FROM THE ARCHIVE

Judge rejects Norton's 'absurd' accounting clai

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MONDAY, SEPTEMBER 23, 2002

A federal judge last week said it was "absurd" for Secretary of Interior Gale Norton to claim she has fulfilled her trust responsibilities to four of the five named plaintiffs in the Indian trust fund lawsuit.

In a lengthy ruling, U.S. District Judge Royce Lamberth found Norton and Indian affairs aide Neal McCaleb in contempt of court. He blasted the pair as "unfit" to manage the funds of more than 500,000 American Indians whose trust assets have been in disarray for more than a century.

With regard to the plaintiffs in the landmark Cobell class action, he was more specific. Lamberth rejected testimony proffered by Norton herself that a $20 million report by accounting firm Ernst & Young (E&Y) satisfied her duties to the the Individual Indian Money (IIM) account holders.

"The court finds that while the work performed on these accounts may assist the agency in performing an accounting for those individuals, it was not done as part of a general effort to provide the IIM trust beneficiaries with an accounting and there is no indication that the work can be or will be used towards that end," he wrote on September 17.

"It is absurd for the Secretary to now argue that the work performed by Ernst & Young brings her into compliance with" her trust responsibilities, he continued.

While only contained in a footnote in the ruling, Lamberth's finding shatters a key government argument about the controversial project and the historical accounting owed to Indian beneficiaries in general. During the contempt trial, Norton said half a million government documents were successfully matched to "canceled checks" of the plaintiffs.

"The account balances reconciled," she testified on February 13.

Norton and other Bush officials also have told members of Congress that the costly project sheds light on the process. In testimony to the House Interior Appropriations subcommittee in March, Deputy Secretary J. Steven Griles said he wanted to share the information with lawmakers.

The panel -- acting independently, according to Department of Interior officials but with the full support of the White House -- later approved a bill whose language thwarted the court-ordered accounting. Reps. Joe Skeen (R-N.M.), who is retiring, and Norm Dicks (D-Wash.) limited the undertaking to the years 1985 to 2000 -- even though the IIM trust was created in 1887.

Thanks to intense lobbying by the Indian plaintiffs and tribal allies, the measure never cleared the House. A resounding 281 to 144 vote killed the provision although others related to the Cobell lawsuit remain.

Included is one directing the Interior to provide more details about the report. Norton, however, has been ordered -- in rather harsh words -- not to hand over the document.

"Secretary Norton has demonstrated once again her total inability to understand the role of a trustee in relation to a beneficiary by seeking to release to Congress -- knowing it will be made public -- the confidential financial information of these beneficiaries," Lamberth wrote on February 5.

The report, completed more than a year ago, is currently under seal at the government's insistence because it contains private information about the Cobell plaintiffs. It purports to be a reconciliation owed to the plaintiffs and their predecessors -- about 35 account holders total. The Bureau of Affairs spent $20 million to collect the relevant documents and E&Y was paid $1 million to examine them.

Based on court documents, Norton's testimony and other information that surfaced during the contempt trial, the report can hardly be considered accurate. Norton acknowledged that it was based on data contained in two outdated computer systems.

E&Y, who was hired to fight the Cobell plaintiffs, never signed off on the report either. A contract between the firm and the Department of Justice stipulated a number of limitations to the project.

The effort is comparable to another failed reconciliation project the Interior undertook in the 1990s. Arthur Andersen, which has been convicted of obstruction of justice for shredding documents, looked at billions of dollars in tribal -- not individual -- funds and determined there was at least $2.4 billion in unreconciled cash.

Nevertheless, the General Accounting Office (GAO) has pointed out repeatedly that Andersen's reports to tribes are inaccurate and incomplete. Yet Bush lawyers, in tribal trust cases before Lamberth, now argue that they constitute an accounting.

According to court documents, Ernst & Young created "virtual ledgers" for the IIM plaintiffs. They include: Elouise Cobell, a member of the Blackfeet Nation of Montana; Mildred Cleghorn, the late former chairwoman of the Fort Sill Apache Tribe of Oklahoma; Louis LaRose, a member of the Winnebago Tribe of Nebraska; and Earl Old Person, the longtime Blackfeet tribal chairman.

The BIA, which has lost, destroyed or otherwise mishandled trust documents, claimed it could not find records between the year 1915 and 1999 for plaintiff Thomas Maulson, a member and longtime leader of the Lac du Flambeau Band of Lake Superior Ojibwe of Wisconsin.

With regard to an historical accounting for the entire IIM class, the Interior in July released a plan to spend at least $2.4 billion over 10 years to fulfill its duties. The report has been criticized by the plaintiffs and members of Congress as unacceptable.

"There are a lot of Indian people out there who are going to die before they get that money," said Sen. Ben Nighthorse Campbell (R-Colo.), ranking member of the Senate Indian Affairs Committee, at a hearing in July.

Relevant Documents:
Contempt Decision (9/17) | Order Against Norton on E&Y (2/5) | Republicans React to Judge's Order (2/5) | Rahall Letter Opposing Request for Report (2/4) | Hansen Letter Asking for Report (1/15)

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
Trust Reform, NCAI - http://www.ncai.org/main/pages/
issues/other_issues/trust_reform.asp

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House bill cuts trust fund accounting (6/28)
Bush administration bets on accounting (3/18)
Norton says accounting complete for plaintiffs (2/14)
Judge rejects 'improper' request by Norton (2/6)
Norton criticized on private trust report (2/5)
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