[Mb-civic] Accounting Coup

Sun Sep 11 13:16:53 PDT 2005

Accounting Coup

When banker Elouise Cobell added up the Indian trust money lost, looted, and mismanaged by the U.S. government, the tab came to $176 billion. Now she's here to collect.

by Julia Whitty

September/October 2005 Issue

     ALONG HIGHWAY 89, south of the Two Medicine River on the slope of Glacier National Park, at a place Elouise Pepion Cobell passes every day on her way from her ranch to her office in Browning, stands a historical marker erected by the state of Montana: 
     OLD AGENCY: The Starvation Winter of 1883-1884 took the lives of about 500 Blackfeet Indians who had been camping in the vicinity of Old Agency. This tragic event was the result of an inadequate supply of government rations during an exceptionally hard winter. 
     The story of that winter that came down to Cobell from her parents and grandparents is a darker one: of Indians effectively imprisoned by what locals called the Indian Agency (now the Bureau of Indian Affairs or BIA) on land that had been emptied of the bison and pronghorn that had been their staples, and with their promised government provisions lost to pervasive corruption. "All the Blackfeet know," says Cobell, "that the Agency man was black-marketing the Indians' rations, and that the reservation was enclosed in barbed wire." 
     In the winter of 1883, as the cattle of white settlers grazed illegally on Indian lands, the Blackfeet began to die of starvation and a streptococcal epidemic. In the spring, they ate their last government-provided seed potatoes; by June they were stripping cottonwood trees to chew the inner bark; and by the time BIA officials in Washington, D.C., finally responded with extra rations, a Blackfeet man called Almost-A-Dog was said to have cut 555 notches in a willow stick, one for every Indian who had died -- one in every four Blackfeet in the state of Montana. 
     Just west of the Old Agency historical marker, in what is now the Blackfeet Nation, lies an unmarked, wind-scoured rise of hills the Indians call Ghost Ridge, where the dead from the Starvation Winter, which actually lasted 18 unrelenting months, were buried in mass graves. When Cobell was a child, an uncle lived nearby, and every time they visited him, her parents repeated the story of Ghost Ridge. Cobell says it's those dead who give her the courage to fight on. "Fighting for them," she says. "Fighting the same government that tried to get rid of this entire race of people." 

     HER FIGHT TAKES THE FORM of Cobell v. Norton, a federal lawsuit on behalf of a half-million Indians across America whose individual property is held in trust by the Department of the Interior, which oversees the BIA. Interior leases these private Indian lands to oil, timber, and agricultural corporations and other commercial entities, then pays the Indians the revenues those leases yield. But Cobell claims the government has been grossly negligent in its 118 years of managing the Individual Indian Trust, treating the Indians not as clients and beneficiaries but as easy marks. 

     While generations of non-Indians have become rich harvesting the abundant resources of private Indian lands -- which once included virtually all the oil fields of Oklahoma -- Indian landowners have been paid only erratically, and far less than their due. Consequently, even landowning Indians remain among the nation's poorest citizens, joining the 23 percent of Indians in America living in poverty, and the nearly 40 percent who are unemployed. Some tribes fare even worse, and the Blackfeet suffer a 34 percent poverty rate and a 70 percent unemployment rate. Overall, Indians are more than twice as poor as the average American. 

     Cobell filed her lawsuit in 1996 after years of kinder entreaties failed, demanding payment of all unpaid revenues from Indian leases for the past century, a tally of past revenues, and a new accounting system to deal with future revenues. According to Cobell's forensic accountants, the government owes $176 billion to individual Indian landowners, averaging $352,000 per plaintiff, making this monetarily the largest class-action lawsuit ever launched. 

     If successful, Cobell's lawsuit may force a historical shift of America's capital away from the cowboys -- the oil, gas, timber, mining, grazing, and agriculture industries, along with their political cohorts -- toward the Indians. Furthermore, there's a nearly identical case waiting in the wings regarding Tribal Trust lands, also managed by Interior. Not surprisingly, the Clinton and Bush administrations have flexed unprecedented bureaucratic muscle to delay the resolution of Cobell v. Norton, spending hundreds of millions of dollars defending Interior. 

     In court, Interior is backed by the formidable resources of the Department of Justice, along with 35 of the country's most expensive private law firms. Cobell, meanwhile, rents a modest four-room office in Browning and has funded her legal challenge with $11 million in grant money. Small, soft-voiced, and an energetic 59 years old -- she refers to herself as "kind of hyper" even six weeks after undergoing surgery to donate a kidney to her husband -- Cobell seems an unlikely crusader. But she is the great-granddaughter of Mountain Chief, part of a pantheon of legendary Blackfeet warriors who battled the U.S. government as far back as its original real estate emissaries, Lewis and Clark.

     To those concerned that the United States can't afford a Cobell v. Norton settlement, she says, "It's not your money and never was." 

     WHILE GHOST RIDGE is Cobell's personal inspiration, the historical heart of Cobell v. Norton beats in the Dawes Act -- a 19th-century legislative attempt to solve what President Chester A. Arthur called "the Indian problem." Simply put, Western pioneers wanted Indian lands, while liberal Easterners (mostly out of sight of any Indians) wanted the Indians to be happy. The act's author, Senator Henry Dawes of Massachusetts, felt the solution for the Indian lay in a Puritan work ethic: "Put him on his own land, furnish him with a little habitation, with a plow, and a rake, and show him how to go to work to use them.... The only way is to lead him out into the sunshine, and tell him what the sunshine is for, and what the rain comes for, and when to put his seed in the ground." 

     The Dawes Act was signed into law in 1887, three years after the Blackfeet were buried atop Ghost Ridge. Also known as the General Allotment Act, Dawes mandated that most reservation lands be broken into individual parcels in the hope that dissolving communal ownership would dissolve the power of the tribes -- considered counterproductive to Indian assimilation. Thus, BIA agents surveyed the reservations, typically allotting families 160 acres, and single adults 80 acres. The "surplus" lands -- two-thirds of the area in question -- were put up for sale. 

     From the Indians' point of view, Senator Dawes' experiment in social engineering was a mockery. Not only did the government fail to furnish the Indian with a plow when it gave him his allotment, it typically splintered those allotments into unmanageable islands (30 acres of timberland here, 50 acres of farmland 100 miles away), more or less guaranteeing that no Indian could work the disjointed parcels. Consequently, the government took legal title of the allotments and began to lease the land to settlers and, later, corporations. It pledged to collect the revenues and disburse them to the Indian landowners. 

     But from the beginning, Senator Henry M. Teller of Colorado foretold that "the real aim of [the Dawes Act] is to get at the Indian's land and open it up for settlement." And in fact as soon as allotment began, Indian-owned acreage began to vanish. Twelve percent disappeared the first year. By 1920, the 136 million acres held by Indians when the Dawes Act was signed into law had shrunk to 72 million acres -- 17 million of which were leased to white settlers. Today some 46 million acres remain in the Tribal Trust, and 10 million in the Individ-ual Indian Trust. The rest disappeared at a rate of 1.5 million acres a year.

Click to enlarge.

     THE BLACKFEET NATION lies on the eastern edge of Glacier National Park, under the ice and limestone fortress of the Rockies. These 1.5 million acres mark the last citadel of a tribe that once controlled most of Montana. Yet as beautiful as the land is, the Blackfeet feel isolated and marginalized here -- 120 miles from Great Falls, an airport, a medical facility of any size, a college or university, or a competitive (cheap) shopping environment. People in need of nearly anything have to drive a long way, weather permitting.

     Even on a relatively warm February afternoon the climate of the high prairie feels ominous. The skies lower unpredictably. The roads mask black ice. The wind dropping off the scarp of the Rockies blasts through Browning, and the town groans like a wooden ship in a storm at sea. Sometimes it blows at 90 miles an hour, downing signs and billboards and blowing freight trains off the tracks. Before they lost their land, the Blackfeet wintered down by Yellowstone, among its sheltered forests and warm waters, where the bison spent the cold months. "We weren't crazy," Cobell says.

     "Crazy" and "dumb" are two words Indians hear a lot. At age 18, when Cobell started asking the BIA for an accounting of her Individual Indian Monies, officials told her she wasn't "capable" of understanding the accounting. "If someone tells me something can't be done, I get so mad I just have to do it," she says.

     So Cobell became an accountant. Twelve years later, in 1976, she was appointed treasurer of the Blackfeet Nation. The job gave her the opportunity to hear the Blackfeet's concerns about their trust monies. Some years her fellow landowners got their checks, some years they didn't. They never received an accounting, and most (including Cobell) didn't even know, and couldn't find out, which lands exactly were theirs. Worse, some had once received payments but now no longer did, and they had no idea why. No one dared confront the BIA.

     One Blackfeet Cobell heard from was Jim Little Bull, now 82 years old and living in a tiny, nearly unfurnished home in Browning heated with an ancient woodstove. When his mother, Mary Little Bull, passed away years ago, the government taxed her estate $7,000 for the operation and management of an irrigation system on her allotment. The problem was, although the land had been scored with ditches years before, no irrigation equipment had ever been installed, and no water other than rainfall had ever graced it. But Jim Little Bull was afraid to ask questions, worried his own Individual Indian Monies (IIM) would be withheld to pay his mother's bill. So he forfeited her land back to the government.

     His story was hardly unique, and visiting one impoverished family after another, Cobell couldn't help but notice the oil wells pumping on Blackfeet land, the thousands of heads of cattle, the rippling fields of alfalfa. The non-Indian tenants who worked these lands were living in nice houses, driving new cars, while their Blackfeet landlords were living in cold, leaky government housing, largely unemployed and undereducated. "Why couldn't an Indian -- a landholding Indian at that," wondered Cobell, "get a mortgage or a bank loan to start his or her own life?"

     In 1983, after the government shut down the only bank on the reservation, Cobell got the idea of founding an Indian-owned bank. Told it would never work, she went back to school, became a banker, and, in 1987, threw open the doors of the Blackfeet National Bank, the first national bank located on a reservation, and the first owned by an Indian tribe. Within 15 years it had grown into the Native American Bank, with 23 tribes from across the country investing as much as $1 million apiece to participate in it.

     All the while, Cobell was looking into the government's handling of the Indian trusts. The more she investigated, the more she became convinced that the amount owed to Indian beneficiaries, both tribal and individual, was substantial, potentially enormous. Collaborating with accountants from three other tribes, she untangled a messy history of Indian trust monies dumped in the U.S. Treasury's general fund, where they could be used for the latest weapons system or for bailing out the Savings and Loan industry. "One administration after another treated the trusts as slush funds," she says. "It didn't matter to them that it was Indians' money." 

     Certain these findings would shake the system open, Cobell began to approach lawmakers and others in government. In 1996, she had an impromptu face-to-face with Attorney General Janet Reno, who listened attentively, then asked Cobell to write a letter. "Another letter," Cobell says.

     Instead, she contacted Dennis Gingold, a prominent banking attorney she had met four years earlier at a meeting called by a sympathetic official of the federal Office of Management and Budget. Although Gingold had thought they were convening to discuss the banking and finances of Americans from India -- "I'm from New Jersey," he quips, "I've never even heard of Native Americans" -- when he heard Cobell's story, he turned to the government officials in the room and said: "I can't believe you guys haven't been sued."

      "I'm going to keep my eye on that guy," Cobell thought. Four months after the Reno snub, Dennis Gingold filed what was initially called Cobell v. Babbitt in U.S. District Court. 

     ONE OF COBELL V. NORTON'S unnamed plaintiffs is James Mad Dog Kennerly, a man who should be a prosperous Montanan. One of his hereditary allotments includes as many as five working oil wells. Yet from these he receives a government-issued royalty check for roughly $30 a month, and he lives in a house smaller than a modern walk-in closet.

     The drive to his oil-producing property at the eastern edge of the Blackfeet Nation passes through two worlds: Browning's bleak government housing, followed by miles of prosperous farmland. "That's my land, right here," says Kennerly. He points to another of his allotments -- leased not to an oil company but to a Hutterite farming colony, an Amishlike community that, ironically, works property communally. These farms are large and seemingly prosperous, with huge barns and well-tended fields. Kennerly complains that Interior -- which manages one-fifth of all land in the country -- leases his lands for far less than the going rate.

     Mad Dog Kennerly's fight against the government began in a government-run orphanage for Indians, led through the Indian occupation of Alcatraz in 1969, and is focused now on getting paid what he feels he's owed. His battle colors include embroidered bald eagles and American flags adorning his leather jacket and baseball cap. When asked what he would have done if he'd had access to the money he believes was his all these years, he fires back without a moment's hesitation."I'd have gone to school and become a lawyer and fought the goddamned BIA."

     At the center of Kennerly's fight is the effort to free himself from the paternal grasp of a government that has tried to make every decision for him since the moment of his birth. This is the struggle of all Indians, says Cobell -- a battle personified by legendary athlete Jim Thorpe, a member of the Sac and Fox Nation, who was forced to beg for his trust monies to fund his travel to the 1912 Olympics in Sweden. The government denied his request, although the BIA eventually gave him a whopping $25. Nevertheless, Thorpe brought home two gold medals to a cheering America.

     This misbegotten paternalism continues to pervade the Indian trust saga. Keith Harper, one of Cobell's lawyers and a member of the Cherokee Nation, notes that Interior administers the Individual Trust like a welfare program. "There's an institutional reluctance to change from a boss to a servant," he says. "A trust officer is a servant." Early in the Cobell suit, the government contended that the Individual Indian Trust was not a trust at all, a contention it lost in court.

     These days Interior likes to spin the Cobell suit as an attempt to seek reparation for all wrongs done to Indians. Interior spokesman Dan DuBray admits to a "sad and difficult history between this government and native peoples," but says the Cobell case is not about "Trail of Tears or Wounded Knee -- it's about seeking an accounting." DuBray, a Rosebud Sioux and son of a BIA employee, contends that even if the plaintiffs win Cobell v. Norton, it won't make much difference in the lives of the majority of Individual Indian account holders. "In all the years my father opened his IIM mail he never said this isn't enough money," says DuBray. Instead he questioned, "Why is the government spending all this money on postage to send me an 8-cent check?"

     Cobell counters that many of the payments Indians never received were "lost" in BIA pockets, even into the pockets of Indian employees of the BIA -- who inherited a broken system and were promoted for going with the flow. "In the old days we called them the Fort Indians," Cobell says.

     DuBray says the real problem is not the government's loss of Indian records or mismanagement of funds or its negligence as trustee but an issue most Indians "don't really understand": the issue of fractionated heirship. This is the heart of the case, he says -- not that over the years the government has been paying out less money to the Indians, only that it has been splitting the money among an ever-growing number of Indian heirs. He cites his own case. DuBray and his brother will soon inherit 50 percent shares in their recently deceased father's Individual Indian Trust account. "His 8-cent check will be split between the two of us," DuBray laughs. He says even his own family members don't understand, and are hoping their "1/250th share will pay out big money if Cobell wins." 

     The plaintiffs contend the government can't be trusted when it says that 8 cents is all that's due. "How do we know it's only 8 cents?" asks Cobell. "Why not $8 or $8 million?" For Cobell and her lawyers, the heart of the case lies in the responsibilities dictated by trust law. The government is the trustee, and "if they can't show it," says Harper, "they owe it." 

     So far, the government hasn't been able to show much of anything. Although Interior maintains that trust records generated since the 1950s are mostly intact, plaintiffs contend that until a Treasury official testified to the practice in 1999, trust records were routinely destroyed after six and a half years. In any case, the Indians and the BIA disagree as to how much land is Indian land and how much money those lands have generated. The court must determine which version of history is correct -- a task that has consumed more than nine years of taxpayer-funded court time.

     The government claims it's cooperating. But U.S. District Judge Royce C. Lamberth strenuously disagrees. In the course of overseeing the lawsuit, this Reagan appointee has held two secretaries of Interior and one secretary of Treasury in contempt, has written scathing opinions on the government's destruction of evidence, and has periodically banned the entire Interior Department from access to the Internet for its failure to safeguard trust data. The BIA has been stranded offline for nearly four years (see "Interior Monologue"). "The entire record in this case tells the dreary story of Interior's degenerate tenure as Trustee-Delegate for the Indian trust," Lamberth recently ruled, "a story shot through with bureaucratic blunders, flubs, goofs and foul-ups, and peppered with scandals, deception, dirty tricks and outright villainy, the end of which is nowhere in sight." 

     In 1999, Lamberth concluded the lawsuit's first phase, finding the government in breach of its trust responsibilities. In consequence, he ordered court jurisdiction over the Individual Indian Trust for a minimum of five years, and mandated the government file quarterly reports detailing its efforts to reform the trust. He then ordered Interior to provide the Indians an accurate historical accounting dating back to 1887. "The plaintiffs should take great satisfaction in the stunning victory that they have achieved today," he concluded. 

     Yet more than five years later, James Mad Dog Kennerly is still receiving only $30 a month on his oil lease. And on this February day, driving the dirt roads to his allotment, he discovers the wells on his land, and on all the adjacent Indian lands, lying idle. Meanwhile, across the creek on non-Indian lands, they're genuflecting energetically to the four corners of the Interior-managed earth. 

     THE DEPARTMENT OF THE INTERIOR has responded to its ongoing losses in court with tactics the plaintiffs construe as retaliatory and intimidating. In 2004, after Judge Lamberth found the BIA was seizing land owned by Indian trustees without properly informing them of its value or location and selling it to oil companies, he ordered the agency to stop communicating with plaintiffs regarding the sale, conversion, and transfer of land. Interior reacted by shutting down BIA offices and phone lines, telling Indians they would not receive their royalty checks because of the lawsuit. Cobell's name was published on the BIA website -- tacit encouragement, she says, for Indians to call and blame her. "It was the dumbest thing they could have done," she says. "I returned every one of those calls and explained what was really going on." 

     Among the Indians who filed affidavits about these BIA tactics was Verna St. Goddard, an elderly Blackfeet. She ran into problems when she visited the BIA office in Browning last February. For more than 35 years St. Goddard has withdrawn funds for the developmentally disabled Roseline Spotted Eagle, her former foster child. But not this day. A BIA official ordered her to drive to Great Falls and ascertain the price of the goods she wanted to buy for Spotted Eagle, then drive back to the BIA office for a check, and then return to Great Falls to purchase the items and back again -- 480 miles altogether. (A perfect example, St. Goddard quips, of what the BIA really stands for: Bossing Indians Around.) When she asked the BIA official why he wouldn't give Spotted Eagle her money, as he has for years, he said it was because of the Elouise Cobell lawsuit.

     Lamberth called these tactics "a testament to the startling inhumanity of government bureaucracy...[and] a deliberate, infantile, and frankly ridiculous misinterpretation of this Court's straightforward order." He added: "The idea that Interior would either instruct or allow BIA to withhold payments and then to stonewall the Indians who dared to ask why is an obscenity that harkens back to the darkest days of United States-Indian relations.... The perniciousness and irresponsibility demonstrated by blaming the Court pales in comparison to the utter depravity and moral turpitude displayed by [Interior's] willingness to withhold needed finances from people struggling to survive and support families on subsistence incomes."

     BIT BY BIT, piece by piece, the Department of the Interior is losing this case. But as with the Starvation Winter, government tactics are exacerbating the agony -- in part by appealing every one of Judge Lamberth's rulings. Interior recently lost a challenge to Lamberth's right to adjudicate the case. The department also appealed and lost a key ruling entitling the plaintiffs to full compound interest on all unpaid Individual Indian Monies. Currently, Interior is at loggerheads over how -- or if -- the historical accounting dating back to 1887 can be accomplished.

     In 2003, Congress inserted itself into the machinations by attaching midnight riders to omnibus budget and Iraq appropriation bills to delay the court-ordered historical accounting. It also attempted to cut the salary of court-appointed investigators, while permitting Secretary Gale Norton to use discretionary funds to pay for the scores of private attorneys hired by all past and present Interior employees appearing in the case. 

     In July, Judge Lamberth wrote: "For those harboring hope that the stories of murder, dispossession, forced marches, assimilationist policy programs, and other incidents of cultural genocide against the Indians are merely the echoes of a horrible, bigoted government past that has been sanitized by the good deeds of more recent history, this case serves as an appalling reminder of the evils that result when large numbers of the politically powerless are placed at the mercy of institutions engendered and controlled by a politically powerful few." 

     Cobell however is confident the Indians will eventually win. The government has no case and they know it, she says. "They can't provide the historical accounting because they've lost or destroyed too many records. Their only strategy now is to go slow and try to outlive us all." The plaintiffs are willing to settle but insist that, after more than a century of ongoing mismanagement, Interior needs to be removed as trustee, and the Individual Indian Trust put into receivership.

     COBELL'S OFFICE, upstairs on a side street in Browning, is a cheery mess, littered with awards, treasures, books, and paintings -- the disordered hallmarks of someone who spends more time at work than at home. From here, she orchestrates the many brainstorms that occupy a mind bent on improving life across Indian country. 

     Thanks to Cobell, Browning now has the feel of a ghost town regenerating its flesh and blood, 30 years after white business owners fled most reservations. Today the Blackfeet Nation hosts more than 200 enterprises, 80 percent of them Indian-owned, and most launched with loans from the banks Cobell helped start. Yet her ideas are wider ranging than banking. As founder and executive director of the Native American Community Development Corporation, Cobell initiated a recycling program on the reservation funded with an annual art auction in nearby Glacier National Park. She also facilitated the creation of the Blackfeet Land Trust -- the first land trust administered by Indians -- protecting 1,200 acres of unique fen vital to grizzlies, a species the Blackfeet revere. "We Indians were the original environmentalists," she says. "We need to get back to that."

     Three years ago, the Blackfeet awarded her warrior status -- a rare honor for a woman. In 1997, in recognition of her diverse talents, the MacArthur Foundation awarded her a "genius" grant. She jokes about having made the leap from "dumb Indian" to "genius" in one lifetime, and says she doesn't ever again want Indians taken advantage of because they don't understand banking and finance. Collaborating with tribal educator Roberta Kipp, Cobell founded a mini bank program in which Blackfeet kids in elementary school open bank accounts, play the roles of bankers and customers, and grow their money during their school years. They reap the windfall when they graduate. Cobell, herself a graduate of a one-room schoolhouse, insists, "I want these kids to understand the way the world works, and to question everything that comes before them." No more silence or fear. After 118 years, it's time to call in the debt.

Julia Whitty is the author of A Tortoise for the Queen of Tonga, which was a finalist for the PEN/Hemingway Award. She has been a recipient of an O. Henry Award and a Rona Jaffe Foundation Writers Award, and she is currently finishing a book on coral reefs.

@2005 The Foundation for National Progress

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