Wednesday, December 5, 2001; Page A27

A court-appointed special master urged a federal judge to take over management of a $500 million per year
trust fund for Native Americans yesterday, saying the government's attempts to manage the 114-year-old program are in
shambles, despite years of federal efforts to solve the problem.

In a stinging 154-page report, the special master, Alan Balaran, wrote that the computer security of the
Individual Indian Monies account is so poorly managed by the Department of the Interior that a firm secretly hired by the
court easily hacked into the system and set up a phony account that would be eligible to receive funds.

"It is the recommendation of the Special Master that the Court intervene and assume direct oversight of
those systems housing Indian trust data," Balaran wrote. "Without such direct oversight, the threat to records crucial to the
welfare of hundreds of thousands of IIM beneficiaries will continue unchecked."

Attorneys representing Indians in a class action suit plan today to ask U.S. District Judge Royce C.
Lamberth, who has been overseeing the six-year-old case, to immediately shut down the massive accounting program. They contend, following a line from the report citing the "sheer enormity of the dangers to which this trust information is being
exposed," that the system is dangerously open to exploitation.

"In effect, there is no trust," said Dennis M. Gingold, lead attorney for the 500,000 Indians represented in the class action suit.
"It means the accounts are open. Nobody has any idea of where the money is, if it's going to the right people. It involves
hundreds of millions of dollars for which there is almost no audit trail."

An Interior Department spokesman declined to comment on the report yesterday.

The lawsuit was filed by Indians who say they are owed up to $10 billion because of widespread accounting
failures. Two years ago, Lamberth ruled that the program was beset by incompetence, neglect and mismanagement. He ordered the department to clean up the accounting problems.

Norton took office in January, portraying herself as an energetic reformer of a system she inherited from Clinton administration
officials. In November, she said she would appoint an assistant Interior Department secretary who would directly oversee the
trust fund. The new office, called the Bureau of Indian Trust Assets Management, would overhaul the accounting system.

But Lamberth has shown impatience with her attempts to find a solution. Norton is facing a contempt-of-court
trial next week, at which she will defend herself against charges that her department has lied to Lamberth about progress in
overhauling the trust fund.

Especially grating to the court is the fact that the government's new computer accounting system, which has
cost millions of dollars, is almost completely useless in monitoring the trust fund.

The trust, established in 1887, is built from proceeds derived from 11 million acres held in trust by the
U.S. government. Concessions or rights to oil, gas, timber and mining ventures on those lands are channeled into accounts
managed by the Bureau of Indian Affairs.

But government records have been destroyed or lost through the years, and there is now little accurate accounting of where the money has gone, or is now going.

The Interior Department's basic computer accounting program -- and the new system which began to be
deployed in 1999 -- are both unable to provide even a modicum of computer security, the report said, citing 30 previous
government or private audits that showed similar results.

"It is disgusting and shameful that Secretary Norton and her predecessors have allowed this situation to
exist," said Elouise Cobell, lead plaintiff in the litigation. "They're treating money that belongs to individual Indians --
some of the poorest people in this nation like it's a candy store."