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An audit has uncovered widespread Interior Department mismanagement of an Indian trust fund, including the unexplained disapperance of $17 million and other losses because of sloppy record-keeping, officials said Friday.

The losses were brought to light by an inspector general's investigation into the Bureau of Indian Affairs' management of the trust fund totaling more than $1.7 billion.The fund, which represents money belonging to 200 Indian tribes and 290,000 individuals, is managed for investment purposes by the bureau. Most of the money comes from court-ordered monetary awards to the Indians or revenue from oil, gas or mineral leases.

The inspector general's report concluded that the financial and investment records of the trust fund were in such disarray that their accuracy no longer could be relied upon. It called the fund's management and control problems pervasive.

The investigators said they found no evidence indicating how $17 million shown on the fund's main ledger had been disposed of. While there is no direct evidence that the money had been stolen, the report said it did not rule out the possibility.

The audit identified another $19.5 million in actual or potential losses because of poor investment decisions or mismanagement of invested funds. In many cases, sloppy record-keeping and inattention cost the fund millions of dollars, the report said.

The Bureau of Indian Affairs acknowledged severe shortcomings in the record-keeping of the trust fund. It said that much of the problem stemmed from not having a modern automated system. The agency said it is preparing to shift the accounting responsibilities for the fund to a private contractor, possibly later this month.

The report said that for the most part the losses and shortcomings were kept from the Indian tribes or individual to whom the money belonged.

"The Bureau's practice regarding known losses of trust funds has been to not disclose the losses, but rather wait for (an Indian tribe or individual) ... to file a claim or sue the government for recovery," James Richards, the inspector general, wrote Interior Secretary Manuel Lujan.

In an interview, Richards said for the most part the tribes never filed such a claim because they were not aware of the losses. "They (the fund managers) didn't tell anybody," said Richards.

While investigators had no clue as to the missing $17 million, they documented millions of dollars in losses because of poor management and record keeping.

For example:

-At least $5 million remains unaccounted for in connection with the fund's investments in guaranteed mortgages. Control of some of the mortgage holdings were transferred to a private fiscal agent in 1983, but investigators found no records that showed how many loans were shifted or when they were to be paid off, raising the possibility that some funds may have been lost.

An attempt by investigators to determine the status of 17 loans worth $3.5 million was unsuccessful because of the incomplete records, said the report. "We believe these funds may have been lost or misappropriated."

-From mid-1985 to the end of 1986, fund managers under-reported the amount of uninvested money in the fund, resulting in the loss $2.4 million during the 18 months in overnight interest payments from the U.S. Treasury.

-In 1984, fund managers deposited $7.8 million in a Kansas City bank to buy certificates of deposits supposedly from a credit union. But no CDs were ever received, nor interest paid, because the money was fraudulently diverted by a middleman.

The bureau eventually recovered most of the money, but as of last April $1.5 million was still lost as was an estimated $1.2 million in interest that the money could have earned. The losses were never recorded on the trust fund's ledgers, or officially recognized, the report said.

-The fund has lost nearly $4 million in recent years from bank failures. While such losses normally are recovered in about 60 days, it has taken five years for the Bureau to recover some $3.1 million as a result of bank failures. The delay has cost the fund an estimated $3.8 million in interest alone, said the report.