UH regents tackle ethics questions on accountability - Hawaii News Now - KGMB and KHNL

UH regents hire $50K consultant for accountability panel

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KAPOLEI, OAHU (HawaiiNewsNow) -

The University of Hawaii Board of Regents Friday moved forward with plans for a task group on accountability to spend up to $50,000 to hire a consultant in the wake of the Stevie Wonder blunder, even as they debated whether members of the group had perceived conflicts of interest.

Click HERE for our special Wonder Blunder section.

The accountability panel is made up of five regents and four experts from the accounting and auditing industry, and is charged with evaluating the UH's operational and financial controls as well as its oversight practices.

The regents have hired accounting firm KMH on a contract, not to exceed $50,000, to do the "leg work" of the accountability group, said UH Regents Chair Eric Martinson.

KMH already holds another much more lucrative UH contract, worth $435,000, to help with implementation of the university's new Kuali financial system. That contract was awarded in April, and UH has paid the company $310,000 as of Aug. 31, a UH spokeswoman said. The existing larger contract is being amended to include the work for the regents, a UH spokeswoman said.

"I have a problem with this," said Regent Benjamin Kudo, a member of the accountability task group. "If we want to eliminate any doubt about the results of this committee, we should have somebody who's cleaner, that doesn't have an existing contract with the university to do the independent study." Kudo said he wanted to avoid the appearance of a conflict of interest.

Cory Kubota, of the auditing firm Accuity, which is hired as UH's external auditor, also serves on the panel. He volunteered to serve as a non-voting member to clear up any ethical questions.

"We've got to move forward and start doing some stuff," Kubota said.

Regent John Dean said as long as any potential conflict is fully disclosed, "I just don't see any conflict."

The regents voted unanimously to make the non regents non-voting members of the committee while the State Ethics Commission determines if those business people have conflicts of interest because they also have contracts with the university.

The accountability panel is tentatively set to produce the first of what could be three reports by Oct. 18.

Kudo said he didn't understand the quick deadline, which he said may not allow the committee to do a thorough job.

"I'd rather do that than rush and provide a document that was useless in terms of its information or its conclusions," Kudo said. 

Martinson said he called for the quick deadline for the first phase of the committee's work.

"Because I felt that we had a responsibility for accountability to the public that had to be addressed, at least, as quickly as possible," Martinson said.

Martinson, who appointed the members of the group, said if the panel is unable to meet that deadline, it will wait until it has finished its work.

Regents Vice Chair James Lee, who also serves on the accountability task group, said, "The initial report in connection with phase one, will, at a minimum, present the task group's assessment and evaluation of the operational and financial processes that resulted in the failed Stevie Wonder transaction."

Regent Jan Sullivan, another member of the special panel, said she also wanted to hear from top UH management about their solutions to management and accountability problems highlighted in the aftermath of the failed Stevie Wonder concert.

"We have a fact finder's report that we paid a consultant to do, and before we pay another consultant to do that consultant's work, I felt we should have our own staff and management and internal auditors tell us what their conclusion is," Sullivan said.

UH has already has a $50,000 contract, which could go higher, with one Honolulu law firm that compiled a fact finding report on the failed concert. Another law firm has a $25,000 contract to help UH prepare documents for disclosure and assist UH officials in their testimony at State Senate hearings into the matter.  A public relations firm has been advising UH officials for $2,500 a month since the concert was canceled July 10.

Click HERE for our special Wonder Blunder section.

Regent John Holtzman said, "I think it should be very clear that our interest is in a report that is fair, that is tough and that the people of Hawaii can understand, because we're on the line now, too."

During open debate on the task group proposal that lasted more than an hour, Dean, another regent, urged his colleagues to move forward with the panel.

"We can discuss and discuss and discuss, but we need to get going on this," Dean said.

It was the first time the regents discussed the failed concert in public since it was canceled July 10.  The unpaid regents have been criticized by members of the State Senate, the media and the public for spending five hours discussing the situation in a closed-door meeting on Aug. 22.

The names of the members of the Advisory Task Group on Operational and Financial Controls Improvement are: James H. Q. Lee, Vice Chair, Board of Regents and Chair, Committee on University Audits; Barry Mizuno, Regent and Vice Chair, Committee on University Audits; Saedene Ota, Regent and Member, Committee on University Audits; Jan Sullivan, Regent and Member, Committee on University Audits; Benjamin Kudo, Regent; Lawrence Rodriguez, Business Consultant; Terri Fujii, Managing Partner, Honolulu Office of Ernst & Young LLP; Patrick Oki, Managing Partner, PKF Pacific Hawaii LLP; Cory Kubota, Assurance Principal, Accuity LLP.

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