Flooding along the Missouri River from May through August 2011 caused major damage in Nebraska. Shown here is a flooded area of South Sioux City, not far from the Omaha Reservation in the northeast part of the state. Photo: Jeannie Mooney / Federal Emergency Management Agency

Omaha Tribe fires back after being accused of mismanaging federal disaster funds

Omaha Tribe appeals loss of federal emergency funds

Tribe was hit hard by Missouri River flooding
By Kevin Abourezk

The Omaha Tribe is firing back at federal officials who slammed the tribe for failing to properly spend Federal Emergency Management Agency funds following disastrous flooding along the Missouri River in 2011.

Floodwaters destroyed 11 tribal-owned homes and severely damaged the tribe’s casino, irrigation systems and fuel plaza.

In a statement directed to The Omaha World-Herald on Thursday, the tribe’s acting attorney general, Paul Hofmann, criticized the newspaper for not giving the tribe enough time to respond to a report written by the Department of Homeland Security’s Office of Inspector General and published November 30.

“The formal appeal process has not concluded,” Hofmann wrote in the statement. “As I am sure you are aware, many grantees receiving FEMA assistance since Hurricane Katrina are identified as ‘High Risk’ grantees.”

In its report, the OIG said the tribe’s accounting system and supporting documentation were so unreliable and in such disarray that it could only verify $3 million of the $16.9 million awarded to the tribe for flood recovery.

“The problems we found at the Omaha Tribe were serious and pervasive,” the OIG said. “Therefore, FEMA Region VII should not provide any additional funds to the Omaha Tribe until FEMA can confirm that the tribe actually performed the FEMA-authorized work at a reasonable price.”

FEMA agreed with the recommendation and told the tribe last summer that it will no longer receive federal disaster funds pending additional review.

The OIG criticized the tribe for contracting with itself to generate artificial profits, which the tribe then used to cover its 10 percent cost-share of the grants, or $1.65 million.

“This arrangement violated federal regulations, the FEMA-tribe agreement, FEMA policy and prudent grant management business practices,” the OIG wrote.

The tribe also spent $169,000 on repairs to its old casino, costs not allowed under federal guidelines following the tribe's decision to build a new casino, the OIG wrote.

The agency criticized the tribe’s emergency management director, who it said defended the tribe’s practices by claiming that tribal sovereignty allowed the tribe to manage its grant through tribal law.

“The principle of tribal sovereignty does not allow Native American tribes to poorly manage their finances, profit from federal grants, pay themselves bonuses, or disregard federal regulations,” the OIG wrote.

Federal regulation does not allow profit to grantees.

The Omaha Tribe's fuel plaza on its reservation in Nebraska was underwater in the summer of 2011 due to flooding along the Missouri River. Photo: Omaha Tribe

In addition, the tribe paid its general contractor a $312,282 bonus for not spending all of the funds FEMA provided to build the new casino, according to the OIG.

“Of course, a payment to its wholly owned contractor is essentially a payment to itself,” the OIG wrote. “This bonus violates both the basic tenets of contracting and practical business sense; it was simply a method used to seize FEMA’s remaining funding.”

Hofmann criticized the OIG for its “thinly veiled racist comments” and defended the tribe’s practice of awarding contracts to tribally owned businesses.

“The process of awarding contracts to tribally owned businesses and departments is part of the tribe’s Procurement Policy, which FEMA approved,” he wrote.

He said the tribe never used FEMA funds to pay for repairs to its old casino and that the $312,282 payment to its casino contractor was not a bonus but a final payment.

“These comments are especially disturbing given the fact that the tribe complied with all federal regulations with respect to the disaster grant,” Hofmann wrote.

He said the OIG routinely recommends that federal agencies cut off funding to state and local governments for failing to properly spend millions and billions of dollars in federal funds. Hofmann criticized the Omaha World-Herald for failing to report other cases of alleged federal funding mismanagement.

“In any event, there seems to be a lack of meaningful reporting concerning disallowed reimbursement expenses for state and local governments, including the State of Nebraska, and a disproportionate focus on the Omaha Tribe by your newspaper,” he wrote.

He said he was hopeful the tribe would reach a favorable resolution regarding its appeal of FEMA’s decision to cut off the tribe from future funding.

Office of Inspector General Report:
The Omaha Tribe of Nebraska and Iowa Mismanaged $14 Million in FEMA Disaster Grants DR-1998-IA and DR-4013-NE (November 30, 2017)

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