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C. Gopinath

ANYONE, even remotely interested in the business world, is by now familiar with all the accounting gimmickry that so-called world class US companies like Enron, WorldCom, Global Crossing, Tyco and so on have indulged in. The malfeasance has ranged from shifting debt off the company balance-sheet to subsidiary partnerships, treating operating expenses as capital expenditure to show higher profits, using company money to pay for personal expenses, granting oneself personal loans that were not reported, and the like.

The US federal government stepped in to cleanse the stables. Inquiries are being held by governmental agencies, new oversight bodies are being created, and cases have been filed in courts to recover monies from the miscreants. And, of course, we are all breathing a little easier due to these actions, confident that this will not be repeated. But, then, maybe the fox is in charge of the chicken coop. On September 17, a federal judge held the Interior Secretary, Ms Gail Norton, in contempt for failing to reform a trust fund for native Americans, saying that she had committed a fraud on the court in failing to reform the trust fund in spite of promises made.

The fund generates income of about $500 million (Rs 2,400 crore) a year. There are 500,000 beneficiaries and their lawyers charge that mismanagement by the federal government has resulted in losses of more than $100 billion (Rs 4,80,000 crore). Compared to this, the amounts involved in all the corporate accounting scandals that the government is trying to fix look like lunch money.

And, yet, it is a sad reflection on the political influence of the native Americans that a news item like this only makes it to the inside pages of national newspapers and does not get commensurate TV airtime.

The problem goes back to 1887 when the Individual Indian Money Trust began. (Native Americans in the US continue to be called `Indians' following Columbus' mistaken belief that he had reached the east when he landed on the American continent.) The government had moved many native communities out of the over 90 million acres previously established as `reservations', and gave the land to white settlers.

In return, the natives were given land allotments ranging from 40 to 320 acres. The natives were judged incapable of managing their own affairs. By creating the fund, the US Congress gave the government the responsibility for keeping track of the individual's income from grazing leases, mining and other uses, collecting the revenues, and disbursing them to the land-owners. The natives could not sell property without government approval and the government made all the deals for them. But over the years, rather than account for it individually, the money was put in a general fund and the individuals were never told how their lands were being used. Occasionally, random amounts would be mailed out.

The Interior Secretary is the Minister who oversees the management of the energy and mineral resources, use of land and water resources, fish and wildlife, grazing rights, timber, land sales, etc., apart from managing the trust fund. In 1996, Ms Elouise Cobell, treasurer of the Blackfeet native American group (largely based in the state of Montana), sued the government alleging mismanagement. She charged that thousands of records were missing, damaged, or destroyed. She claims that the money was used for a variety of purposes not originally intended, including the bail out of Chrysler Corporation.

As a precursor to Enron and Andersen destroying documents, when the case was first heard three years ago, the Treasury Department was found to have destroyed thousands of cancelled cheques that were evidence in the case.

Native Americans have been battling the government on several fronts. Since the Supreme Court, in a 1987 decision upheld their right to run a casino within their land, irrespective of the laws of the state they are in, many communities have found this a lucrative source of revenue. Several native communities across the country have opened casinos and are raking in the cash; since it is normally a very difficult process for non-natives to get government permission to open casinos. Thus, many tribes who were content with eking out subsistence living have now begun to look at ways by which they can be recognised as a legitimate tribe and thereby open casinos.

The federal government stipulates seven requirements for recognition: The tribe must have been identified as an Indian entity since 1900; must have functioned as a community since their first contact with the European immigrants; must have a true political leader; must have requirements for membership; must have descended from a historical tribe; cannot already belong to another federally recognised tribe; and must not have had their recognition terminated by the government. Thus, it is not a blood test, but a judgment call based on several cultural and other factors

The US has about 558 recognised tribes, most of which were well established even in the 19 century. Several have been recognised after that, but increasingly the non-natives have started challenging the recognition being afforded. That is because recognition as a tribe gives them privileges denied to the others. Sometimes, an already existing neighbouring tribe running a thriving casino may also try to nix a new application for fear of competition. It is estimated that about 148 tribes that run gambling operations take in about $6 billion (Rs 28,800 crore) in revenues a year. Some of the bigger tribes have invested the profits into resorts, eco-industries, ferry services, etc.

The history of the conquest of the `West' in the US is full of wars between natives and the expanding European immigrant population, along with over 350 treaties entered into by the two parties which were routinely violated by the ruling European elite. The insensitivity to native culture and practices continues. A professional football team calls itself the `Redskins' in spite of protests.

The settlement between major tobacco companies and the governments in 1998 towards healthcare costs arising out of smoking did not make any provision for how the money will be allocated to the native population even though the smoking rate among the natives is much higher than the rest of the population. Although most citizens of the US observe Thanksgiving in November as a day when the early settlers celebrated their first harvest in the new land, several native groups commemorate it as a day of mourning.

Elsewhere in North America too, the natives have been challenging discrimination, fighting for their rights, and have made progress. In 1999, the eastern half of the state called Northwest Territories in Canada was split to give the 27,000 strong Inuit (native tribes mistakenly called Eskimos) their own full-fledged territory called Nunavut, with their own legislature.

In the current trust funds case, by holding the Interior Secretary in civil contempt, the judge spared her jail time and instead the government will have to pay the legal fees of the petitioners running into several millions of dollars. But this is not going to produce results, as the judge knows. Three years ago, he similarly held the Interior Secretary at that time in contempt and was promised by the government that it would undertake major reform. But little reform took place.

In a scathing judgment running into 267 pages, the judge observed that in the previous case, "I stated that `I have never seen more egregious misconduct by the federal government.' Now, at the conclusion of the second contempt trial, I stand corrected. The Department of Interior has truly outdone itself this time." He felt that the government has done virtually noting of what the court ordered.

So, rather than just pass strictures, this time he is going to take over the fund by putting it under a court appointed receiver. He has ordered that the programme be placed under his jurisdiction for five years so that he can ensure that the government complies with his orders. He has also said that he will hold trial to decide what accounting system will be used to measure the losses in the trust fund, a matter which he had previously left the government to decide. Let us hope that the government cleanses itself while trying to cleanse corporate life.

(The author is a professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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