January 9, 2002

Special trustee testfies that Interior gave court inaccurate, incomplete reports


SOURCE: Press Release

WASHINGTON, D.C. ­ Thomas N. Slonaker, the senior official entrusted by Congress with overseeing reform of the Individual Indian Monies (IIM) trust, told a federal judge today that two Interior Department Secretaries and their top aides filed misleading reports with the court and did virtually nothing in the past two years to comply with orders from Congress and the judge to provide Indian trust beneficiaries with an accounting of their money. 

Saying repeatedly that he could not recall specific details, Slonaker nevertheless acknowledged, under questioning, that a series of trust reform projects, including a $36 million trust accounting data computer system, were poorly conceived and badly managed and that the disastrous results were concealed from the court in misleading quarterly reports okayed by both former Secretary Bruce Babbitt and current Secretary Gale Norton.

Asked by lead plaintiffs attorney Dennis M. Gingold if a report submitted by Norton late last year was untruthful, Slonaker replied, “It was certainly incomplete.” Was it accurate, Gingold asked? “I can’t assure you that it’s accurate,” Slonaker said. But was it truthful, Gingold continued. “I’m splitting hairs here between accurate and truthful,” Slonaker answered.

Asked later if ­ in light of a $3 million consultant’s report to Interior that the new computer system should be scrapped ­ he believed Norton’s report had given the court an accurate picture of trust reform, Slonaker said, “No.”

Was it complete? “No.”

Was it truthful? “I’m still stumbling with the difference,” Slonaker said. “If you take truthful and equate it to accurate and complete, it was not truthful. I’m struggling with the semantics.”

The testimony came in the 13th day of a contempt trial for Norton and Assistant Secretary for Indian Affairs Neal McCaleb on charges that they failed to comply with court orders to reform the IIM trust and filed false reports with U.S. District Judge Royce C. Lamberth that painted a rosy picture of their progress.

Slonaker, a presidential appointee, agreed today with earlier testimony by his principal deputy, Thomas Thompson, that both men grew increasingly concerned with the reports’ lack of candor and eventually refused to verify their contents, fearing legal repercussions.

Slonaker said he submitted a memo to Norton citing four examples of inaccuracies. He said that led to an attempt by Norton to get subproject managers in the field to verify the reports instead. “So they went around you?” asked Judge Lamberth. “You could say that,” said Slonaker.

“It was the Secretary’s decision?” Lamberth asked. Slonaker said it was.

Slonaker, who began in late 2000 to add his own, independent observations to the reports, described ongoing tension between himself and top Interior aides over the level of candor to be exercised with the court.

“There was a concern about giving all bad news,” he said. “In my [independent] observations, there was a concern to take the edge off my remarks. That bad results ought to be balanced with good results ­ a fairer view.”

In Slonaker’s earlier career in private sector banking and trust work, Gingold asked, “was there a balancing of good and bad” in reporting to the Securities and Exchange Commission? “No,” Slonaker said.

Why not? “It was against the law.”

Why was that, Gingold asked. “I wouldn’t want to find out,” said Slonaker.

Overall, Slonaker testified, he agreed with the accuracy of a series of reports by a court-appointed monitor, Joseph S. Kieffer III, whose investigation forms the basis for the contempt charges against Norton.

“Until the [trust reform] plan is overhauled and thought through more carefully,” he said, “I don’t think we can say we’re on the right track….I don’t have a great deal of confidence in the subprojects and trust reform generally as I sit here right now.”


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