Norton orders overhaul of failing trust fund's management of Indian money

Thursday, November 15th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Interior Secretary Gale Norton has ordered sweeping changes to a system that was created to manage billions of dollars in royalties from Indian land, but continues to fail in its mission.

Norton created the Bureau of Indian Trust Assets Management and will appoint an official, reporting directly to Norton, to manage overhaul of the trust system.

The action comes beneath the looming threat that Norton and other government officials could be held in contempt of court for failing to comply with the court-ordered reform of the mismanaged system of Indian trust funds.

The department notified U.S. District Judge Royce Lamberth of the changes in a filing late Wednesday after Lamberth scolded government attorneys earlier this month for Interior's bungling of the trust reform.

``I understand that reorganization by itself does not solve the numerous problems of trust reform, but it does provide an avenue for developing solutions,'' Deputy Interior Secretary J. Steven Griles said in court documents.

Griles said that he has taken temporary responsibility for trust reform.

In 1994, Congress ordered Interior to clean up the mismanaged system established in 1887 to manage royalties from mining, cattle grazing, oil drilling, and timber harvesting on Indian land. The proceeds were supposed to be paid to the Indian beneficiaries.

In 1996 a class-action lawsuit was filed on behalf of 300,000 American Indians, alleging the government had squandered at least $10 billion in Indian royalties and possibly many times that amount.

Nearly two years ago, Lamberth ordered Interior to piece together how much it owes the Indians and to overhaul its accounting system.

Neither has happened, despite $614 million spent by Interior in the effort, according to a series of reports in recent months by a court-appointed watchdog. Moreover, Interior officials have misled the court about the status of reform efforts, the reports say.

The Indians' attorneys want nearly 50 government officials held in contempt and possibly jailed on grounds they have obstructed the reform and misled the court.

At a hearing two weeks ago, an exasperated Lamberth said the actions of the current and previous administrations showed such blatant contempt for the court's orders that he told a government attorney it would be better to ``throw yourself on the mercy of the court,'' than contest the contempt motions.

Government attorneys were expected to contest the allegations of contempt in filings due Thursday.

In 1999, Lamberth held President Clinton's interior secretary, Bruce Babbitt, and treasury secretary, Robert Rubin, in contempt of court and fined them $600,000 for failing to turn over documents related to the case.