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For Immediate Release: Sep 24, 2007
Contact: Kirsten Stade (202) 265-7337

AGENCY AUDIT VERIFIES WHISTLEBLOWER MISMANAGEMENT CHARGES

Interior Continues to Mangle Indian Trust Accounts, Losing Millions Monthly


Washington, DC — An internal report by U.S. Interior Department auditors confirms disclosures by an agency attorney concerning ongoing gross mismanagement of Indian land leases, according to a copy of the audit released today by Public Employees for Environmental Responsibility (PEER). The attorney whose charges triggered the audit is facing a proposed dismissal for revealing “trade secrets.”

Robert McCarthy, a Field Solicitor for Interior, has repeatedly warned his superiors, Congress and others about systemic mishandling of an estimated 11,000 land leases on behalf of hundreds of tribal members and the Agua Caliente Band of Cahuilla Indians by the Bureau of Indian Affairs (BIA) office in Palm Springs. An “Indian Trust Investigative Review” by Interior’s Office of the Special Trustee for American Indians dated July 20, 2007 vindicates McCarthy by validating his claims that the BIA failed to collect millions of dollars in lease revenues owed to Indian landowners.

Although the report carries the notation, “Draft – For official use only,” it was released by the Office of the Special Trustee to the Agua Caliente Band and its members. Its transmittal sheet reads “the draft report has been sent to the BIA and we are waiting on their response.” The report identifies “significant deficiencies…that are likely to result in deterioration or harm to Indian trust assets if not addressed and/or result in substantive noncompliance with laws, regulations, or court decisions”, including –

  • Failure by BIA and its parent agency, the Interior Department, to implement key recommendations from a 1992 audit to conduct legal reviews of all leases and institute basic fiduciary safeguards;
  • BIA lacked any written “justification for approval of lease payments at below fair market value,” with BIA officials offering the rationale that “the landowners ‘just didn’t care’”; and
  • The auditors “could not determine if lease payments were made timely, accurately and in accordance with the lease agreement.” Rents on some leases not been paid for years because, as the auditors stated, “the Agency has not actively enforced lease compliance.”

“Robert McCarthy has been vigorously raising these concerns since 2005 with the only result being that he is barred from his office, ordered to work from home, denied access to the law library and precluded from using the Department intranet or even hooking up a fax,” stated PEER Executive Director, Jeff Ruch, whose organization is representing McCarthy in conjunction with the Government Accountability Project. “Rather than being bureaucratically banished, Robert McCarthy should be commended for risking his career to bring these major deficiencies to light.”

Perhaps even more significantly, the auditors found that a decade-long commitment to implement an electronic lease accounting system has been an utter failure. The report states, “with implementation of TAAMS [Trust Assets and Accounting Management System], the Agency should now have …the ability to better monitor and enforce lease payments” but the report finds: “Realty staff also stated that TAAMS is not an accounting system and cannot be used to determine the amounts due for leases.”

Meanwhile, the August 9th proposed dismissal of McCarthy is still pending. The decision was first assigned to a senior attorney, and then elevated to Interior Solicitor David Bernhardt on August 29th, but last week was transferred to the Regional Solicitor in Alaska, Richard Myers.

“The Solicitor’s Office has been playing hot potato with Robert McCarthy’s career for the past two years,” Ruch added, noting that McCarthy has now been placed on a protected witness list in a multi-billion lawsuit (Cobell v. Kempthorne) against the Interior Department for mismanagement of assets and revenues owed to Indian property-holders. “Interior needs to start listening to and stop shooting at its messengers.”

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Read the “Indian Trust Investigative Review” audit report

Look at the effort by the Office of Solicitor to dismiss Robert McCarthy

See the relationship of McCarthy’s disclosures to the multi-billion dollar Cobell case