Hill slams Interior's trust fund system

Senators, trust fund experts and American Indians last week blasted an Interior Department plan to spend as much as $60 million on a new computer system to track and compensate American Indians for commercial mining on Indian property and leases of tribal land.

Interior acknowledges that it has poorly managed Indian trust fund accounts - a complicated amalgam of real estate titles, bank accounts and leasing contracts - since the trust fund program was set up by Congress in 1887 to deal with leases on nearly 54 million acres of land owned by American Indians. The system used to track, collect and disburse payments has been accused of losing billions of dollars owed to American Indians.

Interior is seeking about $100 million in fiscal 2000 for trust reform. The department wants to use some of the money to pay for a new system called the Trust Asset and Accounting Management System to better manage the trust funds. However, a General Accounting Office study released last week concluded that TAAMS is inadequate, so GAO recommended Interior undertake an exhaustive analysis of the problems that have crippled the trust fund system before spending millions of dollars on information technology.

Donald Gray, a San Francisco lawyer who specializes in setting up commercial trusts, told a joint hearing of the Senate Indian Affairs Committee and the Energy and Natural Resources Committee that a "clueless" Interior should not be given responsibility to set up the trust.

"You should not and cannot try to operate on yourself," Gray said. "What's missing here is first you have to sit down and think. You can't just go out and buy a software system."

A pilot version of the system was unveiled last month in Montana and will be tested for several months. Following the test, the department will decide whether to recommend deploying TAAMS to manage the roughly 350,000 trust funds in the system, which together are worth an estimated $3 billion, according to the department.

Sen. Ben Nighthorse Campbell (R-Colo.), chairman of the Indian Affairs Committee, said Interior "is in a state of denial" about the gravity of the problems with the trust fund system and with TAAMS' ability to correct the flaws and deliver a working management system.

"It would seem to me that one of the first steps is admitting you've got a hell of a problem," Campbell said.

Mark Fox, vice chairman of the Three Affiliated Tribes of the Fort Berthold Reservation in North Dakota and chairman of the Intertribal Monitoring Association on Indian Trust Funds, testified that the department should go ahead with paying for TAAMS. But he also said an independent board should be set up to oversee the management of trust funds.

"Experts have determined that the plan the department is proposing is seriously flawed and is likely to result in developing systems that will fail to meet trust standards," Fox said. "For that reason, [the Intertribal Monitoring Association] has concluded that it is imperative that the overall control of trust reform be placed under the authority of an independent entity."

He said that "it would be a big mistake to trust the department" to put together a working management system because nobody with extensive trust experience is involved in TAAMS.

Campbell said he and Sen. Frank Murkowski (R-Alaska) authored a bill that would put building the new system into the hands of the private sector. It is unlikely, however, that President Clinton would sign the bill, Campbell said.

No one from Interior testified at the hearing because the department is in the midst of a trial involving the trust funds, according to a statement from Interior Secretary Bruce Babbitt.

In the statement, however, Babbitt said GAO's recommendation that the department stop pursuing TAAMS "was unacceptable to me."

"The realities of our current situation - significantly outdated trust management systems, a need to make corrections as quickly as possible and limited trained and experienced personnel - have called for an accelerated approach to the TAAMS project to ensure its success," Babbitt said.