Norton announces new money for American Indian trust fund as she heads off charges that she mismanaged it

WASHINGTON (AP) _ President Bush will seek an additional $83.6 million next year to fix a mismanaged American Indian trust fund that has become a thorn in the Interior Department's side, Secretary

Saturday, February 2nd 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush will seek an additional $83.6 million next year to fix a mismanaged American Indian trust fund that has become a thorn in the Interior Department's side, Secretary Gale Norton said Friday.

Norton's announcement of a 76 percent funding increase came as she sought to smooth over differences with suspicious Indian leaders, and prepares to woo members of Congress skeptical of her plan to fix the trust fund.

Meantime, her attorneys will be in federal court, trying to convince an increasingly frustrated judge that Norton should not be held in contempt for failing to comply with changes to the trust he ordered two years ago.

It is the latest chapter in what a Senate committee called one of the most egregious examples of government mismanagement.

The trust debacle dates back to 1887, when Congress assigned Indians small allotments of land, but took responsibility for managing the grazing, timber and oil and gas rights on the land.

The Interior Department was supposed to collect the royalties and disburse the money to the Indian land owners. But much of the money was stolen or misappropriated, and record-keeping was in such a shambles that nobody knows how much was squandered, although some estimates are as high as $40 billion.

In 1994 Congress created a special office in the Interior Department to head efforts to reform the trust. Two years later, Elouise Cobell, a Montana banker and member of the Blackfeet tribe, was so fed up with the state of the trust that she sued the department.

``I feel they've taken advantage of people,'' Cobell said. ``No other race of people would ever have had to put up with this.''

Just more than two years ago, U.S. District Judge Royce Lamberth agreed that Interior had failed the 300,000 Indian beneficiaries and ordered the department to piece together how much the Indians were owed and overhaul the system.

The department has failed to do either, according to a series of reports from two court-appointed watchdogs, despite Congress allocating more than $614 million to the effort.

The most recent reports, issued Friday, said the department has not complied with the court-ordered accounting and continues to mislead the court.

Another report found such a severe lack of computer security for the trust fund's accounting system that Lamberth pulled the plug on the Interior Department's Internet access _ knocking national parks and other agencies off the Web, as well _ to keep the $500 million account from being looted by hackers.

Lamberth also ordered Norton to show why she shouldn't be held in contempt for failing to reform the program and misleading the court, although many of the alleged misdeeds occurred under her predecessor, Bruce Babbitt, who was held in contempt during his tenure.

Threatened by the judge, Norton proposed in November to create a new bureau to take over trust reform from the Bureau of Indian Affairs.

This weekend, Norton and top Interior officials will meet in Shepherdstown, W.V., with 24 Indian leaders opposed to her plan and the tactics used to craft it.

On Monday, Bush will request the $83.6 million from Congress to reform the trust. Tribal leaders say it's not enough.

``To me, that's a very small portion of what it should be,'' said Tex Hall, president of the National Congress of American Indians.

On Wednesday and Thursday, two congressional committees will hear testimony from Norton and McCaleb on Interior's reform proposal.

And Lamberth will continue Norton's contempt hearing all week. He has also been asked to strip Interior of its oversight of the trust fund and assign a receiver to manage the money.