Navajos claim Utah wasted $100 million in trust money
Story-Date: 01:58 a.m. PST Thursday , April 8, 1999

Navajos claim Utah wasted $100 million in trust money


By Paul Foy
Associated Press Writer


SALT LAKE CITY (AP) -- When auditors reviewed Utah's handling of an
oil-and-gas royalty trust set up by Congress to benefit Navajo Indians, one
state lawmaker likened the chronicle of abuses to a cheap novel.

More than $62 million had gone into the trust but only $12 million remained
by 1991. The rest, the auditors found, was lost to lax oversight, payoffs,
bribes and ill-conceived business ventures.

Now, a federal judge has ruled the Navajos can go ahead with their claim
that Utah must make up for abuses dating to the trust's creation in 1933.
Their estimate of the damage -- $100 million.

"The attorney general should be calling any minute now to talk about a
settlement," Brian Barnard, a lawyer for the Navajos, said Wednesday. "I'm
not holding my breath."

The Navajos are Utah's poorest residents. Many reservation areas have no
running water or electricity and unemployment runs up to 50 percent.

The idea of setting aside the state's share of oil and gas royalties for
the Indians surfaced when Congress decided to expand the Navajo Reservation
from New Mexico and Arizona into southeastern Utah, where a number of
Navajo clans had fled when Kit Carson marched the tribe into New Mexico in
1865.

Congress made the idea law in 1933. But it wasn't until oil and gas
companies started drilling in the Aneth extension oil field about 30 years
later that the battle was joined over how the 37.5 percent royalty should
be spent. The remaining 62.5 percent is divided between the tribe,
headquartered at Window Rock, Ariz., and the Bureau of Indian of Affairs,
Barnard said.

In 1991, the year before the Navajos' class-action lawsuit was filed, the
Utah Legislature's auditor general reported suspected self-dealing and
mismanagement by trust fund officials.

Federal criminal indictments followed, alleging bribery, conspiracy, fraud,
money laundering and misuse of tribal funds against seven Navajo Nation
leaders in Arizona.

According to the Navajos' lawsuit, Utah breached its duties as the trust's
fiduciary -- a role it never wanted and would like nothing more than to
shed.

Utah had argued its liability, if any, should be governed by the state's
own statute of limitations, or extending only as far back as 1988. But U.S.
District Judge David Sam ruled on Friday that no statute of limitations
applies to the case -- opening the possibility for a massive judgment if
the Navajos can prove mismanagement at trial.

Assistant Attorney General Valden Livingston said federal law placed no
special obligation on Utah to properly invest the Navajo royalties. Rather,
Utah had only to see that the money was spent on reservation roads, health
care and "tuition of Indian children at white schools," he said, reading
from a federal statute.

The decision means Utah has to provide a complete accounting of the $62
million received or earned by the Navajo Trust Fund between 1955 and 1991,
when professional managers took over.

Barnard said the case is "shockingly similar" to the federal government's
century-old mishandling of billions of dollars in Indian trust accounts.
That case in February landed Interior Secretary Bruce Babbitt in contempt
of court for failing to produce documents.

Like the federal case, Utah's 7,500 Navajos claim they've been cheated on
their trust funds. Some funds were never invested while others were
squandered on bad business deals and "thievery," Barnard said.

Utah itself took trust money to build a state office in Blanding under a
"sweetheart" lease deal, Barnard contends, in one of many deals marred by
conflicts of interest.

Barnard believes that properly managed, the trust should have grown to $100
million by 1991, even with payments made for the welfare of Navajos.

In 1997, Gov. Mike Leavitt said an out-of-court settlement of the case was
best for Utah. But he waited to measure the state's potential liability.

"Our commitment to work it out remains," Vicki Varela, the governor's
spokeswoman, said Wednesday. "We'll move it forward in the most productive
way we can."

No trial date has been set.


For more information, visit the NewsHound website at http://www.newshound.com
or send an email to speak@hound.com.