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Sunday, November 13, 2016
Ethics Complaint: OHA Insiders Take Kickbacks from Kakaako Makai Projects
By Andrew Walden @ 1:26 AM :: 5292 Views :: Ethics, Development, OHA

Editor’s Note: This is the text of a complaint filed with the State Ethics Commission April 22, 2016 (last day Leslie Kondo was Executive Director).  The full text of the complaint has been provided to HawaiiFreePress.com by a source near OHA.  To date, there has been no public action on this complaint by the Ethics Commission.  Some text has been redacted to protect potential witnesses from retaliation.  Spelling and grammatical errors have been corrected and links have been inserted to assist readers.

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April 22, 2016

To: Hawaii State Ethics Commission, Leslie H. Kondo, Executive Director

From: Kealii Makekau, Mililani B. Trask

Re: Complaint against OHA Employees and Trustees for Violations of State Ethics Laws

Aloha Mr. Kondo,

We are forwarding herewith a Complaint and request that the Hawaii State Ethics Commission investigate the concerns presented herein for violations of our State Ethics laws. The State Ethics Code prohibits any elected official or State employee from using their position to gain benefits. It also prohibits State elected officials & employees from using their job to grant favors to friends. We believe that certain Trustees and Executive staffers manipulated the Kakaako RFP process to ensure that the Kuhikuhi Puuone (WCIT, DTL, and EKF) would receive the award despite the fact that OHA had previously awarded another RFP for Kakaako planning to Group 70 & Sanford Murata who had completed the work.

This Complaint also references actions of Trustee Peter Apo who has used his office to further his private business, pay company debts, obtain income from media outlets, help friends access OHA funds and obtain OHA contracts for use of a Kakaako Makai parcel without posting an RFP or informing the OHA BOT.

II. Background: OHA Kakaako Development Process:

When Oz Stender was the ARM Chair, OHA posted an RFP for the development of Kakaako. The OHA BOT awarded the first RFP to Group 70 & Stanford Murata. OHA paid several hundred thousand dollars to GROUP 70 for their plan & Group 70/Murata completed the work. The focus of Francis Oda and Murata had been on developing a project with a strong Hawaiian sense of place, something that was reflective of Hawaiian culture etc. Many of their planning documents were made public and were discussed at public sessions of the OHA Land Committee & BOT.  The final plan was completed in November 2013. Contract #13-02.

[See: OHA Kakaako Makai, Land Management and Design Services, RLB, Group 70 International & Sanford Murata Inc., November 2013.]  Note: they used a "Hawaiian Sense of Place" as a goal is in their approach.

When OHA promoted Kamana'o Crabbe as CEO & Trustee Peter Apo replaced Stender, the  new  team  decided to discard the Group 70 work so they  could  hire  their Hawaiian friends, and  start the  process over. In order to accomplish this,  the  process for awarding the second RFP was  handled "in house" by Crabbe & his newly hired Executive Staff.

Crabbe worked with "Executive Staffers" Hawley Iona (CFO), Kawika Burgess (COO), Kehau Abad, and Allen Kam to ensure the Kakaako Development Project would  be awarded to a group of Hawaiian friends in the Kuhikuhi Puuone Consortium (KPC). Pua Kanakaole Kanahele & the Edith Kanakaole Foundation (EKF), Rob Iopa (WCIT) etc. Malia Kaaihue (DTL).

Crabbe & the Executive staff posted a new Kakaako RFP for another Plan.  Although they were requested by Trustee Hulu Lindsey (Chair of OHA Land Committee) to prepare a draft RFP for the Land Committee to discuss, Crabbe and  Burgess refused. Instead they posted a new RFP and when bids came in, they refused to allow the Trustees or the Land and ARM Committees to participate in the process.

OHA attorney Robert Klein advised Crabbe that he could exclude the Trustees because they transferred the procurement authority o the CEO when Colette Machado had  been  chair.  Crabbe was  the  OHA Procurement officer  not the Trustees or Chair of OHA. Although Bob Lindsey had sent out a memo regarding revocation of Crabbe's authority as OHA Procurement Officer, Lindsey later retracted his memo.

Trustee Hulu Lindsey, Chair of the OHA Land Committee objected to Crabbe & his Executive staff handling an RFP in house because if their lack of expertise. She sent out a letter to the  BOT expressing concern that the staff was unqualified to assess and award an RFP and  that she  didn't agree the  planning RFP. See letter of Hulu Lindsey dated October 14. 2014. Her letter was ignored by Bob Lindsey and Crabbe who decided to re-award the planning RFP to the Kuhikuhi Puuone group and  to waive  an independent due diligence for the  BOT (since the BOT was  being excluded from the process.)

Crabbe & his staff awarded the  bid to their friends in the Kuhikuhi Puuone Consortium on October 30th, 2014. See article in Pacific Business News by Duane Shimogawa entitled “Office of Hawaiian Affairs Selects Team to Develop plan for Kakaako Makai.”

The RFP was awarded  to Kuhikuhi Puuone despite  the fact that they did not submit a Financial/Fiscal Assessment as required by the RFP, and they had no developer in their consortium. The financials came in several months late.

The OHA Land Committee Chair Hulu Lindsey, found out about the second RFP by reading it Pacific Business News (PBN).

THE BOT NEVER SAW THE BIDS, THE LAND & ARM COMMITTEES WERE LEFT OUT OF THE PROCESS.

NO DUE DILIGENCE WAS PERFORMED ON THE CONSORTIUM BID NOR WAS ANY DUE DILIGENCE DONE COMPARING THE 3 BIDS TENDERED.

The 3 million dollar addition:

When the RFP was awarded to Kuhikuhi Puuone, Crabbe, Iona and Burgess inserted OHA funding in the amount of 3 million dollars for the RFP project. The Trustees had not identified these funds as an allocation for Kakaako development and the 3 million was not a line item in the budget for Kakaako approved by the Trustees.

Complaint  Note: I spoke  w/Trustee Lei Ahu Isa about this because she has worked for Hilton for years. She was shocked & said that Hilton had never awarded anything as high as 3 million, & rarely topped 1 million for their most expansive projects.

Note: This problem was also occurring with other lands in the vicinity of Kakaako. An email string (Walden) surfaced wherein Peter Apo is addressing the development of Parcel A with staff for the Kalaimoku Group, without posting RFP's and without Committee or BOT review. See news article of Andrew Walden in attachments.

Trustees Hulu Lindsey (Chair of Land) & Rowena Akana (Chair of the ARM) became concerned when they learned that Crabbe & his group had encumbered 3 million dollars figure for the Kakaako bid. In addition, Hulu Lindsey had checked  the credentials of the Kuhikuhi Puuone Group and they did not have any development experience for shoreline/harbor commercial use nor did they have any developer on their team.

Complaint Note: The data shows several "connections" between the Iopa Consortium people who had been OHA employees or who had links to OHA. See Hawaii Business Magazine, Translating Development Into Hawaiian.  Dennis Hollier, September 2014.

When Trustee Hulu Lindsey objected to the way Kakaako was being handled, Chair Bob Lindsey called a special  meeting with the Hawaiian Development Group & Executive staff to confront Hulu Lindsey & pressure her to go along with the staff & Bob Lindsey's decision. She will not discuss this meeting with the Complainants, but may inform the Ethics Commission about who attended and what occurred.

Bob Lindsey knew of the staff action and approved the 3 million figure for the Kuhikuhi Puuone group. There is no public record, it was done quietly because the company hired to review OHA fiscal matters specifically addressed misuses of this fund as a slush fund. (see PKF Report).

This transfer & allocation of funds was done without a BOT meeting or approval on the record. When ARM chair Akana reviewed the budget, she noticed there was no fiscal allocation in the approved budget for 3 million dollars. When this was raised, Hulu Lindsey & Akana learned  from Burgess and Iona (COO & CFO) that the money had been "hidden" in the budget previously approved  by the Trustees, so it could be transferred to the Kakaako project later after the bid was awarded without Trustee approval or review.

Complaint Note: See OHA ARM Action Item Report October 16, 2013 page 2. This explains how Crabbe, Stender & OHA hide funds for their own projects & friends in the Native Hawaiian Trust Fund for "budget stabilization, 1-time payments and capitol acquisitions". This is a fund has been used as a "slush" fund for Crabbe & for giveaways for the Chair & Executive staff. Three million dollars per year is put into this fund for expenditures most of which are not approved  by the BOT. Every year these funds disappear through  allocations for items that have not been approved  by the BOT or Committees.

When Bob Lindsey became chair of OHA he immediately drafted & sent out a MEMO saying Crabbe was no longer the Procurement Officer for OHA & that he was resuming this authority that the law says is under the OHA BOT Chair. Within a day he rescinded  the memo & put Crabbe back in as Procurement Officer. See Walden Jan 17, 2015: ”OHA Chair Lindsey: Rescind CEO’s Authority, Let Staff Know Who is Boss.”

Lindsey never revoked Crabbe's procurement authority, instead he rescinded  his memo and agreed to provide him with an "Executive Discretionary  Fund of $150,000 as an annual allocation so he could disburse  funds for personal reasons without OHA BOT review or approval.  Later Crabbe would include Bob Lindsey on trips to New Zealand and the Cook Islands, also approved  were Lindsey's two nephews.

Complaint Note:  Trustees have discretionary funds in the amount of about $22,000.00 per year, Crabbe now gets $150,000.00. No review of Crabbe's expenditures of "discretionary funds" has ever been undertaken by OHA.

Trustees Hulu Lindsey and Rowena Akana were aware of these improprieties & tried to stop the unauthorized appropriations & favoritism but were sidelined by Chair Lindsey and Crabbe. Kawika Burgess, left the office after signing a complaint against the Trustees.  He alleged that Akana & H. Lindsey were interfering in staff authority & were guilty of micro-management.

The November 25th email string

In January, 2015 Andrew Walden published an article quoting a string of emails between Kawika Burgess, Trustees Hulu Lindsey and Bob Lindsey, Crabbe and Peter Apo.

The email verifies that Apo was working with John Aeto and his group, to get them a contract for Hawaiian Music & entertainment etc. on one of the Kakaako Parcels (lot A) without going through an RFP. Apo's email specifically mentions the Kalaimoku Group (John Aeto) and indicates that Apo already had them running the numbers  for Aeto and Apo's Hawaiian Music Hula and Food show. The email from Kawika Burgess, OHA COO indicates that he was already  helping Apo and  working with "a very popular vender". According to trustee Hulu Lindsey she had come under pressure from Apo to support a $40,000+ monthly payment to the Kalaimoku Group for the Hawaiian Show which Apo was lining up. She refused.

Complaint Note: Information from (redacted) indicates that Apo had been paying the Aeto group $1,000.00 per month for promotional services for his company from his discretionary funds during this period.

Status on Kakaako:

Following the awarding of the RFP to Kuhikuhi Puuone on October 30th 2014, OHA began to expend funds for them. These funds were for statewide "community meetings" to determine what Hawaiians wanted  to see in the development. No other development activity has been undertaken to date.

In September, 2015, Trustee Hulu Lindsey sent a letter to Bob Lindsey and Rob Iopa from KPC detailing all the delays & unfulfilled activities the KPC group had failed to complete. Bob Lindsey then moved to terminate the Land Committee.

Since that time, Kealii Makekau, an OHA beneficiary has attended OHA BOT meetings asking for updates on Kakaako.  Bob Lindsey recently told him at a BOT meeting that Kakaako was going to be developed  by "the new nation".

Hulu Lindsey pressed for OHA to retain Sam Chung, to review OHA's policies & practices & to advise on the Kakaako transaction. In addition, she says that OHA's own in house staffer agreed with her that there was no reason to re-past the second RFP for a Conceptual plan.

(Redacted)

Other OHA Deals for IOPA/WCIT & Friends:

Rob Iopa's group, WCIT received  contractual work from OHA for upgrading the Gentry building (6 million estimated). WCIT is rumored to employ the husband of Momi Lazo, (Kamana'o Crabbe's Executive secretary). No conflict of interest was declared by Lazo, or Crabbe.

The OHA staffer fired for not supporting the Gentry refurbishing deal for Iopa & WCIT is Ka’iwinui Yoon.

Trustee Peter Apo's conflict of interest  & misuse of his elective office.

Peter Apo is an elected OHA Trustee  as well as the owner of Peter Apo Company.  He has a deal with Civil Beat. He writes articles for them and they pay him $300.00 per month and inform readers he is an elected official and has a Private Company that develops projects with a "Hawaiian sense of place".

Background:

Kanani Souza was hired to work for Apo in 2015, after his secretary Rita Makana Chai went to work for KS/BE. Souza left OHA 1 year later because of sexual harassment by Apo and his efforts to get her to do work for his private company.  She filed a Complaint with OHA and was later interviewed  by their attorney. She was asked to leave the office and was placed on leave with pay. Apo told Souza he wanted her out and was bringing back Rita Makana Chai.

(Redacted)

DTL is a group made up of previous OHA employees. They are part of the Rob Iopa group (Kuhikuhi Puuone) who were awarded  the second Kakaako planning RFP in October 2014.  Apo had been submitting billing invoices to DTL for his services to them in December, 2014.  It is not known when Apo started billing DTL for services. Apo also facilitated and appeared in the Hawaii Business Magazine article with the Iopa group touting "a Hawaiian sense of Place" and concluding that only Hawaiian Developers know what this means. The article pushed the Iopa Group and Peter Apo Company.

Apo has also used OHA time, staff, computers and funds for personal business including his Civil Beat contract and payment package.

(Redacted)

Conclusion:

Complainants  believe that the processes and outcomes for the awarding of he Kakaako RFP were influenced by OHA Staff and certain Trustees to help their friends get a lucrative business development opportunity. In addition, it appears that Trustees Peter Apo & Bob Lindsey and the Executive Staff engaged in actions to avoid the public State procurement process in order to facilitate awarding the contract  to their friends.  Crabbe has a long friendship with the EKF and its principles as does Kehau Abad, Bob Lindsey and Trustee Colette Machado. It also appears that Trustee Peter Apo has used his office to generate media and other support for his private Company, as well as income for himself from Civil Beat.

Complainants request the State Ethics Commission investigate these matters and Make public their findings. In addition, we request that if the State Ethics Commission finds wrongdoing  in the awarding of the RFP to Kuhikuhi Puuone, that the Commission refer this matter to the Prosecutors Office for needed follow-up.

(Redacted)




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