- The Washington Times - Tuesday, December 7, 1999

Treasury Department officials shredded 162 boxes of documents being sought in a lawsuit involving the mismanagement of Indian trust funds, covered up their actions for more than three months and lied to a federal court about it, court records show.

The document destruction was outlined in a report by court-appointed investigator Alan Balaran, released yesterday by U.S. District Judge Royce Lamberth who four months ago ordered the government to pay $625,000 for the earlier “disobedience” of Interior Secretary Bruce Babbitt and then-Treasury Secretary Robert E. Rubin in withholding records in the case.

“This is a system clearly out of control,” Mr. Balaran said in the report.

Justice Department lawyers, citing potential “severe and unfair damage” to the reputations of seven Treasury Department lawyers questioned in the shredding probe and the possibility of “eroding confidence” in the agencies involved, asked Judge Lamberth Friday to delay releasing the report. The judge denied the motion.

“It has already been almost seven months since this matter was brought to the court’s attention. The court is unwilling to allow additional weeks or months to go by before this matter is placed on the public record,” Judge Lamberth wrote.

The judge said in his five-page order making the Balaran report public the document destruction was authorized “on the very same day” Treasury officials were testifying before the court about their negligence in allowing the destruction of voluminous microfilm files that should have been preserved.

He also said that on that same day Nov. 23, 1998 Treasury and Justice Department lawyers were “repeatedly assuring the court that all necessary steps were being taken to preserve all relevant documents.”

“Rather than coming forward at that time and making the necessary admissions, the Treasury officials deliberately decided not to tell Justice Department officials about the destruction, arrogating totally to themselves the decision that the documents were not related to this litigation, a decision that everyone involved now admits was wrong,” the judge wrote.

Attorneys for the Indians told reporters yesterday the government’s actions reflected a continuing pattern of “obfuscation, stonewalling and delay.”

“It is clear from this latest event and the history of the case that the government continues to not take this case seriously, and that includes a lot of their employees across this agency,” said John Echohawk, executive director of the Native American Rights Fund.

In a joint statement, the Treasury and Justice departments said they would “respond to the court as appropriate.” The statement also said the departments were “disappointed” in some conclusions in the Balaran report, but was committed to “cooperating with the court to resolve all issues fully and fairly.”

“In fairness to all concerned, we caution against drawing conclusions prematurely,” the statement said.

The document destruction occurred at a Suitland, Md., warehouse between Nov. 23, 1998, and Jan. 27.

In February, Judge Lamberth held Mr. Babbitt and Mr. Rubin in contempt of court for failing to turn over Indian trust records in the pending suit. He issued the contempt citations after Mr. Babbitt and Mr. Rubin refused to produce trust fund records, canceled checks and other documents demanded by the court.

The judge said he found “clear and convincing evidence” that Mr. Babbitt and Mr. Rubin disobeyed his order, although he noted that Mr. Rubin’s involvement came because he “totally delegated his responsibility to others and they have miserably failed to comply with this court’s orders.”

Mr. Babbitt and Mr. Rubin were among those named in the class-action suit, filed when the Native American Rights Fund representing various tribes accused the Interior’s Bureau of Indian Affairs of mismanagement.

Judge Lamberth had sought the records and other materials involving more than 300,000 individual accounts and 2,000 tribal accounts managed by the Interior and Treasury departments. The departments manage money from, among other sources, land settlements, royalties from minerals and other resources, and companies that use Indian land.

Interior and Treasury officials have been unable to produce accounting records or statements to verify how much cash has been collected. An audit by the Arthur Andersen accounting firm said the Bureau of Indian Affairs could not account for $2.4 billion in transactions involving the funds.

The suit seeks damages for the lost money.

Judge Lamberth first ordered the departments to turn over all documents in the case to allow attorneys for the Native American Rights Fund to prepare for trial. The departments never complied, giving the judge a number of reasons for the delay including an Interior Department claim that some of the records have been so tainted by rodent droppings in a New Mexico warehouse that to disturb them would put department officials at a health risk.

Treasury lawyers waited more than three months after the contempt citations before they notified Judge Lamberth the 162 boxes had been shredded. Government lawyers have since acknowledged that statements made to the judge about the documents were “patently untrue,” Mr. Balaran said in his report.

Lawyers for the Indians said last month they would seek another contempt citation after Mr. Balaran discovered records concerning the case in a shed with used tires and other debris on a North Dakota reservation.

Judge Lamberth said he would take no action on the Balaran report until all objections are reviewed. Each side now has 10 days to respond to the findings.

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