Scathing audit: OHA spends with 'little restraint' — or oversight

HONOLULU (HawaiiNewsNow) - The Office of Hawaiian Affairs spends with "little restraint," and has used trust fund dollars to cover a former trustee's retirement benefits, a beneficiary's rent, and political donations, according to a scathing state audit released Tuesday.

The report found that in fiscal years 2015 and 2016, OHA spent nearly $14 million on discretionary disbursements — twice what it doled out on planned, budgeted and vetted grants.

And the audit found several examples of what it dubbed "questionable spending." They included:

• $1,900 to send someone to a rodeo competition in Las Vegas;
• $1,000 to cover medical expenses for a trustee's son;
• $1,000 for funeral expenses, including for the purchase of outfits.

"We acknowledge that trustees have broad discretion in determining whether a particular expenditure helps better the condition of Native Hawaiians and Hawaiians," said Hawaii State Auditor Les Kondo.

"But their desire to provide assistance to individuals should be balanced by their fiduciary duties to the trust, in other words, the interests of present and future beneficiaries. Maybe just as important, this form of giving is inherently unfair to OHA's many other beneficiaries who are in need of financial assistance but are unaware of who and how to ask for help."

Kondo also said that OHA administrators and trustees don't appear to understand the agency's own guidelines and procedures on discretionary spending.

"Many of these spending decisions are being made, 'in the dark,' without the proper airing, inputs, and approvals," Kondo said.

The audit has been anticipated for months, and a draft copy leaked to the media early this month.

Onlookers say the report paints a picture of a state agency that circumvents its own internal policies and staff recommendations by awarding millions of dollars in grants to those "who know how and who to ask."

It also calls attention to the infighting and dysfunction within OHA's boardroom and with top management. These internal disputes that have triggered lawsuits costing OHA nearly $2 million in recent years.

"I'm disgusted, absolutely disgusted and the people of Hawaii should be as well," said Brendon Lee, who is a candidate for OHA's board, after the draft audit was leaked.

He said the entire board should be replaced or voted out.

"A good portion of this money also comes from state taxpayers. So everyone should be … totally upset by the mishandling and mismanagement of state funds."

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