Stolen Trust

Elouise Cobell comes right to the point. “Gale Norton should be thrown in jail.” Cobell is a leader of the Blackfeet tribe, and lives along the Rocky Mountain Front in northwestern Montana. Norton, of course, is secretary of the interior and, as such, oversees the US government’s relationship with Indian tribes.

Norton also controls the purse strings on federal trust funds holding more than $40 billion dollars owed to Indians across the nation. For her role in the mismanagement of the trust fund, Norton is facing a contempt court citation from federal judge Royce Lamberth. If she gets slapped, she’ll be in bi-partisan company. In 2000, Lamberth hit Bruce Babbitt and Treasury Secretary Robert Rubin with contempt citations for failing to halt the destruction of Indian trust account documents.

The case begin in 1996 when Cobell, who has been called the Rosa Parks of Indian Country, filed a federal class action suit against the Interior Department, seeking both money that’s been owed to Indian people and a radical change in how the trust fund is managed. Six years later, the case now stands as the largest class action suit in history, with more than 500,000 claimants. And, as it wound its way through the courts, it has tarnished two administrations and exposed the continuing war on Indian people by the federal government.

“We’re not after money from the government,” Cobell says. “The government has taken money that belongs to us.”

Of course, stealing from Indians goes back to the origins of the republic. Mismanagement of Indian trust accounts was first noted by congress in 1823. But the Cobell suit is targeted at the notorious Dawes Act of 1887, which was a attempt to shatter Indian solidarity and culture by privatizing the reservations into 140 acre allotments put in the names of individual Indians. It was a set up, naturally. Indians were soon swindled out of more than two-thirds of their land, about 135,000 square miles in all. The remaining 57 million acres was put into a trust held by the Department of Interior. This too was a scam. With little or no input from the tribes, the land was leased out to white ranchers, oil companies, mining firms and timber companies. The land was stripped of its resources, often left in a ravaged condition.

The revenues from these leases (often sold at bargain-basement rates) goes into a trust fund administered by the Department of Interior. These days the fund receives about $500 million a year. Since 1887, more than $100 billion has gone into the accounts. Although the ranchers and oil companies have made a killing, little of that money has ever reached the tribes, where the per capita income hovers at less than $10,000 a year and unemployment rates hover near 70 percent. A new study shows that more than 90 percent of elderly Indians across the country are without access to long-term health care.

Lots of people have made money in futile and half-hearted attempts to straighten out the mess. In the early 1990s, Enron’s favorite bookkeepers, Arthur Anderson was hired to make sense of the trust fund accounts. After two years, they retreated in failure, but collected $20 million for their time.

“This scandal makes Enron look like a pimple,” Cobell says. “It’s worse than Enron, because it’s the government that is lying, covering up and breaching its trust. They stole people’s entire life savings. They robbed an entire race of people. If banks had ripped off white people, they’d be shut down in a New York second and everybody responsible would go to jail.”

Before filing suit, Cobell tried to meet with Bruce Babbitt, then Clinton’s Interior Secretary. Despite his high-minded rhetoric about environmental justice, Babbitt slammed the door in Cobol’s face. She then sought out Janet Reno. Reno too brushed her aside. Cobell was disgusted at the hypocrisy and cowardice of the Clinton crowd. “They ought to have been ashamed,” Cobell told one of Reno’s deputies. “People are dying in all Indian communities. They don’t have access to their own money.”

In 1999, Lamberth ruled that the Interior Department had grossly mismanaged the accounts. “This case reveals a shocking pattern of deception,” Lamberth wrote in his ruling. “I’ve never seen more egregious misconduct by the federal government.” It was a huge victory for Cobell, who heard the news as she was driving across the wind-swept Blackfeet reservation. “I pulled over to the side of the road and I cried and cried,” Cobell recalled.

But victory didn’t prove that simple. Three years later, not a single Indian account has been straightened out and the government has done its best to defy the court and subvert its ruling. Incriminating emails were deleted. Subpoenaed documents were trashed, burned and shredded. The recalcitrance and malfeasance were so pervasive that Lamberth cited both Babbitt and Rubin with contempt of court.

Cobell thinks that the Clinton team was simply running out the clock, waiting to hand the mess off to the next administration. “It was crystal clear to me what the Clinton administration was up to,” Cobell says. “Stalling, stalling and stalling.”

When Norton took over, things got worse. Norton is a protege of James Watt, who once described Indian reservations as “the last bastions of socialism in the western world”. Watts desperately wanted to revive the malicious spirit of the Dawes Act and sell off the rest of Indian country to the highest bidder. He was driven from office before he could realize this ambition, but Norton holds many of the same ideas and prejudices.

A few weeks after taking office, Norton told Judge Lamberth that she was intent on developing a plan that would restructure the Indian trust account system. In the year it took to develop, Norton and her team didn’t consult once with the tribes. When the plan was unveiled nearly every tribe in the country denounced it.

Meanwhile, a string of special masters appointed to oversee the Interior Department’s implementation of the rulings of the court have denounced Norton and her colleagues for tardiness, incompetence and “government malfeasance”.

Norton claimed that the Department’s new computer system would provide a quick fix to the problem. But last year a computer hacker successfully penetrated the site to demonstrate how easily the trust fund’s records could be manipulated. Lamberth ordered the department to shut down all of its computer systems until the security problem could be fixed.

Norton’s flacks used the ruling as a pretext to withhold dispatch of the year-end trust fund checks to 40,000 Indians. It was a move designed to punish the tribes and to try to undermine Cobell and her cohorts. Denied their money during Christmastime, several Indians called Cobell, blaming her for the bleak circumstances. “It was an act of retaliation”, says Cobell. “They knew that Indians were starving, because they had no checks. Yet they did nothing.”

Only a couple of members of congress were angered by these strong-arm tactics. “These people were subject to losing their car or their house,” said Rep. Tom Udall, the Democrat from Colorado. “If this happened to security, all of Congress would be in an uproar.”

But Lamberth was less tolerant. He has threatened to hold Norton and Bureau of Indian Affairs head Neal McCaleb in contempt. They could face jail and fines. Lamberth has already warned that the fines will be paid from their personal accounts and not government funds.

But Norton remains undeterred. In late July she engineered the forced resignation of Thomas Slonaker from his position as the special trustee for the Indian trust fund system. Slonaker, a Republican banking executive from Phoenix, had recently reported that the Interior Department had done little to make corrections to the trust account system. Slonaker had been called to testify before a senate hearing on the mismanagement of the trust fund and Norton instructed him not to submit his prepared testimony. When Slonaker refused, he was handed a letter of resignation by Steven Griles, Deputy Interior Secretary.

“It was like telling the emperor that she has no clothes,” said Slonaker. “Sometimes, criticism is not welcome.”

Cobell won’t be so easy to get rid of. In the past, government officials have always counted on the poverty of Indian people as they trample over their rights with near impunity. But Cobell is a creative businesswoman and a master fundraiser. So far she has raised $9 million for the trust lawsuit from private sources and foundations, notably the Lannan Fund of New Mexico, which contributed $2 million to the cause.

She’ll probably need every penny, because there’s no indication that the Bush administration is backing down. “The government is going to fight this no matter what, even if it’s morally, legally or ethically in the wrong,” Cobell says. “That’s a real country in itself.” That’s just the way things go in Indian country.

But Cobell also sees the litigation has having served to unite the tribes in a common front. “I actually see it as a miracle,” Cobell says. “I’ve never seen tribes come together and work so hard.”

Jeffrey St. Clair can be reached at:


Jeffrey St. Clair is editor of CounterPunch. His most recent book is An Orgy of Thieves: Neoliberalism and Its Discontents (with Alexander Cockburn). He can be reached at: or on Twitter @JeffreyStClair3