Feds lift hold on Rocky Boy pipeline project

HELENA — Federal officials this week lifted their temporary hold on funding for a $361 million water pipeline for a Native American reservation in northern Montana after Chippewa Cree tribal officials demonstrated they were addressing conflicts and accounting problems.

The Bureau of Reclamation notified tribal leaders in March there would be no additional funding for the 50-mile pipeline project until the tribe showed action had been taken. The federal agency found problems that included missing money, a conflict of interest by the tribal leader heading the project and inaccurate accounting of project funds.

Since then, a federal corruption investigation into the pipeline project has resulted in six indictments, including that of Chippewa Cree Construction Corp. CEO Tony Belcourt, who headed the pipeline project and owns a company that was awarded a $633,000 contract for the project.

Belcourt and five others are accused of diverting hundreds of thousands of dollars in federal stimulus aid meant for the water pipeline project.

He has pleaded not

guilty to fraud, theft and money laundering charges. He also has been suspended from the Chippewa Cree Construction Corp.

Belcourt's suspension,

plus a new system of administering the federal money for the project and an agreement to allow federal officials to perform a one-time audit, has satisfied the BOR's concerns, agency spokesman Tyler Johnson said Wednesday.

"They are currently being addressed, so we're moving forward," he said. "It's no longer an issue."

That means the BOR won't delay the pipeline project's next funding installment, which is slated to be $3.8 million for 2013. A $5,000 budget placeholder was created Tuesday, and the details on the full funding are being ironed out, Johnson said.

The Rocky Boy's/North Central Montana Regional Water System is 22 percent complete after Congress approved the project in 2002 to bring reliable drinking water to the reservation. When it is completed, the pipeline will serve as many as 30,000 people on and off the reservation.

The March 18 letter from BOR regional director Michael J. Ryan said Belcourt had a conflict of interest as head of the pipeline project and owner of MT Waterworks, the company awarded a $633,000 contract by the tribal construction corporation Belcourt led.

The federal indictment alleges Belcourt diverted federal stimulus money to start MT Waterworks, and that he and tribal business committee member John “Chance” Houle used a network of intermediaries and a shell company to steal additional money.

Belcourt's suspension from the tribal construction company resolves the conflict of interest, Johnson said.

Ryan's letter also said money was missing from Chippewa Cree bank accounts for the pipeline project. Former tribal chairman Ken Blatt St. Marks said the total amount missing was $3.5 million, which the tribe replaced from other revenue sources.

Instead of the BOR giving the tribe the next $3.8 million funding installment in its entirety, tribal leaders have proposed creating a reimbursable drawdown joint account with the BOR.

Under that system, the tribe would submit its expenses be paid month to month, Johnson said.

The tribe also has agreed verbally to allow federal officials to perform a program audit that goes back several years, Johnson said.