribes and individual Indians aren't owed much for the handling of their assets. The figures diverge wildly, particularly in the Cobell case, which was the subject of failed settlement legislation this past year.

Most of the tribal cases are based on "reconciliation" reports created by the former Arthur Andersen accounting firm. Although they were based on incomplete and inaccurate information, the reports uncovered at least $2.4 billion in undocumented transactions just for the years 1972 through 1992, the era of "electronic" records.

In addition to being used in court, the reports have taken on heightened significance this year because tribes have until December 31 to file lawsuits based on the reconciliation. The Bush administration is opposing an extension of the deadline, citing billion dollars worth of liability to tribes.

Arthur Andersen attempted a similar project with the individual trust accounts said the effort was fruitless due to missing documentation. The Government Accountability Office (GAO) has since told Congress tat a full accounting of the Indian trust is "impossible."

Court Decision:
Osage Nation v. US (September 21, 2006)

Earlier Decision:
Osage Nation v. US (July 28, 2003)

Related Documents:
S.1857 | Senate Report 107-138 | Senate Testimony | House Debate

Relevant Links:
Osage Nation - http://www.osagetribe.com

Related Stories:
Tribal trust claims face challenge from Bush (10/31)
Osage Nation wins major trust fund ruling (09/25)
Osage Nation trust suit survives first test (07/31)
Judge upholds ongoing trust relationship (04/29)
Bush strategy assumes no trust mismanagement (11/05)
Andersen reports cited in tribal trust cases (08/12)
Norton handed worst nightmare (7/25)
Trust accounting looms for tribes (3/20)
Bush administration bets on accounting (3/18)
GAO: Full reconciliation impossible (2/8)

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