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Saturday, November 12, 2022
Red Flags 2: Fraud, Waste, and Abuse at OHA
By Keli'i Akina PhD @ 4:00 PM :: 2507 Views :: Akaka Bill, Ethics, OHA

Forensic Review of OHA’s Financial Transactions Finds Evidence of Fraud, Waste, and Abuse -- OHA Trustee Keli‘i Akina Calls for Accountability

PDF: Red Flags 2: A Summary and Analysis of Plante Moran’s Evidence of Fraud, Waste, and Abuse at OHA by Trustee Keli‘i Akina

News Release 1 of 2 from the Office of OHA Trustee Keli‘i Akina, Ph.D., November 10, 2022 

Honolulu, HI - A forensic review performed by auditing firm Plante Moran identified evidence of fraud, waste, and abuse related to 22 financial transactions, worth nearly $8 million, made by the Office of Hawaiian Affairs (OHA) from 2012-2016. 

“The forensic review by Plante Moran confirms my concern that fraud, waste and abuse were occurring at OHA. That is exactly why I called for an independent review of OHA’s financial transactions,” said Trustee Keli‘i Akina. “I commend OHA’s administration for adopting the necessary policies that seek to prevent these actions from occurring again. But it is now time for OHA to take the appropriate steps to ensure that we uphold our fiduciary duty by holding the individuals who were involved in these transactions accountable for breaching their fiduciary duty. We owe it to our beneficiaries to follow through and see that instances of fraud, waste, and abuse are investigated and referred to the appropriate agencies for action.”

In 2017, Trustee Akina’s first major action in office was spearheading the Clifton Allen Larsen (CLA) independent review of OHA’s financial transactions from 2012-2016. In 2019, CLA reported their findings which included 38 “red flag” transactions. These findings showed indicators of fraud, waste, and abuse. In response, OHA implemented Board-approved policies, procedures, and practices that intend to mitigate these potential issues from occurring in the future. In 2022, OHA contracted with Plante Moran, a forensic auditing firm, to determine whether the 38 “red flag” transactions had actual evidence of fraud, waste, and abuse.

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“The evidence of fraud, waste, and abuse related to the 22 transactions may constitute a breach of fiduciary duties by the individuals who were involved with these transactions,” says OHA Trustee Akina.                        

News Release 2 of 2 from the Office of OHA Trustee Keli‘i Akina, Ph.D., November 11, 2022

Honolulu, HI - Today, Trustee Keli‘i Akina is releasing his summary and analysis of Plante Moran’s findings of fraud, waste, and abuse related to 22 financial transactions worth nearly $8 million made by the Office of Hawaiian Affairs from 2012 to 2016.

“Most of the evidence that Plante Moran found and relied on to make their determinations were based on the collection of emails. Specific individuals such as former OHA staffers and former members of OHA’s administration, in addition to individuals from specific vendors, were mentioned as partakers in the fraud, waste, and abuse,” said Trustee Akina. “The evidence of fraud, waste, and abuse related to the 22 transactions may constitute a breach of fiduciary duties by the individuals who were involved with these transactions. Additional legal insight is needed to determine whether there is any other potential criminal conduct or violations of the Hawai‘i Revised Statutes.”

In February 2022, OHA contracted with Plante Moran, a forensic auditing firm, to determine whether the 38 red flag transactions had actual evidence of fraud, waste, and abuse. On November 10, 2022, Plante Moran released their findings in their report titled “Analysis of 38 Transactions.” Plante Moran’s forensic review identified evidence of fraud, waste, and abuse related to 22 of the 38 financial transactions, worth over $7 million, made by the Office of Hawaiian Affairs (OHA) from 2012-2016. Although evidence of fraud, waste, and abuse was not found for the other 16 “red flag” transactions, Plante Moran stated that evidence could still be found related to those transactions.

PDF: Red Flags 2: A Summary and Analysis of Plante Moran’s Evidence of Fraud, Waste, and Abuse at OHA by Trustee Keli‘i Akina

DISCLAIMER: The views expressed in this news release are the personal views of Trustee Akina and may not reflect the views of the Office of Hawaiian Affairs or its Board of Trustees.

Keliʻi Akina, Ph.D., is a community leader who is known for the phrase he has coined, "E Hana Kākou" - Let's work together! Over the past several years as a public policy adviser at the legislative, congressional and international levels, Dr. Akina’s mission has been to preserve the Aloha Spirit by which native Hawaiians and people of all races are welcomed and encouraged to work together for a better future for all our keiki. He was elected to the Office of Hawaiian Affairs Board of Trustees in November 2016.

COVERAGE:

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The OHA Board of Trustees releases a statement and answers questions regarding a recently completed follow up financial review.

News Release from Office of Hawaiian Affairs, November 9, 2022

Four years ago, OHA contracted an independent accounting firm to review contracts and disbursements from 2012-2016 for both OHA and its related limited liability companies, at the direction of the Board of Trustee's Committee on Resource Management. In 2022, OHA engaged a national firm experienced in forensic, accounting, and audit engagement to follow up and review 38 flagged transactions identified in 2019. That report has been completed and OHA would like to share results and subsequent changes to governance, policies, procedures and practices with its beneficiaries and the community at large that demonstrate the agency's commitment to transparency, accountability and fiscal stewardship.

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Office of Hawaiian Affairs ushers in a new era of accountability

Implements policies, procedures and practices to prevent fraud, waste and abuse

News Release from Office of Hawaiian Affairs, November 10, 2022

HONOLULU-Three years ago, during a period of critical transition, the Office of Hawaiian Affairs (OHA) ushered in a new era of leadership by appointing Sylvia Hussey, a certified public accountant with decades of experience in financial administration, as Ka Pouhana (CEO).

"OHA is positioned to serve its beneficiaries better than ever before after a thorough overhaul of its policies, procedures and practices under the leadership of a new executive team," said Board of Trustees (BOT) Chair, Carmen ‘Hulu' Lindsey at a press conference today.

Lindsey, who was elected Chair in late 2020, made it clear that she, her fellow trustees, and the executive team worked tirelessly to set the tone at the top for overall accountability.

"She provides the leadership that OHA needs to ensure ethical stewardship of the resources it manages for its beneficiaries," said Lindsey of Hussey.

In September 2018, the OHA BOT engaged a top ten national Accounting firm--CliftonLarsonAllen LLP (CLA)--to conduct a detailed review of a sample of OHA and limited liability company (LLC) contracts and disbursements from five fiscal years (2012-2016). While OHA was not required to take this extraordinary step, the BOT opted to do so despite OHA undergoing regular state audits and receiving clean annual independent financial audits for 14 consecutive years (now 18 years).

CLA presented the results of their engagement in December 2019, including 73 OHA, 30 LLC and 6 general oversight and governance recommendations. The report also identified 38 transactions from the five fiscal years reviewed (2012-2016) that may contain elements of fraud, waste and abuse.

Better stewardship through tighter systems and controls

Lindsey highlighted the improvement steps taken by OHA since December 2019 to better align policies, procedures and practices, through Administration's Recommendations Implementation Plan which addressed CLA recommendations, including but not limited to:

• Implemented three major technology systems for grants management, accounting and contract management.

• Established a governance and policy framework for the BOT with updated bylaws.

• Approved policy amendments to improve fiscal management and transparency in budget preparation, format, and reporting requirements.

• Placed contract monitoring as the responsibility of the operating unit with oversight by the business line executive.

• Subjected all grants and sponsorships to approval by the BOT.

• Eliminated CEO-initiated sponsorships and the CEO management override practice

• Required that employee-related events be compliant with OHA policies

• Established a financial transparency website that includes 18 years of financial statements and independent auditors' opinions, Trustee Protocol Allowance and Annual Reports.

Steps taken to address 38 questionable transactions

In February 2022, OHA contracted Plante Moran (PM), an audit, tax, consulting and wealth managenent firm, to perform a detailed follow up of the CLA report. PM is a contractor experienced in forensic, accounting, audit, and related engagements. They utilized standards in accordance with the Statement on Standards for Forensic Services established by the American Institute of Certified Public Accountants Council Forensic and Valuation Services Executive committee.  This committee provides guidance and establishes enforceable standards for members performing certain forensic and valuation services.

The PM report found 22 of the 38 questionable transactions with evidence of fraud, waste and abuse.

“Throughout both engagements (CLA and PM), OHA's staff and BOT were fully cooperative and responsive," said Lindsey.

OHA noted matters requiring criminal prosecution will be turned over to the relevant authorities for appropriate action.

"We are determined to ensure accountability for past wrongdoing," said Lindsey.

Moving forward, the four strategic directions OHA has identified to impact the most change for its beneficiaries are education, health, housing and economic stability.

"We know we have to do much better to deliver what our beneficiaries need -everything we do and every decision we make will be informed by those strategic directions," concluded Lindsey.

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