A northcentral Montana Indian tribe and the Bureau of Indian Affairs can't fully account for $3.5 million primarily in federal funds, including money for a corruption-plagued water project that's resulted in numerous convictions, according to government audits and federal officials.
The audits by the Office of Inspector General of the U.S. Department of Interior examined $3.7 million for Chippewa Cree Tribe transportation programs and a $2 million contract for repairs and maintenance of the tribal water system.
In both cases, tribal leaders were unable to fully document how they spent the money or provide inadequate records to justify the spending, federal officials said. The audits stemmed from a broader investigation of tens of millions of dollars in federal payments for the Rocky Boy's/North Central Montana Rural Water system.
Inspector General's Office spokeswoman Gillian Carroll said the money that was paid to the tribe under the contracts was used for other programs on the reservation.
"We did not look into how the money was spent in those programs, so we don't know if any fraud was involved," Carroll said.
Chippewa Cree Chairman Harlan Baker said Monday that the tribe planned to respond to the audit later this week. He declined further comment.
Auditors also faulted the U.S. Bureau of Indian Affairs for its poor oversight of the two agreements with the tribe.
A regional director for the agency approved the $2 million for the water system in 2011 despite not having the authority to do so, officials said. Chippewa Cree leaders later told federal officials that the money was spent on "appropriate expenses" related to the operation, maintenance and replacement of the reservation's water system, but did not provide specifics, according to the audit.
"We could not ascertain whether the funds were spent appropriately with no documentation stating how the money would be or had been used," wrote Chris Stubbs, director of audits for the inspector general.
At the time of the contract, the water system at the time was still being built, so it's uncertain what maintenance or operational work was going on. The money for the water system came from a trust established by Congress in 2002 and funded with $15 million from the federal government and $5 million from the tribe.
Carroll said the Bureau of Indian Affairs would give the Chippewa Cree an opportunity to explain what happened to the money. If the tribe cannot do so, the agency would seek repayment, she said.
Indian Affairs spokeswoman Nedra Darling did not immediately answer questions about the contracts.
A long-running federal investigation on the tribe's Rocky Boy's Reservation has revealed tribal officials were given cash and gifts in return for lucrative contracts paid for with federal money. At least 20 people have been convicted on federal criminal charges brought as a result of the probe.