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Bush reform plans debated in trust fund trial
FRIDAY, MAY 2, 2003

A former Department of Interior official gave the Bush administration's trust reform plans a "flunking grade" on Thursday and said they would not fulfill the federal government's obligations to Indian beneficiaries.

Paul Homan, who served as special trustee during the Clinton administration, testified on the opening day of the next phase of the long-running trust fund case. He repeatedly criticized two proposals Secretary of Interior unveiled earlier this year to considerable opposition in Indian Country.

In one, the government estimates that it can account for the Individual Indian Money (IIM) trust through a statistical sampling and a transaction-by-transaction analysis. The effort is expected to cost $335 million and take five years.

But Homan said the plan will not account for "all funds" in the trust, as required by federal law and common law trust standards. An expert hired by the government was only able to verify 90 percent of transactions in a limited sample, he noted.

"When the commercial standard is 100 percent," he testified, "it is a flunking grade."

Homan also said another government initiative that reorganizes the Bureau of Indian Affairs (BIA) and the Office of Special Trustee (OST) was inadequate because it fails to address systemic management problems. Tribes are also opposing the changes, which are being implemented over the coming months.

"The department does not have enough critical mass to manage this properly," he told the court.

A banking executive with more than 30 years of government and private experience, Homan is considered by the plaintiffs to be a key witness. Lead plaintiff Elouise Cobell, a member of the Blackfeet Nation of Montana, attended the proceedings and felt confident with his testimony.

The Department of Justice sought to disqualify him as an expert but U.S. District Judge Royce Lamberth, who has presided over the case since 1996, rejected the request yesterday morning.

Homan's time on the stand, which is expected to stretch into early next week, followed opening arguments in the trial. Dennis Gingold, an attorney for the Indian beneficiaries, said Lamberth has shown "extraordinary restraint" over the years.

"It's time for that restraint to end," he told Lamberth, urging him to set a trial date to determine accurate balances for more than 500,000 IIM accounts that have been created since 1887. He said the plaintiffs will be ready as early as July to start the correction phase, the final phase, of the case.

John Stemplewicz, a Department of Justice attorney, presented the government's arguments. He criticized the plaintiffs' proposals as overly vague and impossible to implement, saying they go outside the bounds of current law.

"We believe that adopting it would be wrong," he said of the plaintiffs' accounting plan.

He also said changes in the plaintiffs' reform plan would be better addressed by Congress. "Plaintiffs are proposing a quick fix to a very complex problem," he argued.

Homan was the first person to hold the title of Special Trustee for American Indians, a post created by Congress in the wake of reports and investigations that documented widespread trust management failures at the Interior. But he faced opposition from then-Secretary Bruce Babbitt, who provided limited funding and did not give him any authority to make change.

Some tribal leaders didn't warm up to Homan because he proposed radical changes in the trust. They also said he created a strategic plan without their input. Babbitt ended up modifying the plan on the guises that he was doing it on behalf of tribes.

Homan ended up resigning in January 1999 because Babbitt, on the eve of the Clinton administration's contempt trial, reorganized OST.

After Homan, the plaintiffs plan to call Dick Fitzgerald, an OST official, Treasury employees, several experts and other witnesses.

The government plans to call Deputy Secretary Jim Cason and Special Trustee Ross Swimmer in addition to several expert witnesses.

The trial resumes today at 2 p.m.

Relevant Documents:
DOI: Historical Accounting Plan | DOI: Fiduciary Obligations Compliance Plan | Plaintiffs: Remedial Plan | Plaintiffs: Reform Order

Relevant Links:
Indian Trust: Cobell v. Norton - http://www.indiantrust.com
Cobell v. Norton, Department of Justice - http://www.usdoj.gov/civil/cases/cobell/index.htm
Indian Trust, Department of Interior - http://www.doi.gov/indiantrust