Wednesday, October 10, 2007

Huge Reckoning for Native Americans

Can we think of any reason the nations and tribes we call Native Americans or Indians shouldn't trust the U.S. Government? Think. Think. Think.

Well, within four years, at least a portion of them may not have to just trust the Department of the Interior and Bureau of Indian Affairs. As a result of a 1996 lawsuit, Cobell v. Kempthorne, the world's largest accounting project is underway. In short, everyone will be able to see whether the Feds have been cheating on 320,000 individual accounts.

This Historical Accounting Project fort Individual Indian Money Accounts may show over $100 billion is due to the tribes and individuals who own over 56 million acres. Businesses typically lease these lands for grazing, water and mineral rights. The Feds have acted as trustees, negotiating, leasing, collecting, and paying. What they haven't done since 1887 is account for the deals.

Great White Fathers

The background seems typical of our treatment of Native Americans. It started in 1887 with the General Allotment Act (Dawes Severalty Act). This gave the U.S. President the power to survey and divvy up all Indian-owned lands. Individuals were to get between 40 and 160 acres, mostly of land deemed inferior.

One effect of this was that over 90 millions acres were declared surplus and sold to non-Indians at low rates. In other words, this was another theft. Then the remaining lands were in trust and the tribal and individual owners were relieved of the responsibility of having to manage any leases. Trust U.S.

The current status is that there are some records of over 320,000 accounts from 1938 through 2000, but no accounting in the way any government or business would consider it. In fact, according to an excellent piece on this in CFO Magazine, in 1989, accounting giant Arthur Andersen threw up its hands on a first stab at an audit "due to missing records and the lack of an audit trail in the bureau of Indian Affairs (BIA) systems. It could reconcile only tribal accounts — and even then, only those opened after 1972.)"

Much of the background information here is from that article and I strongly recommend reading it all. This story can only get larger and more important.

Shameless Offer

You can imagine the reaction if a bank, brokerage or any business could not show what it had done with assets it manages for decades. In this case, the Feds were quick to insult the tribes and individuals with a low-ball offer.

The outside guesstimate of the plaintiffs is that at least $100 billion is owed. The actual amounts will emerge as the auditors tally up records of several hundred thousand boxes. Meanwhile, our honorable Executive Branch offered $7 billion over a decade to wipe out all tribal and individual claims, and prohibit any future related suits. As you can surmise, according to CFO, "The offer was seen by all tribes as an insult," notes Michael Marchand, chairman of the business council of the Confederated Tribes of the Colville (Washington) Reservation. "It was a clear signal that the Administration has no interest in settling anything."

There are also some nasty looking circumstances, such as 162 boxes of government forms of disbursements from 1900 to 1958 that the U.S. Treasury says it accidentally destroyed in 1999.

Because of the many millions of records, this audit will not be a full fiduciary accounting. Rather, it is likely to mean statistically sampling. With the many missing or incomplete records, this process lends itself to loaded judgments.

In addition, from here, it looks like the plaintiffs will be screwed in another way. At this date with the records methodologies over the past 120 years, they can't test that the DOI trustees negotiated in good faith and got a decent rate for the land use, much less that they provided a full payment to the owners. The records in more recent decades can help with the latter, but the former is that many clouds blown by.

This project will cost several hundred million dollars. That's not much considering the billions at stake.

At the very least, since this suit began, the Feds have been on notice that their handling of these millions of acres is on the record and in the public eye. Many of the records are gone or never existed. However, there should be enough information to provide a modicum of restitution.

Considering our treatment of Native Americans, none of us should be surprised that even the promises for an accounting were blown off for so long that it took legal action to veneer any responsibility or accountability.

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