After nearly a decade of spoiled records, lost money and three Cabinet secretaries cited for contempt of court, lawmakers are saying the Bureau of Indian Affairs under the Department of Interior has lost its credibility with Native Americans.

"This borders on a national scandal," said Sen. John McCain, R-Ariz., who told Deputy Secretary of the Interior James Casson on Tuesday that "there is a lack credibility on the part of the bureau to carry out its responsibilities."

McCain was speaking during a Senate Indian Affairs Committee oversight hearing of Indian Trusts. That's where two former Special Trustees of the Bureau of Indian Affairs testified that an inefficient, stagnant bureaucracy has caused the problems, and that no reform was going to occur unless a separate, independent agency is established to handle the fiduciary responsibilities of the trust and any future settlement to the plaintiffs and other aggrieved property owners.

"You can’t institutionalize reform when more than half of your management is incompetent and needs to be retrained," said Paul Homan, who served from 1995-1999 as Special Trustee for the trust. Homan said he resigned out of frustration because he lacked the authority and independence to carry out reforms required by the 1994 American Indian Trust Fund Reform Act.

"I think [the bureau] is still lacking the will to get the job done," added Thomas Slonaker, who served briefly under the Clinton administration as Special Trustee in 2000, and then under the current administration until Norton asked him to resign this summer. He said he experienced the same frustrations as his predecessor.

Their assertions are not without backing. Earlier this month, U.S. District Court Judge Royce Lamberth charged Interior Secretary Gale Norton with contempt of court for failing to fix the Indian trust fund system, which handles million of dollars in Indian royalty payments dating back over 100 years.

She joins former President Clinton’s Treasury Secretary Robert Rubin and Interior Secretary Bruce Babbitt, who were found in contempt of court in 1999 over the same case.

The case arose in 1996 when Indian groups sued the federal government, charging that it owes Native American landowners at least $10 billion -- and in some reports as much as $137 billion -- resulting from decades of massive mismanagement of Indian trust accounts.

Since 1888, the Department of Interior has leased properties and processed revenues from farming, drilling and other uses on Indian-owned lands, which number in the tens of millions of acres across the country.

Tribes are supposed to have been getting royalties from those leases, but the government has acknowledged major problems in administering the trust.

The Interior has spent close to $700 million since the case was filed to comply with court and congressionally-ordered instructions to clean up its act, but to no avail. Before being cited for contempt, Norton asked the judge for more time to sort out the chaos she inherited, but Lamberth denied the request, saying Norton not only failed to comply with his orders, but lied about the agency’s progress.

"Worse yet, the department has not undeniably shown that it can no longer be trusted to state accurately the status of its trust reform efforts," said Lamberth, who also ordered the agency to pay all of the plaintiff's attorney's fees and come up with a new management structure for the trust.

On Tuesday, Slonaker described a culture that was averse to change and one in which incompetent employees could not be fired, even after several court-mandated reforms.

"Even the competent managers aren’t trained in trust, they are not trust managers," he said. "It’s going to take an outside agency to get it done."

But agency officials said that idea -- whether it be an outside agency or an independent board on the inside -- has already been rejected by tribal leaders, who fear a loss of control over the process.

"We need to try to work together with the beneficiaries," said Deputy Secretary Casson, who felt the contempt order by Lamberth was "demoralizing" for the agency, which is in the process of working with a task force of tribal leaders to hammer out reform proposals.

The agency has also started an "historical accounting" of records, which could take as long as five years, in order to start paying out settlements.

Any proposal tribal leaders agree to, however, is unlikely to include a separate commission, said Danny Jordan, a spokesman for the Hoopa Valley Tribal Council in California. He said most leaders would like to see the agency be given the proper resources, and institute more self-governing measures for property owners over their piece of the trust.

He said they are not willing to throw the proverbial baby out with the bathwater and leave the trust in the hands of outside bean counters.

"The Bureau of Indian Affairs is the most under-funded agency that exists. It has been simply ignored for years," Jordan said. He added, "When you have an agency that has been under-funded and beat up for so long, it’s easy to say let’s throw it out."

Whatever the course of action, it better take place soon, said Committee Chairman Sen. Ben Nighthorse Campbell, who sympathized with the individual property owners who were owed compensation.

"We’ve got to cut our losses, and start cutting some checks," he said.