Mismanagement of the Indian Trust Fund: Abuse Continues Into the Modern Era

Some people might comfort themselves by trying to dismiss the ill treatment of Native Americans as something that happened a long time ago. It is simply not the case. As one example, consider the report by the U.S. House Committee on Government Operations: “Misplaced Trust: The Bureau of Indian Affairs’ Mismanagement of the Indian Trust Fund.” It was published on this day in history, April 22, 1992.

The report runs some 70 pages. It found that financial problems had been “neglected for dec­ades.” The only recourse Native peoples and tribes had to try to fix the problem was to go to the BIA — the very agency that was the cause of the problem. The report cited  Committee member Rep. Albert Bustamonte as saying “if this type of mismanagement taken place in any other trust arrangements such as Social Security, there would be war.”

The problems eventually spurred a massive lawsuit. Even after a decade of reforms, the government was still trying to fix the problems well into the 2000s.

The trust status dates back to the 19th Century, where the government deemed that individual Indians and tribes were not competent to manage money and lands. At the time of the report, the BIA was responsible for managing and investing almost $2 billion in tribal and individual Indian trust funds. Approximately 330 tribes have an inter­est in the tribal trust fund, with a total of 2,965 separate accounts. In addition, approximately 300,000 accounts existed for individual Native Americans.

The report summary reads in part:

The Bu­reau’s management of the Indian trust fund has been grossly inadequate in numerous important respects. The Bureau has failed to accurately account for trust fund moneys. Indeed, it cannot even provide accountholders with meaningful periodic statements on their account balances. … Under the management of the Bureau of Indian Affairs, the Indian trust fund is equivalent to a bank that doesn’t know how much money it has.  …

The report cites numerous problems. Like this one:

The Bureau wasted more than 2 years and as much as $1 million of taxpayer money attempting—inappropriately and unsuccessfully—to privatize its financial management responsibil­ities over the Indian trust fund. In fact, despite the contractor’s re­peated failures to deliver anything of value in return for substan­tial monthly payments for services, the Bureau never even both­ered to demand performance by the contractor.

Congress eventually passed the American Indian Trust Fund Management Reform Act of 1994. More than a decade after the report was issued, work was still underway to try to fix the problems.

An undated report titled Restoring Trust: The Reformation of Indian Trust Management (1994-2007) chronicles reform efforts. It opens with a stunning statement revealing that the work was still unfinished. After 13 years, there still had not been “enough time to resolve a problem over a century in the making.” However, they did have “sufficient time to assess the effectiveness of steps taken so far … ”

Government action was no doubt spurred by the Cobell Class Action lawsuit, filed in 1996, which claimed that the government had failed in it fiduciary duties to Native American people and tribes. “The case was settled for $3.4 billion in 2009, with $1.4 billion going to the plaintiffs and $2 billion allocated to repurchase land … and return it to communal tribal ownership,” according to Wikipedia.

 

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