by Edward T. Pound
U.S. News & World Report
In a blistering report, the Interior Department’s top investigator says
that senior officials who manage $3.2 billion in Indian trust funds
pressured subordinates to award lucrative contracts to executives with
whom the officials enjoyed close social ties.
According to the report, officials in the Office of the Special Trustee
for American Indians (OST), based in Albuquerque, New Mexico, often
partied with executives of an Albuquerque accounting firm, Chavarria,
Dunne & Lamey LLC. The officials and executives played golf together and
exchanged gifts of meals and drinks over an eight-year period. During
this time, the report says, the Chavarria firm won $6.6 million in sole
source contracts.
Inspector General Earl Devaney, in a letter transmitting the report to
top Interior Department officials, says that his investigators found
that “contract personnel felt pressured by these senior OST officials”
to award contracts to the accounting firm. The report, obtained by /U.S.
News /under the Freedom of Information Act, singled out for sharp
criticism Donna Erwin, the number two official in OST, and three other
top officials.
“In summary, the report presents information that establishes that the
conduct of four OST officials … .created an appearance of preferential
treatment” for the Chavarria firm, Devaney says. Their actions, he went
on to say, violate ethics rules and an internal OST memo that directs
personnel to maintain “arms length dealings” with contractors.
In a statement issued to /U.S. News/, Erwin acknowledged that the
socializing “may have given the appearance of preferential treatment,”
but adds, “I believe that no preferential treatment was given to this or
any other contractor.”
Her boss, Ross Swimmer, the special trustee, does not appear likely to
take strong action against her or other senior OST officials named in
the report, including Douglas and Jeff Lords, who are brothers. Swimmer,
in a statement, says he has addressed “this issue with the affected
employees,” and ordered them to undergo additional “ethics training.”
The report cites four other OST employees who socialized with contractors.
Gregory Chavarria, a principal in the accounting firm, did not return
calls left on his office telephone.
Federal prosecutors in New Mexico reviewed the report, and declined to
prosecute.
According to the report, OST issued a $150,000 sole source contract to
the Chavarria firm in October 1998 to perform trust fund accounting and
consulting work. The special trustee’s office modified the contract over
50 times, “increasing the value of the award to over $6.6 million, all
without competition,” the report says.
It says that Erwin and the Lords brothers did not award the contracts,
but it adds, pointedly: “Interviews with the officials who were
responsible for awarding the contracts revealed that they felt pressured
by Erwin, Doug Lords, and Jeff Lords to award work” to the Chavarria firm.
A former procurement analyst told investigators, according to the
report, that “incredible amounts of pressure came from OST management
… Erwin in particular.” Additionally, the report says, a contracting
officer told investigators that he felt OST was “in bed with” the firm.
Investigators said that between October 1998, when the initial contract
was awarded, and February 2005, Erwin and the Lords brothers “socialized
on numerous occasions” with the Chavarria executives and other
contractors. Their report explains, “This included golfing at exclusive
resorts together … dining at upscale restaurants together,
entertaining one another at their personal residences, and attending
happy hours together on a regular basis.”
It says that in September 2002, OST issued a memo directing personnel to
maintain arms length relationships with contractors. However, it went
on, “the socializing did not cease after the guidance was in place.” OST
officials and Chavarria executives particulary loved to play golf,
sometimes at exclusive resorts, the report says. “These golf outings
occurred during both official travel related to contract work and during
non-duty hours,” the report explains. “The golfing took place at
exclusive resorts, private golf clubs, a local country club, and public
golf courses spanning seven states … ”
The Lords brothers and Chavarria executives, it says, even went to the
Phoenix Open one year. The Lords maintained that they paid their own
expenses on trips with the firm’s executives, although Douglas Lords
acknoweldged that “they did share travel expenses, such as gas, snacks,
and beverages.”
According to the Interior Department, OST was created in 1994 to
“improve the accountability and management of Indian funds held in
trust” by the federal government. The special trustee’s office manages
some 1,400 accounts for 315 tribal entities and more than 280,000
Individual Indian Monies accounts.
Native Americans have not been happy with Interior’s handling of its
funds. In a contentious federal lawsuit filed 10 years ago in
Washington, they argue that the department has mismanaged their funds
for a century, and they are demanding billions more.
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