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A Betrayal of Trust

Land-lease deal with U.S. is a trail of broken promises

By Andrew Metz | Staff Correspondent

August 31, 2003

Elouise Cobell is one of the lead plaintiffs in a class action lawsuit against the US government for the mismanagement of Indian territory and finances throughout generations. (Newsday/ Alejandra Villa)

Browning, Mont. - His land is a treasury of America's natural wealth, 118 acres of grazing grass, crop soil and oil percolating underground.

On these flatlands that spill off the Montana Rockies, three pumps draw black gold to the surface, as oil wells here have done for generations.

This is Blackfeet territory, however, and resources that would make anybody else rich are just reminders of what Indians have lost at the hands of the United States government.

And from the shanty where he lives, through gaps in the plastic bags that are his window panes, Mad Dog Kennerly bitterly surveys it all - the mountain corner his people were backed into, the broken-down '75 Camaro beached at his doorstep.

"We are dirt poor," Kennerly said here on the Blackfeet Indian Reservation, where a man like him is actually one of the lucky ones because down the road at the Medicine Bear homeless shelter there are families holding land claims, government-arranged oil and agriculture leases and not much else.

"I used to get $500, $600 a month off those wells. Now we're down to $20, $40, if anything. There is something drastically wrong," said Kennerly, at 62 as convinced as ever that the U.S. system meant to make sure Indians fairly profit from their lands, has instead cheated them and let fortunes bleed away. "They've robbed us, that's all there is to it. They systematically robbed us."

Throughout Indian Country, these long-rebuffed complaints are now behind the largest class-action lawsuit ever against the United States, alleging that the government lost, misused and usurped as much as $176 billion in Indian assets.

One of the most significant reckonings between the United States and its native people, the case is based on a 19th century federal trust that controls Indian lands and is supposed to distribute royalties from government-approved leases on millions of acres allotted to Native Americans. But after 116 years, the most profound results have been a saga of government mismanagement and a trail of destitution.

Hundreds of thousands of Indians have watched their checks from the Department of the Interior, which administers the trust, dwindle to surprisingly small amounts or disappear entirely, and are unable to get even basic answers from the government about their land and their accounts.

Against decades of failed U.S. promises to improve, the case has risen from reservation lore to challenge the nation's conscience and checkbook with a financial malfeasance suit that dwarfs the scandals at Enron or WorldCom and is exposing what the presiding judge in the seven-year-old battle has called "a century-long reign of mismanagement."

In the coming weeks, U.S. District Court Judge Royce Lamberth, a Ronald Reagan-appointee from Texas, is expected to decide how the Interior Department must go about accounting for all the money that should have gone to the Indians and whether he should appoint an outside administrator for the system, which would be historic for a federal program.

Precisely how the Indian money evaporated may never be fully reconstructed, though the verdict against the United States, has in many ways already been delivered. Lamberth has said he has "never seen more egregious misconduct by the federal government" and determined that U.S. officials have continued "to write checks on an account that they cannot balance or reconcile."

"Such behavior certainly would not be tolerated from private sector trustees," the judge wrote in 1999. "It is fiscal and governmental irresponsibility in its purest form."

Earlier this month, the special master in the case reported that government-approved deals for oil and gas pipelines on trust land in the West have been netting far less than those on adjoining non-Indian property.

Nothing, not a 1994 act of Congress, not court orders or outside monitors, has been able to bridge the gulf between the Indians, who claim they have been shortchanged at least $176 billion counting interest, and the government, which puts its liability in the "very low millions."

And with such high stakes, Congress is also poised to take action. Prominent lawmakers are backing a bill that would foster a settlement by creating a new position in the Interior Department to oversee the trust and by empaneling a congressional commission to monitor the progress.

"If this type of egregious action had been inflicted on any other ethnic group, there would have been a tremendous public outcry," Sen. John McCain (R-Ariz.), one of the sponsors, told a Senate Indian Affairs Committee hearing on the case last month.

The government's response to the barrage of criticism and court decisions, which have included rare contempt rulings on former Interior Secretary Bruce Babbitt, former Treasury Secretary Robert Rubin and current Interior Secretary Gale Norton, has swung from contrition to defiance.

Officials in the administrations of George W. Bush and Bill Clinton have repeatedly acknowledged that there have been serious problems with the fund. Even as Lamberth has cited them for obstructionism, document destruction and deception, they have promised to make amends. The government has spent hundreds of millions of dollars on trust reform since the case began in 1996, establishing a special office for historical accounting and undertaking the most systematic streamlining and reorganizing of the trust in its history.

"The accounting process isn't quite as bad as one might be led to believe," James Cason, associate deputy secretary of interior, testified at a July House hearing. Cason told lawmakers that he was spending 95 percent of his time dealing with the lawsuit and that Norton, whose contempt citation was overturned last month, is devoting as much as a quarter of her attention to it. Sample audits and studies, Cason said, have showed only a very small margin of error in dispensing money to the accounts.