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Johnson seeks investigation into OST expansion
Friday, May 7, 2004

Sen. Tim Johnson (D-South Dakota) is asking for a far-reaching investigation into the Office of Special Trustee, citing concerns over the expansion of an agency originally designed to oversee, but not implement, trust reform.

In a letter to the General Accounting Office, the investigative arm of Congress, Johnson said he wanted a probe into "the entire management and administrative system" of OST, including the agency's spending practices. "I am concerned about OST's financial transactions, its regulatory compliance, its internal controls and the accuracy of OST's program allocation financial reporting," he wrote on Monday.

Johnson, a member of the Senate Indian Affairs Committee, said that OST has not addressed numerous deficiencies concerning the management of billions of dollars of Indian trust funds. Several reports, including those from the GAO and independent accounting firms, show discrepancies in the amounts owed to tribal and individual Indian beneficiaries. One audit shows that OST is holding back at least $121 million, up from $62 million previously reported, from individual Indians.

The letter challenges OST's unparalleled expansion under the Bush administration. During the past two years, the agency's budget has increased by 54 percent and 44 percent even as funds for reservation-level programs at the Bureau of Indian Affairs are being cut.

Johnson said he wants justification for the increases. In fiscal year 2005, OST would see a $322 million budget with nearly 680 full-time employees.

The appropriations are of particular concern for Johnson, who sits on the Senate Appropriations Committee. According to Johnson, OST continues to ask for more money despite having millions in "carryover" funds. His letter cited carryovers of $48 million, $25 million and $6 million in the past three years.

"There are too many year end, questionable financial obligations with cancellations in the next fiscal year that gives rise to suspicious activity of impropriety," he wrote.

Johnson also questioned whether senior OST managers are entitled to "hundreds of thousands of dollars in cash awards and retention bonuses for questionable performance in addition to their salary." He said Donna Erwin, the second-in-command at OST, has received $150,000 in cash awards and bonuses over the years.

Tex Hall, president of the National Congress of American Indians, said tribes support an investigation into OST. "I think there's been a lot of concern in Indian Country about a number of issues with OST and one is the budgeting," he said yesterday. "We need to know where the monies are coming from to fund their positions."

"We feel they've been taken from BIA budgets," he added. "We never get a clear answer on that."

Hall was aware that cash bonuses are being given to OST employees and said that tribes raised the issue in recent meetings with Special Trustee Ross Swimmer. But he was shocked to learn that the bonuses might run in the hundreds of thousands.

"I can't imagine that," he said. "All the people that can't get an accounting for their Individual Indian Money account check, and all the proposed cuts in education, Indian child welfare ... and in social services, all these cuts for the poorest of the poor but then to get cash awards and bonuses in excess of that -- that to me is clearly a waste of money."

Congress created OST in 1994 to provide oversight of the BIA's trust management duties. The agency stumbled in its first few years of existence under the Clinton administration -- former Interior Secretary Bruce Babbitt initially refused to fund the office and the first Special Trustee resigned in a dispute with Babbitt.

But under the Bush administration, the agency has seen unprecedented growth and has slowly taken over programs formerly managed by BIA, including cash management, appraisals, probate and accounting. Tribal leaders and some member of Congress say this expansion violates the intent of Congress in creating the office.

OST continues to expand its reach into Indian Country in what top officials once described as a "grow, not shrink" mission. The agency is hiring dozens of trust officers to serve at BIA agencies. Tribal leaders in South Dakota and other Great Plains states -- home to the second-largest number of IIM accounts and the second-largest land base -- passed a resolution recently saying they would refuse to allow a trust officer onto their reservations.

Get the Letter:
Johnson Request for OST Investigation (May 3, 2004)

Relevant Links:
Office of Special Trustee -

Related Stories:
Tribal leaders hope to counteract Bush budget cuts (04/13)
Swimmer to retain control of Indian appraisals (04/06)
Tribal leaders denounce BIA budget plans as reckless (03/24)
Bush budget slashes Indian education by $79M (03/23)
Senate panel hears conflicting views of reorganization (03/11)
Anderson praises Cobell suit in NCAI speech (2/25)
Senate panel shares criticism of Bush budget (02/12)
BIA budget staying the same under Bush request (2/3)
Funding levels flat in new Interior budget (02/03)

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