Interior Report: Indian trust officials violated ethics rules in contract awards
In a blistering report, the Interior Department's top investigator says that senior officials who manage $3.2 billion in Indian trust funds pressured subordinates to award lucrative contracts to executives with whom the officials enjoyed close social ties.
According to the report, officials in the Office of the Special Trustee for American Indians (OST), based in Albuquerque, New Mexico, often partied with executives of an Albuquerque accounting firm, Chavarria, Dunne & Lamey LLC. The officials and executives played golf together and exchanged gifts of meals and drinks over an eight-year period. During this time, the report says, the Chavarria firm won $6.6 million in sole source contracts.
Inspector General Earl Devaney, in a letter transmitting the report to top Interior Department officials, says that his investigators found that "contract personnel felt pressured by these senior OST officials" to award contracts to the accounting firm. The report, obtained by U.S. News under the Freedom of Information Act, singled out for sharp criticism Donna Erwin, the number two official in OST, and three other top officials.
"In summary, the report presents information that establishes that the conduct of four OST officials ... .created an appearance of preferential treatment" for the Chavarria firm, Devaney says. Their actions, he went on to say, violate ethics rules and an internal OST memo that directs personnel to maintain "arms length dealings" with contractors.
In a statement issued to U.S. News, Erwin acknowledged that the socializing "may have given the appearance of preferential treatment," but adds, "I believe that no preferential treatment was given to this or any other contractor."
Her boss, Ross Swimmer, the special trustee, does not appear likely to take strong action against her or other senior OST officials named in the report, including Douglas and Jeff Lords, who are brothers. Swimmer, in a statement, says he has addressed "this issue with the affected employees," and ordered them to undergo additional "ethics training." The report cites four other OST employees who socialized with contractors.
Gregory Chavarria, a principal in the accounting firm, did not return calls left on his office telephone.
Federal prosecutors in New Mexico reviewed the report, and declined to prosecute.
According to the report, OST issued a $150,000 sole source contract to the Chavarria firm in October 1998 to perform trust fund accounting and consulting work. The special trustee's office modified the contract over 50 times, "increasing the value of the award to over $6.6 million, all without competition," the report says.
It says that Erwin and the Lords brothers did not award the contracts, but it adds, pointedly: "Interviews with the officials who were responsible for awarding the contracts revealed that they felt pressured by Erwin, Doug Lords, and Jeff Lords to award work" to the Chavarria firm.
A former procurement analyst told investigators, according to the report, that "incredible amounts of pressure came from OST management ... Erwin in particular." Additionally, the report says, a contracting officer told investigators that he felt OST was "in bed with" the firm.