Nevada's statewide federal
land-swap scandal broadened this week as a confidential
Inspector General audit was leaked to the press and
Congressional hearings were scheduled for July. First reported by Electric
Nevada last Sunday, the land-exchange
irregularities involve millions of dollars in
land-sale profits which in-state Bureau of Land
Management offices effectively diverted from taxpayers to
two favored private land-broker organizations. "The
taxpayers have been swindled out of $12 million,"
Congressman John Ensign, Nevada Republican told a Las
Vegas news conference Friday, citing a figure from the
audit. He
asked Interior Secretary Bruce Babbitt Thursday to halt
BLM land exchanges in Nevada until the controversial
process has been investigated. Spokespersons for Babbitt
indicated he would not stop the swaps. Earlier
in the week Ensign called for a congressional
investigation, and Rep. Jim Hansen, R-UT, chairman of the
Subcommittee on National Parks, Forests and Lands,
scheduled hearings for July. The
Las Vegas Review-Journal published elements of the leaked
audit report, including auditors' conclusion that the BLM
had shortchanged taxpayers at least $12 million in four
Nevada land swaps.
"The BLM failed to obtain fair-market value for
prime development acreage, traded land it should have
sold, did not always used independent appraisals and
ended up swapping for some land it did not need,"
wrote Review-Journal reporters Jane Ann Morrison and
Keith Rogers, quoting the audit report.
"While the government lost millions of dollars,
brokers who specialize in swaps made millions by
obtaining federal land in the Las Vegas Valley and
reselling it to investors or builders hungry to
expand."
Federal auditors found, said Morrison and Rogers,
"that Olympic Group Inc., an Arizona-based land
development company, received land from the BLM and in
three sales quickly resold it for $5 million more than
the exchange value. Twice, land was resold the same day
of the exchanges; a third parcel was sold within two
months." The
I.G. auditors also found that the BLM in Nevada:- did not consistently follow land exchange regulations or procedures and ensure that fair and equal value was received.
- Lost $4.2 million by undervaluing
land it was exchanging; Lost at least another
$7.8 million by exchanging land it could have sold for
more under the Santini-Burton Land Act; Exchanged some of
the BLM's most valuable land for 2,461 acres the federal
government does not need, at a cost of $2.7 million.
Federal
auditors upheld many criticisms made of the recent BLM
land swaps by the former chief appraiser for the bureau
in Nevada, Reno's Charles Hancock,
including the argument that the BLM should be selling the
land competitively, rather than exchanging it.
Hancock
believes the $12 million mentioned in the I.G. auditors'
report is just the tip of the iceberg.
"That's
minor when we get into the full big picture," he
said.
He
also points out that the exchanges not only shortchanged
federal taxpayers but deprived state of Nevada taxpayers
of millions in revenue.
Under
the Federal Land Policy and Management Act, when federal
land is sold rather than exchanged, the state where the
federal land is situated gets 5 percent of the sale
proceeds.
In
just one example, he said, the state lost $2.2 million
because BLM officials swapped the land instead of selling
it.
A
point-by-point letter from Hancock to the Department of
Interior's Office of the Inspector General in late 1994
helped precipitate the statewide audit.
"Since
... your information indicates that problems persist with
[Nevada land] exchanges," wrote Acting Inspector
General Joyce N. Fleischman, "we plan to review the
Nevada exchanges you cited. In that regard, a
representative from our office will contact you to obtain
further information."
Congressman
Ensign also claimed credit for instigating the audits,
saying he had asked the DOI inspector general to
investigate all BLM exchanges after political operative
Don Williams, a friend of former Rep. James Bilbray,
D-Nev., tried an exchange in the Red Rock Canyon National
Conservation Area near Las Vegas.
Williams'
alleged land-exchange ploys were a major issue in the
1994 District 1 congressional election, which Bilbray
lost to Ensign.