WALKING THE TALK - SETTING THEIR HOUSE IN ORDER

OHA DOESNʻT NEED A WATCHDOG?

 

OHA DOESNʻT NEED A WATCHDOG?

 

MAUNA KEA KIA`I KNOWS OHA NEEDS A WATCHDOG

WHY A WATCHDOG IS NEEDED AT THE OFFICE OF HAWAIIAN AFFAIRS

 

DONʻT LET THEM TRICK YOU

 PULLING TEETH AT OHA

 

 

 

 

 

 

 

 

 

 

 

Honolulu Civil Beat - By Tom Yamachika - Oct. 18, 2020

Imagine that you wake up one day to an awful toothache, and you march into your dentist’s office. 

But then your dentist says, “Well, you tell me your tooth hurts, but can you prove that you have a cavity?” 

“Um … no,” you reply. 

“Well, then, get out! You’ve just wasted my time. I’ll be sure to send today’s bill to you personally, not your dental insurer, for this outrage.” 

Similar logic (if you could even call it logic) is being used at our Office of Hawaiian Affairs, and that argument has become an issue in the upcoming election for OHA trustees. 

In September 2018, the OHA Board of Trustees, at the urging of At-Large Trustee Keli‘i Akina, engaged a national accounting firm to conduct a contract and disbursement review, looking for indicators of fraud, waste, and abuse. The accounting firm’s report was issued on Dec. 4 at a cost of $500,000. 

The report and a summary of the report put together by Trustee Akina’s staff highlighted a number of “red flags,” or potential problems. Here are some examples. 

Various places in the report, including at pages 70-72, discuss a $2.6 million grant made to Akamai Foundation to conduct a Native Hawaiian self-governance election, including independently monitoring the election and funding self-governance activities after the election was concluded. The money was supposed to be paid out in five tranches. 

‘Waste Of $500,000’ 

But Akamai Foundation asked that all funds be paid out at once, before the nonprofit incurred a large portion of the costs, and OHA did so (in violation of its internal policies). The election was cancelled, leaving the auditors wondering whether some of the funds disbursed were really needed or actually spent for the requested purposes. 

Page 121 of the report discusses a contract with Mid-Continent Research for Education and Learning. OHA paid $349,527 for consulting services. Neither the procurement documents nor any deliverables could be found. But of course the money went out the door. 

 On the day the report was issued, a statement of OHA Chair of the Board Colette Machado and Chair of the Committee on Resource Management Dan Ahuna said, “While this report observed indicators of potential fraud, waste or abuse, it did not identify actual instances of fraud, waste or abuse.” 

Thus, on a recent PBS “Insights” candidates’ forum, Keoni Souza, who is running for OHA Trustee-At-Large against Akina, said, “Do I think there was a waste of $500,000? Absolutely.” 

Chair Machado then doubled down by saying, “Keli‘i, you tried to find the smoking gun. And there was none. It’s on you now.” 

Has your tooth stopped hurting yet?

Just to be clear: CliftonLarsonAllen, the accounting firm issuing the report, is not the police, is not the FBI, is not law enforcement. An accounting firm can’t arrest people, throw them in jail, or otherwise find that they have committed illegal activity.

We have previously urged OHA to turn the report over to law enforcement. Apparently, that hasn’t happened because, well, there is no smoking gun so why trouble law enforcement?

Ouch! Give us the Novocain!

 

OHA ELECTIONS 2020 - WHO TO VOTE FOR

ARE YOU SURPRISED?

A SPECIAL MESSAGE FROM JACKIE KAHO`OKELE BURKE

HE KNOWS THE SCORE

IMPRESSED WITH OHA TRUSTEE KELI`I AKINA

 

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OFFICE OF HAWAIIAN AFFAIRS - VOTE 2020

OFFICE OF HAWAIIAN AFFAIRS - VOTE 2020

 

DONʻT SWEEP OHA AUDIT UNDER THE RUG

By Trustee Keli'i Akina, PhD, Ka Wai Ola, January, 2020

Some say it's not an "audit," but a "report." Others say it doesn't "show fraud," but "indicators of potential fraud." However people talk about it, you owe it to yourself to look at what the latest audit of OHA actually says.

SHOCKING FINDINGS

The firm CliftonLarsonAllen (CLA) examined 2% of all contracts and disbursements OHA and its LLCs entered into from July 2012 to June 2016. They Red-Flagged 17% of them for ''potentially fraudulent, wasteful or abusive expenditures."

Here are some of their findings:

• The Akamai Foundation, on behalf of Na'i Aupuni, received a $2.6 million grant but OHA was unable to give the CLA auditors any supporting invoices, receipts or billings to demonstrate what costs were actually incurred by the grant awardee.

•A $1.6 million contract was awarded to WCIT to produce the Conceptual Master Plan for OHA's Kaka'ako Makai properties but according to CLA, the purpose of this contract was not accomplished.

• A $250,000 contract was awarded to Kuauli 'Aina Based Insights LLC to "examine the original source deeds of former Hawaiian Kingdom Government and Crown Lands sold" from 1845-1859. The contract bypassed the required procurement process.

• OHA gave a $200,000 grant to 'Aha Kane while the OHA CEO at that time, who founded 'Aha Kane, was serving as an Advisory Chair to the organization.

• Reed Smith LLP received a $200,000 professional services contract to provide legal advice regarding Native Hawaiian self-governance and Hawaiian language immersion education. The main provider of the services contracted for was an OHA employee whose employment with OHA ended shortly before the contract was awarded.

• Absolute Plus received $185,000 to provide reports to the Board on each Trust Fund Advisor and the entire trust fund, yet OHA could not provide CLA with the reports, or any evidence that the required work was performed.

• OHA gave $150,000 to ABW Holdings, LLC for a lease guaranty OHA had signed on behalf of Kauhale, LLC when it defaulted on its commercial lease at Waikiki Beachwalk.

NOT A CLEAN BILL OF HEALTH

While the CLA report "did not identify actual instances of fraud, waste and abuse," the truth is that CLA cannot, and was not asked to make, a formal determination of fraud since it is not a law enforcement entity. CLA did what they were hired to do, which is point out indicators of potential fraud. CLA stated, "Because our engagement was limited to-the matters described in the contract, fraud and/or financial irregularities may exist within the organization that we may not have identified during the performance of our procedures."

Clearly, the auditors did not give OHA "a clean bill of health."

The Honolulu Star-Advertiser editors put it this way: "Audit should set off alarms at OHA." And Hawai'i News Now reported: "Auditors find a mess when they look into Office of Hawaiian Affairs spending."

SERIOUS QUESTIONS

There are serious questions which must now be answered:

• Where are the contract deliverables that the audit could not find?

• Where is the large amount of documentation that OHA could not produce for the auditors?

• Will OHA trustees look into cases with serious indicators of potential waste, fraud and abuse?

• Will the trustees make appropriate referrals to government agencies and law enforcement bodies?

The worst thing OHA could do is downplay the audit and fail to hold responsible parties accountable. Beneficiaries need to insist that OHA trustees follow through and complete the work the audit began.

Let's not sweep the independent audit under the rug.

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"WHY YOU SHOULD MAHALO OHA TRUSTEE KELI`I AKINA"

How Would You Like To Do Something Good & Get Criticized For It?

Thatʻs What Happened To OHA Trustee Keli`i Akina.

Who Would Criticize Him & Why For Doing Something Good?

Watch This For The Answer & What He Did That Benefits All Hawaiians.

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AUDITORS FIND A MESS AT OHA

 

 

 

 

 

  

 

Hawai`i News Now - December 9, 2019

The Office of Hawaiian Affairs paid a mainland firm to take a hard look at questionable contracts, grants and other financial transactions. 

As expected, the firm ― CLA (CliffordLarsenAllen) ― found such lax management that potential fraud, waste and abuse was going unnoticed at the agency. 

The firm used its experience to judge which areas of spending had the most risk for problems and asked OHA to provide documentation on 185 transactions from 2012 and 2016. 

In many cases, the documentation was not adequate to establish that work OHA or its non-profit affiliates had paid for was actually produced. 

The review reinforced the prior findings of government auditors, which described lax controls on financial transactions ― many of which were arranged by former CEO Kaamanao Crabbe ― didn’t meet basic standards of procurement. 

Those transactions had few or no checks for insider dealing, competitive bidding or following up on how money was spent. 

Board of Trustees Chair Colette Machado said the board has already implemented recommendations, including taking away the CEO’s authority to spend without board review and new controls on trustee allowances. 

She said the board hired a new CEO, Sylvia Hussey, who helped reform management of the Kamehameha Schools. 

Machado said the CLA report and the prior audits are a road map for OHA’s reform. 

“Its been an opportunity to work with our new CEO she is a certified public accountant she has tremendous background in how to manage these things,” Machado said. Hussey has been given until January to propose reforms to the board. 

While the agency leadership prefers to look forward, Trustee Kelii Akina, said the report’s findings are alarming enough that more should be done to examine what happened in the past. 

“It would be a mistake to simply whitewash this audit and say there are no problems. clearly there are issues that have to be dealt with there are people who shold be held accountable,” Akina said. “I think its important to take a deeper look and see if there are problems throughout the entire organization.” 

Akina and his staff did their own analysis of the CLA findings, which total around 1,000 pages. 

“Between the years of 2012 and 2016, the audit found that 85% of all the transactions sampled had some kind of problem and 17% had indications of waste fraud and abuse. That’s egregious,” Akina said.

GUILTY! - OHA FORENSIC AUDIT RESULTS - FRAUD, WASTE & ABUSE

Honolulu Star-Advertiser - December 9, 2019

An independent financial review of the Office of Hawaiian Affairs has identified transactions worth $7.8 million as potentially fraudulent, wasteful and abusive.

OHA’s long-awaited independent audit, covering a period from 2012 to 2016, documented signs of shoddy record keeping, inadequate oversight, unlawful procedures, missing documents, conflicts of interest and, in some cases, contractors who failed to perform the work they were hired to do.

Of the 185 contracts and disbursements reviewed by the national accounting firm of CliftonLarsonAllen (CLA), 85% suggested conflicts with statutory requirements or internal policies, and 17% were flagged for potential fraud, waste and abuse.

Trustee Kelii Akina, who pushed for the $500,000 audit following his 2016 election to the board, called the findings troubling.

“The results, in some instances, are more serious than I imagined,” Akina said.

In a written statement, OHA Chairwoman Colette Machado and Kauai trustee Dan Ahuna had a slightly more upbeat take on the report of over 1,000 pages.

“The recommendations of this report confirm that OHA is moving in the right direction,” they said, in part because the board is already working toward greater transparency with a number of the recommendations already being implemented.

However, they did acknowledge that “more needs to be done to regain the trust of our beneficiaries and the general public.”

The trustees voted Wednesday to have the agency’s administration review and analyze the report and prepare a plan for implementation by Jan. 22.

But Akina, who led the OHA committee that helped set up the parameters of the financial review, urged his fellow board members to dive deeper into the findings and hold accountable those responsible for any fraud, abuse and waste.

The audit contract, awarded more than two years ago, called for an examination of both OHA and its limited-liability companies with an eye toward identifying areas in the agency’s procurement process at risk of fraud, waste and abuse.

The firm flagged 32 transactions with potential for fraud, waste and abuse, including:

A $99,600 contract in 2013 to a nonprofit for 36 youth scholarships. OHA had no documentation to show the scholarships were actually given to the students, and the nonprofit’s tax returns indicate only half of the scholarships were awarded.

A $150,000 disbursement to ABW Holdings LLC to pay for a lease guaranty OHA signed on behalf of its now-defunct subsidiary Kauhale LLC when it defaulted on its commercial lease at Waikiki Beachwalk. The transaction appears to have been split in two payments in a move to avoid scrutiny by the chief financial officer and legal counsel.

A $185,000 contract in 2012 to Absolute Plus Advisors, now out of business, for financial advisory services. The contract amendment was executed five months after the contract date, and no documents were available showing the firm did the work for which it was hired.

The largest contract flagged as questionable was a $2.6 million grant to the nonprofit Akamai Foundation, which was the fiscal sponsor for the election of delegates to the 2015 Na`i Aupuni Hawaiian constitutional convention.

The problem is that the election was canceled at the last minute, and auditors found few if any receipts, invoices or billings to demonstrate what costs were incurred. OHA was dinged for potential lack of oversight, abuse of the disbursement process and waste of funds, among other things.

Contacted Friday, Akamai Foundation Chairman Louis Perez said all the funds were spent in accordance with the contract and that there remains documentation that describes every expenditure in detail.

Perez said he might understand auditors not finding a lot of receipts because, with the election under attack in the courts, officials were cautious about appearances, and there was a concerted effort to maintain neutrality and distance between the governance campaign and OHA.

According to its contract, CLA was not tasked with determining whether any transactions were in fact fraudulent, abusive and wasteful. Instead, it was only to point out whether they might be.

In addition, the firm didn’t just pick out a random sampling of contracts and disbursements, but used its professional judgment to select transactions that appeared more likely to have indicators of fraud, waste or abuse, officials said.

The report concludes with 109 recommendations to help OHA tighten up its financial procedures and guard against abuse. Among the recommendations: more employee training, starting a special audit committee and establishing a hotline for reporting fraud and abuse.

In his analysis of the report, Akina said the document acts as a road map of issues to resolve and offers a valuable list of transactions that warrant further investigation.

Former veteran OHA trustee Rowena Akana said she was not surprised by the amount of fraud and abuse suggested in the report.

“We knew what was going on,” she said, adding that she tried to bring additional problem areas to the board leadership’s attention but that her concerns were often ignored.

Akana urged the board to investigate the red-flagged cases in the report and consider having the state Attorney General’s Office resume as lead counsel for the agency.

Machado and Ahuna noted that since the report looked at a five-year period that began seven years ago, several grant and procurement reforms are not reflected in the observations.

What’s more, employees with knowledge about certain contracts or disbursements are no longer with OHA and were unable to provide key information, they said.

One employee no longer with OHA is Kamana`opono Crabbe, who led OHA as CEO during the entire range of the report.

Crabbe, who left his job at the end of June and became CEO of the Kohala Institute at Iole on the Big Island on Oct. 28, could not be reached for comment Friday.

New CEO Sylvia Hussey will head OHA’s analysis of the report and come up with a plan to implement reforms. The former Kamehameha Schools administrator and certified public accountant was hired by OHA as COO last year and took over as permanent CEO on Dec. 1.

In their statement, Ma­chado and Ahuna said OHA has “an unwavering commitment to continued improvement,” as illustrated, in part, by the fact that the board took the “very unusual step” of hiring a national accounting firm to examine a sample of contracts and disbursements.

“We were not required to do this,” they said. “Despite undergoing regular state audits and receiving clean annual independent financial audits for eight consecutive years, our Board chose to do this on its own, something few other state or private entities would do.”

The board leaders added, “We are in a critical period of transition intended to set the agency on a firm course for the future, with a new CEO, a new 15-year Strategic Plan, and the implementation of these financial management upgrades. We look forward to sharing our progress with our community and general public soon.”