Babbitt Misled Judge About New System For Indian Trust Funds, Report Alleges
The Wall Street Journal
By: John J. Fialka
Staff Reporter of The Wall Street Journal
August 10, 2001
WASHINGTON — Former Interior Secretary Bruce Babbitt and officials who worked under him misled a federal judge when they testified in 1999 that a new computer system would solve the agency’s longstanding problems managing billions of dollars in trust funds for American Indians, a special court monitor said.
The often-blistering, 130-page report asserts that Mr. Babbitt and other department witnesses gave U.S. District Judge Royce Lamberth information that was “at best misleading and at worst false” about the new computer system, called the Trust Assets and Accounting Management System, or Taams. Despite two years of repair efforts, the $40 million system has so many problems that “it may not be salvageable,” wrote special monitor Joseph S. Kieffer III, an investigator chosen by Judge Lamberth to examine the Interior Department’s reform efforts.
The long-festering case, brought by Indians demanding that the federal government give a full accounting of activity in the trust accounts, has already resulted in one contempt-of-court citation against Mr. Babbitt in February 1999 for repeatedly failing to provide records in the case. At that time, Mr. Babbitt was represented by Justice Department lawyers, and the financial penalties involved were paid by the Interior Department. If he’s held in contempt again, the legal expenses and any resulting penalties may have to come out of his own pocket.
Dennis Gingold, a lawyer representing the Indians, said he will request another citation against Mr. Babbitt next week.
The report said unnamed “senior managers” knew the system had repeatedly failed tests and faced long delays before department officials praised the system to Judge Lamberth in December 1999. The officials, it said, made “every effort … to show progress and positive events and suppress negative results.”
Mr. Babbitt, who told the judge that Taams “was really right on,” now practices law for Latham & Watkins in Washington. A secretary said he was traveling and not immediately available for comment. Kevin Gover, the former head of the Bureau of Indian Affairs who had touted Taams, was also traveling outside the country and was unavailable, according to his law firm, Steptoe & Johnson.
David Orr, senior vice president for Applied Terravision Systems Inc., a Dallas-based company that developed Taams, said the system experienced repeated difficulties handling trust-fund records, but asserted they were slowly being fixed. “In Mr. Babbitt’s administration they wanted a quick fix to try and get the pressure off. That wasn’t a very good idea,” he said.
Nedra Darling, a spokesman for the Bureau of Indian Affairs, which manages the trust accounts, said the Bush administration is currently “streamlining the trust-reform process” and its management structure. The trust funds are used to track and store income from land sales, grazing rights, rents and other Indian activities. They are part of a banking system set up by Congress in the 19th century to handle banking needs on Indian reservations. They now process some $500 million a year in transactions. Since the mid-1990s, Congress has spent $614 million to reform the system, plagued by decades of sloppy accounting and missing records.
The stakes could be substantial. In an earlier trial, Judge Lamberth found that the U.S. government had breached its duty of trust toward the Indian accounts. A second trial, planned for next year, will attempt to measure how much money Indians have lost from the mishandled accounts. The Interior Department has asserted that provable losses are minimal. Mr. Gingold, the lawyer, argues they could run as high as $10 billion.
Problems with the computer system and the apparent overstatements made about it to the judge emerged in February, shortly after Mr. Babbitt and the Clinton administration left office.
|