Former Bureau of Indian Affairs official Gavin Clarkson is seen with firefighters and police officers during an awards ceremony at the Department of the Interior in Washington, D.C, on July 4, 2017. Photo: U.S. Indian Affairs

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Senior Trump administration official resigns after scrutiny of Indian loan program

Tuesday, November 14, 2017

The Bureau of Indian Affairs has seen its first casualty of the Trump era with the resignation of a senior official whose connection to a failed loan generated unwanted attention.

Gavin Clarkson, a citizen of the Choctaw Nation, joined the Trump team in June, boasting of a wealth of experience in economic development and financial matters. But he is stepping down before the end of the month amid renewed scrutiny of the $22.5 million deal.

The Department of the Interior, however, is declining to discuss the situation at this point.

"The department cannot comment on personnel matters," a spokesperson said on Tuesday morning after an inquiry was sent late in the evening on Monday. Clarkson did not respond to an email sent on Monday evening either.

A spokesperson for the BIA, where Clarkson served as the Deputy Assistant Secretary for Policy and Economic Development, also offered no new information about his status on Tuesday, a day after an internal report exposed problems with the agency's lending practices.

The report was made public on the same day Clarkson returned to Washington, D.C., after an extended trip outside of the area. Colleagues saw him in the Interior building on Monday but most were unaware of any potential changes in his employment status.

Prior to joining the Trump administration, Clarkson helped the Lower Brule Sioux Tribe secure a loan guarantee to purchase a Wall Street firm that later went belly up. The loan has since gone into default and the BIA is now being sued for in federal court for refusing to back the remaining $20 million in debt.

The failed deal was among numerous problems identified at the BIA's loan guarantee program. According to the report, staff at the Division of Capital Investment (DCI) acted in a way that "created unnecessary risk for loans already considered risky."

But Clarkson had nothing to do with the limited oversight and inadequate controls at the program, issues which predate his arrival in Washington. Still, his connection to the loan proved too troublesome for higher-level officials at Interior who accepted his resignation on Monday, according to a source at the department.

Clarkson's ties to the years-old deal have been documented by Indianz.Com and other sources, including The Sioux Falls Leader and Human Rights Watch, an independent group. Documents from an 2016 administrative proceeding at the Interior Board of Indian Appeals also offer detailed insight into his role as an economic development consultant for the tribe.

But it was a story last week in ProPublica which caused more headaches at Interior. Higher-level officials, who thought the unflattering news coverage about Clarkson was ending with the arrival of a more disciplined and higher-ranking political appointee at the BIA, were bothered by the scrutiny of someone whose lack of government and management experience rubbed people the wrong way.

"He's a handful," one senior official at the department has said of Clarkson. Another top official repeatedly referred to him as the "energizer bunny."

Gavin Clarkson, the Deputy Assistant Secretary for Policy and Economic Development at the Bureau of Indian Affairs, speaks at the Mandan, Hidatsa and Arikara Nation Energy Symposium in Mandaree, North Dakota, on July 25, 2017. Photo: US Indian Affairs

Despite the well-known problems with the loan, Secretary of the Interior Ryan Zinke gave Clarkson oversight of the guarantee program. His portfolio included the Office of Indian Energy and Economic Development, where the DCI staff is housed.

And even though his wardrobe -- typically all black and Western inspired -- and his demeanor were the butt of jokes in Indian Country, tribal leaders eagerly welcomed his enthusiasm. That's because he was working on an update to the so-called Indian Traders rule, an initiative which tribes hope will expand economic activity and create more jobs by barring state and local taxation on their homelands.

"Modernization of the Indian Trader regulations provides the opportunity to bring clarity and 'bright lines' back to this area of the law," the Chickasaw Nation, one of the largest employers in Oklahoma, wrote in an October 30 comment to the BIA. "We would advocate, accordingly, that updated Indian Trader regulations should provide for an express preemption of inconsistent state and local taxation or regulatory jurisdiction."

Higher-level political officials at the department, though, haven't committed to following through with the Indian Traders update. Although the process had started toward the end of the Obama administration, Clarkson was attempting to finalize the rule in an "expeditious manner" until the department extended the comment period and scheduled more consultations, essentially delaying its implementation.

"I'm not convinced that we are moving forward with those," Deputy Secretary David Bernhardt said in his first address to the National Congress of American Indians last month. He added: "I'm not convinced that we won't."

Those comments came after Clarkson, barely two months into his tenure, publicly boasted of his desire to help the Mandan, Hidatsa and Arikara Nation end dual taxation of its energy resources, The Bismarck Tribune reported. In terms of taxes, the state of North Dakota has made more than $1.2 billion from development on the Fort Berthold Reservation over the last decade, more than the tribe itself.

"The state of North Dakota is draining our taxes," Randy Phelan, the vice chairman of the tribe, told Bernhardt, who is the second highest-ranking official at Interior, during NCAI's 74th annual convention in Milwaukee, Wisconsin.

Clarkson also raised alarms after he told tribal leaders, at a meeting in D.C., to demand free college tuition for their citizens when they negotiate gaming agreements with states, GamblingCompliance reported. His portfolio at the BIA included the Office of Indian Gaming Management.

During that meeting, Clarkson engaged in a embarrassing breach of protocol, according to one attendee. He had to be prompted to step away from the speaking podium because he was inadvertently making a high-level member of Congress -- Rep. Nancy Pelosi (D-California), the Democratic leader in the House -- wait for her turn, the attendee said.

Clarkson's position did not require Senate confirmation. He was reporting to John Tahsuda, a citizen of the Kiowa Tribe whose official title is Principal Deputy Assistant Secretary for Indian Affairs.

Tahsuda is also serving as the "acting" Assistant Secretary for Indian Affairs. The Senate has yet to act on the nomination of Tara Sweeney to serve in the top leadership post at the BIA.

While Clarkson is the first Trump era exit at the BIA, he isn't the new administration's only Indian Affairs casualty. In September, the director of the Office of Indian Energy at the Department of Energy resigned after offensive and racially charged comments were publicized in the media.

Clarkson has extensive experience in economic development and finance issues in Indian Country. He earned his doctorate at Harvard Business School and a law degree from Harvard Law School and it was during those years when he began forging strong ties with fellow tribal citizens, many of whom have become prominent attorneys, government officials and academics. He also has worked as a college professor.

Office of Inspector General Reports:
Stronger Internal Controls Needed Over Indian Affairs Loan Guarantee Program (November 2017)
Summary: Guaranteed Loan to Lower Brule Ignored Risk Factors (March 2017)

Human Rights Watch Report:
Secret and Unaccountable: The Tribal Council at Lower Brule and Its Impact on Human Rights (January 2015)