Within the Billings Area, irrigation personnel keep their distance from the general BIA administration, with their own local offices and personnel. They have managers, bookkeepers and employ ditch-riders who turn the water on and off at the various locations. They have manual bookkeeping systems to record what is owed and paid by water users. Collections are turned over to BIA's cashiers and are recorded on BIA's books for each irrigation project.
BIA's accounts receivable system does not work. It is so unreliable that little attention is paid to it. Within irrigation projects, there are no complete and balanced records about who is billed for water, who pays and who does not. BIA has no auditors to review irrigation records, which is very convenient for white ranchers who might not want to pay for their federally supplied irrigation water.
It is possible for a water user to get a completely free ride - that is, if the user does not pay his water bill (assuming he receives an accurate bill in the first place) there may be no record to show an unpaid balance. Users learn that if they ignore their water bills, there seldom are problems and the water keeps flowing down the ditch.
There is wide open opportunity for fraud and collusion. A bookkeeping system that does not work, disorganized and unbalanced manual records, no auditing, and no sign that anyone cares or is even interested. If the systems lose money, and they do, Congress just appropriates more money to cover the loss. It is justified as a necessary expense for Indians.
You already learned that most of the usable land on reservations is either owned or leased by whites. If irrigation makes the land productive (it does) and most is used by whites (it is) then most of the cost of BIA Irrigation is for whites, not Indians.
You might wonder how much taxpayer money escapes through this sieve. I have no exact figures, so a rough estimate is the best I can do. At the Billings Area office I believe it's at least a quarter million dollars each year. How long has this been going on? Almost a hundred years. That amounts to over twelve million dollars, and with the other area offices perhaps a quarter billion dollars in total.
I assume that since large ranchers make political contributions to federal politicians, that is the reason that nobody in power wants the system corrected. Why else would BIA refuse to improve the system? They can't blame in on lack of funds; they have enough people for that and the improvements needed are not complicated.
I was assigned to review this system and to report on it by Bill Benjamin. My job description, signed by Benjamin, said:
" ... [Henry] insures the propriety of ... reports [and] ...recommends solutions."
As to irrigation, "reviews the books and accounts ... makes recommendations to ... improve the ... system."
I found that the Area office had no accurate records of water billings and collections. The BIA computer system for recording accounts receivable was bypassed.
There were few internal controls, and they were ignored. Irrigation offices were seldom (if ever) audited. The systems were losing money. BIA's official record - the general ledger - was in complete disarray, and showed large negative balances (over a million dollars) for water receivables, which is a logical impossibility.
I reported this verbally to Benjamin, and made offers to repair and improve the accounting system. The reports were ignored and the offer was refused. My memo to him on 4/29/86 reported:
"You are aware of the negative accounts receivable problem. The system is deficient and very large losses to the government are possible. The situation has been out of control."
After being fired, I received a letter from BIA's William Ragsdale (BIA's head administrator) which has been cited earlier. Concerning irrigation receivables, his letter states:
"Mr. Henry's report was essentially correct."
We can learn still more by looking at a relevant audit by the Inspector General, (OIG). The audit is only a partial answer because it refers to just one project, at the Fort Peck reservation. That audit (WIA-BIA-18-84A) dated 1/16/86 states:
"accounting and controls ... are inadequate [and] BIA's general ledger ... showed a credit balance. ... assessments were not recorded for several years... internal controls over collections and deposits were weak ... and only minimal efforts were made to collect past due accounts."
The irrigation matter was not specifically referred to in my letter of dismissal as a cause of firing me, but in an indirect way it was. My offer to work to repair the damage in this and other systems was found to be arrogant.
Let's explain that "negative accounts receivable" business. The Billings irrigation system showed a negative balance for accounts receivable, and BIA nationally had negative receivables in excess of ten million dollars. The simple part is that it means the accounting records are a complete mess. More importantly it means that ten million dollars of income from water collected from customers has not been shown as income.
Most elected politicians are lawyers, not accountants, and it's unlikely that they would notice the accounting part of this problem. With the ten million left off as income from water sales, the irrigation operations would look even worse than they really are. That means congress (and the taxpayers) because of this particular error have had to supply ten million dollars more in cash (to operate the irrigation projects) than BIA really needs, because of BIA's poor accounting. When BIA "crooks the books" it deceives Congress and all citizens as well as Indians.
In response (at least in part) to my complaints, OIG conducted an audit of BIA's irrigation system. They did not cover all of the Billings Area irrigation projects, but at least two of them were included along with five projects that are assigned to other area offices. I won't bore you with all the details, but here is a brief review of OIG's audit report number 88-42 which was released in February, 1988:
"We concluded that the Bureau was not assessing, billing, and collecting ... in accordance with stipulated requirements"
Referring to an earlier audit at Fort Peck , the Agency was "not assessing ... non-Indians."
At the Pima Agency, they noted that land was "leased to non-Indians but ... not assessed" and that "records of payments were no longer available." Since 1981, thousands of acres (leased by non-Indians) were not billed for water used.
At Wind River , Wyoming "lost revenue in 1986 alone could total $26,599."
For a Crow project, $27,000. was spent without authorization on the basis of "verbal instructions from a Central Office official." For nine non-Indian leases, collection action was not taken on about $9,000. of delinquent accounts of non-Indians.
About that $27,000. Just who do you suppose authorizes spending on the Crow project? Bill Benjamin of course, with assistance from his budget officer, Bill Ellingson.
At the Wapato project in Western Nevada , "bills of $656,000. ... were prepared but never mailed to water users."
For the seven projects reviewed delinquent accounts (that got on the books) increased 300% from 1984 to 1986, and amounted to $1,332,460.
At San Carlos , water charges on 1,573 acres "leased to non-Indians but not billed" amounted to $65,000. over three years.
Page 15 of the audit report noted "the inaccuracy of the ... general ledger account receivable balances."
For just four projects (BIA has 71 projects) the general ledger did not agree with detailed accounts by over seventeen million dollars.
I hope you noticed the instances where non-Indian water users gained special advantages from the system. With amazing frequency, they are not billed or required to pay. It is my belief that these are the people who contribute heavily to political campaign funds. By this route your taxes get into the pockets or campaign funds of federal politicians.
I have no way of knowing if the four selected projects are typical. If they are, and four out of seventy-one are off by a total of seventeen million dollars (according to OIG), then that indicates a $300. million dollar bookkeeping problem in BIA's national irrigation accounting.
If we add the $300. million to a possible two billion in trust account problems, we easily can see the extent of accumulated financial and accounting problems within BIA.
No wonder I got fired; I feel very fortunate that I was not killed.
I am the first person who raised these issues in a powerful and public way. White ranchers don't appreciate my efforts.
The items listed above from the audit report are typical. Nothing good was said about BIA's management of the irrigation systems. Common problems were failing to bill or collect non-Indian accounts, missing records, bad bookkeeping, and unrestricted access to cash that is not accounted for.
For 1989, the international auditing firm of Arthur Andersen & Co. (AA & Co.) was retained to audit the San Carlos irrigation project, managed by BIA. Here are a few extracts from the AA & Co. tentative audit report dated September 30, 1989 :
"The accounting system ... suffer from a variety of procedural weaknesses ... so pervasive and fundamental as to render the accounting systems unreliable.
" ... accounting records do not accurately reflect the Project's financial position ... and results of operations ...
"General ledger balances ... have not been reconciled...
"... cash account ... not being verifiable ...
" ... customer deposits ... differed ... by approximately $400,000.
The San Carlos audit describes that mail-in deposits and walk-in payments are stored in the vault overnight, and:
"As access to the vault is open to anyone and as most employees can open the vault lock, this presents opportunity for ... theft."
"There is no reconciliation of the cash deposited to the customer payments ..."
Other irrigation audits describe cases where the materials storage areas (where rolls of copper wire, etc. are stored) are unlocked and unguarded at night, and there are no adequate inventory records. In addition, supplemental electrical power purchased from non-government sources is not measured or metered. By this process, suppliers could bill BIA for much greater amounts of power than is supplied, with the taxpayers paying for unrestricted fraud.
The 1989 audit information might at first appear to be obsolete, except that situations like this at BIA are seldom if ever improved. BIA is noted as an organization that resists change when it relates to stealing from Indians, or pilfering taxpayer cash.
My Mother, Marion Bishop Henry, will be 100 years old in December, 1994. She has written her memoirs in a book titled Memories, which includes some accounts of years long ago. During World War I (yes, that's World War I, not II) she was a civilian employee of the government in Washington , DC . Here is one paragraph from Mom's book:
"I was to work for a Board of Officers who were to arrange for settling the property problems between the Bureau of Aircraft and Production, and the Department of Military Aeronautics. In going through the records, I found an instance where a single bill for furniture had been submitted and paid four times. The furniture was all numbered, so somebody at the company must have known about the duplicate payments. I used to see that contractor around our building, talking to government employees, so I feel sure that was not the only phony bill that had been paid more than once.
Mom's book is telling about things that happened over seventy years ago. There's not much new under the sun when it comes to the lack of accountability by the federal government.
If you look back at the history of Indian irrigation projects, you will find that much of the investment money for dams and ditches came from Indian funds received for the "sale" of Indian lands. This Indian money was then used to create irrigation projects for white ranchers, a rather typical story from BIA's past history.
As in most BIA fraud, there are wheels within wheels, or fraud piled on top of fraud. Here's a look into how just one "spoke" of this irrigation fraud relates to the current lives and "fortunes" of some Indian people I know.
Late in the winter of 1992, I was the only non-Indian invited to an "underground" meeting on the Crow Reservation. Many Crow Indians were invited by word of mouth, and the word got out, but very few were willing to take the risk of coming. The building was easy to watch, and the fear was that "their whiteman," meaning the person holding the lease on their land, would be told, and anyone at the meeting would be in deep trouble. Now just who do you think would tell? Kissy-kissy Indians who want to please "their" whiteman, that's who. In every society the Quisling or sell-out is feared for good reason; they honor no standard of loyalty. Perhaps you can see how the control of leased land by the whites results in a form of peonage for Indians, who lose their dignity and freedom to white masters.
The subject of the meeting was the injustice practiced by white controlled irrigation districts. To give you some background, many of these districts are the result of what I will call leap-frogging. The late 1800's and early 1900's were a time of heavy pressure from whites on Indian tribes to "cede" land to them, and plot by plot, section by section, large chunks of land were removed from Indian ownership, usually with some modest payment of a dollar or so an acre to make it look "legal" and let the whiteman relieve his guilt. He could call it a smart buy rather than the extortion of helpless victims, and keep going to church on Sunday.
The money earned from these forced sales was not simply paid to the tribes, but placed in "trust" by BIA where federal supervisors could pocket their share and control the remainder for the benefit of whites. Some was left for Indian "charity," generally to feed the hungry, because at the time Indians were literally starving from the loss of land and destruction of their buffalo herds and wild game.
Out of this "trust" money, irrigation projects (dams and ditches) were built for the NEXT plot of ground that the whites planned to take, and where in many cases they were already squatting by force on the land. By this process, they leap-frogged onto land with irrigation facilities already in place, paid for with the Indian money from the previous land sale.
The process could be and was repeated several times as Buffalo Country was destroyed with the plow for short-term profit. It would take several decades for the fragile plains to be eroded and destroyed by irrigation salts, after a million years of productivity which had not been diminished by ten thousand years of Indian stewardship.
Another spoke in the wheel is that after the whites controlled even the remaining Indian owned land through leases, BIA in it's generosity to whites simply gave away many of the existing irrigation projects, to be operated by the ever controlling whites.
One more spoke - the charges for irrigation water on Indian owned land are charged to the Indian owners, while often the white users of the land (my Indian friends told me) pay nothing for their water.
Now, the purpose of this "underground" meeting I was talking about. On the Crow Reservation, Indians have the right to deal directly with white land operators, rather than going through BIA.
Indian land owners go to collect their pitiful amount of lease money from "their" whiteman, and are told they won't be paid. The water bill was sent to BIA, and a "hold" was placed on the lease payment. It is required that the Indian first pay for the whiteman's water, and then he can have what's left of the lease payment.
My Indian friends hoped that I could offer them some help with this injustice. I had no remedy for them, but at the end of this book a permanent solution will be offered to solve many of these basic problems of injustice that impoverish and degrade our American Indians.
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