Indianz.com
The Department of Interior is sitting on top of $67 million in trust funds
for Indian beneficiaries who cannot be properly identified, according to a
recently released independent audit.
Based on data for fiscal year 2001, which ended last September, the amount
of money held in the “special deposit” accounts is growing, reported KPMG.
The firm, a certified public accountant, was hired to review the
department’s financial statements.
KPMG, whose talks with Arthur Andersen to purchase the embattled firm’s
foreign unit have fallen apart, was not required to express an opinion on
the Interior’s fiscal well being. Based on the company’s report of the funds
held in trust for 300,000 Indians and more than 315 tribes, it is
practically impossible to do so.
For instance, KPMG’s audit disclosed the following:
“Interior is unable to reconcile the Indian Trust Fund cash balances that
are disclosed in the footnotes to Interior’s financial statements with the
cash balances reported by the U.S. Department of the Treasury,” KPMG wrote
on February 25.
According to KPMG, Interior reports $33 million more in the Indian trust
system than the Treasury. Further, $12.6 million in trust accounts remains
unreconciled, the firm found.
“Interior is unable to provide accounting records to properly support the
Indian Trust Fund balances,” reported KPMG.
The firm found a negative balance of $44 million in the Individual Indian
Money (IIM) trust.
“A significant number of special deposit accounts have remained inactive for
the past several years and new accounts continue to be established,” KPMG
wrote.
The Office of Trust Funds Management (OTFM), an entity within the Office of
the Special Trustee, is charged with identifying the proper owners of the
funds.
The problems reported are nothing new to the management of the Indian trust.
The Bush administration’s response to KPMG’s recommendation to implement
better financial and other controls was to say it was working to correct
known deficiencies.
“A variety of actions are underway within the Office of the Special Trustee
to address management control deficiencies in coordination with direction
from senior policy officials of Interior and the December 1999, court
decision,” the department said.
But the special deposit accounts, which typically represent high dollar
transactions, many in excess of $1 million, highlight an issue which has
baffled just about everyone involved. “That’s one of the areas of disclosure
that’s been lacking,” said Dennis Gingold, an attorney representing the IIM
beneficiaries in the Cobell class action.
“There could be a few special deposit accounts that could be [erased] and
nobody would know,” he said.
The accounts are supposed to be temporary place holders for lease, royalty
or other payments owed to Indian beneficiaries. As part of its trust
responsibility, the Interior is supposed to transfer the money to the
rightful owner or owners.
By the department’s admission, it has failed miserably, although a pilot
project is being started to address the problem. “Numerous findings have
cited the significant misuse of special deposit accounts for purposes other
than those established,” OTFM officials said in a recent court report.
The special deposit issue is separate from the status of inactive accounts.
The department is moving to close as many at 18,000 low balance accounts
based on a pending opinion from Solicitor Bill Myers.
Additionally, the department has to resolve the number of accounts lacking
current addresses. There were more than 62,000 “whereabouts unknown”
accounts as of December 31, 2001.
KPMG’s audit was included a package prepared for Secretary Gale Norton by
the Office of the Inspector General.
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