HONOLULU, Hawaii (HawaiiNewsNow) - Hawaii’s state auditor announced Monday that he is suspending his audit of non-profit Limited Liability Companies established by OHA.
The audit was ordered by the state Legislature after critics said the Office of Hawaiian Affairs was using the LLCs to hide financial and management misconduct.
They have been used since 2008, including to purchase and operate Waimea Valley, a poi mill on Kauai and other investments and assets.
But in a statement Auditor Les Kondo said that audit won’t reach the Legislature because OHA refused to cooperate with his office’s requests for documents.
Kondo had sought unredacted minutes of the OHA board’s executive sessions, which are closed to the public because they include discussions of personnel, legal counsel and strategy.
“We determined our inability to access complete records may create a significant risk that our findings, conclusions, and recommendations may be based on improper or incomplete information,” said Kondo.
“State law is unambiguous about our authority to examine all OHA records."
Kondo said the minutes were important in order to review how the OHA Board of Trustees decided to form and oversee the companies whose executives were also executives with OHA.
For years, OHA argued that the LLCs were private entities, independent of government, and therefore exempt from public records and procurement laws.
But in March a state judge rejected OHA’s arguments and declared that the LLCs are subject to the same oversight as any other state agency.
House Speaker Scott Saiki criticized Kondo for suspending the audit.
He said Kondo should have used his subpoena power to force OHA to comply or taken the agency to court, instead of halting the work.
Kondo said as a state agency OHA is required by law to comply with his request and that no other state board has ever refused to turn over executive session minutes.
OHA Vice-Chair Brandon Lee told Hawaii News Now that the board is protecting its right to confer with its attorneys in private. He argued that the auditor was able to finish his audit of the Honolulu Rail project -- after accepting redacted minutes.
“We don’t believe he has the right to violate our attorney-client privilege,” Lee said. “Why is he treating OHA differently that HART?”
Kondo said HART was different because it was a city agency, not as clearly under the state law governing audits, and he said the HART minutes weren’t as important as in OHA’s case. He said he doesn’t have the authority to punish OHA for noncompliance. By law, the auditor’s office must keep legally confidential information private.
Kondo added that the audit is only suspended, not cancelled, and would resume if OHA provides the documents.