In June 2008, the Department of Interior Inspector General (DOI-IG) issued a report describing how an employee at the Office of Special Trustee (OST) for American Indians steered lucrative contracts to an accounting firm whose principals lavished him with gifts, golfing trips, and a free place to live. But after two longs months, we're still waiting for Secretary of Interior Dirk Kempthorne to decide how to handle the case.
The firm that received the questionable contracts, Chavarria, Dunne & Lamey, LLC (CD&L), seems to have a Svengali-like hold over the agency. Four senior OST employees have been snagged in the scandal so far: 1) Delano "Jeff" Lords, Deputy Special Trustee for Trust Services, 2) Delano's brother, Douglas Lords, Deputy Special Trustee for Field Operations, 3) Donna Erwin, Principal Deputy Special Trustee, and 4) Margaret Williams, Deputy Special Trustee for Trust Accountability.
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 [including Delano] 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.
At the time, Ross Swimmer, the head of OST, responded by giving slaps on the wrist in the form of ethics training. But the recent DOI-IG report makes it clear that the problem has not been resolved. In an unusually pointed statement, Inspector General Earl Devaney said he is "frustrated by the lack of accountability in this regard..."
The recent DOI-IG report details how Delano Lords "made the decision to select CD&L" to receive a contract even though a three-person evaluation team had unanimously selected Booz Allen, which submitted a bid that was $90,000 cheaper. As the report notes, in the previous DOI-IG investigation, "Lords stated that he had never awarded, or had the opportunity to award, a contract to CD&L since he had lacked the authority in the positions that he had held. He also stated that he had never showed favoritism toward CD&L..."
The DOI-IG also discovered that Lords had accepted free lodging from Brian Lamey, one of the principals of the firm, in violation of ethics regulations, and failed to disclose the gift on required financial disclosure forms. Although Senator Ted Stevens (R-AK) was recently indicted under similar circumstances when it was revealed that he failed to report an oil company's gifts, both the U.S. Attorney's Office in New Mexico and the Department of Justice (DOJ) have declined to prosecute anyone involved in the OST contract steering schemes.
One knowledgeable observer points out that DOJ is unlikely to prosecute senior employees of the OST because DOJ is currently defending the agency in the contentious multi-billion dollar Cobell Indian Trust litigation (a judge recently ruled that the government must pay $455 million to Cobell's side, although Cobell has promised to appeal). A criminal prosecution of OST employees would only serve to undermine DOJ's efforts to convince the court that the OST and other affiliated agencies at DOI are acting in good faith. DOJ is also unlikely to pursue anyone at CD&L, which, according to a May 2007 filing by DOJ, is listed as one of five accounting firms under contract with DOI to conduct the historical accounting of individual Indian money accounts, which has been a central point of contention in the litigation.
-- Beth Daley