Modern Indian war: Bad faith begets a bad deal
Tuesday and today, columnist Vince Emmer, a financial consultant, takes a look at the accounting mess and long-running legal battle over the Individual Indian Trust Fund. Read Part One here.
“We knew about the problem, of course, but it was so enormous,” John Echohawk, soft-spoken Boulder attorney and founder of the Native American Rights Fund recalled. “No one ever got serious about pursuing it.”
More than a century before, the U.S. had taken control of Indian property as trustee. Much later, the Bureau of Indian Affairs boss, Secretary of Interior Bruce Babbit, would testify that he knew of dozens of government reports critical of the BIA’s handling of the trust fund.
Even superstar athlete Jim Thorpe was denied his own Individual Indian Trust Fund money to travel to Stockholm to compete in the 1912 Olympics.
By the 1960s Indians were questioning how their small and variable trust fund checks were calculated.
Blackfeet Indian Eloise Cobell grew up then. She said, “My elders were beat if they asked why. My generation was not. So I asked why. I’m still asking why.”
Finally, in 1996, after the Indians had lost 65 percent of their land under BIA trusteeship, and after another failed congressional attempt to reform the agency, Cobell filed a class-action lawsuit against the U.S.
The Indians wanted a clean set of balanced trust fund books. Cobell’s Indian team initially estimated damages at $176 billion, though many records were missing.
The federal government is not an ordinary legal foe.
First, it runs the BIA. Native Americans joke that the initials stand for “Bossing Indians Around.” Imagine Cinderella suing her stepmother while still living at home.
Second, the judicial system is not impervious to the fleshy hand of political pressure.
Third, the U.S. government controls more money than any other entity on Earth. That matters because legal outcomes are often influenced by budget more than justice.
In 1996, Judge Lamberth ordered the BIA to produce all the records it possessed pertaining to the plaintiffs’ trust balances. It certified that it had done so. Then two years later the government destroyed 162 boxes of previously unreported trust fund records.
During the case, Secretary of the Interior Bruce Babbit testified that the Indians were not told their balances were unreliable “to reduce the risk of lawsuit.”
Judge Lamberth ordered the trust fund accounting system reformed. Yet the BIA never requested money to do so.
In 1999 the judge wrote: “Such behavior certainly would not be tolerated from private sector trustees. It is fiscal and governmental irresponsibility in its purest form.”
When trust fund checks to Indians were interrupted, complaining Indians were told by the BIA that Eloise Cobell was to blame. It published her phone number. Cobell said that plan backfired. She spoke to every Indian who called her and explained what she was trying to do for them.
After finding that hackers could easily access the Indian trust fund accounts, and after unsuccessful requests to fix the problem, Lamberth ordered the BIA off the internet until it plugged the hole. The BIA had no email for years.
In a classic bureaucratic tactic, the Department of the Interior shut down National Park websites, hoping to draw public anger against the court.
In 2006, the government had Judge Lamberth removed from the case. Momentum then swung in BIA’s favor.
The government’s war of financial attrition against the Indians pounded on. The new judge rejected the Indians’ request to statistically estimate the trust fund’s finances.
When U.S. Attorney General Alberto Gonzales went before Congress asking for more money to fight the Indians, he highballed the potential liability at $200 billion. Other than that, the number tumbled from the original $176 billion claim to $40 billion, then $10 billion, $7 billion and finally $3.4 billion, of which only $1.4 billion would go to individual Indians.
In announcing the government’s victorious settlement of this long and bitter legal battle in 2009, U.S. Attorney General Eric Holder said, “With this settlement, we are erasing past liabilities.”
It is clear as a cloudless night, “erasing past liabilities” is not the same as making things right. A clean accounting is still nowhere in sight.
In 2011, Eloise Cobell, self-made banker, intrepid truth seeker, past president of Montana’s Elvis Presley Fan Club and officially recognized Blackfeet warrior, died of cancer.
Back in 1868, Colorado’s Chief Ouray, whose people lived where our homes stand in the Roaring Fork, Colorado and Eagle river valleys, said “the agreement an Indian makes to the United States is like the agreement that a buffalo makes with his hunter when pierced with arrows. All he can do is lie down and give in.”
Why? Why did the U.S. government fight so acidly? Public opinion was not the motor. Nor was it racism. BIA leadership has long been filled by Native Americans themselves.
Budget? Probably not. Other agencies invite allied special interests to sue them to crack loose more money for their mission. The BIA itself is mum.
Public choice theory supports the idea that the most important thing to any bureaucracy is itself. It is highly persuasive that the BIA’s intransigent defense was driven by simple bureaucratic pride.
Reach Vince Emmer, a financial consultant in Gypsum, at email@example.com.
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