U.S. District Judge Royce Lamberth issued the contempt order, saying Treasury Secretary Robert Rubin and Interior Secretary Bruce Babbitt failed to produce documents related to a class-action lawsuit over the alleged mishandling of 300,000 Indian accounts worth an estimated $500 million.
The secretaries and Assistant Interior Secretary Kevin Gover were ordered to pay legal fees and other expenses that resulted from their delay in complying with Lamberth's November 1996 order to produce documents.
"I have never seen more egregious misconduct by the federal government," Lamberth said in his order.
The judge's ruling followed a contempt hearing last month.
Interior's Bureau of Indian Affairs was ordered two years ago to turn over statements, checks and other documents on accounts held by five American Indians who are the lead plaintiffs in the suit against the Interior and Treasury departments.
So far, only a small number of the documents have been produced.
"The court is deeply disappointed that any litigant would fail to obey orders for production of documents, and then conceal and cover up that disobedience with outright false statements that the court then relied upon," the judge wrote. "But when that litigant is the federal government, the misconduct is even more troubling."
The Treasury Department had no immediate reaction to the ruling.
The Interior Department issued a statement saying that correcting decades-long problems with management of the Indian trust funds remained one of Babbitt's "highest priorities."
The lawsuit is related to a long and embarrassing attempt to clean up $2.5 billion in Indian trust funds.
The funds include the 300,000 accounts held by individual Indians and another 2,000 tribal accounts worth $2 billion. The money includes lease revenue, royalties and court settlements.
Some of the accounts are worth only a few dollars. The largest one, valued at $400 million, is a court's award to the Sioux nation for its loss of the Black Hills.
The presidential appointee in charge of reconciling the accounts and improving the bookkeeping resigned last month.
Special Trustee Paul Homan accused Babbitt of stripping him of the authority he needed to do his job, and Homan's supporters accused Babbitt of making him a scapegoat for the department's problems.
Records that have been turned over have included embarrassing revelations.
The Bureau of Indian Affairs was unable to document $2 billion of transactions in the tribal accounts over a 20-year period. It is not known how much of that is actually missing, but it has been estimated the government could be liable for up to $575 million in the tribal accounts alone.
Written By Philip Brasher