TREASURY inquiry finds no wrongdoing in destruction of Indian affairs documents

Wednesday, August 15th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ A Treasury Department inquiry has found that six department attorneys did not knowingly conceal the destruction of 162 boxes of potential evidence in a multibillion-dollar lawsuit over mismanaged Indian money.

``The lack of intentional wrongdoing is borne out by the record,'' said the report, unsealed Tuesday by U.S. District Judge Royce Lamberth.

Dennis Gingold, the attorney representing thousands of American Indian plaintiffs in the class-action suit over the squandered money, called the report a whitewash to cover malfeasance by former high-ranking Treasury officials.

The American Indian trust funds were created in 1887 to manage royalties from grazing, logging, mining and oil drilling on Indian land. But record-keeping was shoddy and in some cases money was stolen, used for other federal programs or never collected, the government has acknowledged.

The Indians say the losses total at least $10 billion.

In late 1999, Lamberth ordered the government to reconstruct the trust fund accounts and reform the current management system _ a ruling upheld by the U.S. Court of Appeals.

In December 1999, a court-appointed investigator criticized Treasury for not immediately notifying the court that 162 boxes of historical documents had been destroyed at its Hyattsville, Md., records office between Nov. 23, 1998, and Jan. 28, 1999, in violation of the court's order.

``This is a system out of control,'' wrote Alan Balaran, the special master assigned by the court. Balaran said the attorneys who did not notify the court had violated professional ethics and been part of a ``pattern of obfuscation'' in the case.

The Treasury review, completed last September, called the destruction deeply embarrassing, but determined that poor communication among the six attorneys and not intentional deceit accounted for the problems.

The review recommended mentoring and communication skill training for four of the attorneys and a one-day suspension for two of those attorneys. Two others no longer worked for the Treasury Department when the review was completed and could not be disciplined.

Treasury fought the release of the report for 11 months, arguing it contained personnel matters.

In unsealing the report, Lamberth noted that Treasury had at least notified the court of its steps to correct attorney misconduct, in contrast to the Interior and Justice departments.

``Neither of those agencies has provided any report whatsoever ... demonstrating that they have held any attorney accountable in any way whatsoever for any misconduct in this litigation,'' he wrote.

The government's handling of the trust fund case has been dealt serious blows in the past five weeks.

A court-appointed investigator has issued two scathing reports: one that Interior has done nothing to reconstruct how much should be in the Indian accounts; the other, that a $40 million computerized accounting system may have to be scrapped.

And two weeks ago, Balaran criticized the government for allowing destruction of archived e-mails potentially related to the case.