Babbitt Under Fire Once More,
This Time Over Indians' Money

WASHINGTON — Clinton administration Interior Secretary Bruce Babbitt is in trouble over Indians again.

Babbitt is still under investigation for a case in which he is accused of deciding an Indian casino dispute on the basis of a campaign contribution. Now a federal judge is threatening to hold him in contempt for his department's failure to hand over Indian trust records for a lawsuit. To make matters worse, the judge is looking into Babbitt's recent moves against officials in charge of investigating the mishandled accounts.

As a contempt hearing opened Monday, U.S. District Judge Royce Lamberth announced he would subpoena former Special Trustee Paul Homan to testify about Babbitt's actions.

Homan, whose oversight position was created by a special order of Congress, quit last week after Babbitt ordered a reorganization of the trust office, which is in charge of cleaning up nearly $3 billion in funds held for tribes and individual Indians. Homan wasn't consulted about the overhaul and accused Babbitt of undermining his authority.

"Don't you think Mr. Homan's resignation flies in the face of the secretary's contention that he's acting in good faith?" the judge asked government lawyers.

The Interior Department is being sued over its admitted decades-long mismanagement of the Indian trust funds, and the government lawyers claimed Babbitt's reorganization of the trust office showed he was dealing with the problem. His actions included reassigning the top recordkeeping official.

"If you've got a football team that isn't winning, sometimes the coach has got to go," said Justice Department lawyer Phillip Brooks. "The secretary is entitled to pick his coach, because he's in trouble here and he's entitled to try and fix it."

Lamberth last month lost patience with delays in producing canceled checks and other account records for the lawsuit's five lead plaintiffs and he ordered the contempt hearing for Babbitt and Treasury Secretary Robert Rubin.

The hearing is expected to take a week. It isn't clear whether Babbitt, who appears to be the judge's main concern, will be forced to testify.

The funds include 300,000 accounts held by individual Indians worth $500 million and another 2000 tribal accounts. The lawsuit focuses on the individual accounts.

The special trustee's office is responsible for handling the money and improving the accounting system. Leases and other records necessary for reconciling the accounts are scattered around the country in various Bureau of Indian Affairs offices.

Homan was appointed to his post in 1995 under a set of congressionally ordered reforms.

In a letter to the judge, the trust office's advisory board said Homan's departure would "undoubtedly curtail progress on the reforms."

A Babbitt spokeswoman claimed Homan was reassigned because his replacement had more experience in handling records. It turns out, however, that the replacement is a former State Department functionary, whereas Homan is a former bank executive and federal bank regulator.

He is thought to have drawn Babbitt's ire early on for criticizing Interior's handling of the trust funds as the "worst" case of bank mismanagement he's ever seen.

"There are no books," the Wall Street Journal quotes Homan as saying.

One of the plaintiffs in the lawsuit, a Blackfoot tribal member, opined that Babbitt was "retaliating against the one person who was implementing reforms."