Part two

Editors’ note: Ross Swimmer is the Special Trustee for Indian trust funds within the Department of Interior. The Office of the Special Trustee was authorized by the 1994 American Indian Trust Fund Management Reform Act to house trust accounts and accounting functions that were previously the province of the BIA. Broadly considered, the office is charged with reforming IIM accounting practices. The Senate confirmed Swimmer as the Special Trustee in 2003.</i>

Ross Swimmer: … As this trust grew over the years, it was managed by as many as 80 different local agencies. And these were BIA agencies with superintendents. Each of them set up the kind of management system that they felt was needed for the local area. When you look at the management side of it, then you say, well, if you’re in location A and you’re remote from the bank, you don’t have a depository nearby.

Farmer Jones brings his lease check into that location. That location then has to mail that check, usually to the regional office. First of all, they’ve got to log it in and all that, which may take them a day to do. But then they get it mailed someplace else. It may take one, two or three days. Then that office has to process the check and get it into a bank. So in the best-case scenario you could say that from the time Farmer Jones makes his payment, it’s five days until that check gets deposited in the U.S. Treasury. During those five days, that person lost interest.

Now in the private sector, that would be mismanagement. You would not have a gap of that long a time, but there would be other processes in place in the private sector to avoid it, such as a lockbox. Where Farmer Jones, instead of carrying his check to the agency, giving it to someone who has to make out five sheets on what to do with it and then put it in the envelope, mail it and then they got it.

Instead Farmer Jones puts it in an envelope, mails it and the next day it gets to a lockbox where it’s immediately deposited and gains interest. That’s one of the reforms that we think is important, and it’s not to say that it was necessarily mismanagement because before it was five days of lost interest. The fact is that’s simply the way the system operated all this time, and it was as efficient a system as you could have given the situation that was out on the ground. But in order to do that and reform this trust, so that we can improve the management, we say we’re going to create a lockbox.

We’re not going to take money at the local agency. … We are able to save a lot of time by not having hundreds of thousands of checks processed at the local agencies. Now those people are freed up, maybe they can hire another range manager, or use their money more effectively to do something else. So that’s what I’m talking about in the context of mismanagement. You look at the oil and gas business. There is no question that there are accounting issues from the oil and gas companies and whether they paid the right amount of royalty. So the department [of Interior] back in the ’80s created what is called the Minerals Management Service.

Minerals Management Service is, their duty is to audit these energy companies to be sure that whatever method is used to tabulate the royalties is accurate, and actually does give the right amount. That was a reform that was implemented in the early 1980s with the Minerals Management Service doing these audits. Now, you go back 50 or 60 years and say, well, OK the oil company reported that they produced this many barrels of oil sold at this price and here’s the royalty. Were they audited all the time? Probably not. You know, were mistakes made? Could be, you know. But again, where do you draw the line; and so how far back in history are we going to go to try to determine what the value of that might be? It’s still all speculation. …

Then we’ve got the case of the fellow in Oklahoma who died, and his heirs looking back now on his transactions say, well you know, he sold 20 acres of his land, and he sold it in fee, minerals and everything. Well … somebody drilled an oil well. That oil well’s produced $6 million.

Now he – we know that old granddad never would have sold that 20 acres – he shouldn’t have. He shouldn’t have been allowed to sell it. Well again, you know, hindsight’s great. But the fact is if you look at his ledger card, showing what he did with the money, things like he went out and bought a horse, he repaired his roof, he bought groceries – I mean he needed the money. He sold his 20 acres. So you know, whether … that constitutes mismanagement, that’s a real question. Did it? I mean where does the bureau draw the line? – “Look fella, you know, you got oil wells around here, do you really want to sell this land? Maybe you want to retain minerals? Maybe you want to take” – but the fact is that he sold it, the evidence is there, the money came in, the money went out, you know. So that’s what we look at. …

The other thing, we obviously in our listening conferences we’ve attended through [the InterTribal Monitoring Association], we have picked up on a lot of concern from individuals who say, “I can’t get information. I just — I go to the BIA and they shuffle me around from one person to another – I just, you know I’m frustrated. I can’t get account information, I can’t find out you know when my leases are due or who’s leasing my property, and I want to know these things.”

So we’ve created the call center. We’ve said we want to give every beneficiary a number, toll-free, where they can call and get basic information, and if there’s a complex issue involved, like a trespass or something, they can be sure that when they call the beneficiary call center, that information will get passed on to the trust officer.

The trust officer – think about this. You have a retirement account with a fiduciary bank and trust company, a 401(k) or a Schwab account.

If you want information on that, you’re generally going to talk to what is called a trust officer. You’re going to talk to somebody that has some general, pretty good information on investments, can give advice, who understands what the term “fiduciary” means and has some knowledge about your particular situation.

Maybe you’ve got a 401(k), it’s got a half-million bucks in it; you want to know, well, you know we didn’t do too well last year, what do you think some investments for this year might be that would be better perhaps than what we were in last year? So you’ve got somebody you can sit and visit with.

This [IIM] never had a trust officer available to a beneficiary until three years ago, two and a half years ago. … Doesn’t mean that the work wasn’t being done appropriately. It’s just that there was no one in the BIA at the agency offices that was tasked with the title of trust officer. You had social workers, you had realty people, had people doing probate, you have law enforcement, education. But if you went in and said, “I’ve got an account that’s got $100,000 in it from this lease we just signed, and I want to talk to a trust officer.” You know all they could do is scratch their head and say, “What’s that?” So they would get sent to realty.

Well, realty might say well, yeah, we did, we leased that land like you – you know, we talked about it, we leased the land. I have to go over to finance and see where the money is. I’m not sure when it came in, I imagine we’ve got it but it’ll take me a couple days because she’s on vacation, but I’ll let you know in a few days whether we got the money and where it is and you know, that sort of thing.

Well, if you called the bank and said, “Can you give me an account balance?” Well, you know, our bookkeeper’s out today, probably can’t do it for a couple weeks or three days – you wouldn’t feel real comfortable. Again, that would come under a claim of mismanagement. But it might not be. It might be, in fact, that that’s the system, that’s the way it worked.

So our response to that in the trustee’s office is look, let’s get trust officers out there who have one single duty, and that is to communicate with the beneficiary. They don’t have to build roads, they don’t have to lock people up, they don’t have to do social work; they have to be there to meet and talk with the beneficiary and connect with that person and be available. …

<i>Continued in part three