Fraud! The Bureau of Indian Affairs: Re-visiting an on-going story that needs to be dealt with and exposed

By Jennifer Hicks

Okay, let’s face it. We’ve got a problem. And something must be done. The Bureau of Indian Affairs (BIA), a part of the Department of the Interior, has stolen billions of dollars from various Indian tribes. This is not an exaggeration. Nor is it an untruth, as you will see. The federal government has done nothing about this. Rather, they have ignored it, implicitly stating that it’s okay to steal from America’s Natives. How then can we look at The U.S. Initiative on Race as anything other than rhetoric? The U.S. bases the race initiative on his belief that there should be “responsibility from all”. This is a noble goal, but shouldn’t it apply also to governmental agencies?

By doing nothing, the government condones theft from American Indians. Certainly, this is neither a responsible stance nor one that promotes racial equality. According their mission statement, the BIA is “to promote economic opportunity” for the people they serve — the American Indians. Such is not the case. Instead, with overt lack of respect and BIA’s Bill Benjamin’s sentiment that “it’s just Indian money… it doesn’t matter”, the BIA is indicative of the government’s own racist attitudes against Native peoples. In its 11/28/94 issue, U.S. News & World Report described the BIA as “the worst federal agency.” Little was done. Three years later, Ken Gover, Pawnee, took office as the Assistant Secretary for Indian Affairs. At his address to the 53rd Annual Convention of the National Congress of American Indians, he admitted, At times, the agency [BIA] has carried out offensive, destructive policies and has approached Indian Affairs in a paternalistic, disrespectful manner.

He went on to say, We must keep you informed about what is happening within the Bureau. If we’re not telling you what we’re doing, it’s natural for you to conclude that we’re not doing much. A press release from the Department of the Interior admitted $1.97 billion in “unreconciled transactions” emanated from the BIA. The press release defines an unreconciled transaction as “one in which source documents could not be located to verify the accuracy of an entry on the general accounting ledger.” Sounds suspiciously like theft, to me. In an attempt to appease the Natives of America from whom it stole, the BIA and DOI have offered extremely unfavorable settlement terms to the affected tribes. A recent Business Wire story reported that “57 percent of government employees say they’ve seen ethical violations.”

David L. Henry would agree — and go several steps further, further illuminating the corruption and massive fraud within the BIA. Henry, a non-Indian and CPA, began his career as an accountant working for Arthur Andersen & Co. He later worked as controller for a group of construction companies , Volkswagen, and Reader’s Digest. Clearly, he knows finances. In 1985, he joined the Bureau of Indian Affairs in Billings, Montana. Ten months later, he was fired for “insubordination” because, as he says: I found fraud in every one of the several BIA financial systems I examined, and what can only be seen as criminal neglect in BIA accounting and auditing in general. The loss to Indians from fraud, and the liability to taxpayers to replace missing money in BIA trust accounts is more than a billion dollars.

He didn’t stay quiet. Instead, he wrote a book called Stealing From Indians: Inside the Bureau of Indian Affairs: An Expose of Corruption, Massive Fraud and Justice Denied. Through extensive use of third-party evidence, analysis, and audits, Henry asserts: Information fed into the agency’s computer system is disorganized and erroneous. An estimated $5.8 billion has not been collected (since 1979) from companies that pump oil and gas from reservation lands, thus robbing Indians. In some cases, money that belonged to individual Indians and tribes was deposited in slush funds through accounts set up under phony names. There are thirty recent incidents in which federal employees were allegedly involved in theft, embezzlement and fraud on Indian reservations, yet few were prosecuted. BIA sponsored Indian programs failed to improve the economies of reservations, and BIA failed to provide quality education for Indian children. Housing programs are riddled with scandal, and housing in many areas is shockingly substandard. Indian health remains poor, with diabetes reaching epidemic proportions on some reservations.

The BIA cannot manage its own money, or account for millions in equipment and supplies. One of the primary problems according to Henry is that no federal law exists against fraud, if the fraud is committed by a federal employee under “the color of his office.” This is due in part to the doctrine of sovereign immunity. The doctrine of sovereign immunity basically says that States (and the federal government) can’t be sued unless they agree to be. According to Mike Taylor, tribal attorney for the Colville Confederated Tribes, The basic idea behind sovereign immunity is that property held by the government (including assets in the public treasury) is in trust for all the citizens of that particular government. The public treasury and public property are, therefore, to be used for the benefit of all the citizens equally–not jut a few individuals (such as the people who file lawsuits).

And, while many state supreme courts have eliminated the doctrine of sovereign immunity, the federal government has not. This means that the BIA has no liability and can not be taken to court — no matter how much money is part of “unreconciled transactions”. Henry has proposed that the doctrine be repealed. His Hobbes- Henry Act would eliminate such protection. We cannot expect government officials to abide by the law as long as a law exists to protect them when they break it. Yet his proposed bill has not yet been heard in Congress for it lacks a congressional sponsor. Indeed, Henry’s proposal goes to the heart of the Eleventh Amendment of the Constitution. The amendment basically says it’s unconstitutional for federal courts to entertain suits brought by private parties against the State (or federal government) without its consent.

Clearly, then, finding a sponsor may be a challenge. But, not an insurmountable one. Not too long ago, a little girl named Megan was abducted, kidnapped by a known abuser of children. Her parents were outraged. Their neighbors supported them. Petitions circulated. New Jersey Governor Christine Todd Whitman supported the proposed law. Eighty-nine days after Megan’s disappearance, Megan’s Law was signed into effect. Eighty-nine days have long since passed. Henry has been talking about the fraud in the BIA for a decade. It’s time to change this. No, we’re not talking about a little girl. We’re talking about many little girls and many little boys. We’re talking about many Elders. We’re talking, basically, about many people who are being told to settle for less than what is owed to them. And, it’s not just money. American Indians are owed equal treatment.

Crippling Legacy

It would be hard to find an agency with broader responsibility than BIA. It is the primary administrator of federal Indian policy, and as such, is responsible for fulfilling the government’s trust responsibilities for American Indian tribes and Alaska Natives. Hundreds of treaties, federal policies and court decisions govern how the federal government protects and administers lands held in trust for Indians legacy.

The bureau provides the same services on reservations and other lands held in trust for Indians-collectively known as Indian Country-that state and local governments provide. The agency administers schools, social services, law enforcement, court systems, detention facilities, water resources, roads and housing. It performs land management activities, including fish and wildlife management, forestry, and oil and gas exploitation and mining operations. It also processes business loans and maintains land and genealogy records.

While the bureau’s role is broad, so too are the needs of the population it serves. Of the approximately 2.4 million American Indians and Alaska Natives throughout the United States, the bureau serves about 1.2 million who are members of more than 550 federally recognized tribes, and who live on tribal lands or land held in trust for individual Indians. Some tribes have rich natural resources-the Osage Nation in Oklahoma and the Southern Ute in Colorado have large oil and gas reserves, for instance-while other tribes have land poor in resources and unfit for most agriculture, such as the Oglala Sioux on the Pine Ridge Reservation in South Dakota. Since the Indian Gaming Regulatory Act of 1988, a few tribes have even become rich. The Mashantucket Pequot Tribe in Connecticut, for example, operates the largest casino in the world, making millionaires of its 450 members.

But despite the extraordinary success of a few tribes, by virtually all measures, Indian people have the greatest needs of any group in America. A history of oppression, disastrous government paternalism and the geographic isolation on many reservations has contributed to vastly higher rates of unemployment, poverty, and alcohol and drug abuse than any other demographic group. While unemployment has hovered near 4 percent or less in recent years for the general population, unemployment on reservations, on average, has been about 49 percent. Indians also suffer far higher rates of diabetes, suicide and child mortality than the general population.

Services for Indians are administered through a network of field offices extending across the country, but located primarily in the Midwest and West. Complicating an already complex BIA mission, tribes have the option of contracting with the bureau to provide some or all services themselves.

While BIA’s primary role today Is to administer trust responsibilities and promote self-governance among Indian nations, that wasn’t always the case. When the bureau acknowledged its 175th anniversary in a ceremony at headquarters last September, then-Assistant Secretary of the Interior for Indian Affairs Kevin Gover issued an emotional apology for the bureau’s role in past abuses. “The works of this agency have at times profoundly harmed the communities it was meant to serve. From the very beginning, the Office of Indian Affairs was an instrument by which the United States enforced its ambition against the Indian nations and the Indian people who stood in its path,” Gover said.

“In these more enlightened times, it must be acknowledged that the deliberate spread of disease, the decimation of the mighty bison herds, the use of the poison alcohol to destroy mind and body and the cowardly killing of woman and children made for tragedy on a scale so ghastly that it cannot be dismissed as merely the inevitable consequence of the clash of competing ways of life. This agency and the good people in it failed in the mission to prevent devastation. “This agency forbade the speaking of Indian languages, prohibited the conduct of traditional religious activities, outlawed traditional government, and made Indian people ashamed of who they were. Worst of all, the Bureau of Indian Affairs committed these acts against the children entrusted to its boarding schools, brutalizing them emotionally, psychologically, physically and spiritually. Even in this era of self-determination, when the Bureau of Indian Affairs is at long last serving as an advocate for Indian people in an atmosphere of mutual respect, the legacy of these misdeeds haunts us.”

Nevertheless, in an interview with Government Executive before he left office in January, Gover said heading up BIA had been the most rewarding job of his career. He said he had a sense of dread about taking the job when the Clinton administration asked him. “Basically, I resolved that if you’re going to be willing to criticize, you have to be willing to take the opportunity to make a difference.” His biggest surprise in assuming leadership of the agency was in the quality of personnel he found. “I didn’t come in with a negative attitude, but I was also not prepared to be impressed. I found the people here to be extremely high quality.” He also found himself at the center of one of the largest class action lawsuits ever filed against the federal government.

Fiscal Irresponsibility

BIA’s inability to accurately manage Indian trust accounts has been building for decades. In some locations, records documenting trust assets are in almost incomprehensible disarray, many damaged through overuse or exposure to the elements and others missing altogether. In 1994, Congress passed the American Indian Trust Fund Reform Act, which established a special trustee at the Interior Department to take over trust fund management from BIA. But progress made by the special trustee’s office was insufficient. In 1996, fed up with the Interior Department’s inability to account for billions of dollars in Indian trust fund accounts, Elouise Cobell, a member of the Blackfeet Tribe, filed a class action suit on behalf of Indians seeking an accurate accounting of funds and reform of the system.

Some of the records demanded under a court order could not be provided because they were found to be covered in mouse droppings, potentially contaminated with the deadly Hantavirus. In February 2000, a federal judge held then-Interior Secretary Bruce Babbitt and Gover in contempt of court for failing to provide relevant materials to the court. U.S. District Judge Royce C. Lamberth was so disgusted by the way the Interior and Treasury departments have handled Indian trust monies-a situation he described in a December 1999 opinion as “fiscal and governmental irresponsibility in its purest form”-that he gave the court oversight of the ongoing federal efforts to reform the trust program. This February, a three-judge appeals court panel upheld Lamberth’s order that Interior officials provide continual updates on their progress, though the panel gave Interior officials credit for taking “significant steps towards the discharge of the federal government’s fiduciary obligations.”

Gover says he doesn’t blame Indians for filing suit against the government, although he contends the lawsuit has made it much more difficult to clean up trust fund management. While fixing the trust fund system is no longer BIA’s direct responsibility, the agency still has a central role to play in managing records and maintaining information about Indian lands managed in trust.

‘Untenable Situation’

To improve the management situation overall at BIA, Gover worked to implement some of the reforms advocated in the NAPA study. He substantially beefed up the managerial capacity of his office. He restored the human resources function to the agency: Previous budget cuts had forced BIA to cut personnel management to a minimum and rely on other Interior Department agencies for support. He established chief information officer and chief financial officer positions to provide oversight and guide reform at the agency.

While maintaining accurate records is critical if the bureau is to carry out its mission effectively, without substantially more funding for information resources management it’s impossible to see the situation improving. “We’re nowhere close to what we need to fulfill the mission that’s been assigned us by the Congress,” Gover says. A staff member on the Senate Indian Affairs Committee says a key problem is that BIA competes with other Interior Department agencies for funding. Environmentalists repeatedly have fought increases at BIA out of fear they would come at the expense of other Interior agencies. In addition, BIA has been perpetually unable to provide critical program data that would justify higher spending. BIA cannot provide the data without better information technology, yet Congress is unwilling to increase the agency’s budget without some indication that the agency is improving management. “I agree it’s an untenable position,” the Senate staffer says.

“Congress needs to be sensitive to the fact that if you want to have better trust records for Indians, you have to have systems upon which these trust records run. If you want to know how many Indian kids need schooling, you have to have systems to find that information,” Nessi says. “[Congress] complains on the one hand that the bureau doesn’t provide them any information, but they don’t give us any money to [develop the systems necessary to] provide it.”

The capacity to collect and use information for management decisions is just not there, he says. “I’ve been here for three years, and I have never seen a BIA manager, other than with some of the few financial systems, make a decision based on information,” Nessi says. “Everything is based on anecdotal evidence or gut feeling, or whatever.”

Accountability Issues

Nessi recently conducted an analysis of BIA’s information technology assets and concluded the agency was out of compliance with virtually every requirement of the Office of Management and Budget’s guidance for computer systems as spelled out in OMB Circular A-130. “For all practical purposes, we have no security; we have no infrastructure,” he says. “Our entire network has no firewalls on it. I don’t like running a network that can be breached by a high school kid. I don’t like running a program that is out of compliance with federal statutes, especially when I have no ability to put it into compliance.”

When he took over as chief information officer, Nessi expected the NAPA study would create the necessary momentum in Congress to boost the agency’s budget for management systems. He discovered he was wrong. He also discovered that the bureau is structured in such a way that he does not directly control spending on computers in the field offices, a major barrier to improving accountability.

“When I came here, I saw that everybody seemed to have decent computers, and I thought, ‘Wow, this is better than HUD.’ Then I found out why: Every office controls its own purchase budget. So if somebody wants a flat screen monitor, they’ll spend $1,700 on a flat screen monitor. If you’re in an office that has any kind of resources, you might not hire more people, you’ll just buy good computers-but they’re not connected to anything. It is completely unmanaged. I don’t even know what they do with the old computers. We’re trying to get a hold on that acquisition process right now,” Nessi says. Lack of a direct line of authority from headquarters to the field is a problem, says Jeff Malcolm, an analyst at the General Accounting Office. “The people in headquarters may want to get reports or may want to get information, but they can’t order the people out in the field directly to do that,” he says. “When those types of problems get to be too great, the historical response has been to remove those programs from the BIA chain of command.” As a result, the education and law enforcement programs both operate independently of the agency’s field structure.

‘Nobody’s in Charge’

Another impediment to managerial accountability is the high turnover rate among personnel in key management positions. “The joke is everyone’s ‘acting’ and nobody’s really in charge,” says Malcolm. “You talk to someone, and then 60 to 90 days later, you talk to someone else who’s acting in that position. In that sense, there’s a lot of continuity problems. It’s hard to hold people accountable for getting results over the long term when you’re just cycling people through there.”

The NAPA study team, which interviewed hundreds of people throughout the agency, found that overall, employees were well-qualified for their jobs, although some appointed managers at headquarters seemed to lack the experience necessary to lead their programs. The NAPA study also questioned whether the agency was adequately training people for some positions. Malcolm wonders too. “When the bureau puts people in these positions, are they equipping them with the tools they need to do their jobs? Or are they just promoting someone and then basically throwing them to the lions without giving them training and resources to be able to succeed?” he asks. “There are a lot of good people in BIA, but it seems frequently they’re put in unreasonable situations where it’s difficult for them to succeed.”

To make the most of a bleak situation, BIA formed an IT Investment Council and a Technology Advisory Council, and put tribal representatives on the boards. By giving tribes a direct role in the technology investment process, the agency hopes to create more momentum for change. Plus, the pressure tribes can bring to bear on members of Congress might help mobilize funding for technology projects. Nessi also has worked out agreements with some contractors to donate consulting services.

The irony is that BIA is well-positioned for reform. Interviews with dozens of employees at headquarters and in the field reveal a workforce eager for change. Her Many Horses says the Lower Brule Agency and the Indians it serves would welcome better performance measures. “We think we’re doing a good job and we’d like to see who the real performers are. It seems that some [field offices] are rewarded for not doing their job.” Because bureau field offices with the most severe backlogs in administration tend to receive any available supplemental funding, the fact that the Lower Brule Agency doesn’t have any large workload backlogs ultimately deprives the tribe of extra funds.

“Our people spend evenings and time that should be with their families here because they’re catching up on work. I’ve got three people doing the work of eight in the realty section, and yet because we get the work done, we don’t see any relief,” Her Many Horses says.
Unless BIA receives more funding, Nessi is not optimistic about the future. “I feel I have really three choices: One, sit here and do my best and understand that when all hell breaks loose I’m going to get the blame. Two, something I’ve never done in my career, and that’s become an outspoken critic of the department and the government for providing a lot of requirements but no resources to fulfill them. Or three, find another job.”

The Nike Strategy

The best hope for tribes today seems to be self-governance. Beginning with the 1975 Indian Self-Determination and Education Assistance Act, BIA has been helping tribes win control over their own services and programs. Tribes can enter into contracts with BIA to take over specific functions, such as school administration, or they can operate through compacts, which work essentially like block grants-tribes sign annual funding agreements, under which they receive the funds BIA would have spent providing services or contracting for services. The tribes are then free to use the money to craft programs as they see fit. The first self-governance compact pilot was signed in 1988. Now more than half of BIA’s funding is passed directly to tribes through contracts and compacts.

Bill Sinclair, director of the self-governance office at the Interior Department, oversees compacting for the bureau. Overall, he says, the program has been highly successful. Today, the bureau has 75 annual funding agreements covering more than 200 tribes that are providing their own services. “When tribes contract for services, they’re constantly looking over their shoulder to the BIA asking if they’re doing it right,” Sinclair says. “When they compact under self-governance, they look to their members to see how they’re doing. The tribal council is where the buck stops.”

As BIA shifts from providing direct services to administering contracts and compacts, it faces new challenges. Providing services indirectly takes employees with different skills; it also puts the agency in an untenable position regarding performance data. BIA has crafted an ambitious human resources plan, which would address many of the agency’s personnel management shortcomings, but without adequate funding, it will not be able to carry out the organizational changes and training envisioned in the plan. Also, by law, the bureau cannot compel tribes to provide performance data, as required under the 1993 Government Performance and Results Act. “We’re really in a ‘Catch 22’ situation here,” says one regional director. “On the one hand, we’re encouraging tribes to do this, and we want to be able to justify requests for budget increases, but on the other hand we’re dependent on their willingness to provide data on program outcomes.”

Nevertheless, Andrew Lee, executive director of the Harvard Project on American Indian Economic Development at Harvard University in Cambridge, Mass., says self-governance offers tribes the best hope for economic and social success in the future. “We can’t find a single case of sustained economic success where BIA is in control,” Lee says. Two Harvard professors founded the project in 1987 to explore the conditions under which American Indian nations could achieve sustained, self-determined social and economic development. Through field-based research in Indian Country, the project has determined that successful, long-term development hinges on a tribe’s ability to make decisions for itself. When the federal government, under the Nixon administration, began to embrace the concept of tribal sovereignty, “that’s when we really saw a shift and some tribes began to take off,” Lee says.

“The BIA today is full of good, well-intentioned people-and that wasn’t always the case,” Lee says. But the agency lacks the resources to serve tribes well. More importantly, he says, tribes themselves have the biggest incentive to make things work on their own reservations-an incentive no agency, however well intended, can match. “To the degree that BIA can encourage that shift through contracting and compacting it will be a positive force.”
For example, an upcoming study, conducted by the Harvard project and sponsored by the National Institute on Justice, suggests that law enforcement in Indian Country works best when tribal governments have more control over their police departments and BIA serves in an advisory capacity. “The historical record shows how federal policy created a system that served the interests of the U.S. government and nontribal citizens and failed to promote the ability of Indian nations to design and exert meaningful control over their own policing institutions,” the study concluded. Tribal control helps eliminate the view among Indian citizens that their police departments care more about federal concerns than their own concerns. Control of police departments has been steadily shifting into tribal hands in recent years, much as tribes have been taking on more responsibility for school administration.
“We call it the Nike strategy,” Lee says. “Tribes need to just do it.”

VIA: JamesMagaskaSwan



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