Elouise Cobell first sensed something was wrong with the Bureau of Indian Affairs as a student, when she got a summer job at a BIA office in Montana. "[People] would wait for hours. I didn't understand what was going on," she says.
Years later, as treasurer for her Blackfeet tribe, her suspicions were confirmed. The BIA oversees trust accounts worth billions for individuals and tribes, accounts that government reviews now show to have been grossly mismanaged for decades.
Today Ms. Cobell is one of five native American leaders behind a class action suit filed against the BIA by the Boulder, Colo.-based Native American Rights Fund. The $540 million suit, filed on behalf of 300,000 Indians, may mark the start of a shift away from reliance on the federal agency for financial management.
Government malfeasance and a developing financial strength and savvy (in some cases, gleaned from running casino operations) have already prompted some tribes to take their accounts out of federal hands. The Oneidas of Wisconsin have managed their own accounts since the 1980s and tribal attorney Aurene Martin says other tribes will follow. "Tribes are thinking they could do a better job," she says. "They wouldn't do any worse."
A recent independent review of 2,000 tribal accounts estimated $695 million was mishandled in the past 20 years. Auditors couldn't locate records for $2.4 billion in transactions and say individual accounts, which range from 35 cents to $1 million, are in even worse shape. "If your bank...couldn't tell you how much you had, you'd be pretty upset," Cobell says.
Next week Congress will hold the last of several hearings to see if the tribes are willing to accept the findings of their investigation and what legislation needs to be introduced to compensate them. "If we made a mistake, we'll pay," says Ed Cohen, deputy solicitor for the Department of the Interior. "But I think it would be far more productive if we were handling these issues legislatively, rather than litigating them."
The BIA's role dates back to the 19th century, when Indians weren't considered competent to manage their own affairs. But Cobell says it's the BIA, which was managing 2,000 accounts worth billions by 1994, that has proved its incompetence.
Many tribes earn money from leases on tribal lands held in trust. Royalties from oil and gas exploration leases are collected by federal agencies and transferred to the BIA, which pools and invests the funds. Tribes and individuals are supposed to receive monthly checks, but Cobell discovered her tribe was losing, not earning money. "When I tried to look into it, I found it very difficult to obtain account statements," she recalls.
The results of a BIA audit led Congress to appoint former bank director Paul Homan as special trustee for American Indians in 1994. Among the problems he found:
*The BIA had never set up an accounts receivable system, making it impossible to track how much money was in the system at any given time.
*Over $50 million had not been paid to individual account holders because the BIA had lost track of them.
*21,000 accounts bore the names of people who were dead.
*Records were water damaged and unreadable.
"Honestly, I have never seen anything like it in my 30-year career," Mr. Homan told a Senate panel in June. Homan has presented Congress with a plan to fix the BIA's banking systems, but solutions will depend in part on Congress's willingness to fund the agency. "It's hard to convince them they're not throwing good money after bad," says a House staffer who works on native American issues. There have been proposals to privatize the BIA. But tribal leaders say they want the system fixed before it's privatized. "That would be a natural way out for the government," says Cobell. "They transfer it, say to Wells Fargo - then who's responsible for historical wrongs?"