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WEDNESDAY, AUGUST 15, 2001

The Department of Treasury recommended and took action against a group of government attorneys who were aware of -- and attempted to cover up -- the destruction of 162 boxes of records related to the trust accounts of American Indians, according to an internal report unsealed on Tuesday.

But while the government tried to keep details of the "deeply embarrassing incident" away from the public eye, there was little the Treasury, and the lawyers, could have been ashamed about. According to the report and accompanying documents, the most severe forms of punishment doled out to the group of six lawyers were counseling and management training sessions.

Two lawyers didn't face discipline at all. They had left the department by the time deputy general counsel Joan B. Donoghue last October informed them of the corrective action -- a reprimand for Daniel Mazella, now in private practice, and a letter to Ingrid Falanga's new boss at the Department of Commerce -- they would have received.

The other four are still employed at the department, which a federal judge and a court-appointed investigator have criticized for not taking the Cobell v. Norton trust fund lawsuit seriously for two years despite being a named defendant. None of the attorneys -- Eleni Constantine, James Regan, Roberta McInerney and Randall Lewis -- had opposed making the report public.

According to court documents and the internal report, the attorneys became aware of the records destruction as early as January 1999. It took place at a Department of Treasury facility in Maryland.

Yet even as then-Treasury Secretary Robert Rubin was under court order to produce documents related to the case, the lawyers waited until May 1999 to inform the court of the destroyed records. By February, however, Rubin and other top officials of the Clinton administration were slapped with contempt fines by US District Judge Royce Lamberth for failing to comply with his order.

Yesterday, more than two years after the incident occurred, Lamberth rejected the Treasury Department's attempt to keep its internal "Cobell Panel" report and disciplinary letters secret. Ruling that public interest in the case "cannot be overstated," he made the 110 pages part of the public record.

"The underlying litigation has not only brought to light the federal government's continued breach of its substantial trust responsibilities toward Native Americans, but, in a historic proceeding, the contumacious conduct of two former Cabinet members," he wrote.

The document destruction was one of the low points in the earlier stages of the trust fund case, which represents an estimated 300,000 American Indians throughout the country. It was the subject of numerous press accounts and a scathing December 1999 court report by special master Alan Balaran.

When he filed the report calling the government's handling of the incident "out of control," Balaran recommended holding off on potential punishment for the Treasury Department until officials could complete an internal investigation to ensure the document destruction "will never be repeated." Lamberth might now consider holding past members of the Clinton administration in contempt or fine them.

According to the unsealed documents, the department has taken a number of steps to reform the culture of certain attorney groups which "impeded free communication" not only internally but with other federal agencies. Sessions on mentoring, professional conduct and records management have been held for attorneys at the department, according to the documents

The Department of Treasury did not immediately return a request for comment.

In addition to the Cobell plaintiffs, Dow Jones & Company, the publishers of The Wall Street Journal, had sought to make the Treasury report public. Steven Goldstein, vice president of corporate communications for Dow Jones, yesterday praised the release of the documents.

"Dow Jones is gratified that the court reaffirmed our position that the public's right to know is beyond question," he said.

Get Related Documents:
Cobell Panet Report | Disciplinary Letters | Court Opinion and Order | Special Master Report and Recommendations (1999)

Relevant Links:
The Department of Treasury - http://www.ustreas.gov
Indian Trust: Cobell v. Norton - http://www.indiantrust.com

Related Treasury Stories:
Bush administration won't challenge trust fund ruling (5/31)
Fed instructed to preserve documents (4/20)
Court investigator faults Federal Reserve (4/19)
More trust documents reported destroyed (3/16)
Landmark trust fund decision upheld (2/26)
Records a continued source of problems in lawsuit (01/18)