The front-page story on that first Sunday said that federal Indian programs were “a shambles, plagued by fraud, incompetence, and deceit and strangled by a morass of red tape that has all but destroyed their effectiveness.” And that was just the first sentence.
While the central target of the stories was the federal government, the bulk of the first day’s investigation focused on US oil companies that drilled on Indian lands. A headline across the front of the Sunday paper declared that the federal system allowing oil companies to drill on Indian reservations was really nothing more than a “license to loot.”
The looting happened in a complicated and insidious way. The Arizona Republic story showed that the oil companies themselves were responsible for reporting how much oil they drilled on the Indian reservations: the companies would drill wells, pump the oil, and then report to the government how much oil they had taken out of the ground. The government was not effectively double-checking the companies’ reports to verify how much oil they were actually getting from the Indian reservations. The whole thing worked on an honor system, and the Arizona Republic alleged that firms were abusing it by consistently underreporting how much oil they pumped out of the ground. The stories said that oil companies were carting off at least millions of dollars in free oil every year.
The Arizona Republic series garnered the kind of attention, and outrage, that most reporters can only dream of. In particular, the series captured the attention of Arizona’s Democratic US senator, Dennis DeConcini. He told reporters that the series was “devastating.” The stories, he said, “indicate criminality as well as mismanagement.”
There was something about the allegations that seemed to particularly bother DeConcini. Crime and bureaucratic mismanagement were always offensive, but it seemed especially offensive when the victims were Native Americans. DeConcini sat on a Senate committee that oversaw affairs on Indian reservations. He was intimately familiar with the fact that Native Americans in his home state were among the most beleaguered people in America. On paper, America’s Indian tribes were considered sovereign nations. By the late 1980s, those nations were really nothing more than a giant, failed Socialist state. After being hounded and dislocated and, finally, penned into reservations, the tribes signed treaties that left them with land and natural resources. However, the land was held in trust by the United States and administered by the BIA, so that, in short, the treaties made the federal government a paternalistic overlord of the supposedly sovereign tribes. It seemed that every aspect of life on Indian reservations was governed by the BIA, from health care to housing, education to oil drilling.
By the late 1980s, the results of this arrangement were truly ruinous. About 45 percent of all Indians lived below the poverty line, the unemployment rate was above 50 percent, and fewer than half of Indian households had a telephone. Most of the people lucky enough to have a job earned about $7,000 a year. Town squares were boarded up, and business was booming at liquor stores; some of the villages resembled shantytowns. This squalor was all the more offensive because a tidal wave of taxpayer money washed up on the shores of Indian reservations every year. The federal government spent about $3.3 billion a year to support the BIA and Indian programs. Strangely, the entire Native American population managed to earn less than $3.3 billion a year even when government assistance from Indian programs was factored in. The federal bureaucracy was sucking up cash while managing to infuriate the very Indians it was supposedly helping.
The Arizona Republic alleged that oil companies were exploiting this toxic system. Some of the world’s biggest oil drillers operated on the wide belt of federal land and reservations stretching across Oklahoma, Texas, Arizona, and surrounding states. These firms were making a killing amid all the dysfunction and poverty, collecting a steady stream of crude oil and piping it out to US and world markets. Rumors of oil theft had been circulating for years.
In Washington, the Senate Select Committee on Indian Affairs held a private meeting and voted to form a special investigative subcommittee that would look into the allegations. Senator DeConcini was selected to lead the subcommittee. He was joined by Arizona’s other senator, the Republican John McCain, and by Tom Daschle, the Democrat from South Dakota.
What resulted was one of the most far-reaching investigations of its kind. DeConcini and his counterparts decided to investigate major oil companies, the BIA, local Indian schools, and even the tribal authorities themselves. DeConcini knew that he would need a top-notch investigator to run the effort. He would need someone who could manage a large team of lawyers and field agents like Jim Elroy, and someone who could oversee a sprawling and complicated chain of evidence that would be developed.
Luckily for DeConcini, there was a young lawyer who had recently gone on the job market named Ken Ballen. Ballen was on the job market because he had been a lead investigator for the Iran-Contra hearings, a nationally watched investigation of covert US arms sales to Iran. When the investigation wrapped up, Ballen was looking for a new challenge. And he was about to get it.
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In the spring of 1988, Ken Ballen walked down a tree-lined sidewalk near Capitol Hill, on the way to his new job. He walked past a strip of low-slung brick buildings that were built back in Washington, DC’s earliest days, when it was not much more than a sleepy little town that seemed to shut down when the legislature was not in session. Just across from these quaint buildings was the imposing nine-story structure where Ballen was headed, an edifice that evoked the new age of Washington and all of its power. This was the Hart Senate Office Building, where Ballen had just recently started work as the lead investigator for the Senate’s investigation into potential criminal conduct on Indian reservations.
The front of the Hart Building was a grid of rectangular, black windows, bordered by a façade of white marble. This was the face of the Senate bureaucracy. Ballen hustled into the main entrance of the Hart Building along with the usual crowd of Washington workers. While it is nondescript from the outside, the interior of the Hart Building is magnificent. It’s the kind of place that makes a person feel important, even powerful, just by the mere fact of working there every day. Even in the bathrooms, the partitions between urinals are made from slabs of white marble, giving every corner of the space a feeling of quiet authority.
Ballen certainly had considerable authority in his new position. He oversaw a large team of investigators who had recently been given full reign over the ninth floor of the Hart Building, the top story that contained a warren of cubicles and offices. He was just thirty-three years old in 1988 and not too long out of law school. But even at that young age, he had already played a major role in one of the biggest investigations in the US Senate. That’s how he caught the eye of Senator DeConcini. Ballen took the job when DeConcini offered it because he believed that the new subcommittee was dedicated to uncovering the truth and, just as importantly, because the Senate would be willing to give him the resources he needed. Ballen wasn’t disappointed on this front. As he entered the Hart Building and took an elevator to the ninth floor, he walked into an entire suite of offices that were now dedicated to his effort.
Early in the investigation, Ballen knew that he needed a lead investigator in the field, and the Senate turned to the FBI to find one. The request was sent to Oliver “Buck” Revell, who, at that time, was the FBI’s associate deputy director in charge of all investigative operations. When Revell got the request, he only had one agent in mind: Jim Elroy. Revell had worked with Elroy back when the two of them were based in Oklahoma, and he thought Elroy would be the perfect agent to head a complex and difficult investigation. “I think Jim’s the best investigator I ever ran into at the FBI. And I ran into thousands,” Revell said many years later.