Indian Fund Settlement Seen Biggest Since S&L; Bailout
Barron's
By: Jim
McTague
October 16, 2000
Congress has urged the Interior Department to settle a multibillion-dollar class-action suit brought by Blackfeet Indian Tribe member Elouise Cobell in 1996 for damages arising from the government's mismanagement of the Indian trust fund. Lawyers for Cobell estimate that some 500,000 Indians, most of whom live in Oklahoma and Montana, are owed anywhere from $20 billion to $40 billion. That would be the most the federal government has to pay on a claim since the $160 billion bailout of the savings and loan industry. Indians living in reservations are supposed to be paid by the government for oil, timber, and minerals taken from their lands by private companies.
Cobell, who began questioning the government's handling of the trust fund program in the 1970s, alleged in her suit that the government short-changed the Indians through gross mismanagement of the accounts. Figuring out just how much the Indians are owed is a significant problem, because 90% of the government's records are missing. The government destroyed many of the records while the lawsuit was in progress. An outraged judge held former Treasury Secretary Robert Rubin and Interior Department Secretary Bruce Babbitt in contempt of court as a result of the incident, which the government claims was an accident.
Last December, the Indians got a favorable ruling when U.S. District Court Judge Royce Lamberth ordered the government to reform the trust system with court oversight. The government filed an appeal, which is still pending. Congress last week appropriated $27 million to Interior to help reconstruct the missing records. Congress said the government has been wasting millions of dollars on the lawsuit and that it ought to stop now.
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