REPORT: Indian Tribes Spent Thousands Of Taxpayer Dollars On Christmas Party, Improperly Spent Millions More

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  • Two American Indian tribes didn’t properly document $6 million in federal funds meant for roads and bridge projects
  • More than $7,000 went to fund a Christmas party and gifts for employees
  • The tribes ran out of money before they could complete a $4-million bridge project

The government is asking two American Indian tribes to return thousands of federal dollars spent on a Christmas party and gifts, and justify millions more that the tribe might have improperly spent on vehicles, construction and overhead costs like internet services.

The Northern Arapaho and Eastern Shoshone Tribes on the Wind River Reservation in Wyoming could not support how they spent $6.2 million in federal funds meant to build bridges and transportation infrastructure for the reservation, according to a government watchdog, and part of the blame for the messy accounting practices falls on the federal government’s oversight.

The Wind River Tribes submitted inaccurate and unsupported expenditures to the Bureau of Indian Affairs (BIA), failed to turn in a single audit on time and spent money on indirect overhead costs without negotiating an appropriate rate with the government, the office of the inspector general (OIG) for the Bureau of Indian Affairs said in a final report released Monday. (RELATED: The Crow Tribe Fired An Accountant And Lost Track Of $14 Million Federal Funds)

The inspectors found the tribes spent $3.6 million in capital expenditures that were not approved by the BIA, including $2.6 million in indirect costs, like internet, telephone and utility bills the tribes spent without clearing with the government. The tribes also spent $4,042 for a 2012 Christmas party, and bought $3,380 worth of turkey or prime rib to give as gifts to each transportation employee in December 2012 and December 2014.

The government is seeking an outright refund of the $7,422 spent on the party and the gifts, and wants the tribe to document all the purchases made under the agreement.

“The Wind River Tribes’ accounting system and procedures are not adequate to manage federal funds,” the report said, and the BIA shares some of the blame. “BIA did not oversee the agreement in accordance with applicable Federal laws and regulations.”

“BIA personnel did not review financial status reports submitted by the Tribes in a timely manner, nor did they approve capital purchases made by the Tribes or identify unallowable purchases submitted with the Tribes’ financial status reports,” the report said.

BIA management also failed to provide adequate training for its own staff to oversee the management of the tribal contract, the OIG said.

The tribes were supposed to spend no more than $500,000 on equipment as capital expenditures, but instead they spent $3.6 million to purchase things like trucks and rent construction equipment without the BIA’s approval. The tribe told the OIG that since they were renting and leasing to own, they did not need the BIA’s approval. The purchases included nearly $100,000 for two Chevy trucks.

Susan Messerly, the acting director for the BIA’s office in Billings, Montana, wrote in a May 9 memo that the government wants the tribes to prepare a “binder for each single capital expenditure with supporting backup documentations (copies of their sub-contracts, vendor receipts, i.e.) to establish exact amount of equipment purchases, determine that all equipment purchases were allowable or disallowable,” the Riverton Ranger reported.

One of the main projects undertaken with the contract funds, the Lenore Bridge over the Wind River, was a particular issue for the inspectors. The bridge was supposed to replace a temporary crossing that went up in 2014, but while the new structure is completed, it’s unusable because the tribes ran out of money before they could complete construction on the road approaches.

The bridge cost more than $4 million to build, but the tribal accounting system only reflected $864,964 in costs, the OIG said. The tribes awarded a $2,568,757 contract for the construction and allocated $1,007,996 in 2015 Tribal Transportation Program funds, but “ran out of funding and did not have a new tribal transportation plan to continue transportation projects,” according to the OIG.

The tribes also double-counted expenditures for utilities and other indirect costs, but did not have an agreement in place with the BIA for how much they could spend on administrative services.

Unaware they had to negotiate a rate for indirect expenditures, the tribes applied 15 percent of their funds toward internet, telephone and other utility costs, but even then the spending reports submitted to BIA included the indirect costs twice, the OIG said.

Tribal leaders said they did not misspend federal funds, and are working to address their accounting practices.

“We are working to determine the correct amount of administrative costs associated with the BIA contract and revising our financial management systems to improve how we account for and apply our authorized negotiated indirect cost rates in our federal contracts,” Shoshone and Arapaho business council chairmen Clint Wagon and Roy Brown told The Ranger in a statement. “If we didn’t calculate these allowable costs correctly, we’ll fix our mistake. In any case, the tribes did not misspend the federal transportation funds by incurring overhead administrative costs.”

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