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Sunday, February 25, 2018
OHA: Does Draft Audit Blow Blackmail Scheme?
By Andrew Walden @ 8:18 PM :: 1872 Views :: Ethics, OHA

“Freedom is just another word for nothing left to lose.” – Janis Joplin

by Andrew Walden

How has Office of Hawaiian Affairs CEO Kamana’o Crabbe kept his job for so long?

OHA-watchers have long believed Crabbe had dirt on various Trustees.  Taking a page from J Edgar Hoover’s playbook, Crabbe held the Trustees relatively manini wrongdoing over their heads in order to get his way on items many times larger.

But once Crabbe’s dirt is out in the open, it loses its coercive effect.  OHA’s $50K settlement of sex harassment claim against Trustee Peter Apo was revealed in January, 2017.  Apo is now a sharp critic of administration foot-dragging on the release of the financial records of OHA’s six LLCs.

The leaked “Draft” version of the February, 2018 OHA audit report may be enough to free trustees from Crabbe’s political blackmail scheme.   Unlike the redacted “Final” version of the audit,  the “Draft” contains enough details to identify which Trustee is responsible for alleged spending violations in each of ten expense accounts identified in the report by letters ‘A’ through ‘I’.

The auditor’s report describes a system obviously designed to entrap Trustees:

Some trustees have asked the CFO, controller, and corporation counsel for advice on allowable expenditures and actions. OHA Administration has said that it is the nature of the fund to allow trustees the flexibility to use their allowances as they see fit, albeit with discretion. As such, we found that policies and procedures are so broad and expansive that they do not expressly prohibit specific expenditures or actions. Administration personnel describe the policies as “vague” and nearly impossible to monitor for compliance in part because Administration’s reviews are performed after-the-fact.

The Auditor reports that one Trustee—we believe to be John Waihee IV--“expressed confusion about allowable usage and the way allowance funds are disbursed to trustees, describing the process as ‘strange’ and ‘too much trouble.’”  Waihee, identified as “I” in the Draft report had only three expenses: One to cover a bank overdraft fee, another to assist a beneficiary with rent, and a third to repay himself the cost of an airline seat upgrade.  The last of these was January 9, 2015.  Apparently Waihee did not like having these charges held over his head by Admin, so he quit using the account.

Keli’i Akina states he is the other Trustee not using his expense account.  He told the Auditor he had “concerns about the ethical issues regarding an elected official’s ability to use allowances for purposes of beneficence in which they garner personal goodwill from the electorate.”  Akina has called upon Trustees to repay OHA for items tagged by the Auditor's report.  (UPDATE: See Akina statement below.)

A third trustee, Hulu Lindsey, in the Maui News February 20, 2018 explains she made a “trustee allowance contribution to the Mayor Arakawa Community Kokua Fund of $350, or the purchase of two tickets to its fundraiser. The Kokua Fund is a 501(c)(3) nonprofit organization that provides financial assistance to individuals or groups who are in dire need.”  This means that Hulu Lindsey must be ‘F’—the only account with any Arakawa-related expense items.

Accounts ‘A’ and ‘AA’ are identifiable by their start-stop dates which correspond to the November, 2014 end of Os Stender’s (AA) last term as Trustee and the subsequent commencement of Lei Ahu Isa’s (A) term.  In the Final version of the Auditor’s report, ‘A’ and ‘AA’ are merged into one account, perhaps reflecting the fact that they were from a single Trustee position, albeit occupied by two different people.   In response to questions from Hawai’i Free Press, Trustee Lei Ahu Isa explains: “When I was sworn in Jan 2015, I could not believe that I was given the leftover balance of the former Trustee Stender’s Allowance.   It’s different from the House of Representatives where a newly elected Rep gets her own $10,000 assigned for newsletters, etc. for constituents in your District.”  (UPDATE: Lei Ahu Isa has refunded $1404.02 to OHA for items including the $1000 check written to Kanoe Ahuna, wife of Trustee Dan Ahuna, as a contribution towards medical expenses incurred by their son.)

Haunani Apoliona is identifiable as the owner of ‘E’ because it is coterminous with the end of her final 2016 term as OHA Trustee. ‘E’ is also the only Trustee to contribute to Alu Like--an organization which Apoliona formerly headed.

Other Trustees are identifiable by one or more payments to reimburse themselves or their staffers for expenses.  All of these names were redacted from the Final version of the Auditor’s report.  These include Dan Ahuna ‘B’, Rowena Akana ‘C’, Robert Lindsey ‘G’, Colette Machado ‘H’.  By a process of elimination we can then determine that the remaining account ‘D’ belongs to Peter Apo.  (UPDATE: See Rowena Akana statement below.)

In the February 25, 2018 Star-Advertiser, Rowena Akana explains Machado, Ahuna, and Robert Lindsey have been keeping Crabbe in office.

Using the key below, readers of the Draft audit can see for themselves which Trustee is responsible for which alleged spending violations.  With this information out in the open, what is left for Crabbe to blackmail Trustees with?

  • A- Lei Ahu Isa
  • AA- Os Stender 
  • B- Dan Ahuna
  • C- Rowena Akana
  • D- Peter Apo
  • E- Haunani Apoliona
  • F- Hulu Lindsey
  • G- Robert Lindsey
  • H- Colette Machado
  • I- John Waihee IV

Does the ‘designed to fail’ system at OHA go beyond Trustee allowances?

Referring reporters to a 2015 analysis by UH Law Professor Randy Roth and retired Judge Walter Heen, Trustee Lei Ahu Isa points out: “OHA has not yet been defined whether we are a trust like Kamehameha Schools or a State agency….  I posed this question when I first got elected.  Our Board Counsel said we were both.”

---30---

Background:

​​UPDATES

Statement by OHA Trustee Keli'i Akina:  Why I Voted Against Moratorium on Trustee Allowances

February 27, 2018

Today, at the OHA Board of Trustees meeting, I voted against the measure to impose a moratorium on OHA trustee allowances for two reasons.  While the measure passed, I feel it is important to state my reasons for voting against it.

The first reason I opposed the moratorium is that it is the wrong medicine.  The correct medicine is for trustees who have misspent from their personal accounts to repay all inappropriate expenditures. The moratorium does not require repayment and simply pushes the matter off for further policy discussion.  Today I called upon current and past trustees to repay any of their expenditures flagged as inappropriate by the state auditor.

The second reason I opposed the moratorium on trustee expense accounts is that it is a largely symbolic measure that takes attention off of the more significant issue raised by the state auditor,  which is the gross misspending by the OHA CEO.  By comparison, while the state auditor flagged $46,480 in inappropriate trustee account expenditures for 2015 and 2016, the state auditor flagged more than 14 million dollars in overall discretionary spending and CEO-initiated sponsorships.  In perspective, inappropriate trustee account expenditures were only a fraction, one-third of 1% of the total amount of inappropriate expenditures in OHA.  Further analysis shows that the vast majority of trustee account expenditures were actually not problematic.  The state auditor found no problem with 78% of all trustee account expenditures, which amounts to a grade of B- . 

The real problem OHA needs to deal with is reining in the spending by its CEO and Administration.  The moratorium measure passed today may give a false impression that OHA is dealing with the problems raised by the audit.  OHA beneficiaries and state taxpayers deserve better.  They deserve trustees who will do their fiduciary duty and replace the current CEO.

PDF: Power Point Presentation

  *   *   *   *   *

From Rowena Akana, February 26, 2018

Aloha!  Thank you for allowing me to comment on the state audit of OHA.  Let me begin by saying that I can defend every one of my expenditures.

I believe that a focus on the Trustees allowance spending is shining the light away from what has really been going on within the walls of OHA.  The Trustees’ policies can be easily fixed and improved on, while the internal funneling of money to friends and organizations affiliated with the CEO takes much more skill and investigation.  There are Trustees and staff who have also played a role in what I believe is corruption and a misuse of Trust funds.

The purpose of the Trustee Allowance and Sponsorship fund is to allow Trustees to help beneficiaries who do not qualify for other grants.  OHA’s current policies and procedures allow Trustees to spend allowance funds on communications with beneficiaries, funerals for beneficiaries, and helping beneficiaries with emergency expenses.

Paying for a fax line and Internet connection are also allowable.  Since we are considered part-time, we can work from home and the lines of communication to our offices must always be open.  A website is also allowed.

Paying membership dues to a national organization that represents the interests of Native Hawaiians is allowed.  OHA officers are also allowed to use OHA funds to pay for memberships and subscriptions.  What is the difference between a Trustee paying for membership in a sister organization that helps our people on a national level and OHA officers paying for memberships and subscriptions with the same intent?  The problem is that the state auditors never really looked at the intent of our policies.

Also, I never used my Trustee allowance for a “campaign brochure.”  That was a mistake in the billing.  The money went to re-design my website so that all my information on it would be categorized and made to look like a brochure so that it would be more user-friendly for our beneficiaries.

There is a vast difference between what Trustees used their allowance money for and the way the CEO and his staff were misdirecting funds.

Mahalo,

Trustee Rowena Akana

 

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