Date: Thu, 8 Apr 1999 03:27:39 EDT

Navajos Claim Utah Wasted $100M

 

©The Associated Press By PAUL FOY

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.