Elouise C. Cobell
Chair, Blackfeet National Bank
Lead Plaintiff, Cobell v. Babbitt
"Native American Nation Building: Empowerment and Asset Development in Poor Communities"
February 6, 2001

Elouise Cobell: You know, when you are traveling on the airplane, traveling out to Washington and you talk to people on the plane, they always say, "What do you do?" If you say I am a banker, they look out the window and the clouds seem more interesting than you. But if you tell them "I am reforming the United States government", they look at you and say "What! For real?" And you say yeah, because that is basically what we are doing with this lawsuit is we’re reforming the United States government.

How did I get to where we are today? By listening. I began listening to the stories of the mismanagement of Indian trust funds when I was just a young girl, listening to the hardships that my aunts, my uncles, my grandparents had to go through on trying to get access to their own money. And I say their own money and I think every one of you need to understand this because I think that so many people are of the misconception that all Native Americans people just are handed a government check. They’re not. That check that they receive is for their own resources. It’s for their land that they own, what is on top of the land, what’s underneath the land. But it was decided way back when, when the Allotment Act was enacted, or the Dawes Act, that the government would set up trusts for Native people because they were incompetent of managing their own affairs. They didn’t understand so the United States government said, "We will manage your assets in trust. So the people had to depend o the United States government to do the right thing. The Allotment Act was started in 1887 and they’ve actually been mismanaging the monies and the lands since 1887. And it was amazing to me some of the real statistics that came out of this case when I grabbed onto it.

Like what I said, I was young, then went to college and came back and became the treasurer of the Blackfeet Indian Nation. At that point in time was when I really realized what was happening. I couldn’t reconcile the tribal trust accounts. There are two types of accounts that this encompasses: the tribal trust account that is held by the United States government and individual Indian trust accounts that are for the individual Indians that own land. So when I couldn’t reconcile the tribal trust accounts, I brought it to the attention of the government. I had to be persistent and I had to continue to write letters to everybody, every congressman, every senator, and every government official I could to tell them about this mismanagement that there was a real serious problem. We began to ban together.

And it wasn’t something that was new because there were zillions of GAO reports and Inspector General reports dating back to the 1800s that basically said, "We have a real serious problem here. The United States government, being the Department of Interior, being the Department of Treasury, are mismanaging Indian trust funds." But nobody would do anything about it. Nobody, and it wasn’t until Congressman Sianar, after hearing repeated cries from individual Indians, that he finally started holding hearings. And Congressman Sianar didn’t have anything to do with Indian Affairs Committees. He was in charge of government operation affairs. So he took it upon himself because he felt this was a horrible crime that the United States was doing to Native people. So he began holding hearings and finally our voices came to light because we testified at several of the committee hearings. The last count that I had is that I testified at 11 hearings on this issue. Finally Congressman Sianar led a charge. He came out with a report that is called "The Misguided Trust", or something to that effect, but it was basically the mismanagement of Indian trust funds where he built the record. So he entertained and introduced legislation that would form the first trust fund reform act, that was called in 1994 the Trust Fund Reform Act. We were able to get that enacted and for the first time it called for qualified people to manage the trust. Because the irony of this all is that I am a banker. I know how your money should be managed and I know how the government regulates how us bankers manage your money. But why was it different when they managed brown people’s money? Why were there different laws that they could break? They could actually do almost anything and they were not held accountable.

So when the legislation was finally approved, we put somebody in charge that was called a special trustee. Normally they just had janitors or anybody that they could pick out of their pool of employees to manage billions and billions of dollars. So I don’t really have to tell you the end of the story. There was tons of mismanagement, fraud, and embezzlement. We are uncovering things that would shock you. Probably after the case more of it will come out. But we actually had determined that there was no way that we wanted to go criminally after somebody and convict them, that we wanted to go after to tell the United States government to do the right thing. Number one: our case is about compelling the United States government to put in place accounting systems. Now in the real world, why would you ever have to sue to make that happen? You wouldn’t. I know. If you managed a trust department in a bank and you did not give your customers, the beneficiaries of that trust, if you didn’t give them account statements that reflected their assets, you would be in serious trouble. You wouldn’t have to sue. The regulators would be in, in a New York second and close you down. Then you would have to build your own accounting system.

Well not in this situation. We had to sue to compel the United States government to put accounting systems in place because one of the secrets that we unveiled was the fact that there were no accounting systems. Here the Department of Interior, the Department of Treasury got away with taking people’s money and not getting any part of accountability. Basically, put very simply, they were running a bank that was totally out of control. We were able to, in 1989, get United States Congress to mandate that the Department of the Interior reconcile, audit, and certify not only the tribal accounts, but the individual Indian accounts. So they hired the largest accounting firm in the entire country. They went out and did a RFP. We were involved as an Indian group that were represented and they hired Arthur Anderson. Arthur Anderson went out and started looking at the accounts. What the mandate said is that you will go back to the earliest date practical. Since they had never had an accounting since the inception of these trust accounts in 1887, that meant that they could go back to 1887.

Well they got out in the field and there are 93 different agencies of the Bureau of Indian Affairs that regulate Indian country. By not having the uniformed accounting system, there was probably 93 different ways that records were stored or destroyed or whatever. So Arthur Anderson came back with a report in 1991 and said, "There is no way that we can go. That we can’t audit. We cannot perform an audit. The records are inauditable but the best we can do is we can perform a reconciliation." We all know what that is. That is basically the ticking and the tacking of your credits and your debits. Like if you have your checkbook and your bank statement, you compare. Deposit goes in, this check is dispersed. So that’s basically what a reconciliation is. It’s not saying, "did so and so pay in the money?" It didn’t say that. It didn’t check if they paid in the money or if they paid in the money, where did it go to the proper place? A reconciliation doesn’t trace back to the source documents, where an audit actually does. So they said the best we can do is perform a reconciliation from 1972 to 1992 for the tribal accounts. And the tribal accounts were in bad shape but they said for the individual Indian account, we won’t even attempt it. It will take us at least $280 million to perform a reconciliation for 1972 to 1992, just to attempt it. But we know that there are so many missing documents out there that we can’t perform a reconciliation for individual Indians. And the saddest thing, the individual Indians on most Indian nations are the poorest people in country.

What makes me so angry, and why I took this case on, is the fact that people were robbed of a better quality of life. Most of the people that owned these thousands of acres of land, rich in resources, are living in poverty. They could have had health care. They could have sent their kids to college. They could have done many things. But because of the government’s mismanagement, because of their inability to have accounting systems in place, oil companies, timber companies, they could come in and just do anything they wanted. They could basically take resources and not pay for them. People could use land and not pay for it because nobody held the United States government accountable. So it was back when the report was coming out and you would think that after Arthur Anderson came and gave their report to the Department of Interior, to the Department of Treasury, to Congress, that they would have said, "What are we going to do? Let’s work together. Let’s figure out how we can get an accounting for all the individual Indians. Let’s figure out how we do this?" But they decided to just stonewall. They said, when I would go to the meetings and we would have a copy of this report, "What are you going to do? These people are the poorest people in the country. You have got to give them accounting. We’ve got to give them account statements. We’ve got to fix these systems." They would say, "Sue us." They knew they could say that because individual Indians did not have deep pockets. They didn’t have any money to go hire attorneys and they knew that. So basically they were taking advantage of the poorest people in this country.

Well, we continued to fight. It wasn’t only me. We had a couple of other people. We continued to have meetings with people. We continued to try to convince them to do the right thing. Finally one day, I think, the icing was put on the cake. I had this opportunity to be with Janet Reno. We were doing the co-keynote talk together for the Office of Controller Currency in Washington, D.C. So they had us in this holding tank together. And I thought I would take the opportunity to visit with Janet and tell her, "You gotta listen to me. Let me tell you about the mismanagement of the trust fund. Let me tell you about it." She said, "Oh yeah, it sounds interesting. Why don’t you, when you get home, why don’t you write me a letter." So I did. I whipped home and wrote a letter. I was good at writing letters. I wrote everyone in the whole country. I’d write each and every one of you if I knew that there was a way that you could help me. But I wrote a letter to Janet Reno and I said, "I want a meeting. You said I could have a meeting with you to explain what is happening with the mismanagement of Indian trust funds." I never get an answer but I continue to call and call. Finally, one day it broke through and they said, "Come to Washington. We have a meeting set up for you."

So when I got to Washington and went to the Department of Justice, the meeting was set up with a lower echelon person. It wasn’t Janet Reno. It was some man and about 20 other attorneys from the Department of Justice. The first thing he said to me is, "Now don’t you come in here with any false expectations." I said, "You ought to be ashamed of yourself. You ought to be very ashamed of yourself. How can you say that when people are suffering and dying every single day in Indian country and you say, ‘don’t have any false expectations’." Then I said, "I want a special prosecutor assigned." Of course that didn’t go anywhere so I walked out of that room and I decided that the only way that they are going to listen to me is if we file a lawsuit. So right then and there I decided. I used to be so naïve thinking, "If only I could get to the President. If only the President knew. If I could just get to the President and he knew this horrible mismanagement was going on."

Well, the President knew. I found out much later. But the big issue was liability. They didn’t care about the accounting. They cared about the fact that they owed individual Indians billions of dollars and they didn’t want it to happen on their watch. That was basically it. So it was the old stall, stall, stall. Stonewall, stonewall, stonewall. And a new administration would come in and they will have to deal with it. So that was how they handled the mismanagement of Indian trust funds. Anyway, we filed the lawsuit. And I just want to say a little bit about how we filed the lawsuit. We didn’t have any money, bet we had to hire attorneys. We had to hire the best accountants in the entire country because we are going to have to reconstruct records way back from the 1880s. We had to hire historical mappers. We had to hire the best oil and gas accountants in the entire country. The best timber, the best of everything. An attorney woman said, "Let me help you. Let me gather some philanthropists together in New York and you come in and you tell the story to them."

So we did that and it was wonderful. We had a bigger turnout than this from all of the groups of philanthropy organizations that came in for social justice and they were blown away. They could not believe that this had happened. And I hope each and every one of you, when you go home tonight, that you think in your mind, "I can’t believe this happened in the United States." But it has happened.

So the first funder. I walked out of the door and a funder came up and said I’ll give you $75,000 grant and I’ll give you a $600,000 PRI, which is a program-related investment, which is like a loan. So I said, "Yes!" I had $675,000 and I was so excited and we filed the lawsuit about two days later. Our budget was around $8 million that we needed but we couldn’t wait. We had to take the risk. We had to take them to court. So on June 10, 1996 we filed one of the largest class action lawsuits against the United States government in history. And I think probably when it ends and when you finally hear the ending story, that it is probably the biggest scandal that’s been covered up y the United States government for 100 plus years.

I was fortunate. I got to stay in the trial a lot and traveled back. Before the judge gave his ruling on the first part of the case. He bifercated the case. So the first part of the case was fixing the systems and the second part of the case was giving the individual Indians an accounting. So we won the first part of the case in December 21, 1999. In the meantime, the two secretaries for the first time in history were charged in contempt of court — Secretary Rubin and Secretary Babbitt — for failing to honor court orders on production of documents. To this day, just a couple months ago there was another huge destruction of documents. S o they continued to destroy documents that are really important to the case. So that was a great victory because we’ve now got their attention. Two secretaries were charged in contempt of court. I went to my attornies and said, "What does that mean? They are charged in contempt of court. Now when they leave office, what will happen?" He said that will follow them everywhere they go. So when Secretary Rubin, he’s out of office now, he has to tell people that he has a flaw in his record, that he was charged in contempt of court. And so does Secretary Babbitt.

Like I said, we won the case. It was a stunning victory, as the papers said, for the plaintiffs. And the judge appointed, said that he would keep oversight on fixing the system for the next five years. So that was really nice and we really felt that we had a great victory, a great breakthrough. Now we are working on the accounting piece. They know that they can’t give us an accounting and they know that they probably have to use our accounting information that we have developed because we have gone to third parties. We know where every oil well is drilled in Indian country. We know that. But they don’t want to use it so they continue to stall. And the latest event that happened was December 29, I believe it was, Secretary Babbitt gave notice that he is going to issue an RFP to do statistical sampling on individual Indian accounts. That just blew us through the water. That was the last slap in the face, I guess, that he could give us. Because if you don’t have documents, how are you going to sample? That’s the entire part of a statistical sampling - making sure if you go through five documents, is this document there? What we don’t want him to do is if they go to five documents and if I pull this and it’s not there, go "Oh well, go to another five documents." The documents are not there so it’s a waste of money. So they estimate it will cost $70 million to perform this test that we know will not work. So we are going to block that right now. We are probably going to be working with Congress to appropriate the money to stop it. They know that it’s senseless to do but it’s another stall.

But we are getting ready to go to trial on the next case. We don’t know if this new administration will settle with us. We hope so. Like I said, it’s billions of dollars. It’s at a minimum of $10 billion. At least that we would not go any lower. The figures are much higher. So that’s kind of the overview of the case.

So I want to get back just a little bit about how this leads into banking and why it was so difficult to get a financial institution into communities. It’s probably everything that you take for granted today. You could walk and choose. You have choices in banking in downtown Charlottesville. But that’s something that we don’t have in Indian country. We are just now receiving access to financial institutions. So when the Blackfeet started a bank, the people were not familiar with banking at all. And it’s because the United States government managed their money. They managed their money for them so we can’t to this day, if you decided that you wanted to pay me for leasing my land, you can’t pay me directly. You have to pay the local Bureau of Indian Affairs Office and they have to manage that money. So it’s basically robbed people of the ability to establish relationships with financial institutions.

So when we started our bank in Blackfeet, it was very difficult. We had to really work with people on understanding that when you came in and cashed a check, that you were not a customer of the bank, that you were just cashing a check. It took establishing an account. It took many, many seasoned relationships with the bank. And it was amazing for people to understand what had to happen when you developed a bank and the fact that we are a country, so our jurisdiction is not state law. State law does not apply. And when we were applying to the regulators for authority to open up a bank, we had to jump through so many hoops that it was unbelievable. They said, "What do you have in place as far as laws for loan defaults? Do you have a commercial code in place? How are you going to handle trust mortgages (because all of our land is held in trust)?" So the tribe took the initiative and approved laws that would allow us to establish the first bank in Indian country. That’s really historical. That was the first bank that was ever chartered. We opened our doors in 1987 and we’re still the Blackfeet National Bank and we’re doing really well. So we have established ourselves that we can have access to financial services, access to capital, access to credit for the first time. So as time…and when we are talking about reforming the United States government, that’s what I mean about reforming the United States government. It’s why can’t we implement or change the laws so that if you lease my land that that money would not go through the bureaucratic levels and get back to me two months later. Why can’t you just deposit it in a direct deposit to my bank account at Blackfeet National Bank? If I happen to be in Charlottesville, all I need to do is take my ATM card and drive right back out.

But I think that the government has looked at the management of funds as more of a jobs program than actually as their real fiduciary duties of managing money. So that sort of put us at a handicap, but what it did, it built the financial literacy of our community. Now our community is understanding how their money should be managed. And they are not going to allow this to happen to them again. They are not going to allow the government to mismanage. If they don’t have an account statement, they are going to ask why. And that is, I think that is one of the greatest benefits from the lawsuit and the bank, is that people are now going to start asking why.