OHA DEMANDS FINANCIAL DETAILS FROM ITS OWN COMPANIES
Honolulu Civil Beat - February 7, 2018
The Office of Hawaiian Affairs Board of Trustees wants several nonprofits that the agency created to hand over financial documents for an internal audit.
The trustees voted 8-0 Wednesday to require managers of the organizations to submit documents upon request, a big win for critics who have questioned why the financial details of the OHA-founded limited liability companies have remained secret.
The companies include Hiipaka LLC, which manages Waimea Valley on Oahu, and Hookele Pono LLC, which helps Native Hawaiian companies obtain government contracts. They were set up by OHA, which manages a $600 million trust and is charged with using it to benefit the indigenous Hawaiian community.
Last week, a draft state audit of the government agency found widespread financial mismanagement and no consequences for misspending.
The trustees spent an hour in executive session discussing the draft Wednesday with their legal counsel but didn’t hold a public discussion. The board is commissioning its own audit to conduct a more in-depth analysis of the agency, including the nonprofits OHA created, which are managed by the agency’s executive director.
“Isn’t it amazing that it would take a motion like that given that these are LLCs set up by the board?” said Randall Roth, a University of Hawaii law professor emeritus who specializes in trusts. “Just based on general principles and what I do know about the history of this, it’s just a sad state of affairs when the board has to formally instruct their own agents to provide information that’s absolutely essential in order for the board to carry our their legal fiduciary duties.”
Roth said the companies were reminiscent of drop-down entities that Kamehameha Schools Bishop Estate, a multi-billion-dollar private trust, created in the 1990s to hide fiscal mismanagement.
“I don’t know what’s going on here,” said Roth, giving OHA credit for demanding more transparency Wednesday. Still, “one just has to wonder how it got to the point that it’s at right now.”
Attorneys for three of the limited liability companies last year refused to give up financial documents, saying they weren’t subject to public records law.
Last year, Abigail Kawananakoa — a well known descendent of Hawaiian royalty — filed an ethics complaint against Kamana’opono Crabbe, the chief executive officer of OHA, because he didn’t disclose his affiliation with the nonprofits on his official financial disclosure.
OHA trustee Keli’i Akina leads the conservative think tank Grassroot Institute and has been an outspoken critic of the limited liability companies.
After the motion passed Wednesday, he issued a public statement saying, “Serious questions have been raised concerning the finances of OHA’s LLCs. Now that the OHA board has made it clear that the LLCs must open their books to the independent auditor, I call upon the LLCs to cooperate fully with the internal audit.”
Crabbe said after Wednesday’s meeting that the companies will cooperate with the motion but declined to comment further.
Germaine Meyers, a Native Hawaiian from Nanakuli who has been attending board meetings for the past year, said the decision is a big deal for beneficiaries like her who wonder why the companies exist and where the money is going.
“They were shut like a clam,” she said of the nonprofits.
