Tuesday, February 27, 2018


By Samuel Wilder King II - Honolulu Star Advertiser - February 25, 2018

"The final audit of the Office of Hawaiian Affairs (OHA) produced by the Office of the State Auditor makes one thing clear: It is time for the incumbent OHA trustees and Chief Executive Officer Kamana`opono Crabbe to step aside or be voted out.

Trustees Keli`i Akina and perhaps Leina`ala Ahu Isa should be spared the voters’ wrath because they only arrived recently, but the rest of the trustees and the CEO should take the hint and move on.

The audit’s findings, largely undisputed by OHA, were jaw-dropping. The trustees owe Native Hawaiian beneficiaries the highest duty under law — a fiduciary obligation. The trustees apparently have so little an understanding of this obligation that the audit recommended training for the trustees in the same.

Even after OHA had a chance to respond, the auditor still found it necessary to point out that OHA’s response was “silent on the core issue of the report: the trustees’ misunderstanding of their individual and collective fiduciary responsibilities to the beneficiaries of the trust.”

The trustees and the CEO have presided over an organization that spent 26 percent of its fiscal 2016 budget on staffing (not including overhead expenses and OHA’s limited liability corporations, or LLCs). Charity Navigator rates typical nonprofits a 10 out of 10 if they spend no more than 15 percent on administration (commonly called the “expense ratio”); 7.5 percent for grantmaking organizations like OHA. An organization with an expense ratio over 25 percent would score a 2.5. A grantmaking organization with OHA’s expense ratio would score a 0.

In 2015-2016, OHA spent nearly double on non-competitive, unbudgeted grants and CEO sponsorships ($14 million) than on competitive grants ($7.7 million). The issuance of these unbudgeted grants often violated OHA procedures or were made over the objections of OHA’s staff. It seems the trustees and the CEO were disbursing trust funds to people who happened to know the right person to ask, not people who had been vetted through a competitive process.

To top it off, all but two of the trustees seem to have been walking around handing out cash directly to beneficiaries. Since 1991, the trustees have received a cash payment at the start of the fiscal year that was supposed to be used for expenses. Today that amount is $22,000. Some trustees apparently commingled these funds with their personal funds. That is insane.

Appendix A to the audit, listing certain expenditures claimed by the trustees, is so ridiculous the auditor included sarcastic titles, such as “Being A Trustee Has Its Benefits.” As noted by a trustee anonymously paraphrased in the audit, there are serious ethical concerns with elected officials having the ability to use allowances for purposes of beneficence in which they garner personal goodwill from the electorate.

Reading Appendix A gives one the distinct impression the trustees were simply walking around handing out trust funds as if they were ali`i entitled to hand out such largesse. The trustees’ justification was that the money helped beneficiaries. When asked how they knew who beneficiaries were, 6 of the 9 trustees told the auditor that “they just know who is Hawaiian.” That only makes sense if you are only giving money to your cousins.

Perhaps the trustees and the CEO started with the best intentions, but the audit makes clear that it is time for a clean slate. No one is irreplaceable, and it is time to replace the trustees and the CEO.

Samuel Wilder King II is a practicing attorney in Honolulu, and a graduate of Punahou, Georgetown and the University of Hawai`i William S. Richardson School of Law.